Treaty establishing the European stability mechanism (ESM): text link and discussion

[He3]

Update 2 Feb 2012. A revised ESM Treaty is to be signed in four weeks. The revised version is here. The text has not yet been compared with the original version so what follows may have changed.

Update 8 May 2012. The government today published the ESM Bill, by which it intends to ratify the treaty without referendum. They have simultaneously published the Bill to enable them to agree an essential amendment to the EU treaties without which the ESM cannot proceed. They are declining to put either of these to referendum.

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The 17 eurozone members including Ireland signed this treaty on 11 July 2011 - Treaty establishing the European stability mechanism.,

Here is a short video clip of the signing ceremony. Michael Noonan looks lost. I have no idea who the blonde is but she is getting great attention.

It is to be ratified before the end of December. There has been almost no public discussion on the content of the treaty. Perhaps this thread can serve as a forum for that on Politics.ie.

The treaty establishes a new institution with legal immunities placing it above the law, and it has an intricate set of ties to the EU treaties and EU institutions (itemised in this post #29):

"ARTICLE 27
Legal status, privileges and immunities


3. The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly
waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments.
4. The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.
5. The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable."


"ARTICLE 4
Structure and voting rules

1. The ESM shall have a Board of Governors and a Board of Directors, as well as a Managing Director and other dedicated staff as may be considered necessary.

2. The decisions of the Board of Governors and the Board of Directors shall be taken by mutual agreement, qualified majority or simple majority as specified in this Treaty. ...

6. The voting rights of each ESM Member, as exercised by its appointee or by the latter's representative on the Board of Governors or Board of Directors, shall be equal to the number of shares allocated to it in the authorised capital stock of the ESM as set out in Annex II.

7. If any ESM Member fails to pay any part of the amount due in respect of its obligations in relation to paid-in shares or calls of capital under Articles 8, 9 and 10, or in relation to thereimbursement of the financial assistance under Article 14 or 15, such ESM Member shall be unable, for so long as such failure continues, to exercise any of its voting rights. The voting thresholds shall be recalculated accordingly."


"ARTICLE 5 (extract)
Board of Governors
1. Each ESM Member shall appoint a Governor and an alternate Governor. Such appointments
are revocable at any time. The Governor shall be a member of the government of that ESM Member who has responsibility for finance. The alternate Governor shall have full power to act on behalf of the Governor when the latter is not present."

There is a board of directors -

"ARTICLE 6 (extract)

Board of Directors
1. Each Governor shall appoint one Director and one alternate Director from among people of
high competence in economic and financial matters. Such appointments shall be revocable at any time. [...]

5. The Board of Directors shall take decisions by qualified majority, unless otherwise stated in this Treaty. Decisions to be taken on the basis of powers delegated by the Board of Governors shall be adopted in accordance with the relevant voting rules set in Article 5(6) and (7)."

and an MD -

"ARTICLE 7 (extract)
Managing Director
1. The Managing Director shall be appointed by the Board of Governors from among candidates having the nationality of an ESM Member, relevant international experience and a high level of competence in economic and financial matters. Whilst holding office, the Managing Director may not be a Governor or Director or an alternate of either. [...]

5. The Managing Director shall be the legal representative of the ESM and shall conduct, under the direction of the Board of Directors, the current business of the ESM."

The new body will be capitalised by the member states up to a ceiling set at €700 billion. Individual state contributions are fixed with a set initial payment and the balance which may be called in at any time. Ireland's commitment ceiling is put at €11 billion.

"ARTICLE 8 (extract)

Authorised capital stock
1. The authorised capital stock shall be EUR 700 000 million. It shall be divided into seven million shares, having a nominal value of EUR 100 000 each, which shall be available for subscription according to the initial contribution key provided for in Article 11 and calculated in
Annex I.
2. The authorised capital stock shall be divided into paid-in shares and callable shares. [...]
4. ESM Members hereby irrevocably and unconditionally undertake to provide their contribution to the authorised capital stock, in accordance with their contribution key in Annex I.
They shall meet all capital calls on a timely basis in accordance with the terms set out in this Treaty."

The board of directors has power to change the ceilings.

"ARTICLE 10 (extract)
Changes in authorised capital stock
1. The Board of Governors shall review regularly and at least every five years the maximum lending volume and the adequacy of the authorised capital stock of the ESM. It may decide to change the authorised capital stock and amend Article 8 and Annex II accordingly"

As well as having €700 billion available to it through the member states, the new body has unlimited authority to borrow on its own account.

"ARTICLE 17
Borrowing operations
1. The ESM shall be empowered to borrow on the capital markets from banks, financial institutions or other persons or institutions for the performance of its purpose.
2. The modalities of the borrowing operations shall be determined by the Managing Director, in accordance with detailed guidelines to be adopted by the Board of Directors."

More later....

[Mrwoody]

yawn fest its no wonder nobodys interested, why isnt if passed allready?

[corelli]

Well, for a start it seems not to be judiciable by the ECJ. Nor could a "european citizen" litigate it, if they felt aggrieved, as it is a multi-lateral treaty between States. Therefore, the normal principles of international law would apply, in that, the treaty will mean exactly what the parties thereto agree it means. So, not being trite, there is little point discussing it's finer points, or loop holes, as the member state/parties thereto will just give it the meaning they want as they go along, so long as they are in agreement.

For example, if you say, or another european institution says, that paragraph x line y gives a certain meaning which prohibits z the parties to the treaties merely have to collectively say, "No it does not", and there is no recourse.

[jacko]

Well, for a start it seems not to be judiciable by the ECJ. Nor could a "european citizen" litigate it, if they felt aggrieved, as it is a multi-lateral treaty between States. Therefore, the normal principles of international law would apply, in that, the treaty will mean exactly what the parties thereto agree it means. So, not being trite, there is little point discussing it's finer points, or loop holes, as the member state/parties thereto will just give it the meaning they want as they go along, so long as they are in agreement.

exactly - it is the ratification of the amended A136 that Ganley and the other little englanders will turn their attention to

[WellNow]

[He3]

exactly - it is the ratification of the amended A136 that Ganley and the other little englanders will turn their attention to

Well, for a start it seems not to be judiciable by the ECJ. Nor could a "european citizen" litigate it, if they felt aggrieved, as it is a multi-lateral treaty between States. Therefore, the normal principles of international law would apply, in that, the treaty will mean exactly what the parties thereto agree it means. So, not being trite, there is little point discussing it's finer points, or loop holes, as the member state/parties thereto will just give it the meaning they want as they go along, so long as they are in agreement.

corelli this is a very good example of the need for a discussion based on the text. You have formed a view in all good faith that is, alas, mistaken. jacko has followed your lead. Have a look at the Treaty. This is in the Preamble -

(12) Disputes concerning the interpretation and application of this Treaty arising between the Contracting Parties or between the Contracting Parties and the ESM should be submitted to
the jurisdiction of the Court of Justice of the European Union, in accordance with Article 273 of the Treaty on the Functioning of the European Union ("TFEU").

Article 32 gives effect to that.

[corelli]

This is a very good example of the need for a discussion based on the text. You have formed a view in all good faith that is, alas, mistaken. Have a look at the Treaty. This is in the Preamble -

(12) Disputes concerning the interpretation and application of this Treaty arising between the Contracting Parties or between the Contracting Parties and the ESM should be submitted to
the jurisdiction of the Court of Justice of the European Union, in accordance with Article 273 of the Treaty on the Functioning of the European Union ("TFEU").

Article 32 gives effect to that.

I missed that entirely. Sorry.

However, it still is not judiciable by a citizen or other institution, not even the Commission. The text would seem to give effect to normal principles save that the referee is the ECJ in this instance.

Therefore, am I not correct in saying that the treaty means whatever they agree it means and only in the event of a disagreement BETWEEN MEMBERSTATES or the ESM itself that the ECJ gets involved.

It seems rather poverty stricken in that a citizen who's taxes are to be used in this manner has no chance whatsoever to challenge it's provisions.

[Berty]

Forgive my laziness, will this have to go to a referendum?

[corelli]

Forgive my laziness, will this have to go to a referendum?

Forgive mine. No.

[ibis]

He3, is this not a reprise of your earlier thread on the ESM? Referendum on European Stability Mechanism - govt says not needed: are they right? in case you've forgotten.

Did something happen to that thread you didn't like? Did people ask you...questions (the horror!)?