Estonia's top court rules EU bailout constitutional

(TALLINN) - Estonia's Supreme Court ruled Thursday that the new European permanent bailout fund is constitutional, allowing the eurozone's smallest and newest member to ratify the key crisis-fighting tool.

The court dismissed a complaint by Ombudsman Indrek Teder contesting the constitutionality of the European Stability Mechanism (ESM), a 500-billion-euro ($615-billion) fund set up to help debt-wracked eurozone countries.

Teder said that the ESM's qualified majority voting procedure jeopardised "the principle of parliamentary democracy, the principle of parliamentary prerogatives" and parliament's control over the public finances.

The court said, however, that while the provision "restricts the financial competence of the Estonian parliament, the principle of rule of law and the sovereignty of Estonia, the restriction is justified."

The ruling was made by a very narrow majority, with nine out of 19 Supreme Court justices opposed, while some said the issue should be put to a referendum.

Thursday's decision opens the door for Estonia's parliament to ratify the ESM, a move the centre-right government of Prime Minister Andrus Ansip has vowed to push though with a clear majority.

It was not clear Thursday when the vote might take place.

Designed as a permanent fund, the ESM was to begin operation in July and run in parallel with the temporary European Financial Stability Facility for one year, but a similar constitutional challenge in EU powerhouse Germany has delayed it.

Germany's top court began hearing challenges to the ESM and the European fiscal pact for greater budgetary discipline on Tuesday.

Germany's parliament passed the two pieces of legislation with a two-thirds majority on June 29 but the country's president has held off from signing them into law pending resolution of the legal challenge, now expected to take several months.

Estonia, a Baltic state of 1.3 million people known for strict fiscal discipline and the EU's lowest national debt, joined the eurozone in January 2011.