Germany's constitutional court has laid down the ground rules for controlling decisions by the EU top's court, an area that had been left unclear after a controversial 2009 ruling by Germany's highest judges on the Lisbon Treaty, the EU's new rule book.

In a ruling with far-reaching implications, the German court on Thursday (26 August), gave the green light to a 2005 judgement by the EU court that had called a German law "inapplicable."

The German court has acknowledged the competences of the EU court (Photo: wikiepdia)

Thursday's pronouncement backed by seven of the eight judges not only avoids a direct conflict with the EU's Luxembourg court but also appears to strengthen it. Germany's court stated that EU decisions may only be checked if European institutions seriously overstep their powers.

A headline in the Frankfurter Allgemeine Zeitung says: "Karlsruhe (the court) restricts its own powers."

EU court decisions can only be re-examined "if the breach of EU competences by the EU authority is obvious and the act in question leads to a structurally significant shift in the arrangement of competences between the member states and the European Union to the detriment of member states," says the ruling.

The origins of Thursday's ruling began several years ago. The plaintiff in the so-called Mangold case had a temporary work contract with an auto supplier. The arrangement was based on a government law allowing employers to give only temporary work to people over 52 years of age.

The EU court ruled that the law, proposed as part of a general package to free up the country's labour market, was age discriminatory and should not be enforced. This in turn led the national court to say the plaintiff was within his rights to ask for a permanent contract.

The employer then took the matter to the constitutional court saying that the EU court had overstepped its powers by ruling on short-term contracts as protection against anti-age discrimination was not part of EU primary law but had been handed down in a directive, which member states have some leeway in implementing.

Lisbon Treaty

The constitutional court on Thursday confirmed the original European Court of Justice ruling. Its also clarified its role towards EU court more generally with its statement defining when an EU ruling maybe checked.

This had been called into question by a controversial ruling by the Karlsruhe judges in 2009 concerning the Lisbon Treaty, which increases EU power in several areas and had been challenged by a conservative German MP.

The 2009 ruling emphasised the principle that the EU could only act if its powers were acknowledged by member states and blatant transgressions would be controlled by the German constitutional court. The judgement raised fears that the German constitutional court could put the break on further EU integration - with the EU court long known as an engine of integration through its case law.

Interpreting Thursday's ruling, the Legal Tribune said "(With the decision) the judges in Karlsruhe are clarifying their verdict on the EU Treaty of Lisbon and at the same time are diffusing potential conflict with the ECJ."

One judge, Herbert Landau, disputed the decision reached by his colleagues, whom he accused of abandoning the Lisbon Treaty consensus. He said the ECJ decision on age discrimination was clearly overstepping its powers and said his colleagues did not take into account the creeping transfer of powers to the EU.

German President Roman Herzog, who has been critical of the direction of the EU court's rulings in the past, has previously written that the Mangold case would set the tone for future relations between the ECJ and national courts.