The U.K. is on a bit of a winning streak in its legal battle to stop the European Union (read: France) from destroying London's financial services industry, and it's pressing its luck in a last-ditch bid to keep the vultures in Brussels and Paris from kind of but not really taking a chunk out of your paycheck. For in spite of what the other 27 members of the bloc think, it seems that the bonus curbs will both be ineffective and probably maybe sort of illegal under that grand monument to jargon and opacity, the EU Treaty.
The legal challenge was filed with the EU's top court, the Luxembourg-based European Court of Justice, "in the past couple of months," the court's press division said Wednesday. It follows a series of victories for the U.K. over financial services legislation as the country seeks to claw back powers from Brussels….
"These latest EU rules on bonuses, rushed through without any assessment of their impact, will...[push] bankers' fixed pay up rather than down, which will make banks themselves riskier rather than safer," a Treasury spokesman said….
"Regulation of pay in this manner goes beyond what is permitted in the EU Treaty," the Treasury spokesman said….
The U.K. lawsuit raises other concerns about bonus caps, including the legality of granting the European Banking Authority powers to decide which staff are covered by the caps, privacy issues surrounding personal data and whether the rules would wrongfully apply outside the EU….
The lawsuit comes after the U.K. won partial legal victories in recent weeks over a plan to slap a tax on financial transactions, and the power of EU agencies to limit short-selling.
For its part, the EU will simply shrug its shoulders rely on the grinding power of its impressive judicial bureaucracy to ensure that the bonus limits can go into effect and stay there for the foreseeable future.
Britain must apply European Union-imposed caps on bankers' bonuses while its legal action against the law is being examined, a spokeswoman for the European Commission, the EU's executive arm, said Thursday.
The U.K. government's lawsuit, "doesn't mean that the legislation in force will be suspended," a spokeswoman for internal market commissioner Michel Barnier told reporters at the commission's daily news conference.
"The U.K. will have to apply all the rules that are going to be applicable," she said.