Austerity on the Loose in Portugal: European Judicial Restraint in Times of Crisis
Perspectives on Federalism, 8 (3) 2016, 105-132
28 Pages Posted: 16 Mar 2017 Last revised: 12 Apr 2017
Date Written: 2016
The international bailout granted to Portugal between 2011 and 2014 was conditional on the adoption by the Portuguese State of austerity measures included in a memorandum of understanding (MoU) signed by the European Commission on behalf of the European Union (EU) and the Member States. The MoU was never published in an official journal or even translated into the Portuguese language. Its implementation caused a significant decrease in the level of protection of social rights.
The compatibility of the MoU with core principles of the rule of law and with the EU´s social Constitution was never tested in court. A systemic failure in the jurisdictional system of the EU immunized the MoU to any judicial challenge. At the apex of the system, the Court of Justice of the EU declined to answer preliminary references submitted by Portuguese lower courts that questioned the compatibility with the Charter of Fundamental Rights of the EU of national budgetary measures that implemented the MoU. At the bottom, Portuguese courts either failed to properly identify the EU law acts that were the source of national austerity measures or disregarded their role as common EU law courts of ordinary jurisdiction when they bypassed the opportunity to refer a question for a preliminary ruling of the Court of Justice challenging the validity of the MoU.
Keywords: Bailouts, Charter of Fundamental Rights of the European Union, Social Constitution of the EU, Financial crisis, Portugal, Memorandum of Understanding
JEL Classification: K10, K30
Suggested Citation: Suggested Citation