(CN) - An en banc Court of Justice upheld Europe's sweeping attempts to stabilize the euro against the economic crisis gripping the region, allowing a treaty to take effect on Jan. 1 as planned.
The European Council advanced the amendment to the EU's foundational law - Treaty on the Functioning of the European Union, or TFEU - in early 2011, and 17 member states approved it earlier this year.
It established the European Stability Mechanism (ESM), a one-stop shop to mobilize and dispense funding to struggling EU countries. The ESM is designed to safeguard the euro and member states within the eurozone. It had an initial lending capacity of $600 billion, but which finance ministers pushed it up to $850 billion last month.
Funding for the ESM will come from member states that have approved it, some of which remain Europe's biggest economic challenges. Powerhouses like Germany, the Netherlands, Austria and Finland stand with struggling Greece, Spain and Italy aboard the massive bailout machine, along with fledgling EU members like Estonia and Slovenia.
But the decision to tinker with the very fabric of the EU for the purpose of bailing out struggling nations did not sit well with some, including Irish Parliament minister Thomas Pringle, who sued his own government for ratifying the amendment.
Pringle says the European Council's decision to amend the TFEU - known as a simplified revision procedure - is illegal, as are the amendment's intrusions into member-state sovereignty and the economic principles on which the EU was founded. He also argued that Ireland's ratification of the ESM saddled his country with obligations incompatible with the European constitution.
After accelerated hearings - Pringle lodged his case with the Luxembourg court in late August - the full 27-member Court of Justice concluded Tuesday that none of Pringle's objections would invalidate the ESM treaty.
The council's use of simplified procedure to advance the amendment applies to internal policies and actions of the EU, and the challenged amendment relates to both, according to the ruling. Otherwise it would have needed to convene national representatives, the European Parliament and the European Commission.
The amendment also does not give the EU greater powers or encroach on member-state sovereignty, the court held.
"[The] TFEU states that the union is to have exclusive competence in the area of monetary policy for the Member States whose currency is the euro," the judgment states. "Moreover, under Article 119(1) TFEU, the activities of the member states and the Union are to include the adoption of an economic policy based on the close coordination of member states' economic policies, on the internal market and on the definition of common objectives, conducted in accordance with the principle of an open market economy with free competition."
While monetary policy belongs to the EU, the ESM aims to safeguard the stability of the euro area as a whole, the court held, distinguishing economic policy from monetary policy.