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The two below paragraphs come from the article “EU in der Krise. Gesucht: Ein Staat namens Europa” in Der Spiegel (my question refers to the second sentence in the second paragraph; I highlighted the sentence in bold):

Die deutsche Sicht auf den Staat ist hingegen von Misstrauen geprägt, zumindest soweit es die EU-Partner betrifft. Deshalb hat Berlin im Zuge der Eurokrise ein System von Überwachungsmechanismen und Sanktionen durchgedrückt, das die EU-Mitgliedstaaten auf Kurs halten soll ("Stabilitäts- und Wachstumspakt", "makroökonomisches Ungleichgewichteverfahren", "Europäisches Semester").

Dass dieses System nicht funktioniert, ist längst offensichtlich. Es ist ein Rezept für permanenten Unfrieden: Ständig sitzen die Mitgliedstaaten übereinander zu Gericht und drohen einander mit Sanktionen - die allerdings nicht glaubwürdig sind. Man kann, wie Spanien, gegen den Stabilitäts- und Wachstumspakt verstoßen, ohne die im Verfahren vorgesehenen Strafzahlungen befürchten zu müssen. Man kann, wie Deutschland, über viele Jahre einen außenwirtschaftlichen Überschuss fahren, der viel höher ist, als es das Ungleichgewichteverfahren erlaubt, weil ohnehin niemand etwas dagegen tun kann.

I cannot understand whether the EU member states really sue each other and thus sit in court or merely criticize each other.

According to dict.cc,

zu Gericht sitzen = to sit in judgment [law]

über jdn. zu Gericht sitzen = to sit in judgement on sb.

When I look up the meaning of the expression to sit in judgment on sb./sth., I get the following explanation from The Free Dictionary: to make a judgment about someone or something. And the Oxford Dictionary has the following to say about to sit in judgement: Assume the right to judge someone, especially in a critical manner.

To sum up: dict.cc says that zu Gericht sitzen is a law term, which implies actual court proceedings. But English equivalents of the expression zu Gericht sitzen do not seem to imply law context.

So, do the EU member states actually sue each other or merely criticize each other?

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    The ambiguity is by purpose. There are the so-called Vertragsverletzungsverfahren, filed by the EU commission against EU members who fail to conform to regulations. These are done when talks gave no result. The usual picture of "zu Gericht sitzen" however is a heated discussion among family members in which the youngsters get all the blame. Going to court is "bei Gericht" or "vor Gericht". – Janka Jun 18 '17 at 18:52
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    One (more or less) synonym for "zu Gericht sitzen" is "verhandeln", another is "erörtern". I think "to criticize" or at least "critically/meticulously considering" or "critically/meticulously negotiating" is about right. – Rudy Velthuis Jun 18 '17 at 23:42
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I am pretty convinced it means that they are not suing each other. This is also concluded by the sub sentence that they are threatening each other. If they are really in court sanctions are really a consequence but not only a threat any more.

In the "Zeit" I found following saying: "In Dresden durfte vergangene Woche erstmals ein Gremium aus Laien über die Biopolitik zu Gericht sitzen." It means to talk about something very precise and with sharp eyes like it is done in a real court whilst it is not a court in fact.

Back to the "Spiegel" it is meaning that they are much debating like in court which is over complicated and time consuming.

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Literally, "zu Gericht sitzen" means to "sit in judgment." That is in a court of law.

Here, we are not talking about a "legal" process but a quasi-legal (political) process, whereby countries sit in "judgment" of each other's actions without an objective legal framework.

That is why the conclusion was: "Es ist ein Rezept für permanenten Unfrieden: Ständig sitzen die Mitgliedstaaten übereinander zu Gericht." (It is a receipt for permanent disharmony when the member states constantly judge each other.)

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