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Two weeks on since the German Constitutional Court issued its momentous ruling on ECB’s quantitative easing programme, commentators are still wondering what kind of bomb has been detonated by the German Court. Will the blast bring down the Euro along with the European Union? Or will a makeshift arrangement of some sort allow the EU to kick the can down the road and muddle through, at least until the next crisis flares up? Whether the ruling ends up triggering a much-feared thermonuclear chain reaction marking the end of the European project will depend in large part on the response of other EU and German institutions and their ability to persuade the judges in Karlsruhe that the PSPP meet their exacting proportionality test.

But even before the dust has fully settled on the ruling, one thing is clear. By pronouncing the Weiss ruling of the Court of Justice a ultra vires act, the German Court has already caused considerable, and possibly irreversible, damage to the authority of supranational law in Europe. This holds irrespective of whether central bankers manage to find a way out of the hole dug by the ruling or whether public relation efforts by EU institutions and others succeed in containing the perception that EU law supremacy is now merely notional.

Together with the European Court of Justice, the German Constitutional Court is Europe’s only judicial superpower. Unrivalled at home, whatever it says carries the weight of Germany’s economic and political clout. The influence of the German Court beyond its borders is attested by the fact that several apex courts, from the Danish Hojesteret to the Czech Constitutional Court, have imported its doctrines, including the ultra vires doctrine it first spelled out in its Maastricht judgment, into their own case law. So a domino effect, with devastating consequences for the effectiveness of EU policies, is a real possibility.

Shifting signals and increasing Euroscepticism

While the international and constitutional court commentariat has focused more on the consequences of the ruling or the weaknesses in the Court’s argumentation, one question that promises to attract a great deal of academic attention in the coming months is what may have spurred the German Court to make such a move? Legal formalists may point to the Court’s 40 000-word opinion as the best summary of the Court’s motives. But, without even considering the holes in the constitutional judges’ argument (crucial claims about the Court of Justice’s reasoning being “incomprehensible” and “arbitrary” are bizarrely unsubstantiated), there are obvious reasons to believe that this cannot be the full story.

Since the 1960s, the German Court has ruled on the place of EU law in the German legal system on many occasions, alternating EU-friendly with warning shots. From the mid-2000s onwards, there has been discernible trend towards increasing defiance. In 2014, the Court submitted its first-ever request for a preliminary ruling to the Court of Justice regarding another ECB’s bond-buying scheme – the Outright Monetary Programme (OMT). Although this would normally be interpreted as a pace offering, the language of the reference was itself emphatically defiant, foreshadowing the 5 May 2020 ruling. 

While it borrows much of the state-centric sovereignty rhetoric of the Court’s Eurosceptic rulings on the Maastricht and Lisbon treaties, the Court’s ultra vires holding also emphasises what the economist and Financial Times columnist Martin Wolf has characterised as a “litany of conservative concerns”: public debt, personal savings and pension and retirement schemes. These are themes that indubitably find a strong echo in large sections of the German public, in a country known for its high saving rate, quasi-religious fear of inflation and staunch adherence to rigid monetary policy.

Change in judicial ideology or breakdown in judicial dialogue?

One way to rationalise the trajectory and occasionally abrupt shifts in the German Court’s evolving case law has been to conceptualise its relation with the Court of Justice in terms of a pacific coexistence equilibrium in which the two courts accommodate each other’s red lines by trading issues across time. In this view, the Eurosceptic rhetoric and non-compliance threats served to signal the importance the German Court attached to an issue, inviting the judges in Luxembourg to exert greater restraint. The prospect of mutually assured constitutional destruction acted as a strong incentive to seek judicial dialogue, thereby guaranteeing the non-compliance threat would never be put to execution.

Although some scholars dismissed the German Court as a dog that barks but never bites, there was anecdotal evidence that the Court of Justice paid attention to the warning shots coming from Karlsruhe. It articulated new EU fundamental rights in response to the first Solange judgment and seemed to hold back its activist impulse after the Maastricht ruling. While actively bargaining with the Court of Justice over the terms of further integration, the Karlsruhe judges made sure, by announcing (in Kloppenburg) a constitutionally enforceable right to one’s “natural judge”, that other German courts behaved as rule stickler when it came to referring questions to the European Court. As statistics attest, German courts, including its five supreme courts, effectively became the most reliable purveyors of preliminary references. As integration deepened, the warning shots turned more frequent. But all this could be viewed as part of the same implicit on-going negotiation process. The German Court was the Court of Justice’s best friend as well as its best enemy.

However, there were conditions for this equilibrium to be sustainable which may point to possible explanations for the constitutional crisis that the German judges decided to trigger. One condition was that the two courts would attach greater benefits to long-term cooperation than to an escalated conflict in the short run. One possibility is that the judges sitting on the Court have become more sceptic of the long-term benefits of European integration. Both Gertrude Lübbe-Wolff and Michael Gerhardt, who wrote pro-integration dissents in the OMT case, left the Court in 2014. These departures may have affected the Court’s ideological centre of gravity. Or, maybe, it has less to do with an alteration in the composition of an already Eurosceptic bench and more with growing public disaffection with the EU in Germany. Dwindling enthusiasm for the EU and trepidation that fiscally irresponsible governments in the south may turn the EU into a “transfer union” may have lowered the costs of an escalated war with EU judges. The Court’s rhetoric purports to vindicate the interests of German savers and tax payers. This renders more difficult for German politicians to evade the consequences of its ruling. The German judges have also given interviews in German newspapers to defend their decision.

Yet another condition for the equilibrium that has underpinned the effective operation of the EU legal system was the belief that the German Court would be willing to press the big red button in case the Court of Justice would unilaterally deviate from the equilibrium path. As in the Cold War, deterrence credibility guaranteed that peace would prevail. It could be that, at some point the Court of Justice started to doubt this premise. There were reasons to expect that, when responding to the German Court’s reference in the OMT case in 2015, EU judges would make some concessions. The fact that it did not may indicate that it is when it started to treat thee warning shorts as mere bluff. If so, then the Court of Justice may have been the first to deviate from the normal equilibrium path of play. This, in turn, suggests that the bomb that the German Court dropped on the EU legal order last week reflects a breakdown in judicial dialogue, rather than a shift in judicial ideology or in German attitudes towards EU membership. If that is what happened, then there might be hope that a form of judicial dialogue can restored in the near future. Such hope is not unreasonable. But such is the damage that has been inflicted on the collective beliefs and expectations sustaining the EU legal order that if judicial dialogue is restored, it will most probably be under terms and in an equilibrium much less favourable to the Court of Justice and to the authority of supranational rule-makers.

Legal tech has become mainstream and even something of a buzzword. Huge sums of money are pouring into legal tech and legal automation research. Start-ups are popping up like mushrooms and everyone wants to claim he’s doing something with AI. How and to what extent legal tech is going to change the profession and legal services delivery nobody can really say with much certainty. Legal tech may be in the same phase of creative destruction as tech in general was during the dotcom bubble of the early 2000s. Yet it is important to understand that the tech revolution is part of a broader transformation of legal practice. Law has long been the quintessential gentleman’s profession with business practices more akin to that of a craft than of a modern, efficient capitalist industry. This has changed, partly as a result of globalisation but also as a consequence of the rise of in-house counsels (who have put pressure on law firms to become more efficient) and the entry new players like the big-four accounting firms (PWC, EY, Deloitte and KPMG) into the legal market. What this transformation means for legal education and legal training was the theme of a “Future of Legal Education” workshop that just took place in Barcelona.

While elite institutions – the Stanford, Harvard and Bucerius Law School of this world – have been very responsive to these challenges, the response at the median law school, certainly in Europe, has been at best tepid. Some law schools have added a course on law and technology here or there. But this is largely window dressing and goes very little distance towards addressing the fundamental rethink that these challenges pose for future lawyers. Law is a highly (self-)regulated business and protectionist impulses often drive lawyers’ response to change. Legal Luddites do exist (I’ve met a few of them) and maybe they are especially present in non-elite law schools. But although protectionist and anti-tech regulations – like the French ban on judicial forecasting or the German court ruling on smart contracts – may slow down the pace of transformation, it will not stop it. Legal education is increasingly perceived as archaic and outdated. Everywhere in Europe – look at the numbers in France, Germany and Italy – law school enrollments are down (even when university enrollment overal is up). In most European countries legal education is nearly free but this is a plausible sign that prospective students are responding to market signals (in the US, where legal education is prohibitively expensive, enrollments are at a historic low). It is time that law schools accept that legal education must be reengineerd from the ground up. As I have argued elsewhere, the challenges require a truly interdisciplinary curriculum, a greater emphasis on skills and innovative tech-supported teaching methods. Just as legal practitioners are learning to work with computer scientists, engineers and entrepreneurs to create tomorrow’s legal business models and services, law schools must embrace interdisciplinarity in their course offering as well as in their teaching personnel.

It is often said that change is the law of life. It is time it also becomes the law of legal education.

With another deadline looming, I’ve been commenting again the last developments in the Brexit saga on the Argentinian radio programme Corresponsales en Línea.

With Parliament facing suspension and PM Boris Johnson trying to rein in the rebels in his party, the entire world is watching the Brexit chaos unfolding. I just commented the latest developments in the Brexit story on Argentina’s radio programme Coresponsales en línea (in Spanish).

Since the 1950s, EU legislators have produced hundreds of thousands of legal acts while EU courts have issued more than 15 000 rulings. We used natural legal language processings methods (i.e. dynamic topic modelling) to explore and annotate this giant legal corpus. Check the topics and their variation over time across legislation and judicial opinions with our interactive plot on the EUTHORITY website.

Signs that democracy is under siege seem to be everywhere. Start with populists and far-right politicians. From the Philippines to Brazil, from Italy to the UK, they are clearly on the rise, when not already in power. Leading the populist surge, President Trump has given up the role of torchbearer of democratic values the United States had assumed since WWII. His country’s political institutions appear to have become dysfunctional, eroded by a dangerous cocktail of patronage politics and ideological polarisation. On the other side of the Atlantic, in Hungary and Poland, two countries that are part of the European Union, populist governments harass political opponents while seeking to restrict press freedom and judicial independence. Then are the unpredictable forces that social media and the free – and less free – internet have unleashed. For good, but also for bad, online forums have displaced more traditional sources of news and political information. Not only established figures of intellectual authority, such as academics and experts, but the very concept of truth – truth as correspondence to facts – believed to lie at the heart of democratic deliberation ever since the invention of democratic rule in ancient Athens are under attack. At the same time, authoritarian regimes – chief among them China and Russia – are seeking to fill the void left by divided and inward-looking democracies. Supporting dictators and strongmen from Central Asia to Venezuela, they are happy, at least in the case of Russia, to cheer on and even subsidize far-right parties.

To be sure, in a non-deterministic world, very few things in the long run are absolutely certain and it is possible to concoct a plausible argument that rejects Cassandras’ stories about the imminent demise of democracy as unwarranted. After all, close to two-thirds of the world’s population live in a democracy and, at least by some accounts, more countries are governed democratically now than at any point in human history. Moreover, rather than as a sign of weakness, the populist wave may be interpreted as a manifestation of the strength of democratic institutions. The ballot box does not only allow voters to try new ideas but also to learn and to correct their mistakes when these ideas fail. Nor are populist movements necessarily bad for democracy. As political scientist Philippe Schmitter once argued, one virtue of populism is to give a voice to the “losers” – whether from globalisation, technological progress or social change – who cannot find a place within established partisan structures. Ultimately, as voters learn who is an effective decision maker and who is not, the ideas that cannot pass the test of reality will be winnowed out in the following electoral cycle and democratic institutions will emerge intact, if not stronger.

This scenario sounds reassuring and is sufficiently credible to give supporters of democracy hope. Yet I want to invite all constitutional scholars and supporters of democracy to conduct a pre-mortem analysis. A pre-mortem is a managerial strategy devised to reduce the optimism bias of project managers. In a pre-mortem exercise the project team imagines that the project has failed and then works backwards to establish the most likely reasons of its failure. I suggest the same should be done for democracy. In the case of democracy, even a small measure of optimism bias could have disastrous consequences if it makes us more complacent than we ought to be. Democrats must imagine the death of their own project better to understand the dangers that may threaten its existence. Democracy may reveal itself as more fragile and, therefore, as in greater of support and protection than we had assumed. No less important, the exercise may focus minds and point out what the priorities should be for those who wish to save democracy from its enemies. It may also lead constitutional scholars to reassess the parameters and prevailing assumptions of their discipline.

A pre-mortem is a managerial strategy devised to reduce the optimism bias of project managers. In a pre-mortem exercise the project team imagines that the project has failed and then works backwards to establish the most likely reasons of its failure.

Democracy as a project has several components. Some, such as a directly elected head of state or a written bill of rights, are optional. But others, such as free and fair elections, a free press and an independent judiciary, are mandatory. Where these components are absent there is simply no democracy. Now imagine that, thirty years from now, democracy thus defined has disappeared from the surface of the earth. What would have been the most likely cause? Such backward causal questions are, no doubt, challenging. To make the problem more tracatable, it is possible to distinguish exogenous and endogenous factors of democratic mortality. Exogenous causes would be events external to the democratic regimes, like global warming or a military invasion by a non-democratic state. Endogenous factors, by contrast, are events internal to the democratic regime such as coups or revolutions. If we first attend to possible exogenous causes, many can be readily ruled out. Military invasions are unlikely to be the cause of mass democratic extinction. Democratic countries are still among the world’s dominant military powers and, while the global balance of powers may change with the rise of China, it won’t be enough to make democracies vulnerable to military attacks. Other external events like global warming or mass migrations from poor, undemocratic countries to richer, democratic ones would more serious candidate causes. However, even if such events can be connected to democratic mortality, it will be via some endogenous, internal dynamics. So, ultimately, an examination of the causes of democratic death should point to self-destruction as the most likely mechanism.

Ultimately, an examination of the causes of democratic death should point to self-destruction as the most likely mechanism.

What would cause the self-destruction of the democratic project? Democracy is not a logistically unfeasible project. We have seen it at work for more almost two centuries (at least if we equate the beginning of democracy with the introduction of universal male suffrage). Logistically feasible projects, though, often fail because the project lacks commitment or incentives to support it. Who is the team in charge of the democratic project? The most straightforward answer is the middle class. While India may be an exception, democracy seems to require a middle class sufficiently numerous to spurn more elitist forms of government but yet sufficiently well-off to have some interest in preserving democratic rule.

That a supporting middle class constitutes a precondition for democratic government is an old argument. Economic prosperity does not always lead to democratization (look at China). But economic hardship makes middle class voters less committed to the status quo. For that reason, when the middle class suffers, so too does democracy. Hyperinflation is often said to have precipitated the fall of the Weimar Republic. And it is no mystery that the current populist wave came on the heels of the financial crisis— in the West, the most severe economic recession since the 1930s. Yet behavioural psychology suggests that it is both deeper and more complex than surface familiarity suggests. What drives middle class support for the democratic project is the belief that regime change would make middle class people less well off. However, whether change is experienced as a gain or as a loss depends on what is taken to be the reference point. As long as the reference point is what mum and dad earned and middle class incomes keep going up, democracy faces little threat. Where difficulties arise is when the economy stalls or growth becomes less widely shared. Yet this would pose less of a danger for democratic institutions if humans were not loss averse. Humans respond more strongly to losses than to gains. So it takes three percentage points of economic growth to offset the effect a one percent recession on self-reported well-being. This asymmetry makes democracy vulnerable because economic booms raise the reference point. As a result, any contraction can be experienced as an intense loss. Research further shows that losses make us more willing to take risks as we seek to recoup them. This behavioural tendency can be observed in the casino as well as in the stock market. But we have good reasons to think it is also at work in elections. The financial crisis has made middle class voters more open to risky options. Donald Trump, Nigel Farage, Jair Bolsonaro and their ilk are in that sense the electoral equivalent of a lottery ticket – that is, a low probability of a very large reward.

Humans respond more strongly to losses than to gains.

For multiple reasons, which surely include exhaustible natural resources, we cannot reasonably envision continuous, infinite economic growth. Moreover, demographic pressures mean more people potentially have a claim over our scarce resources – world population reached three billion in 1960 but our planet is now home to 7.7 billion humans. Add to this all the challenges arising from global warming, automation and, especially in Western democracies, aging and you get a full set of potential shocks to middle class well-being. Two or three of these shocks could be enough to kill democracy if they lead middle class voters to embrace autocrats and demagogues who promise easy solutions to these vast problems.

The extinction scenarios that I’ve just pointed to imply that defending democracy could turn out to be a formidable task. Also, the most effective strategy to defend democratic rule may not be the one that scholars have often advanced in the last sixty years, when politics (at least, the domestic sort) was predictable and reassuringly boring. Courts and constitutional charters, in particular, may not represent the reliable institutional safeguards that some had hoped for. The recent Supreme Court rulings on gerrymandering illustrates why, in a deeply polarized society, we should not expect courts to protect the rules of the democratic game. Just as other actors and institutions, courts and judges can be part and even contribute to polarization. Judge Learned Hand was wise when he said that liberty “lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it.”

Judge Learned Hand was wise when he said that liberty “lies in the hearts of men and women; when it dies there, no constitution, no law, no court can save it; no constitution, no law, no court can even do much to help it.”

In the arc of human history, democracy is, so far, just a 150 years blip. What is more, large swathes of the world (first and foremost China) have never experienced free and fair elections. This is a world with enough large rocks to sink the democratic ship for centuries if not millenia. To decode and speak to the hearts of the men and women who will decide the future of their preferred form of governments, this pre-mortem suggests that democrats and constitutionalists have their work cut out.

You’re interested in conducting cutting-edge research at the intersection of law, economics and data science? You’re fluent in Dutch? We welcome applications for a full-time PhD position at the Leuven Centre for Empirical Jurisprudence. Start date: 1 October 2019. Application deadline: 31 July 2019.  Apply here.

In an article that just appeared in the European Journal of Law & Economics, we investigate the incentives and constraints of national courts when deciding to cooperate with the European Court of Justice. Among other things, we find evidence that courts pass on more cases to the Court in Luxembourg when the political branches are more fragmented.

The EUTHORITY Project has a brand new website (www.euthority.eu). Check the Analysis section for the interactive map of EU law use, the EU Issues (EUSSUES) Index and other cool apps.

I will be talking at the first Workshop on Natural Legal Language Processing in Minneapolis on Friday 7 June