GERMAN LAW JOURNAL
[Vol. 07 No. 04
C. Constitutionalizing Private Law: How “Indirect Effect” is like “Direct Effect”
But does any of this support the claim that the German Constitution in effect constitutionalizes the relationship between private individuals? After all, the German Basic Law provides that “basic rights shall be binding for the legislative, executive and judicial powers.”34 Generally, the constitutional rights guaranteed by the Basic Law are not addressed to individuals. Individuals may not rely on them against one another in private litigation directly. Constitutional rights are in play in private litigation only indirectly as duties of the respective public authorities, and in particular the civil courts, to respect constitutional rights in the legislation and interpretation of private law. This is the core point of the doctrine of “mittelbare Drittwirkung.”
The practical difference between indirect and direct effect, however, is negligeable. It concerns merely the formal construction of the legal issue and has no implications whatsoever for questions relating to substantive outcomes or institutional competence. Not only is private law in Germany already fully constitutionalized. If, in a surprise move, the constitutional legislator were to amend the Constitution and explicitly determine that constitutional rights are also applicable to the relationship between individuals, it would change practically nothing. There would be a difference in the way complaints could be framed: instead of naming the public authorities, which are currently the addressees of the complaints, the complainant could simply name the other private party as the defendant in the case. And the challenged act would be the act of the private individual rather than that of the public authorities. But this change in the construction of the issue would have no implications whatsoever either substantively with regard to outcomes or institutionally with regard to the jurisdiction of the FCC. This means that even under a doctrine of “indirect effect” constitutional principles are already the basis for both private and public law. The following serves to illustrate this point.
A hypothetical to begin with: A, a consumer in dire financial straights, contracts with C, a credit card company. The card A signs up for is advertised as offering high credit limits, no questions asked, and 10% interest for the first 6 months. The standard contract then establishes that after six months interest goes up to 35% per annum. After running up the maximum amount of debt possible, A over a number of years pays back the original amount borrowed but refuses to pay the interest claimed by C on the grounds that it is ridiculously high. After having verified that A is actually able to pay, C decides to sue A for the remaining interest.
Art. 1 para. 3 Basic Law.