EU Court able to fine nations that violate fiscal pact

The European Court of Justice will be empowered to impose sanctions to fiscally wayward countries under a new accord supported by the majority of European Union countries, according to the latest draft of the fiscal compact.

The draft version is to be discussed later Monday by EU leaders at a summit in Brussels, where they are expected to approve it.

The latest version had relatively few significant changes from previous versions.

"If the court finds the contracting party concerned has not complied with its judgment, it may impose on it a lump sum or a penalty payment appropriate in the circumstances and shall not exceed 0.1% of its gross domestic product," the draft says.

The draft also says that any country that wants to tap the euro-zone's permanent bailout fund--the European Stability Mechanism--after March 2013 must first ratify the fiscal compact, which will be activated after ratification by the national parliaments of 12 countries.

EU leaders will discuss Monday two final unresolved questions on the fiscal compact.

The first is whether non-euro-zone countries that have signed the pact will be allowed to participate in meetings where euro-area issues are discussed.

Another issue is whether sanctions will be imposed when countries fail to meet the pact's requirements on debt-to-gross domestic product ratios.

"The Italians and the French are not keen on the debt rules being up for sanctions," an EU official told Dow Jones Newswires Monday.

(Published by WSJ - January 30, 2012)