Resumen de Memoranda of Understanding in the Governance of European Financial Institutions

Dariusz Adamski

• The expansion of the European supervisory powers towards financial institutions in the last decade has brought to the fore not only the typical hard law instruments comprising the backbone of the emerging regulatory set-up, but also various atypical soft law tools. This contribution concentrates on the legal nature and consequences of one such soft law instrument: Memoranda of Understanding (MoUs). Their nature and context, and therefore practical consequences, distinguish these measures from their better-known strict conditionality namesakes, concluded with the countries undergoing a financial crisis. The MoUs discussed in this article are signed by EU authorities in charge of financial sector regulation and supervision with their peers and other stakeholders within and outside the EU. Placing such negotiable instruments within the broader realm of new governance tools, this contribution contends that the soft law moniker attributed to them does not properly depict their purposes, at the same time producing certain liability dilemmas. Furthermore, the article discusses the possibility of judicial review of such measures before the Court of Justice, and makes a case for their increased contractual enforceability as a solution to the liability loopholes created by their formally soft law character.