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Ana Maria Guerra Martins, The Judicial Control of the Portuguese Austerity Measures during the Crisis from a Multilevel Perspective in:

Jörn Axel Kämmerer, Markus Kotzur, Jacques Ziller (Ed.)

Integration und Desintegration in Europa | Integration and Desintegration in Europe | Intégration et Désintégration en Europe, page 299 - 326

1. Edition 2019, ISBN print: 978-3-8487-6131-9, ISBN online: 978-3-7489-0222-5, https://doi.org/10.5771/9783748902225-299

Series: Societas Iuris Publici Europaei (SIPE), vol. 13

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The Judicial Control of the Portuguese Austerity Measures during the Crisis from a Multilevel Perspective Ana Maria Guerra Martins* Introductory remarks This article focuses on the judicial1 control of the Portuguese austerity measures during the economic and financial crisis from a multilevel perspective. In an earlier article we analyzed the case law of the Portuguese Constitutional Court (PCC) concerning social rights during the public debt crisis,2 with the aim to demonstrate the consistence and coherence of that case law, which was, in my opinion, exaggeratedly called into question by Portuguese scholarship. Nowadays, times have changed and the public debt crisis is apparently over; but since then the European Union (EU) has suffered successive threats and crises, whose end is not in sight. The emergence of nationalist, anti-European and populist movements, which led, for instance, to Brexit, the rise of extreme right-wing political parties that intend to eliminate either the euro or even the European Union, and the migration and refugee crisis that, instead of increment‐ ing European solidarity, contributed to enhance xenophobe and racist trends. The financial and public debt crisis, which had endangered the euro, arises, without any doubt, as one of the most significant causes of these threats. As a matter of fact, individuals have looked to the Union as the main responsible for their impoverishment and lower standard of living. Therefore, they do not see any reason to support it. I. * Associate Professor (with Aggregation) at the Law School of Lisbon University, senior researcher at Lisbon Centre for Research in Public Law (CIDP) and former Justice at the Portuguese Constitutional Court. All opinions expressed only bind the Author. She can be reached at: aguerramartins@gmail.com. 1 The non-judicial bodies – the European Committee on Economic and Social Rights and the UN Committee on Economic and Social Rights – have also played a relevant role. Due to lack of space, in this article, they are left out of our analysis.To go further on this issue see, for instance, Lorenza Mola, The margin of appreciation accorded to States in times of economic crisis – An Analysis of the Decision by the European Committee of Social Rights and by the European Court of Human Rights on National Austerity Measures, in: Revista Jurídica de Derechos Sociales, 2015, p. 174 ff.; Luis Jimena Quesada, Adoption and Rejec‐ tion of Austerity Measures: Current Controversies under European Law (Focus on the Role of the European Committee of Social Rights), in: Revista Catalana de Dret Públic, 49 (2014), p. 41 ff.. 2 Ana Maria Guerra Martins, Constitutional Judge, Social Rights and Public Debt Crisis: The Portuguese Constitutional Case Law, in: MJ, 22 (2015), p. 678 ff. 299 Taking this into account, the legal causes and consequences of the economic and financial crisis remain an important topic and the proof of this is the number of researchers and groups of researchers, that are currently investigating this mat‐ ter. The scholarship’s scrutiny of the austerity measures allows the identification of the potential mistakes that have been committed, either by the EU or by its Member States, in order to prevent such a crisis in the future. Furthermore, in the meanwhile, the Court of Justice of the European Union (CJEU) has apparently changed its case-law on the Portuguese austerity mea‐ sures, and this change deserves to be assessed. Summing up, the main purpose of this article is to elaborate on the relation‐ ship between the PCC, the CJEU and the European Court of Human Rights (EC‐ tHR) and to investigate whether an eventual dialogue between these three courts could have increased the protection of the of individuals’ fundamental rights. Outline In order to achieve this purpose, I start with a brief overview of the principles, values and objectives that are common to the European States, to the EU, and to the Council of Europe. As Luis Jimena Quesada pointed out in a paper pub‐ lished in 2014, “the austerity measures, as such, are neither positive nor nega‐ tive”.3 The problem lies in their compatibility with not only the national constitu‐ tions but also the major texts of the Council of Europe and the EU. In times of crisis, one has to come back to the basics and in this context the basics comprise the European common heritage, in which the respect for funda‐ mental rights – including social rights – plays a somewhat important role. Secondly, the article focuses on the analysis to the extent strictly necessary of the PCC’s so-called “case law of the crisis”. Afterwards, we turn to the analysis of the CJEU and of the ECtHR’s case law on the Portuguese austerity measures, comparing them with the decisions of the PCC on the same subject and seeking an explanation for when they do not coincide. Finally, the case study of Portugal shows that in times of crisis the PCC, the CJEU and the ECtHR were rather deferent to the legislator and somewhat selfrestrained. In addition, the case study of Portugal also reveals that multilevel ju‐ dicial control does not necessarily mean a better protection of fundamental rights. II. 3 Luis Jimena Quesada, Fn. 1, Adoption and Rejection of Austerity Measures…, p. 41. The Judicial Control of the Portuguese Austerity Measures 300 European common values, principles and objectives When one talks about the public debt crisis and the corresponding austerity mea‐ sures, it immediately crosses our minds the challenge they represented to funda‐ mental rights,4 namely to social right and to the so-called social State. As is wellknown, both are foundational pillars of Europe and they constitute a distinctive feature in comparison with the rest of the World.5 Going back to the History of the European State, especially after the Second World War, we observe that democracy, rule of law and fundamental rights, namely social rights, acquired a constitutional status in almost all European States. More impressive is that looking at the origins of the Council of Europe and of the EU, the respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights (see preamble of the ECHR and Article 2 TEU) are the main values of both international entities6. As for the EU, these values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail (Article 2 TEU). Both the Council of Europe and the EU have to strive for “achieving a greater unity between its members through economic and social progress based on the observation of minimum standard in the field of human rights” (see also the Preamble of the ECHR).7 Furthermore, the EU, beyond the promotion of peace and its values, aims among many others, the well-being of its peoples, a balanced economic growth, and a highly competitive social market economy, aiming at full employment and social progress (Article 3 TEU). III. 4 For a study on the impact of austerity measures on fundamental rights, Dalila Ghailani, Vi‐ olations of Fundamental Rights: Collateral Damages of the Eurozone Crisis?, in: Social Pol‐ icy in the European Union: state of play, 2016, p. 157 ff.; Council of Europe, The Impact of the Economic Crisis and the Austerity Measures on Human Rights in Europe – Feasibility Study, adopted by the Steering Committee for Human Rights (CDDH) on 11 December 2015, 2016; Lisa Ginsborg, The impact of the economic crisis on human rights in Europe and the accountability of international institutions, in: Global Campus Human Rights Jour‐ nal, 1 (2017), p. 97 ff. 5 For an overview of this topic, Colm O’Conneide, Austerity and the Faded Dream of a «So‐ cial Europe», in: A. Nolan (ed.), Economic and Social Rights after the Global Financial Crisis, 2014, p. 169 ff. 6 We use the expression international entity instead of international organization, because we do not believe that the EU is an international organization. For more developments see Ana Maria Guerra Martins, in: Manual de Direito da União Europeia, 2nd ed., 2017, p. 224 ff. 7 Luis Jimena Quesada, Fn. 1, Adoption and Rejection of Austerity Measures…, p. 43. Ana Maria Guerra Martins 301 The Union also aims to combat social exclusion and discrimination, to pro‐ mote social justice and protection, equality between women and men, solidarity between generations and the protection of the rights of the child. And last but not least, the Union shall promote economic, social and territorial cohesion, and solidarity among Member States. Although these objectives are themselves not enforceable,8 they are relevant when it comes to the interpretation of EU law.9 Consequently, the EU should take them into consideration in all decisions and this rationale also applies in emergency situations, such as the public debt crisis. To put it in other words, dur‐ ing the crisis, the EU should have interpreted its competences in accordance with said regarding objectives. However, one has the feeling that the EU was more concerned with financial and economic issues than with the values and principles enshrined in Article 2 TEU. For instance, the balance between the European so‐ cial model and the protection of fundamental rights, on the one hand, and the res‐ cue of the euro and the EMU, on the other, the EU has clearly decided in favor of the latter. No doubt that the euro and the EMU constitute matters of huge public interest and that the purpose of the austerity measures was fully legitimate. Notwith‐ standing, we can also ask ourselves whether it would have been possible to find a better balance between economic and financial issues, on the one hand, and the rule of law and human rights, on the other hand. The truth is that as far as the EU has verified the impossibility of approving EU acts, in due time, as a result of the resistance of some Member States, in or‐ der to face the crisis it did not hesitate to allow and even encourage the EU insti‐ tutions and the Member States to adopt international acts and treaties.10 This is nothing but encouraging the disrespect of the rule of law. 11 8 ECJ judgment of 24/1/91, C-339/89, Alsthom Atlantique, Reports of Cases, 1991, p. I-107, par. 9; ECJ judgment of 3/10/2000, C-9/99, Echirolles Distribution, Reports of Cases, 2000, p. I-8207, par. 25; ECJ judgment of 3/6/2010, C-484/08, Caja de Ahorros y Monte de Piedad de Madrid, Reports of Cases, 2010, p. I-4785, par. 46-47. 9 For going further, see Ana Maria Guerra Martins, in: Manual de Direito da União Euro‐ peia, 2nd ed., 2017, p. 218 ff.; Pierre Pescatore, Les objectifs de la Communauté euro‐ péenne comme principes d’interprétation dans la jurisprudence de la Cour de Justice, in: Mélanges Ganshof van der Meersch, t. II, 1972, p. 325 ff.. 10 See Paivi Leino / Tuomas Saarenheimo, Sovereignty and subordination: on the limits of EU economic policy coordination, in: European Law Review, 2017, p. 166 ff.; Bruno de Witte, Euro Crisis Responses and the EU Legal Order: Increased Institutional Variation or Constitutional Mutation?, in: EuConst, 2015, p. 434 ff.; Federico Fabbrini, The Fiscal Compact, the "Golden Rule”, and the Paradox of European Federalism, in: Boston College International and Comparative Law Review, 32 (2013), p. 1 ff.; Bruno de Witte, Using International Law in the Euro Crisis – Causes and Consequences, ARENA Working Paper, 4/2013; Paul P. Craig, The Stability, Coordination and Governance Treaty: Principles, Po‐ litics and Pragmatism, in: European Law Review, 2012, p. 231 ff.; Giuseppe Martinico / Carla Maria Cantore, The New ‘Treaty on Stability, Coordination and Governance in the Economic an Monetary Union’: Asymmetry or Des-integration?, Working paper 10/2012, The Judicial Control of the Portuguese Austerity Measures 302 In addition, in the case of the Members under financial assistance, the EU did not hesitate to contribute to a severe restrictions of social rights, such as the right to a pension, the right to a salary and the right to social benefits, but also the right of equal access to a court. Furthermore, the EU never made any effort in conciliating the austerity mea‐ sures with the principle of solidarity and economic, social and territorial cohe‐ sion, the well-being of the people, full employment and social progress. Taking into account this scenario, no one will be astonished that national and international courts and quasi-judicial bodies were called up to review the legali‐ ty of the austerity measures. The plaintiffs were individuals whose rights were under threat; trade unions whose workers’ wages have been cut; and other pen‐ sioners, associations whose pensions had also been cut.12 In spite of the plurality of judicial (and non-judicial bodies) called to review the austerity measures, there was not necessarily an increase in the protection. As we sustained in earlier articles,13 a multilevel protection and enforcement of fun‐ damental rights only makes sense – or at least it is desirable – when it brings benefits to the individuals. Otherwise, it is rather difficult to justify the existence of international human rights law and EU fundamental rights law, especially when fundamental rights’ restrictions come precisely from international law and EU law, as it was the case in the last financial and economic crisis. In the next section we will briefly analyze the case law of the PCC. http://www.realinstitutoelcano.org/wps/portal/rielcano; AAVV, Another Legal Monster? An EUI Debate on the Fiscal Compact Treaty, EUI Working Papers, 2012/09; Jean-Victor Louis, The unexpected revision of the Lisbon Treaty and the establishment of a European stability mechanism, in: Ashiagbor / Countouris / Lianos, The European Union after the Treaty of Lisbon, 2012, p. 284 ff. 11 See Claire Kilpatrick, On the Rule of Law and Economic Emergency: The Degradation of Basic Legal Values in Europe’s Bailouts, in: Oxford Journal of Legal Studies, 2015, p. 1 ff. 12 For an overview of the case law of the domestic and European Courts see Claire Kil‐ patrick, Constitutions, Social Rights and Sovereign Debt States in Europe: a challenging new areas of constitutional inquiry, EUI Working Papers, Law, 34 (2015), p. 1 ff; Frederico Fabbrini, The Euro-Crisis and the Courts: Judicial Review and the Political Process in Comparative Perspective, in: Berkeley J. Int’l Law, 32 (2014), p. 74 ff. 13 Ana Maria Guerra Martins, Opinion 2/13 of the European Court of Justice in the Con‐ text of Multilevel Protection of Fundamental Rights and Multilevel Constitutionalism Re‐ visited, in: Papadopoulou / Pernice / Weiler (eds.), Legitimacy Issues of the European Union in the Face of Crisis – Dimitris Tsatsos memoriam, 2017, p. 239. See also in the same book the criticism of Joseph Weiler, p. 415 ff and the reply of the author, p. 418 ff. Ana Maria Guerra Martins 303 Overview of the Portuguese constitutional court’s case law during the public debt crisis14 General remarks on the Portuguese austerity measures The financial crisis of 2008 and the subsequent public debt crisis (2010/2014) led some EU Member States,15 including Portugal, to the adoption of a package of austerity measures. At the beginning, those measures were restricted to tax matters, but during the course of the financial and public debt crisis, and specifically after the request for external assistance and the signature of the Financial Assistance Programme (FAP) for Portugal16 in May 2011,17 they were extended to other areas, such as cuts in staff, in wages and other benefits for the public sector, cuts in pensions for the public and private sector, “flexibility” of the labour market and reduction of unemployment benefits for the private sector. It is important to note, however, that as a rule, these cuts did not touch the lower levels of wages, pensions and benefits. Some of these measures were integrated into the State Budget Laws of 2011, 2012, 2013 and 2014, which were all challenged before the PCC. Other measures were formally independent from the said laws, but strictly connected to them. A third group of laws was completely autonomous. During that period, the unemployment rate increased (in Portugal, it reached more than 17% in 2013), income and social benefits were reduced, which led to more poverty and quality of public social services decreased. IV. IV.1. 14 This section follows rather closely our above-mentioned article, Fn. 2, “Constitutional Judge, Social Rights and Public Debt Crisis…” p. 678 ff. 15 For a study of the austerity measures and its consequences for EU Member States, see Lisa Ginsborg, The impact of the economic crisis on human rights in Europe and the account‐ ability of international institutions, in: Global Campus Human Rights Journal, 1 (2017), p. 97 ff; Council of Europe, The Impact of the Economic Crisis and the Austerity Measures on Human Rights in Europe – Feasibility Study, adopted by the Steering Committee for Human Rights (CDDH) on 11 December 2015, 2016; Margot Salomon, Of Austerity, Hu‐ man Rights and International institutions, in: European Law Review, 21 (2015), p. 521 ff. 16 This programme comprises a set of legal instruments. On the one hand, the Portuguese Government and the International Monetary Fund (IMF) signed a Technical Memorandum of Understanding and a Memorandum of Economic and Financial Policies, which set out the terms and conditions governing the provision of financial assistance to Portugal by the IMF. On the other hand, the Portuguese Government and the European Union signed a Memorandum of Understanding on Specific Economic Policy Conditionality. These Mem‐ oranda require the Portuguese State to adopt the measures they set out, as one of the condi‐ tions for the phased fulfillment of the financing contracts entered into force by the same parties. 17 The FAP for Portugal and all the documents related to are available on the website of Ban‐ co de Portugal (https://www.bportugal.pt). The Judicial Control of the Portuguese Austerity Measures 304 Some of the Portuguese austerity measures were challenged before the Consti‐ tutional Court, which had to take into account, on the one hand, the European and international commitments of the Portuguese State and, on the other hand, the highly protective character of the Portuguese Constitution concerning funda‐ mental rights, and especially social rights. Main lines of the Portuguese Constitutional Court’s “case law of the crisis” Throughout the so called “case-law of the crisis”, the PCC accepted that the law‐ maker has a wide margin of appreciation to reverse the level of protection of so‐ cial rights, including the right to a fair wage, the right to a pension, and the right to social benefits, which constitute the core of social rights. The Court also ad‐ mitted that the control of the public debt strongly lies in the public interest, and consequently considered that the related European and international commit‐ ments should be respected. However, the retrocession of social rights must re‐ spect the principles of equality, proportionality and legal certainty comprised in the rule of law. Insofar as the Court considered that these principles were violat‐ ed, it did not hesitate to declare the national legislation unconstitutional, despite the government’s argument that the provisions in question were crucial to fight the economic and financial crisis.18 A more detailed analysis of the so called “case law of the crisis” Challenging austerity measures enshrined in State Budgets Laws Starting with Ruling No. 396/11 of 21 September 2011,19 the Constitutional Court was asked to declare as unconstitutional20 several norms contained in the State Budget Law (SBL) for 2011.21 These norms included measures that provid‐ ed for cutting the wages of public-sector workers earning more than €1,500 a month. IV.2. IV.3. IV.3.1. 18 For an overview of the Portuguese case-law, see Canotilho / Violante / Lanceiro, Aus‐ terity Measures under Judicial Scrutiny: The Portuguese Constitutional Case Law, in: European Constitutional Law Review, 2015, p. 155 ff.; Roberto Cisotta / Danielle Gallo, The Portuguese Constitutional Court Case Law on Austerity Measures: A reappraisal, LUISS Guido Carli – Dipartimento di Giurisprudenza, Working Paper 4/2014. 19 Portuguese version in http://www.tribunalconstitucional.pt/tc/acordaos/20110396.html. 20 Cf. Article 281 (1) (a) and (2) (f) CPR. 21 Articles 19, 20 and 21 of Law N. 55-A/2010 (Lei do Orçamento de Estado para 2011) of 31 December 2010. Ana Maria Guerra Martins 305 Firstly, the Court considered that there is a constitutional right to a salary (Ar‐ ticle 59 (1) (a) CPR), but that there is no right to keep its specific amount un‐ changed. The cuts of wages set out in the SBL for 2011 aimed to decrease the public debt to the amount precisely imposed by the FAP for Portugal. Secondly, the Court decided that the reductions in the pay of public-sector workers were unequal insofar as they only targeted individuals working for the State and other public-law entities, but not workers paid for providing subordi‐ nate labour in the private or cooperative sectors, independent workers, or anyone else who earning income from other sources. However, it concluded that there are legitimate grounds for this differentiation. The Court considered that the ad‐ ditional sacrifice demanded for a transitory period of time did not constitute an unjustifiably unequal treatment, and consequently did not declare these measures unconstitutional.22 23 In Ruling No. 353/12 of 3 July 2012,24 the Constitutional Court was asked to declare as unconstitutional25 some norms of the SBL for 2012,26 on the grounds that they violate the principles of a democratic state based on the rule of law (protection of legal certainty), proportionality, and equality. These norms provided for “suspension of the Christmas and holiday-month payments”, while simultaneously maintaining the measures involving “wage re‐ ductions” contained in the SBL for 2011. The reasons the legislator provided for adopting these measures were primarily based on the need to comply with the budget-deficit limits (4.5% of GDP in 2012) imposed in both the Technical Memorandum of Understanding and the Memorandum of Economic and Finan‐ cial Policies. The norms that provided for a measure under which the Christmas-month (13th month) and holiday-month (14th month), or any equivalent payments were suspended in 2012-2014, both for individuals receiving salary-based remunera‐ tions from public entities and for those receiving retirement pensions via the public social security system, were unconstitutional because they violated the constitutional principle of equality, which requires the just distribution of public costs. There should have been limits to the difference between the extent of the sacrifice imposed on individuals affected by these measures and the sacrifice im‐ posed on those who were not; and the inequality caused by the difference in situ‐ ations should have been the object of a degree of proportionality. The extremely serious economic and financial situation and the need for the adopted measures 22 The Ruling contains three dissenting opinions. 23 For a comment see G. Fonseca, ‘Anotação ao Acórdão no. 396/11 do Tribunal Constitu‐ cional’, in: Revista de Direito Público,6 (2011), p. 269 ff.. 24 Portuguese version in http://www.tribunalconstitucional.pt/tc/acordaos/20120353.html. 25 Cf. Article 281 (1) (a) and (2) (f) CPR. 26 Law N. 64-B/2011 of 30 December 2011 (Lei do Orçamento de Estado para 2012). The Judicial Control of the Portuguese Austerity Measures 306 to be effective could not serve as grounds for dispensing the legislator from be‐ ing subject to the fundamental rights and key structural principles of the State based on the rule of law. This is particularly true regarding the principle of pro‐ portional equality. The difference between the degree of sacrifice for those affected by these measures and others must be subject to limits. The Court considered that legal equality is always a proportional equality, so no inequality justified by a difference in situations is immune from a judgment of proportionality. The Court also said that the difference of that treatment in that case was so substantial and significant that the efficacy-related reasons advanced for the measures were insufficient to justify it, particularly, because alternative solutions were available. Bearing in mind that the execution of the 2012 Budget was already well un‐ derway, the Constitutional Court restricted the effects of the declaration of un‐ constitutionality, as permitted by Article 282 (4) of the Constitution, and did not apply them to the suspension of Christmas and holiday bonuses or any equiva‐ lent payments with regard to 2012.27 This was the first time in the history of the Constitutional Court that it restricted the effects in such a way on the basis of Article 282 (4) of the Constitution.28 Ruling No. 187/2013 of 5 April 201329 represents one of the most difficult de‐ cisions on the so-called “case-law of the crisis”, not only due to the bearing of the requests, but also taking the complexity of the constitutional questions into account. The legislator, reacting to the declaration of unconstitutionality of the former SBL norms, tried to create new measures fighting the public deficit and simultaneously avoiding the control of constitutionality by the Court. The Constitutional Court was asked by several entities (including the Presi‐ dent of the Republic, Members of the Parliament and the Ombudsman) to review the constitutionality30 of the following norms contained in the SBL for 201331: 27 Three Justices were of the view that the effects of the declaration of unconstitutionality should also extend to the current year, and therefore dissented from the decision to exclude 2012 and three Justices dissented from the declaration of unconstitutionality as such. 28 For a comment see M. Nogueira de Brito, Comentário ao Acórdão 353/2012 do Tribunal Constitucional, in: Direito e Política, 1 (2011), p. 108 ff; A.C. Santos / C.C. Palma, O Acórdão do Tribunal Constitucional No. 353/12, de 5 de Julho’, in: Revista de Finanças Públicas e Direito Fiscal, 5 (2012), p. 31 ff; R. Branco, ‘Ou sofrem todos ou há morali‐ dade: Breves notas sobre a fundamentação do Acórdão do Tribunal Constitucional no. 353/12, de 5 de Julho, in: J. Miranda et al., Estudos em Homenagem a Miguel Galvão Teles, 2012, p. 329 ff.. 29 Portuguese version in http://www.tribunalconstitucional.pt/tc/acordaos/20130187.html. [27 September 2019]. 30 Cf. Article 281 (1) (a) and (2) (a) (d) (f) CPR. 31 Law N. 66-B/2012 of 31 December 2012 (Lei do Orçamento do Estado para 2013). Ana Maria Guerra Martins 307 a) the suspension of the payment of the extra holiday month of salary or its equivalent; b) the same suspension for retirees from both the public and the private sec‐ tors; c) the imposition of an “extraordinary solidarity contribution” payable on pen‐ sions (at rates of between 3.5% and 10%, with pensioners already paying the 10% rate subjected to an additional 15% rate on the part of their pen‐ sions that exceeds 12 times the reference amount used to set, calculate and update contributions, pensions and other social benefits (the so-called Social Support Index Value – IAS), and to a rate of 40% on the amount of their pensions over and above 18 times the IAS; d) a reduction in the pay of public-sector staff; e) a reduction in the remuneration and suspension of the extra holiday month, payable under teaching and research contracts; f) a reduction in the sums payable as overtime; g) the imposition of a contribution payable on sickness and unemployment benefits; h) some changes to the Personal Income Tax brackets. The Court solely declared unconstitutional – with general binding force – the norms related to the suspension of the payment of the extra holiday month of salary or its equivalent for Public Administration staff,32 and the same suspen‐ sion for retirees from both public and private sectors,33 as well as the imposition of a contribution payable on sickness and unemployment benefits.34 Other norms like the continued reduction of wages,35 and the Extraordinary Solidarity Contri‐ bution (ESC) for pensioners,36 were not deemed unconstitutional. Concerning the suspension of the additional holiday month of salary or equiv‐ alent for Public Administration staff, the Court, referring to Ruling No. 353/12, considered this to be a violation of the principle of equality that requires the just distribution of public costs. The Court applied the same reasoning to the suspension of the holiday month of pensions for public and private-sector retirees, declaring it unconstitutional with generally binding force. 32 See para. 42-46. 33 See para. 54-59. 34 See para. 84-94. 35 See para. 26-27. 36 See para. 69-83. The Judicial Control of the Portuguese Austerity Measures 308 Furthermore, the Court declared the norm that provided for a contribution payable on unemployment and sickness benefits to be unconstitutional with gen‐ erally binding force, because it violated the principle of proportionality.37 38 Reviewing substantial budgetary measures In order to avoid another declaration of unconstitutionality of norms contained in the SBL while they were already in force, the Constitutional Court was asked for an a priori review of the constitutionality39 of two Decrees of the Assembly of the Republic. The first Decree approved a regime establishing temporary pay-cut mechan‐ isms and the conditions under which they would be reversed within a maximum of four years. This included a pay cut in 2014 for staff paid out of public funds, similar to the one that had already been created in the SBL for 2011; a pay cut in 2015 worth 80% of the 2014 equivalent; and the inclusion in the law of provisions un‐ der which similar cuts would apply in the subsequent years up until 2018. To‐ gether, these measures added a further five years to past cuts, thus increasing the total consecutive number of years with such cuts to eight (2011-2018). Unlike 2014 and 2015, the Decree did not specify the amount of reductions that would apply in each of the years between 2016 and 2018. Recalling the essential elements of its former jurisprudence, in Ruling No. 574/14 of 14 August 2014,40 the Court considered that systematically presenting the successive pay-cut measures since 2011 as merely transitional, the govern‐ ment had generated the reasonable expectation on the part of workers paid out of public funds that the measures would be reversed and wages would improve with time. The Court acknowledged that the Portuguese State had already fulfilled the terms of the FAP for Portugal, but the constraints derived from international and European commitments – particularly those arising out of the Treaty on the IV.3.2. 37 For a comment see A. P. Antunes, Breves Notas ao Acórdão do Tribunal Constitucional N.º 187/2013 quanto à contribuição extraordinária de solidariedade’, in: E-Publica, Revista Electrónica de Direito Público, 2 (2014), www.e-publica.pt, p. 1 ff., Criticising the decisi‐ on of the Court concerning the reduction of pensions for public and private sector; see J. Reis Novais, O direito fundamental à pensão de reforma em situação de emergência finan‐ ceira, in: E-Pública – Revista Electrónica de Direito Público, 1 (2014), www.e-publica.pt, p. 2 ff.. 38 This Ruling was the object of many partial dissenting opinions. 39 Cf. Article 278 (1) CPR. 40 Portuguese version in http://www.tribunalconstitucional.pt/tc/acordaos/20140574.html. [27 September 2019]. Ana Maria Guerra Martins 309 Functioning of the European Union (TFEU) and the Treaty on Stability, Coordi‐ nation and Governance (TSCG) in the Economic and Monetary Union (known as the ‘Fiscal Compact’) and the effect of the excessive deficit procedure – still per‐ sisted. The logical consequence of these circumstances, which increased the rele‐ vance of the underlying public interest, was that the pay-cuts in 2015 remained within the limits of reasonable expectations and were therefore in conformity with the principle of legal certainty. Turning to 2016-2018, however, a variety of indicators, above all, the govern‐ ment forecasts set out in the Budgetary Strategy Document reflected an econo‐ mic scenario in which there will be an improvement in the economic and finan‐ cial situation and this can be expected to have an effect on the situation of work‐ ers paid out of public funds. In 2016, with the end of the FAP and of the excessive deficit procedure there would have to be other grounds in order to conclude again that the pay-cut mea‐ sures were not unconstitutional. Given the constitutional requirement that public costs must be shared equally, it was not constitutionally permissible in order to balance public finances to cut spending by continuing to sacrifice workers in particular. In conclusion, the Court pronounced the norms applicable to 2016-2018 as unconstitutional.41 The second Decree of the Assembly of the Republic concerned the creation of a Sustainability Contribution (SC). In Ruling No. 575/14 of 14 August 2014,42 the Court rejected outright both the idea that the SC was comparable to the earli‐ er ESC, and the argument that the individuals affected by the former would be in a better position with respect to the amount of their pensions than they had been under the latter.43 The Constitutional Court also followed its own case law on social rights.44 However, the measure sub judice raised serious difficulties on the level of both equality, internal fairness and intra-generational justice.45 On the one hand, failed to resolve inter-generational justice level issue.46 On the other hand, the norms 41 Three Justices dissented (one partially) from the decision not to find the norms that cut the pay of workers paid out of public funds in 2014 and 2015 unconstitutional and five Jus‐ tices dissented from the decision of unconstitutionality of the norms that cut the pay of such workers in 2016 – 2018. One Justice attached a concurring opinion to the Ruling. 42 The Portuguese version is available on the website of the Portuguese Constitutional Court, www.tribunalconstitucional.pt/tc/acordaos/20140575.html. 43 Compare Ruling No. 575/14 of 14 August 2014, para. 29. 44 See ibid., para. 20. 45 Compare ibid., para. 34. 46 Compare ibid., para. 35. The Judicial Control of the Portuguese Austerity Measures 310 accentuated both the inequality applicable to existing pensioners and the inequal‐ ity between the current contributors and beneficiaries of the pension system.47 The SC would have been completely indifferent to both the effort made by fu‐ ture pensioners and the cut that the legislative amendment would have imposed on pensions amounts ab initio. To sum up, the Constitutional Court found these norms in breach of the princi‐ ple of the protection of legal certainty, and therefore pronounced them unconsti‐ tutional.48 Reviewing other measures In Ruling No. 602/13 of 20 September 2013,49 the Constitutional Court declared the unconstitutionalty of the following: (1) the norm concerning the requirements for dismissing workers on the grounds that their jobs are eliminated, emphasizing that the constitutional prohibition on dismissal without just cause (Article 53 CPR) can be breached by both legal provisions that allow for inappropriate grounds for dismissal, and provisions that establish rules which do not do enough to safeguard workers’ positions;50 (2) the norm relating to the dismissal on grounds of unsuitability of the worker for her/his job contained in a law that amended the Labour Code (LC),51 concluding that dismissal on the grounds of unsuitability demonstrated sole‐ ly by a reduction in the quality of the work done and in cases in which it is reasonable to predict that that reduction will be permanent, is not unconsti‐ tutional. However, the Constitutional Court held that dismissal on the grounds of the worker’s unsuitability can only occur if no alternative pos‐ ition is available that is compatible with the worker’s qualifications.52 In the Ruling No. 862/13 of 19 December 2013,53 the Constitutional Court dealt with a Decree54 that intended to deepen social protection convergence mechan‐ IV.3.3. 47 Compare ibid., para. 36. 48 For a critical view see J. Loureiro, Contribuição de sustentabilidade § companhia – linhas para uma discussão constitucional, Website of the University of Coimbra, 2014, http://apps. uc.pt/mypage/fi les/fd_loureiro/707. 49 The Portuguese version is available on the Website of the Portuguese Constitutional Court, www.tribunalconstitucional.pt/tc/acordaos/20130602.html. 50 Compare Ruling No. 602/13 of 20 September 2013, para. 28–32. 51 Law No. 23/2012 of 25 June 2012 that amended the Labour Code approved by Law No. 7/2009 of 12 February 2009. 52 Compare ibid., para. 33–37. 53 The Portuguese version is available on the Website of the Portuguese Constitutional Court, www.tribunalconstitucional.pt/tc/acordaos/20130862.html. 54 Decree No. 187/XII of the Assembly of the Republic. Ana Maria Guerra Martins 311 isms between the general social protection security system and the system of Caixa Geral de Aposentações (CGA), the public sector pension fund. The mea‐ sures previewed in the above-mentioned Decree solely applied to the beneficia‐ ries of old-age, retirement, invalidity and survivor’s pensions from CGA which amount to more than € 600 per month. It cut the value of pensions subject to the regime set out in the Statute governing the Retirement of Public Sector Staff55 by 10% and provided for the application of a new formula for calculating the pen‐ sions. It formed part of the general reform intended to ensure convergence be‐ tween the general social security system and that applicable to public administra‐ tion staff (Article 63(2) CPR). The Constitutional Court took the view that the measures contained in the norms questioned would have resulted in an abrupt cut in the pensions concerned and did not form part of a framework of structural cross-cutting measures de‐ signed to ensure across-the-board progress in fulfilling the interest of conver‐ gence on other levels. According to the Constitutional Court the measures did not adequately pursue the public interests invoked by the author of the norms – namely, the sustainabili‐ ty of the CGA system, intergenerational fairness, and the need for the country’s different social protection systems to converge – in a way that would have made it acceptable for them to prevail over the injury caused to the rights already ac‐ quired by existing CGA pensioners and the latter’s legitimate expectations that the pension amounts they will receive in the future would remain the same.56 Therefore the Constitutional Court held that these norms were in breach of the constitutional principle of the protection of legal certainty.57 55 Law No. 478/72 of 9 December 1972. 56 See Ruling No. 862/23 of 19 December 2013, para. 38-44. 57 For a comment see N.C. Cabral, Convergência do Regime de Proteção Social da Função Pública com o regime geral da Segurança Social, in: Finanças Públicas e Direito Fiscal, 6 (2013), p. 255 ff.; L.P. Coutinho, A “convergência das pensões” como questão política, in: 1 E-Pública – Revista Electrónica de Direito Público, 2014, www.e-p u b l i c a .pt, p. 14 ff.; V. Canas, Constituição prima facie: igualdade, proporcionalidade, confiança aplica‐ dos ao “corte” de pensões, in: E-Pública – Revista Electrónica de Direito Público, 1 (2014), www.e-publica.pt, p. 28 ff.Supporting the unconstitutionality before the judgment of the Court see J. Loureiro, Sobre a (in)constitucionalidade do regime proposto para a redução dos montantes de pensões de velhice da Caixa Geral de Depósitos, Website of the University of Coimbra, 2013, http://apps.uc.pt/mypage/fi les/fd_loureiro/563. The Judicial Control of the Portuguese Austerity Measures 312 Debating Portuguese Constitutional Court’s “case law of the crisis” Criticism The PCC “case law of the crisis” provoked a wide and deep debate not only within the Portuguese scholarship,58 but also outside Portugal.59 In an earlier arti‐ cle, we analyzed and replied to this criticism.60 Within the scope of this article, our focus only concerns the following aspects: a) the lack of consideration for EU law and for international law demonstrated by the Constitutional Court; b) the lack of judicial dialogue with the CJEU.61 In other words: for some authors the PCC analyzed the austerity measures, using only the Portuguese Constitution as a standard of reference, without taking suffi‐ ciently into account that those measure were imposed by international and EU law parameters.62 For other scholars, the PCC should have engaged in a judicial dialogue with the Court of Justice, raising questions, for instance, on the validity of the Memo‐ randa of Understanding.63 Reply to the criticism as regards the parameters used by the Portuguese Constitutional Court It is true that the PCC only used the rules and principles of the Constitution as a parameter for controlling the constitutionality (or validity) of the Portuguese aus‐ terity measures. Otherwise, it would have exceeded the limits of its jurisdiction. Having said that, we do not join our voice to the chorus of critics sustaining that the PCC did not take into due account international and EU law in the “case IV.4. IV.4.1. IV.4.2. 58 For a wide and strong criticism: Gonçalo de Almeida Ribeiro / Luis Pereira Coutinho, O Tribunal Constitucional e a crise – Ensaios críticos, 2014. For a reply to criticism: Jorge Reis Novais, Em Defesa do Tribunal Constitucional – Resposta aos críticos, 2014. 59 See, for instance, Antonia Baraggia / Maria Elena Gennusa, Social Rights Protection in Europe in Times of Crisis: ‘A Tale of Two Cities’, in: ICL Journal, 2017, p. 479 ff.; Claire Kilpatrick, “Constitutions, Social Rights and Sovereign Debt States in Europe: a chal‐ lenging new areas of constitutional inquiry”, EUI Working Papers, Law, 34/2015, p. 6 ff.; Frederico Fabbrini, The Euro-Crisis and the Courts: Judicial Review and the Political Pro‐ cess in Comparative Perspective, in: Berkeley J. Int’l Law, 32 (2014), p. 100 ff. 60 Ana Maria Guerra Martins, footnote 2, p. 689 ff. 61 See, for instance, Maduro / Frada / Pierdominici, A Crisis Between Crises: Placing the Portuguese Constitutional Jurisprudence Crisis in Context, in: e.publica, 4 (2017), p. 5 ff.. 62 Maduro / Frada / Pierdominici, A Crisis Between Crises.., p. 13 ff.; Rui Medeiros, A Constituição Portuguesa num contexto global, 2015, p. 64 ff.. 63 See Francisco Pereira Coutinho, “Austerity on the loose in Portugal: European Judicial restraint in times of crisis”, Perspectives of Federalism, vol. 8, issue 3, 2016, p. E-124. Ana Maria Guerra Martins 313 law of the crisis”. Conversely, in our view, the Court was fully aware of the Por‐ tuguese international and European obligations and took them into consideration in all decisions, and this was sometimes the reason why Court did not declare the unconstitutionality of some provisions. In order to prove this statement, let us have a look at the decisions. Going back to Ruling No. 396/11 of 21 September, the PCC accepted that the above-mentioned Memoranda were binding on the Portuguese State to the extent that they are based on international law and EU law instruments – the Treaties that instituted the IMF and the EU. Since Portugal is a contracting party in both instruments, they are recognized by the Constitution. The PCC could not dive deeper into this issue, because the Memoranda had never been challenged before the court.64 More evident are the references to EU law and international law in Ruling No. 574/2014: The Court acknowledged that admitting the expectations that the pay situation will improve are legitimate cannot eliminate the constraints derived from the state’s inter‐ national commitments – particularly those arising out of the Treaty on the Function‐ ing of the European Union (TFEU) and the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (known in Portuguese as the ‘Budget Treaty’). Moreover, the Court admitted that, [the] effects of the FAP will still be felt in 2015, given that it sets Portugal’s budget deficit for that year at 2.5% of GDP, as well the effect of the excessive deficit proce‐ dure. The logical consequence of these circumstances, which increase the relevance of the underlying public interest, is that the pay cuts provided for in 2015 remain within the limits of that which can be said to be expectable and therefore permitted by the principle of the protection of trust (legal certainty).65 Furthermore, the Constitutional Court recognized that, Portugal’s participation in the European Union (EU) and the Eurozone obliges it to fulfil a range of demanding requisites in the budgetary field. One of the main obliga‐ tions of Member States is to avoid excessive budget deficits, and the Union has the 64 However, some authors sustained that the Constitutional Court should have controlled the conformity with the Constitution of the Memoranda, as a guardian of the Constitution. Cf., J. Melo Alexandrino, Jurisprudência da Crise. Das Questões Prévias às Perplexidades, in: G. A. Ribeiro / L. P. Coutinho, O Tribunal Constitucional e a crise – ensaios críticos, 2014, p. 62, p. 63. On the legal nature of the Memoranda, cf. Francisco Pereira Coutin‐ ho, A natureza jurídica dos memorandos da «troika», Themis, XIII, N. 24/25, 2013, p. 147-179. 65 Extract taken by the English summary of the decision provided by the CC itself in the website http://www.tribunalconstitucional.pt/tc/en/acordaos/20140574 s.html, [29 Septem‐ ber 2019]. The Judicial Control of the Portuguese Austerity Measures 314 competence to monitor each Member State’s budgetary situation and the amount of its public debt. 66 However, concerning the Fiscal Compact, the Court emphasised that it “is not part of EU Law, and is only applicable to the extent that it is compatible with the founding Treaties and the legal provisions they contain.” 67 The PCC also considered that from a constitutional law point of view, the Fis‐ cal Compact, does not enjoy the status the Constitution affords to the Treaties governing the Euro‐ pean Union and the norms issued by EU institutions in the exercise of their compe‐ tences. The latter are applicable in Portuguese Law, subject to respect for the funda‐ mental principles of a democratic state based on the rule of law.68 And the Court persued, asserting that the Fiscal Compact, is a source of Public International Law of the type that is governed by the constitu‐ tional norm according to which norms contained in duly ratified or approved interna‐ tional conventions have effect in domestic law once they have officially been pub‐ lished in Portugal and only for as long as they are binding on the Portuguese State.69 Finally, the Constitutional Court concluded, Portugal is subject to an excessive deficit procedure under which various European Council recommendations have been approved. Setting aside doubts as to how bind‐ ing such recommendations are, in any case they do not require Portugal to take spe‐ cific concrete measures to control public spending and reduce the deficit. They in‐ stead limit themselves to listing the objectives which must obligatorily be achieved under EU norms that are indeed binding – those included in the founding law of the EU and the secondary law referred to above. The binding nature of European Union Law in this domain does not apply to the means by which the individual Member States actually achieve the goals imposed on them.70 To sum up, the PCC distinguished between the obligations arising from EU law and those deriving from international law. Concerning the former, the Constitu‐ tional Court implicitly admitted the supremacy of EU law over domestic law, 66 Extract taken by the English summary of the decision provided by the CC itself in the website http://www.tribunalconstitucional.pt/tc/en/acordaos/20140574 s.html, [29 Septem‐ ber 2019]. 67 Extract taken by the English summary of the decision provided by the CC itself in the website http://www.tribunalconstitucional.pt/tc/en/acordaos/20140574 s.html, [29 Septem‐ ber 2019]. 68 Extract taken by the English summary of the decision provided by the CC itself in the website http://www.tribunalconstitucional.pt/tc/en/acordaos/20140574 s.html, [29 Septem‐ ber 2019]. 69 Extract taken by the English summary of the decision provided by the CC itself in the website http://www.tribunalconstitucional.pt/tc/en/acordaos/20140574 s.html, [29 Septem‐ ber 2019]. 70 Extract taken by the English summary of the decision provided by the CC itself in the website http://www.tribunalconstitucional.pt/tc/en/acordaos/20140574 s.html, [29 Septem‐ ber 2019]. Ana Maria Guerra Martins 315 when it invoked Article 8 (4) CPR. As regards international law, the PCC pre‐ supposed, on the one hand, that the Portuguese State was required to adopt the specified austerity measures set out in the Financial Assistance Programme, as one of the conditions for the phased fulfilment of the convened financing obliga‐ tions and, on the other hand, that some obligations left a certain margin of appre‐ ciation to the Portuguese legislator. And this is the reason why the Court con‐ trolled the constitutionality of the detailed means taken, because it considered that international obligations did not impose certain and precise measures. Notwithstanding, the Constitutional Court has questioned neither the detailed goals of the Programme, nor the obligations of the Portuguese State to achieve them. Moreover, it accepted the control of public debt as a relevant public inter‐ est that justified some restrictive measures (see, for instance, Rulings No.s 399/10; 396/11; 353/12; 187/13, etc.). In fact, as we have already pointed out, the PCC expressly acknowledged the constraints derived from European commitments – particularly those arising out of the TFEU and the excessive deficit procedure, as well as the international ones. Reply to criticism related to the lack of judicial dialogue It is true that the PCC has never questioned the CJEU about the validity of the Memoranda, but one should note that, according to Article 267 TFEU, and the case law of the Court (namely the Foto-frost case), national courts are only obliged to refer to the CJEU whenever they have doubts about the interpretation of EU law or about the validity of secondary law and international law. Assum‐ ing the Constitutional Court did not have any doubts, it was not bound to request a preliminary ruling. Moreover, there were also practical reasons for not referring to the CJEU. In some cases the Constitutional Court did not engage in a judicial dialogue with the Court of Justice because a request for a preliminary ruling to the Court of Justice would have increased the delay of the domestic decisions, which could have in some cases become useless. Some of the Portuguese austerity measures were included into the SBL’s, which have a limited duration (one year); while others were challenged within the scope of an a priori control of constitutionali‐ ty, in relation to which the Court has to decide within twenty-five days. Finally, it is important to underline that other courts had requested preliminary rulings to the CJEU, which did not recognize its own jurisdiction. Taking this into account it is not clear whether the CJEU would have changed its mind if the request of a preliminary ruling would have been filed by the PCC. IV.4.2. The Judicial Control of the Portuguese Austerity Measures 316 In order to clarify this point, the next section outlines the case-law of the Court of Justice concerning the Portuguese austerity measures. Case law of the CJEU on the Portuguese austerity measures Rejecting the preliminary rulings requested by Portuguese courts during the crisis Regarding the Portuguese austerity measures, the CJEU has up to now delivered three orders and one decision. The three orders were delivered during the econo‐ mic and financial crisis – in 2012, 2013 and 2014 – and the decision is much more recent. It was delivered in February 2018. The three orders resulted from a preliminary ruling request coming from by the same court – the Oporto Labour Court (Tribunal do Trabalho do Porto). The Court of Justice, invoking its settled jurisprudence on internal matters, consis‐ tently declared its clear lack of jurisdiction to hear and determine the referred questions.71 The first case72 concerned the interpretation of Articles 20, 21(1) and 31(1) of the Charter of Fundamental Rights of the European Union (CFREU). The re‐ quest was made in the scope of proceedings concerning the national legislation (Article 19 of the 2011 SBL), which established salary reductions for certain public-sector workers. According to the national court, the relevant domestic law had failed to implement EU law, namely the principle of equal treatment. For the Court of Justice, the order at issue did not contain any specific evi‐ dence to support the view that the national law in question was intended to im‐ plement EU law. The second case73 was another preliminary ruling requested in proceedings concerning the abolition of the holiday and Christmas allowances previously paid to public servants. The national court questioned the compatibility of Arti‐ cle 21 of the 2012 SBL with EU law. The Court of Justice considered that the doubts expressed by the referring court with respect to the compatibility of the 2012 SBL with EU law were akin V. V.1. 71 For a critical comment on these three cases, see Claire Kilpatrick, On the Rule of Law and Economic Emergency: The Degradation of Basic Legal Values in Portugal, in: Oxford Journal of Legal Studies, 2015, p. 24 ff.; Franciso Pereira Coutinho, Austerity on the loose in Portugal…, p. E-107 ff. 72 ECJ, Order of 7/3/2013, C-128/12, Sindicato dos Bancários do Norte and Others v. BPN – Banco Português de Negócios, ECLI:EU:C:2013:149. 73 ECJ, Order of 26/6/2013, C-264/12, Sindicato Nacional dos Profissionais de Seguros e Afins and Fidelidade Mundial — Companhia de Seguros SA (‘Fidelidade Mundial’), ECLI:EU:C:2014:2036. Ana Maria Guerra Martins 317 to those which prompted it to make an application to the Court in the case culmi‐ nating in the order in Sindicato dos Bancários do Norte and Oth‐ ers (EU:C:2013:149), which concerned the compatibility of the 2011 SBL with EU law. As a consequence, the Court reiterated its clear lack of jurisdiction to hear and determine the request. In the third case,74 the request was made in proceedings also concerning the suspension of Christmas bonuses or any other benefit relating to the 13th and/or 14th month pay in respect of 2012. Based on the two previous cases, the Court noted again its clear lack of juris‐ diction to take cognisance of the referred questions. For those who have criticised the Constitutional Court for not having request‐ ed a preliminary ruling to the Court of Justice on the compatibility of the Memo‐ randa with the EU law and on the validity of the decisions of the EU institutions with the EU fundamental rights law, namely the CFREU, these orders should have been sufficient to convince them of the uselessness of such a reference. Nevertheless, some of the critics still argued that the decision could have been different, because the CJEU was then rather interested in setting up a dialogue with the constitutional courts, and the PCC could have asked wiser and more rel‐ evant questions. We agree that in the last decade the CJEU has been stimulating the dialogue with constitutional courts and we also agree that the PCC could have requested a preliminary ruling, if it had doubts on the abovementioned issues. However, one cannot overlook the many obstacles that both courts would have faced. As for the PCC, it would have been difficult to formulate questions outside the compatibility of the implementation of the Memoranda with EU law and the compatibility of the domestic measures with the Memoranda. Additionally, the Memoranda had never been challenged before the PCC. Provided the PCC had requested a preliminary question on this topic, it would have probably been criti‐ cized for exceeding its competences. As regards the Court of Justice, in our opinion, it would never have invalidat‐ ed the Memoranda during the economic and financial conjuncture of 2012-2014, the disrespect of either the rule of law or fundamental rights, including the Char‐ ter. Such invalidation could well have triggered nervous reactions from the finan‐ cial markets and could have provoked a further downward spiral. The Court of Justice could not afford the political consequences of such a decision. 74 ECJ, Order of 21/10/2014, C-665/13, Sindicato Nacional dos Profissionais de Seguros e Afins and Via Directa — Companhia de Seguros SA (‘Via Directa’), ECLI:EU:C:2014:2327. The Judicial Control of the Portuguese Austerity Measures 318 As Francesco Costamagna pointed out, “in all cases concerning austerity measures the CJEU has keenly accepted the limits posed by the EU law to its capacity to review the legality of such measures75 […] The Court was not just unable to play its part, but, to a large extent, unwilling to do so”.76 In addition, if one looks at the case-law of the Court of Justice concerning the measures taken outside of the EU law to tackle the Eurozone crisis77 – for instance, the European Monetary System (EMS) treaty – one can easily predict that the Court of Justice would have found a way either to deny the EU law nature of the Memoranda, or to justify the Memoranda with the lack of powers of the EU to reach a solution for the crisis on its own. Declaring its lack of jurisdiction would have been the easiest manner to avoid the questions. Another way would have been to transpose the rationale of the Pringle case78 into the Memoranda. We are not claiming that the EMS treaty and the Memoranda have the same legal nature. In fact, they are different in form and in content. However, may be argued the conclusions reached of Pringle are ap‐ plicable to the Memoranda. In the Pringle case the court deemed that the Union had no powers itself to conclude the EMS within the EU. The same might well be applied to the Memoranda. This would have allowed the Court to avoid the question regarding the validity of the Memoranda. As a consequence, the Memo‐ randa could easily have been removed from the scope of the Charter. Under the terms of para. 178 of the Pringle case, according to Article 51(1) of the Charter, it only applies if Member States are implementing Union law. If the Court concluded that the Memoranda were not EU law, Portugal would not be implementing anything but domestic law. Therefore, the Memoranda would have been excluded from the scope of the Charter. Secondly, if the Court reached the conclusion that the EU law had no powers to conclude the Memoranda on its own, as it did in the Pringle case, the Memoranda would also have been exclud‐ ed from the scope of the Charter. Article 51(2) of the Charter does not extend the field of application of Union law beyond the powers of the Union nor does it es‐ 75 Francesco Costamagna, The Court of Justice and the Demise of the Rule of Law in the EU Economic Governance: The case of Social Rights, Carlo Alberto Notebooks, No. 487, 2016, www.carloalberto.org/research/working-papers p. 13. 76 Francesco Costamagna, The Court of Justice and the Demise of the Rule of Law in the EU Economic Governance: The case of Social Rights, Carlo Alberto Notebooks, No. 487, 2016, www.carloalberto.org/research/working-papers p. 13. 77 On the measures taken inside and outside the EU law to tackle the Euro-Crisis see Frederi‐ co Fabbrini, The Euro-Crisis and the Courts: Judicial Review and the Political Process in Comparative Perspective, in: Berkeley J. Int’l Law, 32 (2014), p.64 ff.; Mark Dawson / Floris de Witte, Constitutional Balance in the EU after the Euro-Crisis, in: The Modern Law Review, 2013, p. 817 ff.; Claire Kilpatrick, Are the Bailouts Immune to EU Social Challenge because they are not EU Law?, in: EUConst, 2014. p. 393-421. 78 ECJ, Judgment of 27/11/ 2012, C-370/12, Pringle v. Government of Ireland, Ireland and the Attorney General, ECLI:EU:C:2012:756. Ana Maria Guerra Martins 319 tablish any new powers or tasks for the Union or modify powers and tasks as de‐ fined in the Treaties.79 Summing up, although the decisions of the courts are sometimes hardly pre‐ dictable, we believe that the CJEU would never have invalidated either the Mem‐ oranda, or other legal instruments needed to tackle the crisis, because it could not have afforded the political consequences of such a decision. Times have changed… Times have changed and so has the case-law of the CJEU. In its judgement of 13 June 2017,80 the Court found that the Memoranda of Understanding concluded between the EU and Romania in the context of finan‐ cial assistance “constitute[d] an act of an EU institution” and could thus be inter‐ preted by the Court following a preliminary ruling reference. Furthermore, the Court considered that the relevant national measure, which related to the remu‐ neration of judges, constituted an implementation of EU law and, consequently, the Charter of Fundamental Rights was applicable. However, the Court did not elaborate much more on this issue.81 More recently, the Court had the opportunity, in the Associação Sindical dos Juízes Portugueses case,82 to set out its case-law on austerity measures in accor‐ dance with the lines initiated in Florescu. Following a request for a preliminary ruling from the Supreme Administrative Court of Portugal concerning the inter‐ pretation of the second subparagraph of Article 19(1) TEU and Article 47 of the CFREU in proceedings concerning the temporary reduction in the amount of re‐ muneration paid to the Court of Auditors’ members, in the context of the Por‐ tuguese State’s budgetary policy guidelines, the Court declared the request ad‐ missible. Nevertheless, the CJEU avoided discussing whether the Portuguese austerity measures fell within the scope of EU Law and whether the Charter was applicable in cases of national austerity measures implementing Memoranda of Understanding concluded under the EFSM – as was the case in Portugal. V.2. 79 For a comment on Pringle see Paul Craig, Pringle: Legal Reasoning, Text, Purpose And Teleology, 20 in: MJ, 20 (2013), p. 1 ff.; Chris Koedooder, The Pringle Judgment: Econo‐ mic and/or Monetary Union?, in: Fordham International Law Journal, 2013, p. 111 ff; Gi‐ anni Lo Schiavo, The Judicial ‘Bail Out’ of the European Stability Mechanism: Comment on the Pringle Case, Research Papers In Law, 9/2013. 80 ECJ, judgement of 13/6/2017, C-258/14, Florescu and Others, ECLI:EU:C:2017:448. 81 For a comment on this judgement see Menelaos Markakis / Paul Dermine, Bailouts, the Legal Status of Memoranda of Understanding, and the Scope of Application of the EU Charter: Florescu, in: Common Market Law Review, 55 (2018), p. 643-672. 82 ECJ, judgement of 27/2/2018, C-64/16, Associação Sindical dos Juízes Portugueses, ECLI:EU:C:2018:117. The Judicial Control of the Portuguese Austerity Measures 320 The major concern of the Court was to set out the criteria for assessing the independence of the judiciary under the terms of Article 19 TEU.83 The Court spent many more paragraphs (17 up to 25) elaborating on the independence of the judges than with the application of the criteria to the concrete case, which was rather uncontroversial.84 Recognizing that the salary-reduction measures at issue in the main proceed‐ ings were adopted because of mandatory requirements linked to eliminating the Portuguese State’s excessive budget deficit, and adopted in the context of an EU programme of financial assistance to Portugal, the Court accepted that the mea‐ sures could not, as a result, be perceived as being applicable to the members of the Tribunal de Contas (Court of Auditors). In addition, these measures provided for a limited reduction of the amount of remuneration (up to a percentage varying in accordance with the level of remu‐ neration) and they were temporary in nature. The Court ruled that the answer to the question raised is that the second sub‐ paragraph of Article 19(1) TEU should be interpreted as meaning that the princi‐ ple of judicial independence does not preclude general salary-reduction mea‐ sures, such as those at issue in the main proceedings, from being applied to the members of the Tribunal de Contas. Interim conclusion As has been highlighted by some authors, the most relevant concern of the CJEU in the Associação Sindical dos Juízes case was not “really about Portuguese judges salaries”85 but about the independence of the judges.86 The Court had V.3. 83 Laurent Pech / Sébastion Platon, Rule of Law backsliding in the EU: The Court of Jus‐ tice to the rescue? Some thoughts on the ECJ ruling in Associação Sindical dos Juízes Por‐ tugueses, in: EU Law Analysis, 13 (2018); Maciej Taborowski, CJEU Opens the Door for the Commission to Reconsider Charges against Poland, VerfBlog, 2018/3/13, https:// verfassungsblog.de/cjeu-opens-the-door-for-the-commission-to-reconsider-chargesagainst-poland/ [29 September 2019]; Martina Coli, Associação Sindical de Juízes Por‐ tuguese Judgment: What role for the Court of Justice in the protection of the EU values?, Diritti Comparati – Comparare il diritti fondamentali in Europa, http://www.diritticom‐ parati.it/associação-sindical-dos-juizes-portugueses-judgment-role-court-justice-protec‐ tion-eu-values/, [29 September 2019]. 84 Michal Ovádek, Has the CJEU just Reconfigured the EU Constitutional Order?, VerfBlog, 2018/02/28. 85 Michal Ovádek, Has the CJEU just Reconfigured the EU Constitutional Order?, VerfBlog, 2018/02/28. 86 Laurent Pech / Sébastian Platon, Rule of Law backsliding in the EU: The Court of Jus‐ tice to the rescue? Some thoughts on the ECJ ruling in Associação Sindical dos Juízes Por‐ tugueses, in: EU Law Analysis, 2018; Maciej Taborowski, footnote 83; Martina Coli, footnote 83. Ana Maria Guerra Martins 321 “two main objectives: to gain a say in the Polish discussion; […] to make it clear that the organization of national judiciaries is not a purely domestic matter”.87 If there were any doubts, the speech of the CJEU’s President, Koen Lenaerts, in a conference organized by the Supreme Administrative Court of the Republic of Poland on 19 March 2018, is rather enlightening. Speaking about ‘the impor‐ tance of the recent judgment of the ECJ in Associação Sindical dos Juízes Por‐ tugueses’, the CJEU’s President mentioned and underlined that the CJEU “held that EU law protects the independence of national courts, since it is an essential prerequisite for the judicial dialogue between the ECJ and the national courts”,88 while neglecting to discuss the compatibility of the Portuguese austerity mea‐ sures with EU law. As Matteo Bonelli and Monica Claes rightly pointed out, the CJEU “avoided any kind of discussion of whether austerity measures fell within the scope of EU law”.89 To conclude, we do not believe that having the CJEU been so cautious after the crisis, it would have envisaged this problematic issue during that period. Therefore, an eventual preliminary ruling reference by the PCC would have made no substantial difference. Case law of the ECTHR concerning the Portuguese austerity measures In order to complete the multilevel framework of the judicial control of the Por‐ tuguese austerity measures, we need to consider the case law of the ECtHR. In Conceição Mateus and Santos Januário v. Portugal,90 the applicants, who were pensioners, asked the Court to rule that the cuts imposed on certain pension entitlements (holiday and Christmas bonuses), enacted as part of austerity mea‐ sures under the State Budget Act 2012, were a violation of their rights under the Convention. Since the complaint did not invoke any particular provisions under the Convention, the Court held that Article 1 of Protocol No. 1 was the accurate basis. VI. 87 Matteo Bonelli / Monica Claes, Judicial serendipity: how Portuguese judges come to the rescue of the Polish judiciary – ECJ 27 February 2018, Case 64/16, Associação Sindical dos Juízes Portugueses, EuConst 14, 2018, p. 628. 88 Available at www.KL_19_03_2018_Warsaw_Poland%20(4).pdf. 89 Matteo Bonelli / Monica Claes, Judicial serendipity: how Portuguese judges come to the rescue of the Polish judiciary – ECJ 27 February 2018, Case 64/16, Associação Sindical dos Juízes Portugueses, EuConst, 14, 2018, p. 629. 90 Judgement of 8 October 2013, Applications No. 62235/12 and 57725/12, available on the website: https://hudoc.echr.coe.int/eng#{%22fulltext%22:[%2262235/12%22],%22docu‐ mentcollectionid2%22:[%22GRANDCHAMBER%22,%22CHAMBER%22,%22DEC‐ GRANDCHAMBER%22,%22ADMISSIBILITY%22],%22itemid%22: [%22001-128106%22]}. The Judicial Control of the Portuguese Austerity Measures 322 In relation to the cuts in pensions amounts, the Court drew attention to the wide margin of appreciation usually allowed to the State under the Convention when it comes to general measures of economic or social policy. Because of their direct knowledge of their society and its needs, national authorities are in princi‐ ple better placed than international judges to appreciate what is in the public interest on social or economic grounds, and the Court will generally respect the legislature’s policy choice unless it is “manifestly without reasonable founda‐ tion”. In this case, the Court noted that the cuts in the holiday and Christmas subsi‐ dies provided for in the 2012 State Budget Act were intended to reduce public spending and were part of a broader programme designed by the national author‐ ities and their EU and IMF counterparts to allow Portugal to secure the necessary short-term liquidity to the State budget with a view to achieving medium-term economic recovery. The very fact that a programme of such magnitude had to be put in place shows that the economic crisis, which was asphyxiating the Por‐ tuguese economy at the material time, and its effect on the State budget balance were exceptional in nature. The Court considered that the cuts in social security benefits were clearly in the public interest within the meaning of Article 1 of Protocol No. 1 and subse‐ quently assessed whether a fair balance had been struck between the general interest of the community and the protection of the applicants’ individual funda‐ mental rights. The Court considered that the interference of the 2012 State Budget Act with the applicants’ right to the peaceful enjoyment of their possessions was limited both in time and in quantitative terms, concluding that it was not disproportion‐ ate. Moreover, since the legislator remained within the limits of its margin of ap‐ preciation and previous measures involving “remuneratory reductions” contained in the State Budget Act for 2011 had proved to be insufficient, it is not for the Court to decide whether the State could have envisaged better alternative mea‐ sures to reduce the State budget deficit. In light of the exceptional economic and financial crisis faced by Portugal at the material time and given the limited extent and the temporary effect of the re‐ duction of their holiday and Christmas subsidies, the Court considered that the applicants did not bear a disproportionate and excessive burden. Therefore, the application was declared inadmissible. In Silva Carvalho Rico v. Portugal91, the applicant was a pensioner who was eligible to receive social-security benefits under the public-sector pension 91 Decision of 1 September 2015, Application No. 13341/14. https://hudoc.echr.coe.int/ eng#{%22docname%22:[%22silva%20carvalho%20rico%22],%22documentcollection‐ Ana Maria Guerra Martins 323 scheme. In 2009 she was granted a retirement pension, which amounted to € 1,980.72 gross per month. The applicant complained that the levying of the Extraordinary Solidarity Contribution (CES) on part of her pension in 2014 had consisted of a violation of Article 1 of Protocol No. 1 to the Convention and Articles 13 and 14 of the Con‐ vention. In particular, she alleged that the CES was no longer a temporary mea‐ sure because of its reintroduction in 2014. The Court accepted that there had been an interference with the right of the applicant to peaceful enjoyment of her possessions as protected by the first sen‐ tence of Article 1 of Protocol No. 1. According to the Court, the measure of in‐ terference must fulfil three conditions: it must be carried out “subject to the con‐ ditions provided for by law”, which excludes any arbitrary action by national authorities; it must be “in the public interest”; and it must strike a fair balance between the owner’s rights and the interests of the community. Taking into consideration the overall public interests at stake in Portugal at the material time, and given the limited extent and the temporary effect of the appli‐ cation of the CES to the applicant’s pension, the Court found that the impugned measure was proportional. Therefore, the Court declared the application inadmis‐ sible. These decisions were rather criticized by scholarship,92 due to the fact that the ECtHR has adopted an excessively wide interpretation of the margin of apprecia‐ tion theory during the financial and economic crisis. Concluding remarks The current study leads us to the following conclusions: a) The public debt crisis and the subsequent Euro crisis that Europe experi‐ enced between 2010 and 2014 contributed to a backsliding of fundamental rights, mainly economic and social, not only in the Member States that were under international and European assistance, such as Portugal, but also in other Member States. b) In order to face the crisis, some governments all over Europe adopted aus‐ terity measures. In Portugal, these measures included cuts in staff, in wages and other benefits for the public sector, cuts in pensions for the public and private sector, “flexibility” of the labour market and reduction of unemploy‐ VII. id2%22:[%22GRANDCHAMBER%22,%22CHAMBER%22,%22DECGRANDCHAM‐ BER%22,%22ADMISSIBILITY%22],%22itemid%22:[%22001-157567%22]}. 92 Rainer Palmstorfer, Austerity Measures on Trial: on the Compatibility of Austerity Mea‐ sures with the European Convention of Human Rights, in: e-Pública, 1 (2014), p. 133-134. The Judicial Control of the Portuguese Austerity Measures 324 ment benefits for private sector. Some of them were challenged before courts. c) Due to the multilevel protection and enforcement of fundamental rights in Europe, not only the domestic courts – including the Constitutional Court – were called upon to decide whether the austerity measures contradicted the Constitution, but the CJEU and the ECtHR also had to decide whether the austerity measures were contrary to EU law and to the ECHR, respectively. d) Since the fundamental rights catalogues do not fully overlap in these three layers of protection, the decisions of the courts were absolutely similar as well. While the CJEU avoided to rule on substantial issues, declaring its lack of jurisdiction, the ECtHR was too respectful of the margin of appreci‐ ation conferred to the States. e) Conversely, the PCC, despite having accepted that the control of public debt was a relevant public interest that justified some restrictions to fundamental rights, declared the unconstitutionality of some austerity measures, not on the grounds of the restriction of economic and social rights, but on the basis of the violation of principles of equality, proportionality and legitimate con‐ fidence. f) That means, in one way or another, all courts were rather deferent to the leg‐ islator and somewhat self-restrained. Even the PCC considered more than 50% of the austerity measures did not contravene the Constitution. g) The case law of the Portuguese austerity measures reveals that multilevel judicial control does not necessarily imply an increased protection of the fundamental rights. Sometimes domestic courts are the best guardians of fundamental rights. Ana Maria Guerra Martins 325

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Abstract

The EU’s vulnerability to crises is not a novelty, but disintegrative trends have reached a new quality. The financial and fiscal crisis shook the Union, which had just been consolidated by the Lisbon Treaty, to its foundations. The refugee crisis becomes a heavy test of European solidarity. For the first time, a member state, the United Kingdom, wants to leave the Union and in doing so, as at least the Brexiteers argue, regain its sovereignty. Even the member states themselves are not spared from moments of disintegration. One might think of the secessionist movements in Catalonia or Scotland etc. Against this background, the SIPE Congress in Hamburg has brought together high-ranking experts from all over Europe in order to explore the tension between integration and disintegration, as well as Europe’s prospects of being “united in diversity”. The discussions paint a differentiated overall panorama of the constantly challenged integration project. With contributions by Francisco Balaguer Callejón, Roland Bieber, Jernej Letnar Černič, Jenö Czuczai, Daria de Pretis, Ian Forrester, Ece Göztepe, Ana Maria Guerra Martins, Christian Heitsch, Stefan Herms, Ann-Kathrin Kaufhold, Panos Kazakos, Markus Kotzur, Clifford Larsen, Friedrich-Joachim Mehmel, Eleftheria Neframi, Dimitrios Parashu, Argelia Queralt Jiménez, Andrea Romano, Tilman Repgen, Sebastian Scholz, Christian Starck

Zusammenfassung

Die Krisenanfälligkeit der EU ist kein Novum, doch haben desintegrative Strömungen eine neue Qualität erreicht. Die Finanz- und Fiskalkrise erschütterte die eben erst durch den Lissabonner Vertrag konsolidierte Union in ihren Grundfesten. Die Flüchtlingskrise wird zur schweren Belastungsprobe für die europäische Solidarität. Mit dem Vereinigten Königreich will erstmals ein Mitgliedstaat den Integrationsverbund verlassen und, so die Brexit-Advokaten, seine Souveränität zurückgewinnen. Auch die Mitgliedstaaten selbst bleiben von Desintegrationsmomenten nicht verschont, man denke etwa an die Sezessionsbestrebungen in Katalonien oder Schottland. Vor diesem Hintergrund hat die Hamburger Jahrestagung der SIPE hochrangige Expertinnen und Experten aus ganz Europa versammelt, um im Spannungsfeld von Integration und Desintegration auszuloten, welche Zukunftschancen Europas „Einheit in Vielfalt“ hat. Die Diskussionen zeichnen ein differenziertes Gesamtpanorama des immer neu herausgeforderten Integrationsprojekts. Mit Beiträgen von Francisco Balaguer Callejón, Roland Bieber, Jernej Letnar Černič, Jenö Czuczai, Daria de Pretis, Ian Forrester, Ece Göztepe, Ana Maria Guerra Martins, Christian Heitsch, Stefan Herms, Ann-Kathrin Kaufhold, Panos Kazakos, Markus Kotzur, Clifford Larsen, Friedrich-Joachim Mehmel, Eleftheria Neframi, Dimitrios Parashu, Argelia Queralt Jiménez, Andrea Romano, Tilman Repgen, Sebastian Scholz, Christian Starck