EU Court landmark decision opens door for legal cases by EU citizens against austerity measures

An important decision for the protection of human rights in times of bailouts and austerity. For the first time, the European Court of Justice explicitly stated that the European institutions and in particular the European Commission are bound by the EU Charter of Fundamental Rights and are obliged to protect the individual and social rights of EU citizens.

In the specific a legal case, several Cypriot citizens and one company based in Cyprus claimed compensation for the private deposits haircut in Cyprus in the year 2013. The Court dismissed their claims for compensation however it ruled that the EU is obliged to protect the rights of its citizens thus opening the doors for more legal cases.

According to the Court ruling:

Τhe haircut of private deposits was legal as the terms for the financing (bailout) of Cyprus come from the European Stability Mechanism. The Cypriot plaintiffs (several individuals and one company) had the right to claim compensation from the EU institutions, the European Commission and the European Central Bank,as they participate in the ESM programs, without losing their obligations towards member-states under the EU fundamental Treaties.

However, assessing the compensation claims, the Court ruled that the claims must be rejected since the signing of Memorandum of Understanding (bailout) for Cyprus was in the context of the public interest as aimed by the EU.

The European Court ruled also that the haircut of private deposits did not violate the right to property,  as it did not “disproportionately and unacceptably interfere with the substance of depositors property right.”

Fundamental Rights

Apart from the determination of the case, the decision of the EU court for the first time explicitly stated that the institutions of the European Union, in particular the European Commission, are bound by the Charter of Fundamental Rights, even when they act in the context of  ESM bailout  programs, as the ESM is not an institutional body of the EU.

The court went one step further pointing out that “the European Commission has to ensure that such a memorandum is consistent with the fundamental rights guaranteed by the Charter. “

Court opens doors for legal cases

The court’s ruling might have a rather symbolic character, however it recognizes the fundamental individual and social rights of EU citizens even in times of bailout agreements and strict austerity policies.

Economist Sven Giegold, MEP of the Greens said that the Court’s decision “is a landmark for the protection of fundamental rights. The judges opened the door to damage claims against austerity measures in countries such as Greece, Portugal, Ireland and Cyprus, where individual and social rights are affected..”

Giegold also said that “From our side we will support people who want to file legal cases.”

Lenders’ attitudes & austerity measures

Of course, knowing the lenders’ attitude, when an affected citizen appeals to the Court of Justice, the EU and all the lenders will claim that specific austerity measures were proposed by the then government/s and that the lenders only mentioned amounts of expenditure that had to be cut.

However, the easiest way to bypass such lenders’ claim would be to get access to the documents and e-mails the lenders sent to every government demanding cuts.

After 6-7 years dealing with the Greek crisis, we all know how measures were taken and to what extend lenders and governments bear responsibility.

More: Court Ruling Press Release here, Court Decision here

My fingers are burning to file a legal case for severe violation of social rights after the sharp cuts in the health and welfare sector. (Hellas Pindakaas)