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ABSTRACT
This contribution argues that policymakers instrumentalise legal ambiguity to provide solutions to crises and achieve their preferences in complex governance systems. It looks at the Eurozone crisis and the introduction of sovereign debt restructuring as part of the policy solution. Despite initial opposition from the European Central Bank (ECB) and European Commission (EC), as well as negative market reactions, Greece’s debt was restructured in 2012. The notion of collective action clauses (CACs)—a private contractual term in bond documentation that enables bondholder coordination—was promoted as the credible tool for enabling sovereign debt restructuring. However, this paper argues that the success of CACs is related to how it functions as a boundary object, enabling a shared space of interpretive flexibility that allows policymakers to interpret CACs in terms of their preferences, despite a lack of consensus on the permissibility of future Eurozone sovereign debt restructurings. While enabling cooperation, this interpretive flexibility leads to different iterations of CACs—the Euro-CAC and Greece’s retrofit-CAC—which connects EU fiscal policy to monetary policy in a way that induces legal uncertainty as to the viability of future debt restructurings vis-à-vis the ECB’s bond-buying programmes.
Acknowledgements
I would like to thank Leonard Seabrooke, Mikael Rask Madsen, Ramona Coman, Oddný Helgadóttir and Jacob Hasselbalch, as well as my colleagues at iCourts at the University of Copenhagen, for comments on an earlier draft of this paper. I am also grateful to three anonymous reviewers for their excellent criticisms and suggestions, which greatly improved the article.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 See the German Federal Constitutional Court (FCC) ruling from 5 May 2020 asserting that the Court of Justice of the EU was ultra vires in its judgement on the ECB’s monetary policy programme, the Public Sector Purchase Programme. See the FCC’s judgement at https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/EN/2020/05/rs20200505_2bvr085915en.html (accessed 9 December 2021).
2 I would like to thank an anonymous reviewer for making this point.
3 Franco-German Declaration Statement for the France-Germany-Russia Summit Deauville – 18 October 2010, available at https://www.eu.dk/~/media/files/eu/franco_german_declaration.ashx?la=da (accessed 10 April 2020).
4 Interview with senior ECFIN legal advisor in Brussels, June 18, 2018 (in person).
5 Interview with ECB lawyer, February 13, 2019 (by video call).
6 Interview with lawyer who advised Greek government, 18 September 2019 (by video call).
7 Interview with private banker who advised Greece’s creditors, 9 December 2019 (by video call).
8 Interview with senior ECFIN economic policy advisor in Brussels, July 18, 2018 (in person).
9 Interview with former senior ECFIN economic policy advisor in Brussels, July 12, 2018 (in person).
10 Ibid.
11 Interview with former senior ECFIN economic policy advisor in Brussels, July 12, 2018 (in person).
12 Interview with senior ECFIN legal advisor in Brussels, June 18, 2018 (in person).
13 Ibid.
14 Interview with former senior ECFIN economic policy advisor in Brussels, July 12, 2018 (in person).
15 Interview with senior ECFIN legal advisor in Brussels, June 18, 2018 (in person).
16 Interview with lawyer who advised Greek government, 18 September 2019 (by video call).
17 Case C-308/17, Hellenische Republik v. Leo Kuhn, EU:C:2018:911.
18 Case C-308/17, para. 41.
19 Case C-308/17, para. 42.
20 This process included lawyers from Cleary Gottlieb, 27 representatives from the EU’s Economic & Financial Committee’s, participants from the Commission, the ECB, the ESM, private market actors, the IMF, Euroclear and the London Stock Exchange (Sabel, Citation2013).
21 Interview with lawyer who advised Greek government, 18 September 2019 (by video call).
22 Ibid.
23 Single-limb CACs will be introduced in the revised ESM Treaty following ratification. See https://europa.eu/efc/efc-sub-committee-eu-sovereign-debt-markets/collective-action-clauses-euro-area_en (accessed 12 August 2022).
24 Case T-79/13, Alessandro Accorinti and Others v European Central Bank, ECLI:EU:T:2015:756.
25 Case T-79/13, para. 88
26 Case C-62/14, Peter Gauweiler et al. v Deutsher Bundestag, ECLI EU:C:2015:7, Opinion of the AG Bot, para. 235.
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Nicholas Haagensen
Nicholas Haagensen is a postdoctoral research fellow at iCourts (Centre of Excellence for International Courts), at the Faculty of Law, University of Copenhagen.