CELEX: 62013TJ0680
Non-contractual liability
Economic and monetary policy
Stability support programme for Cyprus
Decision of the Governing Council of the ECB relating to emergency liquidity assistance following a request from the Central Bank of Cyprus
Euro Group Statements of 25 March, 12 April, 13 May and 13 September 2013 concerning Cyprus
Decision 2013/236/EU
Memorandum of Understanding of 26 April 2013 on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism
Jurisdiction of the General Court
Admissibility
Formal requirements
Exhaustion of national rights of action
Sufficiently serious breach of a rule of law intended to confer rights on individuals
Right to property
Legitimate expectations
Equal treatment

I.

Background to the dispute
A.

ESM Treaty
On 2 February 2012, the Treaty Establishing the European Stability Mechanism between the Kingdom of Belgium, the Federal Republic of Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Italian Republic, the Republic of Cyprus, the Grand Duchy of Luxembourg, the Republic of Malta, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the Republic of Finland (‘the ESM Treaty’) was concluded in Brussels (Belgium). That Treaty entered into force on 27 September 2012.
Recital 1 of the ESM Treaty is worded as follows:
‘The European Council agreed on 17 December 2010 on the need for euro area Member States to establish a permanent stability mechanism. This European Stability Mechanism (“ESM”) will assume the tasks currently fulfilled by the European Financial Stability Facility (“EFSF”) and the European Financial Stabilisation Mechanism (“EFSM”) in providing, where needed, financial assistance to euro area Member States.’
In accordance with Articles 1, 2 and 32(2) of the ESM Treaty, the Contracting Parties, that is to say, the Member States whose currency is the euro (‘the MSCE’), are to establish among themselves an international financial institution, the European Stability Mechanism (ESM), which is a legal person.
Article 3 of the ESM Treaty describes the purpose of the ESM as follows:
‘The purpose of the ESM shall be to mobilise funding and provide stability support under strict conditionality, appropriate to the financial assistance instrument chosen, to the benefit of ESM Members which are experiencing, or are threatened by, severe financing problems, if indispensable to safeguard the financial stability of the euro area as a whole and of its Member States. For this purpose, the ESM shall be entitled to raise funds by issuing financial instruments or by entering into financial or other agreements or arrangements with ESM Members, financial institutions or other third parties.’
Article 4(1) and (3) and the first sentence of Article 4(4) of the ESM Treaty provides:
‘(1)   The ESM shall have a Board of Governors and a Board of Directors, as well as a Managing Director and other dedicated staff as may be considered necessary.
…
(3)   The adoption of a decision by mutual agreement requires the unanimity of the members participating in the vote. Abstentions do not prevent the adoption of a decision by mutual agreement.
(4)   By way of derogation from paragraph 3, an emergency voting procedure shall be used where the Commission and the ECB both conclude that a failure to urgently adopt a decision to grant or implement financial assistance, as defined in Articles 13 to 18, would threaten the economic and financial sustainability of the euro area. … .’
Article 5(3) of the ESM Treaty provides that ‘[t]he Member of the … Commission in charge of economic and monetary affairs and the President of the ECB, as well as the President of the Euro Group (if he or she is not the Chairperson or a Governor) may participate in the meetings of the Board of Governors [of the ESM] as observers’.
Article 6(2) of the ESM Treaty provides that ‘[t]he Member of the European Commission in charge of economic and monetary affairs and the President of the ECB may appoint one observer each [to the ESM’s Board of Directors]’.
Article 12 of the ESM Treaty defines the principles governing the provision of stability support and states in paragraph 1 as follows:
‘If indispensable to safeguard the financial stability of the euro area as a whole and of its Member States, the ESM may provide stability support to an ESM Member subject to strict conditionality, appropriate to the financial assistance instrument chosen. Such conditionality may range from a macro-economic adjustment programme to continuous respect of pre-established eligibility conditions.’
Article 13 of the ESM Treaty describes the procedure for granting stability support to ESM Members as follows:
‘(1)   An ESM Member may address a request for stability support to the Chairperson of the Board of Governors. Such a request shall indicate the financial assistance instrument(s) to be considered. On receipt of such a request, the Chairperson of the Board of Governors shall entrust the … Commission, in liaison with the ECB, with the following tasks:
(a)
to assess the existence of a risk to the financial stability of the euro area as a whole or of its Member States, unless the ECB has already submitted an analysis under Article 18(2);
(b)
to assess whether public debt is sustainable. Wherever appropriate and possible, such an assessment is expected to be conducted together with the [International Monetary Fund (IMF)];
(c)
to assess the actual or potential financing needs of the ESM Member concerned.
(2)   On the basis of the request of the ESM Member and the assessment referred to in paragraph 1, the Board of Governors may decide to grant, in principle, stability support to the ESM Member concerned in the form of a financial assistance facility.
(3)   If a decision pursuant to paragraph 2 is adopted, the Board of Governors shall entrust the … Commission — in liaison with the ECB and, wherever possible, together with the IMF — with the task of negotiating, with the ESM Member concerned, a memorandum of understanding (an “MoU”) detailing the conditionality attached to the financial assistance facility. The content of the MoU shall reflect the severity of the weaknesses to be addressed and the financial assistance instrument chosen. In parallel, the Managing Director of the ESM shall prepare a proposal for a financial assistance facility agreement, including the financial terms and conditions and the choice of instruments, to be adopted by the Board of Governors.
The MoU shall be fully consistent with the measures of economic policy coordination provided for in the [FEU Treaty], in particular with any act of [EU] law, including any opinion, warning, recommendation or decision addressed to the ESM Member concerned.
(4)   The … Commission shall sign the MoU on behalf of the ESM, subject to prior compliance with the conditions set out in paragraph 3 and approval by the Board of Governors.
(5)   The Board of Directors shall approve the financial assistance facility agreement detailing the financial aspects of the stability support to be granted and, where applicable, the disbursement of the first tranche of the assistance.
…
(7)   The … Commission — in liaison with the ECB and, wherever possible, together with the IMF — shall be entrusted with monitoring compliance with the conditionality attached to the financial assistance facility.’
B.

Financial difficulties of the Republic of Cyprus and request for financial assistance
During the first months of 2012, the Hellenic Republic and its private bondholders agreed, and then carried out, an exchange of Greek bonds at a substantial haircut on the nominal value of Greek debt held by private investors [Private Sector Involvement (‘the PSI’)].
As a result of their exposure to bonds which were subject to the PSI, several banks established in Cyprus, including the Cyprus Popular Bank Public Co Ltd (‘Laïki’) and the Trapeza Kyprou Dimosia Etaireia LTD (‘BoC’), suffered significant losses. In total, those losses amounted to more than EUR 4 billion and represented approximately 25% of the gross domestic product (GDP) of the Republic of Cyprus.
Laïki, BoC and other banks established in Cyprus subsequently suffered under-capitalisation problems. Since it was no longer able to supply sufficient securities to seek funding from the European Central Bank (ECB), Laïki requested, and obtained, Emergency Liquidity Assistance (‘ELA’) from the Kentriki Trapeza tis Kyprou (Central Bank of Cyprus) (‘the CBC’). The total amount of ELA granted to Laïki was EUR 3.8 billion in May 2012 and EUR 9.6 billion on 3 July 2012.
In those circumstances, the Republic of Cyprus judged it necessary to intervene in support of the Cypriot banking sector, in particular by recapitalising Laïki to the value of EUR 1.8 billion in June 2012. During that month, BoC announced that it also had requested the Cypriot authorities for capital support, but did not obtain it.
At that time, the Republic of Cyprus was itself already confronted with major financial and budgetary difficulties. Since its rating had already been downgraded by one or two notches by the rating agencies Fitch, Moody’s and Standard & Poor’s in the first quarter of 2011, as a result, in particular, of exposure of its banking sector to the Greek economy, from May 2011 the Republic of Cyprus became unable to refinance itself at rates compatible with long-term fiscal sustainability. In those circumstances, the Republic of Cyprus covered its financing needs, in particular, by issuing very short-term treasury bonds and by concluding, in October 2011, an official loan agreement for EUR 2.5 billion with the Federation of Russia.
On 25 June 2012, since the rating agency Fitch had, following the agencies Moody’s and Standard & Poor’s, downgraded the Republic of Cyprus to a speculative grade, the latter’s bonds ceased to be accepted as collateral for the monetary operations of the Eurosystem, which is composed of the central banks of the MSCE and of the ECB, which conduct the monetary policy of the European Union. On that same day, the Republic of Cyprus presented a request to the president of the Euro Group for financial assistance from the ESM or from the European Financial Stability Facility (EFSF). According to the statements of the Cypriot Government, the assistance requested sought to ‘contain the risks to the Cypriot economy, notably those arising from the negative spill over effects through its financial sector, due to its large exposure in the Greek economy’.
By statement of 27 June 2012, the Euro Group indicated that the financial assistance requested would be provided to the Republic of Cyprus by either the EFSF or the ESM in the context of a macroeconomic adjustment programme to be defined in an MoU to be negotiated between the European Commission together with the ECB and the International Monetary Fund (IMF), on the one hand, and the Cypriot authorities, on the other.
On 29 November 2012, representatives of the Commission, the ECB, the IMF and the Republic of Cyprus drew up a draft MoU.
By statement of 21 January 2013, the Euro Group, first, indicated that a final agreement concerning a macroeconomic adjustment programme could be reached in March 2013 and, secondly, encouraged the parties concerned to make progress so as to finalise the components of the draft MoU.
In March 2013, the Republic of Cyprus and the other MSCE reached a political agreement on the draft MoU.
By statement of 16 March 2013, the Euro Group welcomed that agreement, and the commitment by the Cypriot authorities to take additional measures to mobilise domestic resources, in order to limit the extent of financial assistance connected with the macroeconomic adjustment programme referred to in paragraph 18 above. Those measures include, in particular, the introduction of a levy on Cypriot bank deposits, restructuring and recapitalisation of banks, and the bail-in of the holders of low-ranking bonds. The Euro Group also noted that the Cypriot financial sector would be subject to an appropriate reduction with a view to remedying its weakness and its very large size in relation to the GDP of the Republic of Cyprus. In that context, the Euro Group indicated that it considered that the grant of financial assistance to safeguard financial stability in the Republic of Cyprus and the euro area was, in principle, warranted and called on the parties concerned to expedite the negotiations that were underway.
On 18 March 2013, the Republic of Cyprus declared a bank holiday on 19 and 20 March 2013. Subsequently, the Cypriot authorities decided to extend that bank holiday until 28 March 2013 in order to avoid a run on the banks.
On 19 March 2013, the Cypriot Parliament rejected the Cypriot Government’s bill relating to the introduction of a levy on all bank deposits in Cyprus. The Cypriot Government then prepared a new draft law providing solely for the restructuring of two Cypriot banks, namely BoC and Laïki (‘the banks concerned’).
On 21 March 2013, although the debts of Laïki and BoC arising from ELA amounted respectively to EUR 9.5 billion and EUR 1.9 billion, the ECB published a press release in which it stated the following:
‘The Governing Council of the [ECB] decided to maintain the current level of [ELA] until … 25 March 2013.
Thereafter [ELA] could only be considered if an [EU or IMF] programme is in place that would ensure the solvency of the concerned banks.’
On 22 March 2013, the Cypriot Parliament adopted the O peri exiyiansis pistotikon kai allon idrimaton nomos (No 17(1)/2013) (Law on the Resolution of Credit and Other Institutions, EE, Annex I(I), No 4379, 22 March 2013, p. 117) (‘the Law of 22 March 2013’). Under section 3(1) and section 5(1) of that law, the CBC was entrusted, together with the Minister for Finance, with the resolution of the institutions covered by that law. To that end, section 12(1) of the Law of 22 March 2013 provides that the CBC may, by decree, restructure the debts and obligations of an institution under resolution, including by means of the reduction, modification, rescheduling or novation of the nominal capital or of the outstanding amount of any type of claim, actual or future, against the institution, or by the conversion of debt instruments or obligations into equity capital. Next, that section excludes from those measures insured deposits, for the purposes of the fifth sentence of section 2 of the Law of 22 March 2013, that is to say deposits of EUR 100000 or less. Section 3(2)(a) and (b) of that law provides that the shareholders of an institution under resolution are to be the first to be liable for any losses resulting from the implementation of the resolution measures, whereas the creditors of such an institution are liable for those losses only after the shareholders. Finally, it is apparent from section 3(2)(d) of that law that the measures adopted on the basis of that law cannot place the creditors financially in a less favourable position than that in which they would be in the event of the liquidation of those banks. Section 12(14) of the law at issue states that, in the event of an implementation of the measure provided for in section 12(1) of that law, the affected parties are to receive, in payment of their claims, at least the amount they would have received, under Cypriot law, in the event of the liquidation of those banks.
By a statement of 25 March 2013, Euro Group indicated that it had reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme with the support of all of the MSCE and of the Commission, the Council, the ECB and the IMF.
That statement sets out, in particular, the following:
‘The Euro Group welcomes the plans for restructuring the financial sector as specified in the annex. These measures will form the basis for restoring the viability of the financial sector. In particular, they safeguard all deposits below EUR 100000 in accordance with EU principles.
The programme will contain a decisive approach to addressing financial sector imbalances. There will be an appropriate downsizing of the financial sector … .
The Euro Group urges the immediate implementation of the agreement between [the Republic of Cyprus] and [the Hellenic Republic] on Greek branches of Cypriot banks, which protects the stability of both the Greek and Cypriot banking systems.’
The annex to that statement is worded as follows:
‘Following the presentation by the authorities [of the Republic of Cyprus] of their policy plans, which were broadly welcomed by the Eurogroup, the following was agreed:
(1)
Laïki will be resolved immediately — with full contribution of equity shareholders, bond holders and uninsured depositors — based on a decision by [CBC], using the newly adopted Bank Resolution Framework.
(2)
Laiki will be split into a good bank and a bad bank. The bad bank will be run down over time.
(3)
The good bank will be folded into [BoC], using the Bank Resolution Framework, after having heard the Board of Directors of BoC and Laïki. It will take EUR 9 billion of ELA with it. Only uninsured deposits in BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.
(4)
The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.
(5)
BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.
(6)
The conversion will be such that a capital ratio of 9% is secured by the end of the programme.
(7)
All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.
(8)
The programme money (up to EUR 10 billion) will not be used to recapitalise Laïki and [BoC].’
As was pointed out in reply to the Court’s measures of organisation of procedure, it was considered that, out of the EUR 10 billion included in the programme budget, EUR 3.4 billion would be allocated to the budgetary needs of the Republic of Cyprus, EUR 4.1 billion to the redemption, by the latter, of debt instruments and EUR 2.5 billion to restructuring Cypriot banks other than the banks concerned.
C.

Bank restructuring measures adopted by the Republic of Cyprus
On 25 March 2013, the Governor of the CBC placed the banks concerned into resolution.
Subsequently, four decrees were published in that connection on the basis of the Law of 22 March 2013, namely:
–
the Kanonistiki Dioikitiki Praxi 96/2013, peri tis Polisis ergasion ton en elladi ergasion tis Trapezas Kyprou Dimosias Etaireias Ltd Diatagma tou 2013 (Decree 96/2013 on the sale of certain operations of the BoC in Greece, Regulatory Administrative Act No 96), of 26 March 2013 (EE, Annex III(I), No 4640, 26 March 2013, p. 745) (‘Decree No 96’);
–
the Kanonistiki Dioikitiki Praxi 97/2013, peri tis Polisis ergasion ton en elladi ergasion tis Cyprus Popular Bank Public Co Ltd Diatagma tou 2013 (Decree 97/2013 on the sale of certain operations of Laïki in Greece, Regulatory Administrative Act No 97), of 26 March 2013 (EE, Annex III(I), No 4640, 26 March 2013, p. 749) (‘Decree No 97’);
–
the Kanonistiki Dioikitiki Praxi 103/2013, peri diasosis me idia mesa tis Trapezas Kyprou Dimosias Etaireias Ltd Diatagma tou 2013 (Decree 103/2013 on the bailing-in of BoC, Regulatory Administrative Act No 103), of 29 March 2013 (EE, Annex III(I), No 4645, 29 March 2013, p. 769 (‘Decree No 103’);
–
the Kanonistiki Dioikitiki Praxi 104/2013, peri tis Polisis Orismenon Ergasion tis Cyprus Popular Bank Public Co Ltd Diatagma tou 2013 (Decree 104/2013 on the sale of certain operations of Laïki, Regulatory Administrative Act No 104), of 29 March 2013 (EE, Annex III(I), No 4645, 29 March 2013, p. 781) (‘Decree No 104’).
Decrees No 96 and 97 provide, respectively, for the sale of branches of BoC and Laïki established in Greece (together, ‘the Greek branches’).
Sections 5 and 6 of Decree No 103 provide for a recapitalisation of BoC, at the expense, in particular, of its own unsecured depositors and its shareholders, so that it could continue to provide banking services. Accordingly, the uninsured deposits in BoC were converted into shares thereof (37.5% of each uninsured deposit), into securities which were convertible, by BoC, either into shares or into deposits (22.5% of each uninsured deposit), and into securities which were convertible into deposits by the CBC (40% of each uninsured deposit). Among those securities which were convertible into deposits by BoC, 25% (10% of each uninsured deposit) were released. The remaining 75% (30% of each uninsured deposit) continued to be unavailable to the depositors. Section 6(5) of Decree No 103 states that, if the contributions of uninsured depositors exceed what is necessary in order to restore the equity capital of BoC, the resolution authority will determine the amount corresponding to overcapitalisation and will treat it as if the conversion had never taken place, Pursuant to section 10 thereof, Decree No 103 entered into force on 29 March 2013, at 6.00 a.m.
Following amendments made to Decree No 103 of 30 July 2013, first, 10% of uninsured deposits, which had previously been converted into securities convertible either into shares or into deposits, were converted into shares in BoC. Of the remaining securities convertible, by the CBC, either into shares or into deposits (12.5% of each uninsured deposit) and those which could be converted into deposits by the CBC and which had not already been made available (30% of each uninsured deposit), 12% were placed into a new current account, whereas 88% were placed, in equal parts, in six-month, nine-month and 12-month deposit accounts respectively.
Secondly, the nominal value of EUR 1 of each ordinary share in BoC was reduced to one cent. Subsequently, 100 ordinary shares with a nominal value of one cent were merged into one ordinary share with a nominal value of EUR 1. The ordinary shares with a nominal value of one cent of a number less than 100 and could therefore not be merged to form one new ordinary share with a nominal value of EUR 1, were extinguished.
In so far as concerns Decree No 104, the combined provisions of sections 2 and 5 thereof provided for the transfer, at 6:10 a.m. on 29 March 2013, of certain of Laïki’s assets and liabilities, including deposits of less than EUR 100000 and the debt connected with ELA, to BoC. Deposits of more than EUR 100000 remained with Laïki, pending its liquidation.
Following amendments to Decree No 104 on 30 July 2013, approximately 18% of the new share capital of BoC was granted to Laïki during 2013.
After the adoption of Decrees No 96, 97, 103 and 104 (together, ‘the harmful decrees’), the Commission, the ECB and the IMF embarked upon new discussions with the Cypriot authorities with a view to finalising an MoU.
D.

Grant of financial assistance to the Republic of Cyprus
By declaration of 12 April 2013, firstly, the Euro Group welcomed an agreement reached between the Cypriot authorities, on the one hand, and the IMF, the Commission and the ECB, on the other hand. It stated that, in the light of that agreement, the necessary elements were in place to launch the national procedures required for the formal approval of the agreement on the financial assistance requested by the Republic of Cyprus. It also noted that it expected that the ESM Board of Governors would be in a position to approve that agreement by 24 April 2013, subject to completion of national procedures. Secondly, the Euro Group noted that the Cypriot authorities had implemented decisive resolution, restructuring and recapitalisation measures seeking to remedy the fragile and unique situation of the Cypriot financial sector.
During the hearing of 24 April 2013, firstly, the ESM Board of Governors confirmed, first, that the Commission and the ECB had been entrusted with carrying out the assessments referred to in Article 13(1) of the ESM Treaty and, secondly, that the Commission had been entrusted, in liaison with the ECB and the IMF, with the negotiation of the MoU with the Republic of Cyprus. Secondly, it decided to grant stability support to the Republic of Cyprus in the form of a financial assistance facility (‘FAF’) in accordance with the proposal of the EMS’s Managing Director. Thirdly, it approved a new draft MoU negotiated, on the one hand, by the Commission, in liaison with the ECB and the IMF, and, on the other hand, by the Republic of Cyprus. Fourthly, it requested the Commission to sign the MoU on behalf of the ESM.
On 25 April 2013, acting under Article 136(1) TFEU, the Council of the European Union adopted Decision 2013/236/EU addressed to Cyprus on specific measures to restore financial stability and sustainable growth (
OJ 2013 L 141, p. 32
). That decision provides for a series of ‘measures and outcomes’ with a view to correcting the budget deficit of the Republic of Cyprus and to restoring the soundness of the latter’s financial system.
On 26 April 2013, the new MoU (‘the MoU of 26 April 2013’) was signed by the vice-president of the Commission, on behalf of the ESM, by the Minister for Finance of the Republic of Cyprus and by the Governor of the CBC.
Under the heading ‘Restructuring and resolution of [the banks concerned]’, paragraphs 1.23 to 1.28 of that MoU state:
‘1.23
The accounting and economic value assessment mentioned has revealed that the two largest banks of Cyprus were insolvent. To address this situation the government has implemented a far reaching resolution and restructuring plan. In order to prevent the build-up of future imbalances and to restore the viability of the sector, while preserving competition, a fourfold strategy has been adopted which does not involve taxpayers’ money.
1.24
First, all Greek-related assets (including shipping loans) and liabilities were carved-out, estimated in the adverse scenario respectively at EUR 16.4 and 15 billion. The Greek assets and liabilities were acquired by Piraeus Bank, the restructuring of which will be dealt with by the Greek authorities. The carve-out was based on an agreement signed on 26 March 2013. With the book value of the assets at EUR 19.2 billion, the carve-out has substantially reduced the cross exposures between Greece and Cyprus.
1.25
With respect to the UK branch of [Laïki], all the deposits were transferred to the UK subsidiary of [BoC]. The associated assets were folded into [BoC].
1.26
Second [BoC] is taking over — via a purchase and assumption procedure — almost the entire Cypriot assets of [Laïki] at fair value, as well as the latter’s insured deposits and [ELA] exposure at nominal value. The uninsured deposits of [Laiki] will remain in the legacy entity. The aim is for the value of the transferred assets to be higher than the transferred liabilities with the difference corresponding to the recapitalisation of [BoC] by [Laïki] amounting to 9% of the risk-weighted assets transferred. [BoC] is being recapitalised to reach a core tier one ratio of 9% under the adverse scenario of the stress test by the end of the programme, which should help to restore confidence and normalise funding conditions. The conversion of 37.5% of the uninsured deposits in [BoC] into class A shares with full voting and dividend rights provides the largest part of the capital needs with additional equity contributions from the legacy entity of [Laiki]. Part of the remaining uninsured deposits of [BoC] will be frozen temporarily … .
1.27
Third, to ensure that the capitalisation targets are met, a more detailed and updated independent valuation of the assets of [the banks concerned] will be completed, as required by the bank resolution framework, by the end of June 2013. To this end, no later than mid-April 2013, the terms of reference of the independent valuation exercise will be agreed in consultation with the [European Commission], the ECB and the IMF. Following that valuation, and if required, an additional conversion of uninsured deposits into class A shares will be undertaken to ensure that the core tier one capital target of 9% under stress by end-programme can be met. Should [BoC] be found to be overcapitalised relative to the target, a share-reversal process will be undertaken to refund depositors by the amount of overcapitalisation.
1.28
Finally, given the systematic importance of [BoC], it is important that the operations of [Laïki] are quickly integrated, operational efficiency is improved, the recovery of non-performing loans is optimised with the work-out implemented by the going concern entity and the funding conditions are progressively normalised. In order to achieve these goals and to ensure that [BoC] can operate with maximum safeguards to preserve stability and continued viability during a transition period, the CBC, following consultation with the Ministry of Finance, will appoint a new Board of Directors and an acting Chief Executive Officer until [BoC]’s new shareholders are organised in a general meeting. The CBC will require the Board of Directors to prepare a restructuring plan defining the bank’s business objectives and credit policies by end-September 2013. To ensure that normal business activities are not affected, institutional arrangements will be designed by end-June 2013 in accordance with Cypriot law to insulate [BoC] from reputational and governance risks.’
On 30 April 2013, the Cypriot Parliament approved the MoU of 26 April 2013.
On 8 May 2013, the ESM, the Republic of Cyprus and the CBC concluded the agreement relating to FAF. That same day, the ESM board of directors approved that agreement, and a proposal relating to the arrangements for payment to the Republic of Cyprus of a first tranche of aid amounting to EUR 3 billion. That tranche was divided into two disbursements. The first, of EUR 2 billion, was made on 13 May 2013. The second, of EUR 1 billion, was made on 26 June 2013.
By a statement of 13 May 2013, the Euro Group welcomed the decision of the ESM Board of Governors to approve the first tranche of the financial assistance and confirmed that the Republic of Cyprus had implemented the measures agreed in the MoU of 26 April 2013.
By statement of 13 September 2013, the Euro Group welcomed, first, the conclusion of the first review mission of the Commission, the ECB and the IMF and, secondly, the fact that BoC had been taken out of resolution on 30 July 2013. Moreover, the Euro Group expressed its support for the payment of a second tranche of aid. That payment, of EUR 1.5 billion, was made on 27 September 2013.
II.

Procedure and forms of order sought
By application lodged at the General Court Registry on 20 December 2013, Dr. K. Chrysostomides & Co. LLC and the other applicants whose names are included in the annex brought the present action.
In their application, the applicants claim that the Court should:
–
principally, order the defendants to pay them the sums shown in the annex to this application plus interest accruing from 16 March 2013 until the judgment of the Court;
–
in the alternative, find that the European Union and/or the defendants have incurred non-contractual liability and determine the procedure to be followed in order to establish the recoverable loss which they actually suffered;
–
order the defendant to pay the costs.
In their application, the applicants also made a request for priority treatment of the present case, in accordance with Article 55(2) of the Rules of Procedure of the General Court of 2 May 1991.
By separate documents lodged at the Court Registry on 14 July 2014, 16 July 2014 and 18 August 2014 respectively, the Council, the ECB and the Commission raised objections of inadmissibility under Article 114 of the Rules of Procedure of 2 May 1991.
In its objection of inadmissibility, the Council claims that the Court should:
–
dismiss the application as inadmissible;
–
order the applicants to pay the costs.
In its objection of inadmissibility, the ECB claims that the Court should:
–
dismiss the application as inadmissible or as manifestly lacking any foundation in law within the meaning of Article 111 of the Rules of Procedure of 2 May 1991;
–
order the applicants to pay the costs.
In its objection of inadmissibility, the Commission claims that the Court should:
–
principally, dismiss the application as manifestly inadmissible;
–
in the alternative, dismiss the application as manifestly lacking any foundation in law within the meaning of Article 111 of the Rules of Procedure of 2 May 1991;
–
in any event, order the applicants to pay the costs.
The applicants submitted their observations on the objection on 2 October 2014. In those observations, the applicants claim that the Court should:
–
dismiss the objections of inadmissibility;
–
in the alternative, reserve the pleas of inadmissibility for the final judgment;
–
grant the forms of order sought in the application.
By order of 3 June 2015, the General Court (First Chamber) decided to reserve the pleas of inadmissibility raised by the defendants for the final judgment, in accordance with Article 114(4) of the Rules of Procedure of 2 May 1991.
On 28 July 2015, 30 July 2015 and 31 July 2015 respectively, the Council, the ECB and the Commission lodged defences.
The Council contends that the Court should:
–
dismiss the application as inadmissible;
–
in the alternative, dismiss the application as manifestly unfounded;
–
order the applicants to pay the costs.
The ECB contends that the Court should:
–
dismiss the application as inadmissible;
–
in the alternative, dismiss the application as unfounded;
–
order the applicants to pay the costs.
The Commission contends that the Court should:
–
dismiss the application as inadmissible and/or unfounded;
–
order the applicants to pay the costs.
On 23 September 2015, the Court decided, pursuant to Article 83(1) of the Rules of Procedure of the General Court, that a second exchange of pleadings was unnecessary.
By document lodged with the Court Registry on 14 October 2015, the applicants requested, pursuant to Article 83(2) of the Rules of Procedure, permission to lodge a reply.
By decision of 28 October 2015, the Court granted that request.
On 9 December 2015, the applicants lodged their reply. On 29 January 2016, 11 February 2016 and 12 February 2016 respectively, the Council, the Commission and the ECB submitted their rejoinders.
By letter lodged at the Court Registry on 2 March 2016, the applicants requested, first, a hearing and, secondly, that the present case and Case T‑786/14,
Bourdouvali and Others
v
Council and Others
, be joined for the purposes of the oral part of the procedure. The defendants informed the Court that they had no objection to the cases being joined as requested.
On 18 April 2016, pursuant to Article 69(d) of the Rules of Procedure, the President of the First Chamber of the Court decided to stay the present proceedings pending the adoption of the final decision in Cases C‑8/15 P,
Ledra Advertising
v
Commission and ECB
, C‑9/15 P,
Eleftheriou and Others
v
Commission and ECB
, C‑10/15 P,
Theophilou and Theophilou
v
Commission and ECB
, C‑105/15 P,
Mallis and Malli
v
Commission and ECB
, C‑106/15 P,
Tameio Pronoias Prosopikou Trapezis Kyprou
v
Commission and ECB
, C‑107/15 P,
Chatzithoma
v
Commission and ECB
, C‑108/15 P,
Chatziioannou
v
Commission and ECB
, and C‑109/15 P,
Nikolaou
v
Commission and ECB
.
Following the judgments of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), and Mallis and Others v Commission and ECB (
C‑105/15 P to C‑109/15 P
,
EU:C:2016:702
), by which the Court disposed of the proceedings referred to in paragraph 65 above, the present proceedings were resumed.
On 27 October 2016, in the context of the measures of organisation of procedure provided for in Article 89 of its Rules of Procedure, the Court requested the parties to submit observations relating to the conclusions they drew from those two judgments for the present dispute. The parties complied with that request within the prescribed period.
Following a change in the composition of the Chambers of the Court, pursuant to Article 27(5) of the Rules of Procedure, the Judge Rapporteur was assigned to the Fourth Chamber, to which the present case was, consequently, allocated.
On 27 April 2017, the President of the Fourth Chamber of the Court decided to join the present case with Case T‑786/13,
Bourdouvali and Others
v
Council and Others
, for the purposes of the oral part of the procedure.
On 17 May 2017, on a proposal from the Fourth Chamber, the Court decided, pursuant to Article 28 of the Rules of Procedure, to refer the present case to a chamber sitting in extended composition.
On 18 May 2017, acting on a report of the Judge-Rapporteur, the Court decided to open the oral part of the procedure but did not accede to the applicants’ request for priority treatment. On that same date, the President of the Fourth Chamber of the Court fixed the hearing for 12 July 2017.
On 14 June 2017, in the context of the measures of organisation of procedure laid down in Article 89 of the Rules of Procedure, the Court put written questions to the parties. The latter replied within the prescribed period.
By letter of 20 June 2017, the applicants requested the postponement of the hearing, scheduled for 12 July 2017 (see paragraph 71 above). On 26 June 2017, the President of the Fourth Chamber granted that request and postponed the hearing until 11 September 2017.
The parties presented oral argument and replied to the questions put by the Court at the hearing on 11 September 2017.
III.

Law
Upon the entry into force of the harmful decrees (see paragraphs 30 to 36 above), the applicants were either depositors with the banks concerned, or shareholders thereof.
The application of the measures provided for by the harmful decrees, as amended on 30 July 2013 (‘the harmful measures’), caused a substantial reduction in the value of the applicants’ deposits, shares and bonds, the precise figures for which were supplied by the applicants in an annex to the application.
First of all, the applicants claim that the adoption of the harmful measures is attributable to the defendants. The latter adopted certain acts (‘the contested acts’), by which they, firstly, obliged the Republic of Cyprus to adopt the harmful measures in order to receive assistance which was indispensable for it, secondly, approved the adoption of those measures and, thirdly, promoted or made permanent the implementation of those measures. At issue, more particularly, are the following acts:
–
the Euro Group Statement of 25 March 2013;
–
the ‘Euro Group Agreement of 25 March 2013’;
–
the ‘decision of the Governing Council of the ECB of 21 March 2013 to demand payment of ELA on 26 March [2013] unless a rescue package is agreed’;
–
the ‘ECB decisions to continue the granting of ELA’;
–
the negotiation and conclusion, by the Commission, of the MoU of 26 April 2013;
–
the other acts, by which the defendants endorsed and approved the harmful measures, namely the Euro Group statements of 12 April, 13 May and 13 September 2013, the ‘Commission’s findings that the measures adopted by the Cypriot authorities complied with conditionality’, Decision 2013/236 and the approval, by the Commission and the ECB, of the payment of various tranches of FAF to the Republic of Cyprus.
Next, the applicants claim that the contested acts were adopted without taking into account the interests of the closed group consisting of depositors or shareholders of the banks concerned, in flagrant and serious violation of EU law.
Finally, first, the applicants note that there is a direct link between the harmful measures and the losses they suffered. Secondly, they request to be compensated for those losses.
A.

The jurisdiction of the General Court
The defendants challenge the jurisdiction of the Court to hear the present action.
It should be noted that, under Article 268 and the second and third paragraphs of Article 340 TFEU, in the case of non-contractual liability, the General Court has jurisdiction only in disputes relating to compensation for damage caused by the ECB, the institutions of the Union for the purposes of the second paragraph of Article 340 TFEU or by their servants in the performance of their duties (see, to that effect, order of 1 April 2008, Ayyanarsamy v Commission and Germany,
T‑412/07
, not published,
EU:T:2008:84
, paragraph
).
According to the case-law, the term ‘institution’ used in the second paragraph of Article 340 TFEU must not be understood as referring only to the institutions of the Union listed in Article 13(1) TEU (see, to that effect, judgment of 2 December 1992, SGEEM and Etroy v EIB,
C‑370/89
,
EU:C:1992:482
, paragraph
). That term also covers, with regard to the system of non-contractual liability established by the TFEU, all other EU bodies established by the Treaty and intended to contribute to achieving the EU’s objectives. Consequently, measures taken by those bodies in the exercise of the powers assigned to them by EU law are attributable to the EU, according to the general principles common to the Member States referred to in the second paragraph of Article 340 TFEU (see, to that effect, judgment of 10 April 2002, Lamberts v European Ombudsman,
T‑209/00
,
EU:T:2002:94
, paragraph
).
It follows that the Court cannot hear a claim for compensation that is directed against the EU and based on the unlawfulness of an act or conduct the author of which is not the ECB, or an institution of the EU, within the meaning of the second paragraph of Article 340 TFEU, or one of their servants in the performance of its duties. Therefore, the damage caused by the national authorities in the exercise of their own powers can only give rise to liability on the part of the latter and the national courts retain sole jurisdiction to order compensation for such damage (see, to that effect, judgments of 7 July 1987, L’Étoile commerciale and CNTA v Commission,
89/86 and 91/86
,
EU:C:1987:337
, paragraph
, and the case-law cited, and of 4 February 1998, Laga v Commission,
T‑93/95
,
EU:T:1998:22
, paragraph
).
By contrast, it is not excluded that the Court may hear an action for compensation for damage caused by an act or conduct, by which a national authority ensures the implementation of EU legislation. In such a case, it is necessary to determine, in order to establish the jurisdiction of the Court, whether the unlawful conduct alleged in support of the application for compensation is in fact the responsibility of an EU institution, body, office or agency or of one of its servants in the performance of its duties and cannot be regarded, in reality, as attributable to the national authority at issue (see, to that effect and by analogy, judgment of 26 February 1986, Krohn Import-Export v Commission,
175/84
,
EU:C:1986:85
, paragraph
). Such is the case where the national authorities have no discretion in the implementation of EU legislation vitiated by such unlawfulness (see, to that effect, judgment of 11 January 2002, Biret International v Council,
T‑174/00
,
EU:T:2002:2
, paragraph
and the case-law cited).
Moreover, the Court has jurisdiction to hear an action for compensation for damage caused by the unlawful acts or conduct of the Commission or the ECB in relation to the tasks assigned to them in the context of the ESM Treaty (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
to
).
In the present case, without prejudice to determining the cause of the harm alleged, it must be noted that it is in the application of the harmful measures that the immediate cause of the financial loss that the applicants allege to have suffered is liable to be found, either as shareholders of or as depositors in the banks concerned. As the applicants acknowledge, those measures were introduced by means of the harmful decrees. The harmful decrees, published on 29 March 2013 (see paragraph 30 above) and amended on 30 July 2013, were adopted by a Cypriot authority, the Governor of the CBC, in accordance with a Cypriot law, the Law of 22 March 2013. The adoption of that law and of those decrees preceded the signing of the MoU of 26 April 2013 and was not formally required by an act of the Union, unlike, for example, a national measure implementing a directive. The harmful decrees are therefore not, formally, attributable to the Union.
In that regard, firstly, the defendants contend that the adoption of the harmful decrees is also not, in reality, attributable to the Union and cannot therefore incur its liability. Those decrees are exclusively attributable to the Cypriot authorities, who adopted them unilaterally, in the exercise of their sovereign power. The Commission and the ECB point out that the MoU of 26 April 2013 mentions the harmful measures for historical and descriptive purposes, since the grant of FAF was made subject only to the adoption of future measures. As regards the technical advice provided in the course of national proceedings, the Commission and the ECB note that it does not incur the liability of the Union.
Secondly, the Council and the Commission point out that the Euro Group is an informal Inter-Governmental Meeting whose statements, devoid of legal effects, are attributable to each Member State represented and cannot, consequently, incur the liability of the Union.
Thirdly, the ECB notes that ELA falls within the competence of the national central banks of the Eurosystem. The ECB merely determines whether it interferes with the tasks and objectives of the European System of Central Banks (ESCB). In order to do so, since it does not have the ability to assess the solvency of Cypriot banks, the ECB was obliged to recognise the assessments made by the CBC, which relied heavily on the prospect of the imminent adoption of a support programme. Therefore, the ECB should inevitably have considered that its approach would have to be different if no programme of that type were adopted.
In any event, on 21 March 2013, the ECB did not adopt a decision under Article 14.4 of Protocol No 4, of 30 March 2010, of the Statute of the [ESCB] and the ECB (
OJ 2010 C 83, p. 230
) (‘the ECB Statute’), but issued a mere declaration of intent without any legal effects and which could be freely amended, even if that statement could have increased the burden on the Cypriot authorities due to the poor state of Cypriot public finances and banks.
Fourthly, the Commission maintains that neither the ESM Treaty nor the case-law oblige it to guarantee that everything covered by that treaty complies with EU law. However, since it retains its role as guardian of the Treaties, enshrined in Article 17 TEU, in the context of the ESM, the Commission ensured compliance of the MoU of 26 April 2013 with EU law. It is apparent from the case-law that Article 17 TEU does not confer rights on individuals and that an infringement thereof does not incur the liability of the Union.
The applicants respond that the Court has jurisdiction to hear the present action.
Firstly, they claim that, even if the harmful decrees are formally sovereign and unilateral acts of the Republic of Cyprus, the harmful measures are, in reality, attributable to the defendants. In its statement of 25 March 2013, the Euro Group decided to make FAF subject to the adoption of those measures and, given the ‘demand of the ECB for the repayment of the ELA on 26 March 2013’, FAF would have been indispensable to avoid the bankruptcy of the Republic of Cyprus, whose discretion was illusory. Since the Euro Group required the adoption of the harmful measures, the fact that they were adopted before the signing of the MoU of 26 April 2013 is not relevant for the purposes of their attributability to the Union. Conversely, the fact that the harmful measures were identified in the MoU of 26 April 2013 and that the implementation thereof was monitored by the Commission, in accordance with Article 1(2) of Decision 2013/236 and the substance of Article 2(6) of that decision, show that they are conditions to which the grant of FAF was made subject.
Secondly, the applicants maintain that the Euro Group can incur the liability of the Union, since it is a body established by primary law and its tasks are performed in the context of the monetary union, which falls under the exclusive competence of the Union. Moreover, since the Euro Group generally met in the evening of the Ecofin Council meeting and since it brings together Member States representing 215 of the 255 votes which were necessary to achieve the qualified majority at the time of the facts, its decisions are always followed by the Council.
The applicants add that a non-binding act, such as a publication, may incur the liability of the Union. In any event, the Euro Group Statement of 25 March 2013 is binding. The Euro Group decided to make FAF subject to precise conditions, which the Cypriot authorities, the ESM and the EU institutions concerned considered to be binding. In particular, since the ESM Board of Governors has the same membership as the Euro Group, it could, according to the applicants, only endorse that decision, or was even bound by it. That is, moreover, apparent from the statement of 25 March 2013 itself, and from the Parliament resolution of 13 March 2014 on the enquiry on the role and operations in the euro area-programme countries of the troika, namely the Commission, the ECB and the IMF. The applicants consider in that regard that the case-law is applicable by analogy to the present case, in accordance with which, where an EU act authorises a Member State to take action, it directly affects the legal situation of the individuals concerned if the exercise by the Member State of its discretionary power is not in doubt.
Moreover, the applicants maintain that the grant of FAF falls within the context of the Union. First of all, that grant was decided by the Euro Group, an EU body, in order to achieve the objectives of the Union. Next, FAF was formally granted by the ESM, a mechanism the need for which was decided by the European Council, the objectives of which are closely aligned with those of the Union, and which is under the control and supervision of the Commission and the ECB. Finally, FAF was accompanied by Decision 2013/236, adopted the day before the signing of the MoU of 26 April 2013.
Thirdly, the applicants state that, in accordance with Article 14.4 of the ECB Statute, the ECB must be informed about all ELA operations and has the right to veto such operations. The fact that the ECB does not have any competence to verify the solvency of banks does not mean that its decision could be arbitrary.
Fourthly, the applicants claim that the liability of the Union is incurred where, acting in the context of the ESM, its institutions infringe EU law, cooperate in adopting an act taken in breach of that law, or fail to ensure compliance of the act in question with that law. The liability of the Union is also incurred on the ground that the defendants approved the harmful measures.
The dispute between the parties raises, in essence, two questions, which the Court will examine in turn. First, the Court is to determine whether the harmful measures, formally attributable to the Republic of Cyprus, are, in reality, attributable to the defendants in whole or in part (see paragraphs 101 to 193 below).
Secondly, the Court is to determine whether certain acts and conduct of the defendants could, irrespective of the question to whom the harmful measures may be attributed, give rise to non-contractual liability on the part of the Union (see paragraphs 194 to 207 below).
1.

The attributability of the harmful measures to the defendants
First of all, it should be noted that the assessment of whether a contested act or contested conduct can be attributed to the defendants may be relevant, first, in the context of the assessment of the Court’s jurisdiction, in so far as that Court does not have jurisdiction to hear actions for compensation for damage imputable not to the ECB, the institutions of the Union within the meaning of the second paragraph of Article 340 TFEU or their servants in the performance of their duties, but to a Member State or other entity external to the EU and, secondly, in the context of the examination of the substance of an action, given that it is one of the elements allowing it to be determined whether one of the three conditions for the EU to incur liability is satisfied, namely the existence of a causal link between the conduct alleged against the ECB, the EU institutions within the meaning of the second paragraph of Article 340 TFEU or their servants in the performance of their duties and the damage alleged (see, to that effect, judgment of 3 May 2017, Sotiropoulou and Others v Council,
T‑531/14
, not published,
EU:T:2017:297
, paragraph
). In the present case, in the light in particular of the parties’ arguments (see paragraphs 87 to 98 above), the Court considers that it is necessary to examine the question of attribution in the context of the examination of the Court’s jurisdiction.
The applicants claim, in essence, that the defendants, in reality, by means of the contested acts (see paragraph 77 above), obliged the Republic of Cyprus to adopt the harmful measures. That would mean that the losses which the applicants, in their capacity as shareholders or depositors of the banks concerned, suffered as a result of those measures can be considered to have been caused by EU institutions within the meaning of the second paragraph of Article 340 TFEU, or their servants in the performance of their duties, which the defendants dispute.
It is necessary, therefore, to examine, in accordance with the case-law cited in paragraphs 81 to 85 above, whether the Council, the Commission, the ECB, and the Euro Group, to the extent that it can be considered to be an institution of the Union within the meaning of the second paragraph of Article 340 TFEU, required, by means of the contested acts (see paragraph 77 above), the adoption of the harmful measures (see paragraphs 104 to 182 below) and, where appropriate, whether the Republic of Cyprus had discretion to reject such a requirement (see paragraphs 183 to 191 below). In that regard, the Court states at the outset that the assessment of whether the contested acts are obligatory and of the economic and financial pressure to which the Republic of Cyprus was confronted relates to the determination of the latter’s discretion. Those questions will therefore, where appropriate, be examined in the part of the present judgment dedicated to that issue.
(a)

The question whether the defendants, by means of the contested acts, required the adoption of the harmful measures
It is necessary to examine each of the contested acts (see paragraph 77 above) in order to determine whether it can be considered that, by one or more of them, the Council, the Commission, the ECB, and the Euro Group, to the extent that it can be considered to be an institution of the Union within the meaning of the second paragraph of Article 340 TFEU, required the adoption of the harmful measures by the Republic of Cyprus.
(1)

The Euro Group Statement of 25 March 2013
The applicants claim, in essence, that, by its statement of 25 March 2013, the Euro Group made the grant of FAF subject to the adoption of the harmful measures.
Before examining the contents of that statement, it is necessary to determine whether the Euro Group can be considered to be an institution of the Union, within the meaning of the second paragraph of Article 340 TFEU. In accordance with the case-law cited in paragraph 82 above, it is only in that case that an act of the Euro Group, such as that statement, can incur the liability of the Union. In that regard, it should be noted that, as was stated in paragraph 82 above, the term ‘institution’ used in the second paragraph of Article 340 TFEU covers not only the institutions of the Union listed in Article 13(1) TEU, but also all other EU bodies established by the Treaty and intended to contribute to the achievement of the EU’s objectives.
The Council and the Commission consider, in essence, that the Euro Group is not an institution of the Union within the meaning of the second paragraph of Article 340 TFEU. In support of that contention, the Council relies, in particular, on paragraph 61 of the judgment of 20 September 2016, Mallis and Others v Commission and ECB (
C‑105/15 P to C‑109/15 P
,
EU:C:2016:702
), from which it is apparent that the Euro Group cannot be equated with a configuration of the Council or be classified as a body, office or agency of the European Union. In so far as the Euro Group is not a configuration of the Council or a body, office or agency of the Union, it cannot incur the non-contractual liability of the latter.
In that regard, it should be noted that, in paragraph 61 of the judgment of 20 September 2016, Mallis and Others v Commission and ECB (
C‑105/15 P to C‑109/15 P
,
EU:C:2016:702
), the Court took care to point out that the Euro Group could not be classified as a body, office or agency of the EU ‘within the meaning of Article 263 TFEU’.
The jurisdiction exercised by the Courts of the European Union in disputes relating to legality under Article 263 TFEU differs both with respect to its purpose and the pleas which may be raised from the jurisdiction they exercise in disputes relating to non-contractual liability under Articles 268 and 340 TFEU (see, to that effect and by analogy, judgment of 14 July 1961, Vloeberghs v High Authority,
9/60 and 12/60
,
EU:C:1961:18
, paragraph
). As the applicants note, the action for damages relating to the European Union’s non-contractual liability for actions or omissions on the part of its institutions was established as an independent form of judicial remedy, having its own particular place in the system of means of redress and subject to conditions for its use formulated in the light of its specific purpose (judgments of 28 April 1971, Lütticke v Commission,
4/69
,
EU:C:1971:40
, paragraph
; of 12 April 1984, Unifrex v Commission and Council,
281/82
,
EU:C:1984:165
, point
, and of 7 June 2017, Guardian Europe v European Union,
T‑673/15
, currently under appeal,
EU:T:2017:377
, point
). Although actions for annulment provided for in Article 263 TFEU seek the abolition of a particular measure, actions for damages based on Article 340 TFEU seek compensation for damage caused by an institution (see, to that effect, judgments of 2 December 1971, Zuckerfabrik Schöppenstedt v Council,
5/71
,
EU:C:1971:116
, paragraph
, and of 18 September 2014, Georgias and Others v Council and Commission,
T‑168/12
,
EU:T:2014:781
, paragraph
).
Therefore, irrespective of its status as a challengeable act amenable to an action for annulment under Article 263 TFEU, any act of an institution of the European Union, for the purposes of the second paragraph of Article 340 TFEU, of the ECB or one of their servants in the performance of their duties is, in principle, capable of forming the subject matter of an action for damages under Article 268 TFEU (see, to that effect, judgment of 18 December 2009, Arizmendi and Others v Council and Commission,
T‑440/03, T‑121/04, T‑171/04, T‑208/04, T‑365/04 and T‑484/04
,
EU:T:2009:530
, paragraph
). Likewise, non-decision-making conduct capable of giving rise to the non-contractual liability of the European Union can form the basis for an action for damages, although it cannot be the subject of an action for annulment (see, to that effect, judgment of 15 January 2003, Philip Morris International v Commission,
T‑377/00, T‑379/00, T‑380/00, T‑260/01 and T‑272/01
,
EU:T:2003:6
, paragraph
).
It follows that, in the system of legal remedies established by the FEU Treaty, actions for non-contractual liability pursue a compensatory purpose, intended in particular to guarantee effective judicial protection to an individual also against acts and conduct of the institutions of the European Union for the purposes of the second paragraph of Article 340 TFEU, of the ECB or one of their servants in the performance of their duties which cannot be the subject of an action for annulment under Article 263 TFEU. Therefore, in the light of the different and complementary purposes of those two types of action, it cannot be considered that the content of the concept of ‘institution’ for the purposes of the second paragraph of Article 340 TFEU is necessarily restricted to institutions, bodies, offices or agencies of the Union referred to in the first paragraph of Article 263 TFEU.
By contrast, the identification of EU entities which can be qualified as an ‘institution’ for the purposes of the second paragraph of Article 340 TFEU must be undertaken according to the criteria relevant to that provision, which are different from those governing the identification of bodies, offices or agencies referred to in the first paragraph of Article 263 TFEU. For the purposes of Article 263 TFEU, the relevant criterion relates to the power of the defendant entity to adopt acts intended to produce legal effects vis-à-vis third parties (see, to that effect, judgment of 23 April 1986, The Greens v Parliament,
294/83
,
EU:C:1986:166
, paragraphs
to
). In contrast, for the purposes of the second paragraph of Article 340 TFEU, it is necessary to determine whether the EU entity responsible for the act or conduct complained of was established by the Treaties and is intended to contribute to the achievement of the Union’s objectives (see, to that effect, judgment of 10 April 2002, Lamberts v European Ombudsman,
T‑209/00
,
EU:T:2002:94
, paragraph
).
Article 137 TFEU and Protocol No 14, of 26 October 2012, on the Euro Group (
OJ 2012 C 326, p. 283
), annexed to the TFEU, make provision, inter alia, for the existence, the composition, the procedural rules and the functions of the Euro Group. In that last regard, Article 1 of that protocol provides that the Euro Group is to meet ‘to discuss questions related to the specific responsibilities [the ministers composing it] share with regard to the single currency’. Those questions concern, under Article 119(2) TFEU, the activities of the European Union for the purposes of the objectives set out in Article 3 TEU, which include the establishment of an economic and monetary union whose currency is the Euro. It follows that the Euro Group is a body of the Union formally established by the Treaties and intended to contribute to achieving the objectives of the Union. The acts and conduct of the Euro Group in the exercise of its powers under EU law are therefore attributable to the European Union.
Any contrary solution would clash with the principle of the Union based on the rule of law, in so far as it would allow the establishment, within the legal system of the European Union itself, of entities whose acts and conduct could not result in the European Union incurring liability.
In those circumstances, it is necessary to determine whether the Euro Group, by its statement of 25 March 2013, required the Republic of Cyprus to adopt the harmful measures. In that regard, first, it should be noted that, in its statement of 25 March 2013, the Euro Group gave, in a very generic way, an account of certain measures which were agreed at a political level with the Republic of Cyprus, in order to stabilise the country’s financial situation, and announced or encouraged certain future measures.
By contrast, the Euro Group did not take any definite decision with regard to the granting of FAF, or with regard to the conditions which the Republic of Cyprus should satisfy to benefit therefrom. In particular, the Euro Group did not state either that FAF would be granted to the Republic of Cyprus only if the latter implemented the harmful measures, or that the plans for restructuring the financial sector as specified in the annex to the statement at issue were regarded as being part of the macroeconomic adjustment programme which the Republic of Cyprus would be required to comply with under Article 12(1) of the ESM Treaty.
Secondly, it is apparent from the statement at issue that the Euro Group considered that it did not have the authority to grant or refuse the assistance requested, but that that authority came within the competence of the ESM Board of Governors. It must therefore be concluded that, contrary to the applicants’ claims and despite the existence of statements in its annex which could be regarded as categorical, including those according to which, first, Laïki is to be immediately resolved, with full contribution of shareholders, bond holders and uninsured depositors, and, secondly, BoC is to be recapitalised through a conversion of uninsured deposits into equity with full contribution of shareholders and bond holders (see paragraph 27 above), the Euro Group statement of 25 March 2013 was of a purely informative nature. The Euro Group merely informed the public of the existence of certain policy agreements and expressed its opinion on the likelihood of the grant of FAF by the ESM (see, to that effect, order of 16 October 2014, Mallis and Malli v Commission and ECB,
T‑327/13
,
EU:T:2014:909
, paragraphs
to
).
Therefore, it cannot be considered that, by its statement of 25 March 2013, Euro Group required the Republic of Cyprus to adopt the harmful measures.
(2)

‘The Euro Group Agreement of 25 March 2013’
As they confirmed in their reply to the Court’s measures of organisation of procedure, the applicants consider also that the Euro Group Statement of 25 March 2013 draws attention to the existence of an agreement of the same date, according to which the members of the Euro Group previously agreed that FAF would be granted to the Republic of Cyprus only if the latter adopted the harmful measures, without any possibility of negotiating them.
The existence of such an agreement is not clearly and unequivocally apparent from the wording of the Euro Group Statement of 25 March 2013. Nevertheless, the applicants deduce the existence of that agreement from certain documents in the case file, including a letter sent by the German Minister of Economy to the German Parliament on 13 April 2013, with a view to obtaining approval of the ESM decision to grant FAF to the Republic of Cyprus. That letter contains the following passage:
‘The Euro Group drew the conclusion that against the background of the refusal of the initial agreement by the Parliament of Cyprus and the uncertainty of developments taking place in the meantime, especially in the Cyprus banking sector, a potential programme could only be considered after implementation of the following measures:
–
dissociation of the Greek branches of the Cypriot banking sector: the largest Greek branches of the Cypriot banks are taken over by the Greek banking sector;
–
winding up of [Laïki] and restructuring of [BoC] without the use of funds from a potential assistance programme … .
The owners and other creditors of the banks are thus involved in the aforesaid restructuring measures as follows:
–
the owners and subordinate loan and bond creditors shall bear losses proportional to their shares and in their entirety;
–
deposits at Laïki … of above EUR 100000 and not subject to bank deposit protection shall contribute to covering the financial needs of winding up measures. Deposits of under EUR 100000 and subject to bank deposit protection shall be transferred to [BoC];
–
value-containing assets of Laïki … shall be transferred to [BoC]. The assets transferred should have a value superior to the liabilities transferred, so that Laïki … thus also contributes to the strengthening of the capital of [BoC];
–
37.5% of the deposits in [BoC] not subject to deposit protection shall be transformed into bank shares. A further 22.5% [of those deposits] can also be transformed into shares should the need arise. The target is to achieve a hard core-capital quota of 9% at [BoC].’
It is apparent from that passage that the German Minister of Economy informed the German Parliament of the existence of an agreement, between the members of the Euro Group, making the grant of FAF subject to the adoption of the harmful measures — or, at least, to measures which are very similar to those measures. The existence of such an agreement is corroborated by several statements made by the Cypriot authorities and witnesses before a commission of inquiry of the Cypriot Parliament.
It must be considered, firstly, that there was an agreement (‘the agreement on conditionality’) between the representatives of the MSCE according to which FAF would be granted to the Republic of Cyprus only if it adopted the harmful measures (or, at the very least, measures which are very similar to those measures), secondly, that that agreement was informal, in so far as it was not concluded on the basis of a given procedure or of a specific legal basis, thirdly, that that agreement was concluded either during a Euro Group meeting of 25 March 2013, or around that date, and, fourthly, that the German Minister of Economy considered that the agreement at issue had been concluded by the Euro Group.
Firstly, it must be noted that, in accordance with the combined provisions of Article 137 TFEU and Article 1 of Protocol No 14 on the Euro Group, the Euro Group is an informal meeting of Ministers of the MSCE, whose objective is to facilitate the exchange of views about questions related to the specific responsibilities they share with regard to the single currency (see, to that effect, order of 16 October 2014, Mallis and Malli v Commission and ECB,
T‑327/13
,
EU:T:2014:909
, paragraph
). That protocol states that Euro Group meetings are to be prepared by the representatives of the Ministers with responsibility for finance of the MSCE and the Commission. In the light of those provisions, it is reasonable to conclude that the Euro Group is, in principle, composed of Ministers with responsibility for finance of the MSCE. As was confirmed by the Council at the hearing, that was so in the present case, since the ministers of the MSCE present at the Euro Group meeting of 25 March 2013 are those responsible for finance.
Secondly, the ESM Board of Governors is, in accordance with Article 5(1) of the ESM Treaty, made up of the finance ministers of the MSCE.
Therefore, as the applicants correctly point out, the members of the ESM Board of Governors and the ministers gathered within the Euro Group are, in principle and in any event in the present case, the same natural persons. It follows that it is, in practice, impossible to determine a priori whether an ‘informal’ agreement, such as the agreement on conditionality, was concluded by those natural persons as representatives of the MSCE within the Euro Group or as members of the ESM Board of Governors.
It should be noted that FAF was granted by the ESM, in accordance with the rules and procedures provided for by the ESM Treaty, and not by the Euro Group.
Therefore, it must be considered that the agreement on conditionality was concluded by the finance ministers of the MSCE meeting on 25 March 2013 as members of the ESM Board of Governors, and not as members of the Euro Group. The mention of the Euro Group in the letter of the German Minister of Economy referred to in paragraph 120 above can be explained by the fact that the representatives of the MSCE at the Euro Group who met on that date are, in principle, the same natural persons as the members of the ESM Board of Governors.
In that regard, it should be added that, by creating the ESM, the MSCE decided to grant that international organisation, which has legal personality, specific and exclusive powers in relation to the grant of financial assistance to MSCE in difficulty. The exercise of those powers is subject to the rules of public international law specific to an organisation for intergovernmental cooperation, EU law being applicable only in so far as the ESM Treaty specifically provides for that application. The MSCE therefore clearly stated that the grant of FAF lies outside of both the sphere of activities of the European Union and its regulatory framework.
The MSCE, admittedly, called on EU institutions, namely the Commission and the ECB, to perform certain tasks on behalf of the ESM. However, the duties conferred on those institutions in the context of the ESM Treaty do not entail any power to make decisions of their own and the activities pursued by those institutions within the ESM Treaty commit the ESM alone (judgments of 27 November 2012, Pringle,
C‑370/12
,
EU:C:2012:756
, paragraph
, and of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraph
).
As regards the Euro Group, unlike the Commission and the ECB, it is not mentioned in the ESM Treaty as a body with the power to perform tasks on behalf of the ESM.
There are therefore no grounds for granting the finance ministers of the MSCE meeting within the Euro Group as members of the latter the power to anticipate or to determine the decisions adopted by the ESM Board of Governors, since that power can be granted to them only as members of that board, even if the agreements relating to the conditions for granting FAF are decided in the context of a Euro Group meeting.
Therefore, it must be concluded that the agreement on conditionality was concluded by the representatives of the MSCE as members of the ESM Board of Governors.
In the light of the above, it cannot be concluded that the Euro Group, by means of the agreement on conditionality, required the adoption of the harmful measures.
(3)

‘The decision of the Governing Council of the ECB of 21 March 2013 to demand payment of ELA on 26 March [2013] unless a rescue package was agreed’
The applicants also refer to the press release of the ECB of 21 March 2013 (see paragraph 23 above). As they stated during the hearing, the applicants consider that that press release announces the decision of the Governing Council of the ECB to demand payment of ELA on 26 March 2013, unless a rescue package was agreed.
To recall, the press release at issue is worded as follows:
‘The Governing Council of the [ECB] decided to maintain the current level of [ELA] until … 25 March 2013.
Thereafter, [ELA] could only be considered if an [EU or IMF] programme is in place that would ensure the solvency of the concerned banks.’
In the first place, it is necessary to determine the scope of that press release. For that purpose, the main rules governing ELA must be noted.
It is apparent from the agreement of 7 February 2013 on ELA that ELA is defined as the provision of ‘central bank money’ or as any other assistance which could result in an increase in ‘central bank money’ to a financial institution, or to a group of financial institutions, confronted with liquidity problems, without those operations being part of the single monetary policy.
According to that agreement, the responsibility for ELA lies with the national central bank concerned, which assumes the costs and the risks. ELA is therefore, in principle, based on a national legal basis. In the present case, it is apparent from the ECB’s plea of inadmissibility and from its response to the Court’s measures of organisation of procedure that ELA was granted to the banks concerned by the CBC on the basis of section 6(2)(e) and section 46(3) of O peri tis Kentrikis Trapezas tis Kyprou nomos tou 2002 (No. 138(I)/2002) (Law 138(I)/2002 on the CBC of 2002). In accordance with the first of those provisions, the CBC is required, in particular, to ensure the stability of the financial system. As regards the second of those provisions, it empowers the CBC to ‘grant advances against collateral security, or make loans against collateral security to banks for fixed periods and for purposes which [it] may designate’.
As is apparent from the letter of the CBC of 25 July 2017 annexed to the ECB’s response to the Court’s measures of organisation of procedure, in a document of 31 January 2011, the Governing Council of the CBC specified the principles and procedures governing the grant of ELA. That document indicates, in particular, that the CBC may apply section 46(3) of Law 138(I)/2002 on the CBC in order to provide temporary assistance to a supervised credit institution which is solvent, but illiquid. That document specifies that such assistance seeks to safeguard financial stability, may be considered only in the event of a potential systemic risk and is in general granted only in exceptional circumstances.
It is also apparent from that document that, as the applicants acknowledge, ELA does not come within the single monetary policy and thus falls within the scope of Article 14.4 of the ECB Statute. That provision is worded as follows:
‘National central banks may perform functions other than those specified in [the ECB Statute] unless the Governing Council finds, by a majority of two thirds of the votes cast, that these interfere with the objectives and tasks of the ESCB. Such functions shall be performed on the responsibility and liability of national central banks and shall not be regarded as being part of the functions of the ESCB.’
In a document entitled ‘ELA Procedures’ and invoked in support of its plea of inadmissibility, the ECB states that, under that provision, the Governing Council of the ECB was assigned the responsibility of restricting ELA operations if it considers that they interfere with the objectives and tasks of the ESCB. For that purpose, the decision of the Governing Council of the ECB of 3 November 2011 on ELA procedures and the agreement of 7 February 2013 on ELA (see paragraph 137 above) provide for an information and cooperation system between the national central banks and the ECB.
Amongst the information which the national central bank must supply, for that purpose, to the ECB concerning any ELA operation, is included ‘the prudential supervisor’s assessment, over the short and medium term, of the liquidity position and solvency of the institution receiving ELA, including the criteria used to come to a positive conclusion with respect to solvency’. That requirement must be understood in the light of the prohibition of monetary financing provided for by Article 123 TFEU, the substance of which is reproduced by Article 21.1 of the ECB Statute. In that regard, the ECB maintains in its plea of inadmissibility that it always considered that the financing of solvent financial institutions by means of ELA was compatible with that prohibition, whereas the financing of insolvent financial institutions was not. The CBC document of 31 January 2011 cited in paragraph 139 above supports that claim, stating that any provision of ELA in case of underlying solvency problems clearly infringes Article 123 TFEU and Article 21.1 of the ECB Statute.
At the time of the facts, the ECB did not have any supervisory powers over EU credit institutions, for which the national supervisors had exclusive competence. In those circumstances, in order to ensure compliance with the prohibition of monetary financing, the ECB was dependent on information supplied by those authorities relating to the solvency of banks benefiting from ELA.
In the second place, it is necessary to examine whether the press release of 21 March 2013 indicates the existence of a decision adopted under Article 14.4 of the ECB Statute, as is claimed in essence by the applicants (see paragraph 134 above), or of a mere declaration of intent, as contends the ECB (see paragraph 90 above).
In that regard, it should be noted that, in accordance with Article 14.4 of the ECB Statute, the Governing Council of the ECB is the body which is competent to forbid a central bank from granting ELA where that interferes with the objectives and tasks of the ESCB. The press release of 21 March 2013 states that the Governing Council of the ECB ‘decided’ to maintain a certain level of ELA until 25 March 2013. It follows, impliedly but necessarily, that, from 26 March 2013, the maintenance of that level of ELA would no longer be authorised and that, as that press release states, ‘[t]hereafter, [ELA] could only be considered if an [EU or IMF] programme is in place that would ensure the solvency of the concerned banks’.
It must therefore be concluded, as the applicants claim, that the press release of 21 March 2013 refers to the existence of a decision of the Governing Council of the ECB opposing the maintenance of the existing level of ELA from 26 March 2013 and making a possible extension to its reimbursement subject to the conclusion of a financial assistance programme ensuring the solvency of the banks concerned (‘the decision of the Governing Council of the ECB of 21 March 2013’).
In the third place, it is necessary to examine whether it can be deduced from that press release of 21 March 2013 that the ECB required the adoption of the harmful measures by the Republic of Cyprus.
In that regard, it must be noted that the press release of 21 March 2013 merely expresses an obligation of results. In that press release, the ECB makes no reference, direct or indirect, to the harmful measures, but merely makes a possible extension to the reimbursement of ELA subject to the conclusion of an EU/IMF programme ensuring the solvency of the banks concerned. That press release in no way specifies the necessary characteristics of such a programme, nor does it mention the Euro Group statements, the ESM measures, or the ongoing negotiations relating to the adoption of the harmful measures.
Contrary to the applicants’ claims, the press article of 17 October 2014 entitled ‘Before a bailout, E.C.B. minutes showed doubts over keeping a Cyprus bank afloat’ in no way calls into question that assessment. That article merely reports that ‘[a] close reading of minutes [of meetings of the Governing Council of the ECB] reveals numerous instances in which ECB officials said they would cut off the programme [of ELA granted to Laïki] if progress was not made by [the Republic of] Cyprus in securing an economic rescue programme’, without at any time maintaining that those officials required that such a programme take a specific form or have particular characteristics.
Assuming them to be proved, the opinions expressed by a member of the ECB Executive Board during the Euro Group meetings of 15 and 16 March 2013 also do not substantiate the applicants’ position. According to a press article of 19 February 2015 entitled ‘[d]id the troika defraud billions at the expense of thousands of depositors in Cyprus?’, to which the applicants refer, that member of the ECB Executive Board threatened to deprive Cypriot banks of access to ELA. However, it is not apparent from the opinions reported by that article that that member of the ECB Executive Board thereby understood making the extension to the ECB’s non-opposition to maintaining ELA subject to the adoption of the harmful measures. At the most, it can be considered, in the light of testimony before an investigating committee of the Cypriot Parliament made by the Minister for Finance of the Republic of Cyprus at the time of the facts, that those opinions related to the introduction of a levy on Cypriot bank deposits. That levy, whose introduction was rejected by the Cypriot Parliament on 19 March 2013 (see paragraph 22 above), is not included among the harmful measures.
In those circumstances, it must be concluded that, as the ECB, in essence, maintains, the press release of 21 March 2013 leaves the Republic of Cyprus the option of taking measures other than the harmful measures for the purpose of ensuring the solvency of the banks concerned (see, to that effect and by analogy, order of 14 July 2016, Alcimos Consulting v ECB,
T‑368/15
, not published,
EU:T:2016:438
, paragraph
). It cannot therefore be considered that, by that press release or by the decision referred to therein, the ECB required that the Republic of Cyprus adopt those measures.
(4)

‘[Decisions] to continue the granting of ELA’, allegedly adopted by the ECB
The applicants make a distinction between the decision of the Governing Council of the ECB of 21 March 2013 (see paragraphs 134 to 151 above) and what they classify as decisions of the ECB ‘to continue the granting of ELA’. During the hearing, the applicants stated that those decisions were prior to the press release of 21 March 2013.
At that time, ELA came within the competence solely of the national supervisors (see paragraphs 137 to 143 above), since the Governing Council of the ECB, in this case, has competence only to restrict the operations of ELA which it considers interfered with the objectives and tasks of the ESCB. It must therefore be concluded that the ECB measures referred to by the applicants are those by which the ECB decided, prior to 21 March 2013, not to oppose ELA.
However, the applicants in no way explain how the ECB, by such decisions, required the adoption of the harmful measures by the Republic of Cyprus. On the contrary, the applicants themselves acknowledged during the hearing that they invoked those decisions simply to highlight the allegedly arbitrary nature of the decision of the Governing Council of the ECB of 21 March 2013.
It cannot therefore be considered that, by ‘decisions to continue the granting of ELA’ prior to the press release of 21 March 2013, the ECB required the Republic of Cyprus to adopt the harmful measures.
(5)

Subsequent acts
Among the contested acts (see the fifth and sixth indents of paragraph 77 above) are also the following four groups of acts:
–
the negotiation and conclusion of the MoU of 26 April 2013 by the Commission;
–
the ‘Commission’s findings that the measures adopted by the Cypriot authorities complied with conditionality’ and the approval, by the Commission and the ECB, of the payment of various tranches of FAF to the Republic of Cyprus;
–
the Euro Group Statements of 12 April, 13 May and 13 September 2013;
–
Decision 2013/236.
Those acts postdate 29 March 2013 and, therefore, the adoption of the harmful decrees. It is, therefore, not possible to consider that the defendants, by means of those acts, required the adoption of the harmful measures set out in those decrees. At the most, they could thus have required the adoption of the harmful measures introduced by the amendments made to the harmful decrees on 30 July 2013 and referred to in paragraphs 33 and 34 above. The applicants claim, however, that all of the contested acts are part of a ‘continuum’, beginning with the defendants’ conduct which led to the adoption of the agreement on conditionality and continuing with their various interventions before and after the signing of the MoU of 26 April 2013. During the hearing, the applicants pointed out that each of those acts and conduct was a ‘necessary link in the chain of conditionality’. In those circumstances, the defendants’ refusal to adopt one of those acts would have meant the failure of the harmful measures, which could not then have been, or could no longer be, implemented.
The applicants’ arguments amount, in essence, to considering that the adoption, by the defendants, of each of the acts referred to in paragraph 156 above was a necessary condition for the maintenance or continued implementation, by the Republic of Cyprus, of the harmful measures. It must, however, be noted that that line of argument remains speculative, since the applicants failed to adduce any evidence seeking to establish the truth or even the likelihood thereof. It is not apparent from the documents in the case file that the Republic of Cyprus would have been required to revoke or cease implementing the harmful measures if any one of the subsequent acts referred to in paragraph 156 above had not been adopted.
It is, however, possible to interpret the applicants’ written submissions before the Court, and in particular their argument that the Republic of Cyprus would not, without infringing certain of those later acts, have repealed the Law of 22 March 2013 and the harmful decrees or ceased to implement the harmful measures introduced on 29 March 2013, as meaning that the defendants obliged the Republic of Cyprus to maintain or continue to implement those measures. The harm alleged results therefore not only from the adoption of the harmful measures, but also from the maintenance and continued implementation thereof.
It is therefore necessary to examine whether the defendants, by adopting the acts referred to in paragraph 156 above, required the Republic of Cyprus to maintain or continue to implement the harmful measures introduced on 29 March 2013. It will also be examined whether the defendants, by means of those acts, required the adoption of the harmful measures introduced by the amendments made to the harmful decrees on 30 July 2013 and referred to in paragraphs 33 and 34 above.
In the first place, concerning the conclusion of the MoU of 26 April 2013 by the Commission, it should be pointed out that the measures specified in that MoU are divided into three groups, each of which relating to a different objective, namely, firstly, restoring the health of the Cypriot financial system and rebuilding depositors’ and market confidence, secondly, continuing the fiscal consolidation process and, thirdly, implementing structural reforms.
The harmful measures are referred to in the context of the first of those three groups. They are described, first of all, briefly under the heading ‘Progress to date’ and then in more detail, in paragraphs 1.23 to 1.28 of the MoU of 26 April 2013 (see paragraph 42 above).
First of all, it is necessary to examine the argument of the ECB and the Commission, according to which the harmful measures are listed in that MoU for purely historical and descriptive purposes (see paragraph 87 above).
In that regard, firstly, it is stated in recitals D and F of the MoU of 26 April 2013, first, that FAF is granted to the Republic of Cyprus on condition that it comply with the measures set out therein and, secondly, that the ESM’s Board of Directors must decide, on the basis of Commission reports and before making each payment, whether those measures were complied with. Contrary to what is contended by the Commission, there are no provisions of the MoU of 26 April 2013 which state that the Republic of Cyprus may restrict itself to adopting certain new measures. It follows rather from a reading of that MoU that the implementation of all the measures set out therein, and therefore also the maintenance of those which had already been adopted prior to its signing, was considered to be necessary.
Secondly, in paragraphs 1.23 to 1.28 of the MoU of 26 April 2013, measures which have already been adopted are mentioned together with measures to be adopted. However, there would be no reason for the latter in the absence of measures which have already been adopted. Therefore, it is stated, in paragraph 1.26 of the MoU 26 April 2013, that the recapitalisation of BoC was carried out by means, in particular, of conversion of uninsured deposits into shares (measure already adopted) and, in paragraph 1.27 of that memorandum, that if, following a valuation of the capital requirements of BoC which should be carried out subsequently, it is considered that BoC is undercapitalised, a greater amount of uninsured deposits will need to be converted into shares, whereas, if it is considered that BoC is overcapitalised, the uninsured depositors will have a right to a refund (measures to be adopted).
Therefore, it is necessary to reject the argument of the Commission and the ECB that the harmful measures are listed in the MoU of 26 April 2013 for purely historical and descriptive purposes and, therefore, to consider that paragraph 1.26 of that MoU requires the maintenance of the harmful measures introduced on 29 March 2013 as a condition for the grant of FAF. As regards paragraph 1.27 of that memorandum, it concerns additional conversions of BoC deposits into shares, such as they were introduced on 30 July 2013 by the amendments to Decree No 103 referred to in paragraph 33 above.
However, it should be noted that the Commission signed the MoU of 26 April 2013 on behalf of the ESM, in accordance with Article 13(4) of the ESM Treaty. As was noted in paragraph 129 above, the duties conferred on the Commission and the ECB in the context of the ESM Treaty do not entail any power to make decisions of their own and the activities pursued by those institutions within the ESM Treaty commit the ESM alone (judgments of 27 November 2012, Pringle,
C‑370/12
,
EU:C:2012:756
, paragraph
, and of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraph
). Therefore, the requirement to maintain and continually implement the harmful measures, as well as the possible requirement for additional conversions of BoC shares, included in that MoU are attributable only to the ESM and not to the Commission.
It follows from the above that, by concluding the MoU of 26 April 2013, the Commission did not require either the maintenance or the continued implementation of the harmful measures introduced on 29 March 2013 by the Republic of Cyprus, but restricted itself to providing operational assistance to the ESM with a view to the conclusion of an agreement for which only the ESM and the Republic of Cyprus are responsible. The same conclusion must be reached as regards the harmful measures introduced on 30 July 2013 by the amendments made to the harmful decrees and referred to in paragraphs 33 and 34 above.
In the second place, even assuming that they can be considered to have required the maintenance or continued implementation of the harmful measures or the adoption of the harmful measures introduced on 30 July 2013 by the amendments made to the harmful decrees and referred to in paragraphs 33 and 34 above, the finding, by the Commission that ‘the measures adopted by the Cypriot authorities complied with conditionality’ and the approval, by the Commission and the ECB, of the payment of various tranches of FAF to the Republic of Cyprus (see the second indent of paragraph 156 above), are, for reasons similar to those set out in paragraphs 167 and 168 above, attributable only to the ESM. Where, under Article 13(7) of the ESM Treaty, the Commission, in liaison with the ECB, is to monitor compliance with the conditionality attached to FAF, it merely performs an operational task on behalf of the ESM, which alone has decision-making powers.
In the third place, as regards the Euro Group Statements of 12 April, 13 May and 13 September 2013 (see the third indent of paragraph 156 above), it must be noted that, in those statements, the Euro Group makes no reference to the need to maintain or continue to implement the harmful measures so that the Republic of Cyprus may be able to benefit from the different tranches of FAF granted by the ESM. It also makes no reference to the need to adopt the harmful measures introduced on 30 July 2013 by the amendments made to the harmful decrees and referred to in paragraphs 33 and 34 above. In those statements, the Euro Group merely, in essence, very briefly describes and welcomes certain measures adopted by the Cypriot authorities, and expresses the opinion that those measures are likely to contribute to reducing the financial difficulties confronting the Republic of Cyprus. The Euro Group also describes, in those statements, the past and future stages of the financial assistance procedure and expresses, in particular, its support for the payment of a new tranche of aid.
Therefore, it cannot be considered that, by the statements of 12 April, 13 May and 13 September 2013, the Euro Group required the maintenance or the continued implementation of the harmful measures or the adoption of the harmful measures introduced on 30 July 2013 by the amendments made to the harmful decrees and referred to in paragraphs 33 and 34 above.
In the fourth place, as regards Decision 2013/236 (see the fourth indent of paragraph 156 above), by which the Council ‘approve[d] and incorporate[d] into the main body of EU law’ the allegedly unlawful conditions for granting FAF, it must be noted that, contrary to what is claimed, in essence, by the applicants, not all of the harmful measures are specifically mentioned therein. Only recitals 5 and 9 and Article 2(6) of that decision, which do not refer to the majority of the harmful measures directly, relate to questions connected with those measures.
Recital 5 of Decision 2013/236 contains a passage drafted in the following terms:
‘On 25 March 2013, the Euro [G]roup reached a political agreement with the Cypriot authorities on the cornerstones of a macroeconomic adjustment programme. The banking sector was to be restructured and downsized … In addition, the recapitalisation of the two largest banks was to be exclusively generated from within those banks (i.e. from shareholders, bondholders and depositors).’
Recital 9 of Decision 2013/236 is worded as follows:
‘Enhancing the long-term resilience of the Cypriot banking sector is critical to restoring financial stability in Cyprus and consequently, given the strong links, to preserving financial stability in the euro area as a whole. Substantial downsizing and restructuring of the Cypriot banking sector is under way. The Cypriot House of Representatives adopted legislation establishing a comprehensive framework for the recovery and resolution of credit institutions. Using that new framework, the Cypriot banking sector has been downsized immediately and significantly. To preserve the liquidity of the Cypriot banking sector, temporary administrative measures have been imposed, including capital controls.’
In those two recitals, the Council describes, in a generic way, the attempts to restructure the financial sector already implemented by the Cypriot authorities, but does not provide details about the contents of the harmful measures introduced on 29 March 2013, except by a general reference to the role of the shareholders and depositors of the banks covered by the recapitalisation, nor does it state that those measures must be maintained or that the Cypriot authorities must continue to implement them. The Council also does not refer more specifically to the harmful measures introduced on 30 July 2013 by the amendments made to the harmful decrees and referred to in paragraphs 33 and 34 above.
Article 2(6) of Decision 2013/236 provides:
‘With a view to restoring the soundness of its financial sector, [the Republic of] Cyprus shall continue to thoroughly reform and restructure the banking sector and reinforce viable banks by restoring their capital, addressing their liquidity situation and strengthening their supervision. The programme shall provide for the following measures and outcomes:
(a)
ensuring that the liquidity situation of the banking sector shall be closely monitored. The recently-imposed temporary restrictions on the free movement of capital … shall be closely monitored. The goal is that controls shall remain in place only for as long as is strictly necessary … . The medium-term funding and capital plans of domestic banks relying on central bank funding or receiving State aid should realistically reflect the anticipated deleveraging in the banking sector, and reduce dependency on borrowing from the central banks, while avoiding asset fire sales and a credit crunch. The regulations on the minimum liquidity requirements shall be updated to prevent excessive issuer concentration in the future;
(b)
establishing an independent valuation of the assets of [the banks concerned] and quickly integrating the operations of [Laïki] into [BoC]. The valuation shall be completed quickly so as to enable the completion of the deposit-equity swap at [BoC];
(c)
adopting the necessary regulatory requirements regarding an increase in the minimum core Tier 1 capital adequacy ratio to 9% by the end of 2013;
(d)
taking steps to minimise the cost to taxpayers of bank restructuring. Undercapitalised commercial and cooperative credit institutions shall raise, to the largest extent possible, capital from private sources before State aid measures are granted. Any restructuring plans shall be formally approved under State aid rules, before such State aid is provided. …;
(e)
ensuring that a credit register is created …;
(f)
strengthening banks’ governance, including by prohibiting lending to independent board members or their connected parties;
(g)
maximising recovery for non-performing loans, while minimising incentives for strategic default by borrowers …;
(h)
aligning the regulation and supervision of cooperative credit institutions to those of commercial banks;
(i)
ascertaining the viability of cooperative credit institutions and developing, in consultation with the Commission, the ECB and the IMF, a strategy for the future structure, functioning and viability of the cooperative credit institution sector … by mid-2015;
(j)
enhancing the monitoring of the indebtedness of the corporate and household sectors and establishing a framework for targeted private sector debt restructuring …;
(k)
… enhancing the anti-money laundering framework and ensuring full entity …;
(l)
introducing mandatory supervision based on capitalisation levels;
(m)
integrating stress-testing into … bank supervision; and
(n)
implementing a unified data reporting system for banks and credit institutions.’
Among those ‘measures and outcomes’, the only ones which can be considered to relate to the harmful measures are those referred to, first, in Article 2(6)(b) of Decision 2013/236 and relating to the integration of Laïki into BoC and to the conversion of deposits into shares in BoC, and, secondly, in Article 2(6)(d) of that decision and relating to the minimisation of the cost to taxpayers of bank restructuring.
As regards, first of all, the integration of Laïki into BoC, it must be pointed out that Article 2(6)(b) of Decision 2013/236 merely identifies, in general terms, a measure which the Republic of Cyprus was required to adopt. That provision does not state that the integration of Laïki into BoC must be carried out according to the specific rules. The Cypriot authorities enjoyed, at least, a wide margin of discretion for the purposes of defining those rules. The integration of Laïki into BoC was not, in itself, capable of being vitiated by one of the illegalities about which the applicants complain. At most, the rules for the implementation of that measure could contain such an illegality. Consequently, even if established, the harm which the applicants consider to have suffered as a result of the integration of Laïki into BoC results not from Article 2(6)(b) of Decision 2013/236, but from the implementing measures adopted by the Republic of Cyprus in order to implement that integration.
As regards, next, the minimisation of the cost to tax payers of bank restructuring, it should be noted that Article 2(6)(d) of Decision 2013/236 is restricted to, first, requiring, in general terms, the adoption of measures for that purpose and, secondly, to requiring that undercapitalised commercial and cooperative credit institutions raise, to the largest extent possible, capital from private sources before State aid measures are granted. Article 2(6)(d) of decision 2013/236 does not refer to any specific measure to be implemented for that purpose and thus grants the Republic of Cyprus a wide margin of discretion in that regard. That interpretation is supported by the fact that that provision relates to both commercial and cooperative credit institutions, whereas only the former were the subject of the harmful measures. Therefore, that provision cannot be read as requiring the maintenance or continued implementation, by the Republic of Cyprus, of the harmful measures.
As regards, finally, the conversion of deposits in BoC into shares, it must be noted that Article 2(6)(b) of Decision 2013/236 requires an independent valuation of the assets of the banks covered to be completed in a deadline to enable the completion of that conversion. It follows therefrom, implicitly but necessarily, that, without prejudice to the practicability of such an exercise, Article 2(6)(b) of Decision 2013/236 does not permit the Cypriot authorities to revoke the conversion of deposits in BoC into shares. In the circumstances of the case and, in particular, in light of the financial position of the banks referred to, the requirement to maintain or continue to implement that conversion was, irrespective of its precise rules, capable of involving one or more of the illegalities invoked by the applicants.
Therefore, it must be concluded that the Council, by means of Article 2(6)(b) of Decision 2013/236, required the Republic of Cyprus to maintain or continue to implement the harmful measure consisting in the conversion of uninsured deposits in BoC into shares. By contrast, the Council did not, by adopting Decision 2013/236, require the maintenance or continued implementation, by the Republic of Cyprus, of the other harmful measures introduced on 29 March 2013 or the adoption of those introduced after that date by the amendments made to the harmful decrees and referred to in paragraphs 33 and 34 above.
It is therefore necessary, in accordance with the considerations set out in paragraph 103 above, to examine whether the Republic of Cyprus had a margin of discretion to escape the requirement to maintain or continue to implement the harmful measure referred to, at least implicitly, in Article 2(6)(b) of Decision 2013/236 and relating to the conversion of deposits in BoC into shares.
(b)

The question whether the Republic of Cyprus had a margin of discretion to escape the requirement to maintain or continue to implement the measure consisting in the conversion of deposits in BoC into shares
Decision 2013/236 was adopted by the Council, on a proposal from the Committee, citing the ‘Treaty on the Functioning of the European Union, and in particular Article 136(1) in conjunction with Article 126(6) thereof’. That decision was published in the L series of the
Official Journal of the European Union
, which is intended for the publication of legally binding acts.
In that regard, it must be noted that Article 136(1) TFEU provides:
‘In order to ensure the proper functioning of economic and monetary union, and in accordance with the relevant provisions of the Treaties, the Council shall, in accordance with the relevant procedure from among those referred to in Articles 121 and 126, with the exception of the procedure set out in Article 126(14), adopt measures specific to those [MSCE]:
(a)
to strengthen the coordination and surveillance of their budgetary discipline;
(b)
to set out economic policy guidelines for them, while ensuring that they are compatible with those adopted for the whole of the Union and are kept under surveillance.’
Article 126(6) TFEU, which concerns the procedure under which Decision 2013/236 was adopted, provides that the Council, on a proposal from the Commission, and having considered any observations which the Member State concerned may wish to make, is to ‘decide’ after an overall assessment whether an excessive deficit exists in that Member State.
Decision 2013/236 therefore constitutes a decision for the purposes of the fourth paragraph of Article 288 TFEU. As such, when it was in force, that decision was mandatory for the Republic of Cyprus in its entirety, including Article 2(6)(b) thereof.
The mandatory character of Decision 2013/236 is confirmed by its wording and substance, as well as by its context and by the intention of its author. In the first place, although recitals 7, 10, 11, 13 and 14 are drafted in the conditional, its provisions are entirely worded in mandatory terms, as is evidenced by the systematic use of the word ‘shall’ in Articles 1 and 2 (see, to that effect, judgment of 5 September 2012, Rahman and Others,
C‑83/11
,
EU:C:2012:519
, paragraph
). Thus, Article 1(1) of Decision 2013/236 provides that the Republic of Cyprus ‘shall rigorously implement a macroeconomic adjustment programme …, the main elements of which are laid down in Article 2 of this Decision’. In particular, as was already noted in paragraph 176 above, Article 2(6) of that decision provides that ‘[the Republic of Cyprus] shall continue to thoroughly reform and restructure the banking sector and reinforce viable banks by restoring their capital, addressing their liquidity situation and strengthening their supervision’. To that effect, the macroeconomic adjustment programme ‘shall provide’, as was noted in paragraphs 176 and 177 above, for ‘measures and outcomes’, including the measure consisting in rapidly carrying out an independent valuation of the assets of the banks concerned in order to allow the conversion of deposits in BoC into shares.
In the second place, it is apparent from the Council’s written submissions before the Court that Decision 2013/236 was intended to produce legally binding effects and that the Council intended to grant it such effects. In that regard, firstly, the Council expressly acknowledges having judged it necessary, when adopting that decision, to ‘address to [the Republic of] Cyprus an act with legally binding effects’.
Secondly, it must be noted that Decision 2013/236 was adopted on 25 April 2013, that is to say, first, the day after the meeting of 24 April 2013, during which the ESM Board of Governors, in particular, decided to grant stability support to the Republic of Cyprus in the form of FAF and approved a new draft MoU, and, secondly, the day before the signing of the MoU of 26 April 2013 (see paragraphs 39 to 41 above).
In that context, according to the Council’s response to the Court’s measures of organisation of procedure, Decision 2013/236 reflects ‘a common practice that has developed since the beginning of the crisis of the euro area, according to which conditionality attached to assistance — that has been agreed intergovernmentally between the beneficiary Member State and the ESM — is coupled with Council Decisions based on Article 136 TFEU’ for the purpose of ‘ensur[ing] the correspondence and consistency between the intergovernmental and Union spheres of action’.
It follows from the above that, under Article 2(6)(b) of Decision 2013/236, the Republic of Cyprus had no margin of discretion to revoke the conversion of deposits in BoC into shares.
(c)

Conclusion on the attributability to the defendants of the adoption, maintenance and continued implementation of the harmful measures
In the light of all the foregoing considerations, it must be concluded that the maintenance or continued implementation, by the Republic of Cyprus, of the harmful measure consisting in the conversion of uninsured deposits in BoC into shares is, at least in part, attributable to the Union. Consequently, the Court has jurisdiction to hear the present action in so far as it relates to that measure, as set out in Article 2(6)(b) of Decision 2013/236.
By contrast, without it being necessary to examine whether the Republic of Cyprus had a margin of discretion in that regard, it must be concluded that the adoption, maintenance and continued implementation of the other harmful measures cannot be attributed to the defendants. The Court therefore does not have jurisdiction to rule on that issue in the context of the present action.
2.

The liability of the Union as a result of certain acts and conduct of the defendants
The applicants’ arguments can be interpreted as meaning that, irrespective of whether the adoption of the harmful measures or, possibly, their maintenance or continued implementation is attributable to the defendants, certain acts or conduct of the latter connected with the grant of FAF incurred liability on the part of the Union. At issue are, firstly, acts and conduct by which the harmful decrees, according to the applicants, were ‘approved by the Commission, the ECB, Euro Group and the Council’, secondly, conduct of the Commission and the ECB relating to the MoU of 26 April 2013, thirdly, the communication, by the defendants and in particular by the Euro Group, of precise assurances that the harmful measures would not be adopted and, fourthly, various decisions adopted by the ECB concerning ELA which benefited Laïki.
It must be determined, in relation to each of those acts or conduct, whether it is capable of incurring liability on the part of the Union.
Firstly, as regards the alleged approval of the harmful decrees by the defendants (see paragraph 194 above), it must be noted that the applicants fail to precisely describe the acts or conduct they refer to, but merely refer to the ‘conditionality which the defendant institutions endorsed and approved by agreeing to the granting of financial assistance’. It is, however, possible to deduce from the structure of their arguments that they thereby refer, first of all, to the monitoring, by the Commission and the ECB, of the implementation of the harmful measures in accordance with Article 13(7) of the ESM Treaty and, then, to the monitoring, by the Commission and the ECB, of the implementation of the macroeconomic adjustment programme in accordance with Article 1(2) of Decision 2013/236, and, finally, to the Euro Group Statements of 12 April and 13 May 2013. In support of those arguments, the applicants rely on the judgment of 14 July 1967, Kampffmeyer and Others v Commission (
5/66, 7/66, 13/66 to 16/66 and 18/66 to 24/66
, not published,
EU:C:1967:31
, p.
), from which it follows that the liability of the Union can be incurred as a result of the approval, by the EU institutions, of acts which caused harm to an applicant.
In that regard, first of all, the Court notes that the monitoring, by the Commission and the ECB, of the implementation of harmful measures under Article 13(7) of the ESM Treaty will be examined with the other conduct of those institutions relating to the MoU of 26 April 2013 (see paragraphs 201 to 204 below).
Next, it must be noted that the monitoring, by the Commission and the ECB, of the implementation of the macroeconomic adjustment programme under Article 1(2) of Decision 2013/236 comes within the own competence of the EU institutions having been granted to them by EU law and, therefore, is capable of incurring the liability of the Union.
Finally, as regards the Euro Group Statements of 12 April and 13 May 2013, it should be noted that, as was pointed out in paragraph 113 above, Article 1 of Protocol No 14, of 26 October 2012, on the Euro Group provides that the Euro Group is to meet ‘to discuss questions related to the specific responsibilities [the ministers composing it] share with regard to the single currency’. Those questions concern, under Article 119(2) TFEU, the activities of the European Union for the purposes of the objectives set out in Article 3 TEU, which include the establishment of an economic and monetary union whose currency is the Euro.
In its statements of 12 April and 13 May 2013, the Euro Group merely described very briefly and welcomed certain measures adopted by the Cypriot authorities and expressed the opinion that those measures were, in particular, liable to contribute to alleviating the financial difficulties which confronted the Republic of Cyprus (see paragraph 170 above). In the light of the matters noted in paragraph 199 above, it cannot be considered that the expression of such an opinion by the Euro Group is beyond the competences granted to it by EU law. Consequently, it is capable of incurring the liability of the Union.
Secondly, the applicants refer to various forms of conduct of the Commission and the ECB relating to the MoU of 26 April 2013, namely the negotiation and signing of the MoU of 26 April 2013 by the Commission and the monitoring of the implementation of the harmful measures by the ECB and the Commission under Article 13(7) of the ESM Treaty. In that regard, it must be noted that the tasks conferred on the Commission and on the ECB by the ESM Treaty do not alter the essential character of the powers conferred on those institutions by the EU Treaty and the FEU Treaty. As regards, in particular, the Commission, Article 13(3) and (4) of the ESM Treaty imposes on it the obligation to ensure compliance with EU law of the Memorandums of Understanding concluded by the ESM, so that it retains, in the context of the ESM Treaty, its role as Guardian of the Treaties, as follows from Article 17(1) TEU, according to which it ‘shall promote the general interest of the Union’ and ‘shall oversee the application of Union law’. It is therefore required to refrain from signing an MoU whose consistency with EU law it doubts (see, to that effect, judgment of 20 September 2016, LedraAdvertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
to
).
Consequently, an applicant is entitled to rely as against the Commission on unlawful conduct related to the adoption of the MoU of 26 April 2013 on behalf of the ESM in the context of an action for damages (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraph
).
Contrary to what is contended by the ECB, it cannot be deduced from the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), that the Commission’s unlawful conduct connected with the adoption of a MoU is the only unlawful conduct of an EU institution in the context of the ESM treaty which is capable of incurring non-contractual liability on the part of the Union. First of all, the Court held in that judgment that the legal nature of acts of the ESM, which commit the ESM alone and fall outside the EU legal order, could not prevent unlawful conduct linked, as the case may be, to the adoption of a MoU on behalf of the ESM from being raised against the Commission and the ECB in an action for non-contractual liability (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
to
). Next, although it is true that Article 17(1) TEU and Article 13(3) and (4) of the ESM Treaty impose obligations on the Commission which are not attributable to the ECB (see paragraph 201 above), the fact nonetheless remains that, by its functions under the ESM Treaty, the ECB lends its support to the general economic policies in the Union under Article 282(2) TFEU (judgment of 27 November 2012, Pringle,
C‑370/12
,
EU:C:2012:756
, paragraph
). Finally, it should be noted that, like the Commission, the ECB is required to comply with the Charter of Fundamental Rights of the European Union (‘the Charter’) when it acts outside of the Union legal framework (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraph
). It follows that the unlawful conduct connected with the monitoring of the application of the harmful measures by the ECB and by the Commission can be used against them in the context of an action for damages.
The negotiation and signing of the MoU of 26 April 2013 by the Commission, and the monitoring of the implementation of the harmful measures by the ECB and the Commission under Article 13(7) of the ESM Treaty are thus capable of incurring the liability of the Union.
Thirdly, as regards the communication, by the defendants, and in particular by the Euro Group, of precise assurances that the harmful measures would not be adopted, it should be noted that the principle of the protection of legitimate expectations is a superior rule of EU law for the protection of individuals (see, to that effect, judgment of 19 May 1992, Mülder and Others v Council and Commission,
C‑104/89 and C‑37/90
,
EU:C:1992:217
, paragraph
), the infringement of which by an institution of the Union may incur the liability of the Union (see, to that effect, judgment of 26 June 1990, Sofrimport v Commission,
C‑152/88
,
EU:C:1990:259
, paragraph
).
Consequently, the communication, by the defendants, and in particular by the Euro Group, of precise assurances that the harmful measures would not be adopted is capable of incurring the liability of the Union.
Fourthly, the decisions adopted by the ECB concerning ELA are measures adopted by an institution of the Union in the exercise of an own competence granted to it by EU law and, therefore, are capable of incurring the liability of the Union.
3.

Conclusion on the jurisdiction of the Court
In the light of all the foregoing, it must be concluded that the Court has jurisdiction to hear the present action in so far as it relates, firstly, to the alleged approval of the harmful decrees by the defendants, secondly, to the obligation to maintain or to implement the conversion of uninsured deposits in BoC into shares as follows from Article 2(6)(b) of Directive 2013/236, thirdly, to the negotiation and signing, by the Commission, of the MoU of 26 April 2013, fourthly, to the monitoring, by the Commission and the ECB, of the application of the harmful measures under Article 13(7) of the ESM Treaty, fifthly, to the alleged communication of precise assurances, by the defendants, and in particular by the Euro Group, that the harmful measures would not be adopted and, sixthly, to the decisions adopted by the ECB concerning ELA.
B.

Admissibility
The Council, the Commission and the ECB contend that the present action is, in whole or in part, inadmissible. Their arguments relate, first, to compliance with the applicable formal requirements (see paragraphs 210 to 234 below) and, secondly, to the failure to exhaust domestic remedies (see paragraphs 235 to 242 below).
1.

Compliance with the formal requirements
The Council and the ECB contend that the action does not comply with the applicable formal requirements. Firstly, the ECB states that the action does not respect the requirements provided for in Article 44(1) of the Rules of Procedure of 2 May 1991. First of all, the applicants failed to establish the existence of any causal link between the allegedly unlawful conduct attributed to the defendants and the alleged harm. In particular, the applicants fail to explain how the ECB, in the light of its purely advisory role in relation to the adoption of the harmful measures, could have been responsible for the harm alleged. Next, the applicants fail to sufficiently describe the harm which they claim to have suffered, in so far as they omit to show that they would have lost a smaller share of their deposits if the banks concerned had been put into liquidation instead of being subject to the bail-in measures. Finally, the applicants’ legal arguments are so weak that the unlawfulness alleged of the measures taken by the ECB is insufficiently substantiated.
Secondly, the Council contends that the application fails to satisfy the requirements of the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union and Article 44(1)(c) of the Rules of Procedure of 2 May 1991 to the extent that it concerns Decision 2013/236. The application does not make it possible to identify with the required degree of precision the unlawfulness which the applicants consider vitiates that decision, the reasons why they consider that a causal link exists between that unlawfulness and the harm they allege to have suffered, or the precise scope of the Council’s involvement in creating that harm. The Council concludes therefrom that the action is inadmissible in so far as it relates to that decision.
The applicants contend that those pleas of inadmissibility should be rejected.
Firstly, they claim that the application establishes a causal link between the unlawful conduct of the defendant institutions and the harm which they suffered. As regards, in particular, the ECB’s argument relating to the description of the harm, the applicants consider that it concerns the substance and not the admissibility of the action.
Secondly, they maintain that they have set out the grounds why Decision 2013/236, which integrates the conditions for FAF into EU law, is unlawful and caused the alleged harm.
In that regard, it should be noted that, under the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union and Article 44(1)(c) of the Rules of Procedure of 2 May 1991, the wording of which is identical to that of Article 76(1)(d) of the Rules of Procedure, every application must contain the subject matter of the dispute, the form of order sought and a brief statement of the pleas in law on which it is based. That statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application, if necessary, without any further information. In order to ensure legal certainty and the sound administration of justice, if an action is to be admissible, the essential facts and law on which it is based must be apparent from the text of the application itself, even if only stated briefly, provided the statement is coherent and comprehensible (order of 28 April 1993, De Hoe v Commission,
T‑85/92
,
EU:T:1993:39
, paragraph
, and judgment of 15 June 1999, Ismeri Europa v Court of Auditors,
T‑277/97
,
EU:T:1999:124
, paragraph
).
In order to meet those requirements, an application seeking compensation for damage allegedly caused by the ECB, the EU institutions within the meaning of the second paragraph of Article 340 TFEU or by their servants in the performance of their duties must state the evidence from which the conduct alleged against the defendant can be identified, the reasons for which the applicant considers that there is a causal link between the conduct and the damage it claims to have suffered, and the nature and extent of that damage (see judgments of 18 September 1996, Asia Motor France and Others v Commission,
T‑387/94
,
EU:T:1996:120
, paragraph
, and of 29 January 1998, Dubois et Fils v Council and Commission,
T‑113/96
,
EU:T:1998:11
, paragraph
).
The Court considers that, before examining the parties’ arguments referred to in paragraphs 210 to 214 above in the light of that case-law and even assuming that it can be considered that the applicants’ allegations concerning the bail-in to which the shareholders of Laïki were made subject relate to acts or conduct with respect to which the Court has jurisdiction, it must be noted that those allegations are too imprecise for the Court to be able to assess them. The applicants merely, in essence, allege that the actions of Laïki were, as a result of the harmful measures, ‘extinguished’ without financial compensation or that their economic value was ‘completely extinguished’.
It is apparent from the documents in the case file and, in particular, the evidence referred to in paragraphs 30 to 36 above, that the harmful decrees do not provide that the actions of Laïki be subject to a bail-in. In those circumstances, the applicants’ arguments do not explain how the defendants could, by lending their support to the harmful measures included in the harmful decrees, have contributed to the harm of which the shareholders of Laïki were victims. It follows that, in accordance with the case-law cited in paragraphs 215 and 216 above, the present action is manifestly inadmissible in so far as it relates to compensation for the harm suffered by the applicants as a result of the alleged extinguishment of Laïki shares.
That having been clarified, it is necessary to verify whether the present action complies with the formal requirements described in paragraphs 215 and 216 above in so far as it relates to the acts and conduct with respect to which the Court has jurisdiction, namely, firstly, the alleged approval of the harmful measures by the defendants, secondly, the obligation to maintain or implement the conversion of uninsured deposits in BoC into shares as follows from Article 2(6)(b) of Decision 2013/236, thirdly, the negotiation and signing, by the Commission, of the MoU of 26 April 2013, fourthly, the monitoring, by the Commission and the ECB, of the application of the harmful measures under Article 13(7) of the ESM Treaty, fifthly, the alleged communication of precise assurances, by the defendants, and in particular by the Euro Group, that the harmful measures would not be adopted and, sixthly, the decisions adopted by the ECB concerning ELA.
Firstly, as regards the alleged approval of the harmful measures by the defendants, it must be noted that, for the purpose of establishing a causal link between, on the one hand, the monitoring of the macroeconomic adjustment programme under Article 1(2) of Decision 2013/236 and the Euro Group Statements of 12 April and 13 May 2013 and, on the other hand, the alleged harm, the applicants merely invoke the judgment of 14 July 1967, Kampffmeyer and Others v Commission (
5/66, 7/66, 13/66 to 16/66 and 18/66 to 24/66
, not published,
EU:C:1967:31
, p.
), from which it follows that the liability of the Union can be incurred on the ground that the EU institutions approved the acts which caused harm to an applicant.
In that regard, it must be noted that, in its statements of 12 April and 13 May 2013, the Euro Group, which is not competent to adopt binding decisions, merely described very briefly and welcomed certain measures adopted by the Cypriot authorities and expressed the opinion that those measures were, in particular, liable to contribute to alleviating the financial difficulties which confronted the Republic of Cyprus (see paragraph 170 above). By those statements, the Euro Group thus expressed vis-à-vis the Republic of Cyprus an opinion which is not binding and which did not bind the competent national authorities.
As regards the monitoring, by the Commission and by the ECB, of the implementation of the macroeconomic adjustment programme, it should be noted that Article 1(2) of Decision 2013/236 provides, in particular, that the Commission, in liaison with the ECB, and where appropriate with the IMF, is to monitor the progress of the Republic of Cyprus in the implementation of its programme. Article 1(3) of that decision provides that the Commission, first of all, in liaison with the ECB and, where appropriate, with the IMF, is to examine with the Cypriot authorities any changes and updates to the programme that may be needed, next, to provide continued advice and guidance on fiscal, financial and structural reforms and, finally, at regular intervals to assess the economic impact of the Programme and to recommend necessary corrections with a view to enhancing growth and job creation, securing the necessary fiscal consolidation, and minimising harmful social impacts. None of those obligations imposed on the Commission involves, as such, decision-making power or constraint. Any approval which the Commission may have expressed in the context of the implementation of its responsibilities under Article 1(2) of Decision 2013/236 therefore entirely lacked binding force and, consequently, did not bind the Cypriot authorities.
It follows that the Republic of Cyprus, which was not obliged to adopt the harmful measures (see paragraphs 105 to 155 above), was also not required to request the Commission, the ECB or the Euro Group authorisation to adopt them. As is apparent from paragraphs 221 and 222 above, the Commission, the ECB and the Euro Group, in any event, gave no authorisation to the Cypriot authorities of that sort by way of the acts or conduct referred to in those paragraphs.
By contrast, in the judgment of 14 July 1967, Kampffmeyer and Others v Commission (
5/66, 7/66, 13/66 to 16/66 and 18/66 to 24/66
, not published,
EU:C:1967:31
, p.
), the Court held that liability of the European Community had been incurred due to the fact that the Commission had authorised, incorrectly, the adoption, by the Federal Republic of Germany, of certain agricultural safeguard measures. In that case, the Commission’s authorisation was a necessary condition for the adoption of those measures. The event giving rise to the Community’s liability was therefore not the mere approval, by one of its institutions, of measures taken by a Member State, but the authorisation of those measures, in the absence of which they would not have been implemented.
Therefore, the mere reference to the judgment of 14 July 1967, Kampffmeyer and Others v Commission (
5/66, 7/66, 13/66 to 16/66 and 18/66 to 24/66
, not published,
EU:C:1967:31
, p.
) does not clarify how the fact of approving the adoption of harmful measures was capable of causing the economic loss that the applicants invoke.
It follows that the present action is inadmissible in so far as it relates to the alleged approval of the adoption of the harmful decrees by the defendants.
Secondly, as regards the obligation to maintain or continue to implement the conversion of uninsured deposits in BoC into shares as follows from Article 2(6)(b) of Decision 2013/236, it should be noted that the applicants identify with a sufficient degree of accuracy, first, the conduct complained of on the part of the Council, namely that it, by that decision, ‘approve[d] and incorporate[d] into the main body of EU law’ the allegedly unlawful conditions for FAF, and, secondly, the nature and extent of the alleged harm, which are both described in detail in the body of the application initiating proceedings and in the annex thereto. As is apparent from paragraph 159 above, the applicants also explain with a sufficient degree of accuracy the causal link which exists, in their opinion, between the Council’s conduct which they allege to be unlawful and the alleged harm.
Thirdly, as regards the signing of the MoU of 26 April 2013, it is possible to interpret the applicants’ arguments as meaning that they consider that, if the Commission had not agreed to sign the MoU of 26 April 2013, the ESM and the Republic of Cyprus would not have been able to agree that the maintenance or continued implementation of the harmful measures introduced on 29 March 2013 by the amendments made to the harmful decrees referred to in paragraphs 33 and 34 above should be a necessary condition for the grant of FAF.
The decision to sign the MoU of 26 April 2013 is therefore, at least in part, the source of the harm invoked. In that regard, the applicants identified the reasons why they consider that there exists a causal link between the conduct consisting in the signing of the MoU of 26 April 2013, on the one hand, and the harm invoked, on the other hand.
By contrast, the applicants’ claims concerning the negotiation of the MoU of 26 April 2013 are not developed in any specific and detailed way in the parts of their written pleadings devoted to legal reasoning. In particular, nothing in those written pleadings allows an identification of the reasons why the applicants consider that the conduct of the Commission or of the ECB in the context of the negotiation of the MoU of 26 April 2013 contributed to causing the damage alleged.
Fourthly, as regards the monitoring, by the Commission and by the ECB, of the application of the harmful measures under Article 13(7) of the ESM Treaty, the considerations set out in paragraphs 228 and 229 above apply
mutatis mutandis
.
Fifthly, the communication, by the defendants, and in particular by the Euro Group, of precise assurances that the harmful measures would not be adopted created, according to the applicants, legitimate expectations on their part which were infringed when those measures were adopted. In so doing, the applicants identified with a sufficient degree of accuracy the illegality which they allege the defendants committed and the reasons why they consider that a causal link exists between that conduct and the harm invoked.
Sixthly, the applicants state that the decisions adopted by the ECB concerning ELA contributed to the infringement of their legitimate expectations and of their right to property, and to exacerbating the economic difficulties of Laïki and, therefore, the harm they suffered. They identified with a sufficient degree of accuracy the illegality with which they consider those decisions to be vitiated and the reasons why they consider that a causal link exists between that conduct and the harm invoked.
It follows that the present action complies with the applicable formal requirements in so far as it relates to, first, the obligation to maintain or implement the conversion of uninsured deposits in BoC into shares as follows from Article 2(6)(b) of Decision 2013/236, secondly, to the signing, by the Commission, of the MoU of 26 April 2013, thirdly, to the monitoring, by the Commission and by the ECB, of the application of the harmful measures under Article 13(7) of the ESM Treaty, fourthly, to the alleged communication of precise assurances, by the defendants, and in particular by the Euro Group, that the harmful measures would not be adopted and, fifthly, to the decisions adopted by the ECB concerning ELA.
2.

The alleged failure to exhaust domestic remedies
In the context of its arguments relating to the alleged harm, the Commission contends, in essence, that, where the immediate cause of that harm is to be located in national measures, where no ancillary damage can be attributable solely to the Union and where the alleged illegalities are only indirectly linked with alleged actions of the Union, the applicants must exhaust domestic remedies before the EU Courts can rule on their claim for compensation.
The applicants reply that, according to the case-law, they were not required to bring actions before the national courts before bringing an action before the Court, in so far as, first, the harmful measures are attributable to the Union and, secondly, those courts could not guarantee the applicants effective judicial protection.
In so far as it can be interpreted as relating to the admissibility of the present action and not solely to the damage alleged, the Commission’s line of argument must be rejected.
According to the case-law, an action for damages under Article 268 TFEU and the second and third paragraphs of Article 340 TFEU must be appraised with regard to the entire system for the judicial protection of the individual and its admissibility may thus, in some cases, be subject to the prior exhaustion of national remedies that are available for obtaining annulment of a decision of a national authority, provided that those remedies under domestic law effectively ensure protection for the individuals concerned in that they are capable of resulting in compensation for the damage alleged (see, to that effect, judgments of 30 May 1989, Roquette frères v Commission,
20/88
,
EU:C:1989:221
, paragraph
and the case-law cited, and of 13 December 2006, É. R. and Others v Council and Commission,
T‑138/03
,
EU:T:2006:390
, paragraph
).
In a judgment of 18 September 2014, Holcim (Romania) v Commission, (
T‑317/12
,
EU:T:2014:782
, paragraphs
to
), the Court stated that the situations in which inadmissibility is caused by non-exhaustion of domestic remedies were limited to the situation in which the failure to exhaust domestic remedies prevented the Courts of the European Union from identifying the nature and quantum of the damage pleaded before it, with the result that the requirements of Article 44(1)(c) of the Rules of Procedure of 2 May 1991, as interpreted by the case-law cited in paragraphs 215 and 216 above, were not complied with.
In the present case, the Court is in a position to identify the character and the amount of the alleged damage, which the applicants described with a sufficient degree of accuracy in their written pleadings and in the annexes thereto. Therefore and without it being necessary to determine whether the acts and conduct referred to in paragraph 234 above could even be subject to an action before the national courts, it cannot be considered that the present action is inadmissible on the sole ground that the applicants did not exhaust the domestic remedies.
At the most it could be considered, in those circumstances, that the bringing, by one or more applicants, of an action before a national court seeking compensation for the same damage as the present action is capable of having an impact on the examination of the merits of that action. According to the case-law, where (i) a person has brought two actions before the EU judicature seeking compensation for the same damage, one against a national authority, before a national court, and the other against an EU institution or body, and (ii) there is a likelihood that, because of the different assessments of that damage by the two different courts, the person in question may be insufficiently or excessively compensated, the EU judicature must, before deciding on the amount of the damage, wait until the national court has given final judgment on the action brought before it (see, to that effect, judgments of 14 July 1967, Kampffmeyer and Others v Commission,
5/66, 7/66, 13/66 to 16/66 and 18/66 to 24/66
, not published,
EU:C:1967:31
, p.
, and of 13 December 2006, É. R. and Others v Council and Commission,
T‑138/03
,
EU:T:2006:390
, paragraph
). In such a case, the EU judicature must wait until the national court has given judgment before ruling on the existence and the quantum of any damage. On the other hand, it may, even before the national court has given its ruling, determine whether the conduct alleged against the defendant institution is capable of giving rise to non-contractual liability on the part of the European Union (see, to that effect, judgment of 18 September 2014, Holcim (Romania) v Commission,
T‑317/12
,
EU:T:2014:782
, paragraph
).
Therefore, even if one or more of the applicants brought, in the present case, an action before the Cypriot courts seeking compensation for the same damage as the present action, nothing prevents the Court from ruling on the alleged illegalities even before those courts deliver a judgment.
C.

Conclusion on the jurisdiction of the Court and the admissibility of the action
In the light of all of the foregoing, it must be concluded that the Court has jurisdiction to hear the present action, and that the latter is admissible, in so far as it relates, firstly, to the obligation to maintain or implement the conversion into shares of uninsured deposits in BoC as follows from Article 2(6)(b) of Decision 2013/236, secondly, to the signing, by the Commission, of the MoU of 26 April 2013, thirdly, to the monitoring, by the Commission and by the ECB, of the application of the harmful measures under Article 13(7) of the ESM Treaty, fourthly, to the alleged communication, by the defendants, and in particular by the Euro Group, of precise assurances that the harmful measures would not be adopted and, fifthly, to the decisions adopted by the ECB concerning ELA.
By contrast, with regard to the other acts and conduct that the applicants allege against the defendants, it must be concluded that the action is, in part, inadmissible and, in part, that the Court does not have jurisdiction to rule on the action. An examination of the merits will therefore be carried out only with respect to the pleas and arguments of the parties relating to the acts and conduct referred to in paragraph 243 above.
D.

Substance
It is apparent from settled case-law, applicable
mutatis mutandis
to the non-contractual liability of the ECB provided for in the third paragraph of Article 340 TFEU, that, in order for the Union to incur non-contractual liability under the second paragraph of Article 340 TFEU a number of conditions must be satisfied, namely the unlawfulness of the conduct alleged against the EU institution, actual harm suffered, and the existence of a causal link between the institution’s conduct and the damage alleged (see, to that effect, judgments of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraph
and the case-law cited, and of 7 October 2015, Accorinti and Others v ECB,
T‑79/13
,
EU:T:2015:756
, paragraph
). In so far as those three conditions must be cumulatively satisfied, the fact that one of them is not satisfied is sufficient for an action for damages to be dismissed (judgment of 9 September 1999, Lucaccioni v Commission,
C‑257/98 P
,
EU:C:1999:402
, paragraph
).
In the present case, it is necessary to begin by examining whether the first of those conditions, relating to unlawfulness of the conduct alleged of the defendants, is satisfied.
In that regard, the Court has already pointed out on many occasions that the incurring of non-contractual liability by the EU requires the establishment of a sufficiently serious breach of a rule of law intending to confer rights on individuals (see judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraph
and the case-law cited).
In their application, the applicants claim that the defendants acted without taking into account the interests of the closed group composed of depositors or shareholders of the banks concerned, in flagrant and serious violation of three rules of EU law seeking to protect individuals, namely the right to property, the principle of protection of legitimate expectations and the principle of equal treatment.
The Council and the ECB respond, in essence, that neither the acts and conduct referred to in paragraph 243 above, nor the harmful measures are vitiated by an infringement of EU law.
Since it considers that the harm invoked is attributable only to the Republic of Cyprus, the Commission refrains from systematically defending the lawfulness of measures which the Republic of Cyprus unilaterally adopted and restricts itself, in essence, to presenting focused observations about the illegalities invoked by the applicants.
The Court will examine in turn the infringements alleged, firstly, of the right to property (see paragraphs 252 to 403 below), secondly, of the principle of protection of legitimate expectations (see paragraphs 404 to 439 below) and, thirdly, of the principle of equal treatment (see paragraphs 440 to 508 below).
1.

The existence of a possible infringement of the right to property
The applicants consider that they were deprived of their right to property in the deposits which they had with the banks concerned and/or in the shares they held in those banks, in breach of Article 17(1) of the Charter and of the case-law of the European Court of Human Rights (‘ECtHR’).
The defendants contest the applicants’ line of argument.
It is settled case-law that the right to property guaranteed by Article 17(1) of the Charter is not an absolute right. As is apparent from Article 52(1) of the Charter, the exercise of the right to property may be restricted, provided that those restrictions correspond to objectives of public interest pursued by the European Union and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of that right (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
and
and the case-law cited).
In that regard, it is apparent from Article 12 of the ESM Treaty that the adoption of an MoU such as that of 26 April 2013 corresponds to an objective of public interest pursued by the European Union, namely that of ensuring the stability of the banking system of the euro area as a whole. Financial services play a central role in the economy of the European Union. In so far as banks, an essential source of funding for businesses, are often interconnected, the failure of one or more banks is liable to spread rapidly to other banks, either in the Member State concerned or in other Member States and, as a result, to produce negative spill-over effects in other sectors of the economy (see, to that effect, judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB,
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
and
and the case-law cited; ECtHR, 10 July 2012,
Grainger and Others
v
,
United Kingdom
, CE:ECHR:2012:0710DEC003494010, paragraphs 39 and 42, and 21 July 2016,
Mamatas and Others
v
.
Greece
, CE:ECHR:2016:0721JUD 006306614, paragraph 103).
In the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
to
), the Court held that, in view of the objective of general interest referred to in paragraph 255 above, and in view of the imminent risk of financial losses to which depositors of the banks concerned would have been exposed if the those banks had failed, three of the harmful measures in paragraphs 31 to 35 above do not constitute, as follows from paragraphs 1.23 to 1.27 of the MoU of 26 April 2013, a disproportionate and intolerable interference impairing the very substance of those depositors’ right to property and cannot, therefore, be regarded as unjustified restrictions of that right. Among those measures are, firstly, the takeover, by BoC, of the insured deposits of Laïki and the retention of uninsured deposits with Laïki, pending its liquidation, secondly, the conversion of 37.5% of the uninsured deposits in BoC into shares with full voting and dividend rights and, thirdly, the temporary freezing of another part of those uninsured deposits, it being noted that, should BoC be found to be overcapitalised relative to the core tier one capital target of 9% under stress, a share-reversal process would be undertaken to refund uninsured depositors by the amount of over-capitalisation (together, ‘the first series of harmful measures’).
By contrast, in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), the Court did not examine the compatibility with the right to property of the two other harmful measures. It concerns, in essence, first, the measure relating to the sale of the Greek branches, as is set out in paragraph 1.24 of the MoU of 26 April 2013 and which is provided for by Decrees No 96 and 97 (see paragraph 31 above), and, secondly, the measure relating to the reduction of the nominal value from EUR 1 for each ordinary share of BoC to a nominal value of one cent, which is provided for by Decree No 103 and the amendments made to that decree on 30 July 2013 and which participates in the recapitalisation of BoC referred to in paragraph 1.26 of the MoU of 26 April 2013 (see paragraph 34 above) (together, ‘the second series of harmful measures’).
The Court will examine, initially, the compatibility with the applicants’ right to property of the first series of harmful measures (see paragraphs 259 to 324 below) and, subsequently, that of the second series of harmful measures (see paragraphs 326 to 359 below). The Court will examine, at a third stage, the arguments alleging an infringement of Article 14.4 of the ECB Statute, of the right to sound administration and the obligations of fairness and consistency, raised by the applicants in support of their complaint alleging infringement of the right to property (see paragraphs 362 to 403 below).
(a)

The first series of harmful measures
In the present case, the applicants do not contest that, as the Court held in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
) (see paragraphs 255 and 256 above), the objective pursued by the first series of harmful measures is of general interest. The applicants contest, nevertheless, the applicability to the present case of the conclusion reached by the Court in that case, according to which the first series of harmful measures did not constitute a disproportionate and intolerable interference impairing the very substance of the right to property of the depositors with the banks concerned and could, therefore, not be considered to unjustifiably restrict that right. They put forward three arguments in that regard, the first relating to the nature of the examination conducted by the Court in that judgment (see paragraphs 260 to 262 below), the second to the evidence adduced by the applicants in the case giving rise to that judgment (see paragraphs 263 to 266 below), and the third to the respect for the requirements that any restriction of the right to property must be laid down in law and proportionate to the aim pursued (see paragraphs 267 to 324 below).
(1)

The nature of the examination conducted by the Court in the judgment of 20 September 2016,
Ledra Advertising and Others
v
Commission and ECB
(C‑8/15 P to C‑10/15 P)
The applicants maintain that, in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), the Court merely examined the existence of a possible infringement of the depositors’ right to property only insofar as it concerned the inclusion, in the MoU of 26 April 2013, of paragraphs 1.23 to 1.27, which related, in particular, to the first series of harmful measures. The Court therefore did not examine the defendants’ conduct, the unlawfulness of which is invoked in the present case. That conduct is part of a continuum which began with the defendants’ interventions before the signing of the MoU and continued with their interventions after the signing thereof. Paragraphs 1.23 to 1.27 of the MoU of 26 April 2013 describe measures which were adopted prior to the signing thereof and which are attributable to the defendants.
That argument results from a misreading of the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
). Admittedly, the Court concluded, in paragraph 75 of that judgment, that it cannot be considered that, by dint of having permitted the adoption of paragraphs 1.23 to 1.27 of the MoU of 26 April 2013, the Commission had contributed to an infringement of the applicants’ right to property. For that purpose, however, the Court examined, in paragraphs 73 and 74 of that judgment, whether the first series of harmful measures, as set out in paragraphs 1.23 to 1.27 of that MoU, infringed, itself, the applicants’ right to property. The reasoning set out in those paragraphs related therefore to the inherent legality of those measures. The applicants’ claim that the conduct complained of is part of a continuum, has already been rejected in paragraph 158 above.
The applicants’ first argument must therefore be rejected.
(2)

The evidence adduced by the applicants in the case giving rise to the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
)
The applicants claim that the conclusions reached by the Court in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), with regard to the existence of an infringement of the right to property must be read in the light of the narrow claims of the appellants in that case. It is clear that, in the case which gave rise to that judgment, neither the General Court, nor the Court of Justice examined any evidence seeking to establish an infringement of the right to property. In the present case, the applicants adduced new evidence relating to the circumstances leading to the adoption ‘of the Euro Group statement’ and explaining the defendants’ conduct before and after that statement. That evidence, which the Court did not examine in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), should be carefully examined in the present case in order to determine whether the harmful measures constitute a disproportionate interference in the applicants’ right to property and to guarantee their right to effective judicial protection.
In that regard, it should be noted that the evidence referred to by the applicants concerns, primarily, whether the harmful measures are attributable to the defendants and the reality of the damage invoked. That evidence is not, in itself, capable of showing that the conclusions reached by the Court in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
), regarding the existence of such are not applicable in the present case.
Consequently, the applicants’ second argument must be rejected in so far as it concerns evidence relating to whether the harmful measures are attributable to the defendants and to the reality of the damage invoked.
To the extent, however, that certain evidence referred to by the applicants could be regarded as seeking to establish that the first series of harmful measures is vitiated by an infringement of the right to property, it will, in so far as necessary, be examined in the context of the assessment of the applicants’ arguments relating to the requirements that any restriction of the right to property must be in accordance with the law and proportionate to the objective pursued.
(3)

Compliance with the requirements that any restriction of the right to property must be in accordance with the law and proportionate to the objective pursued
The applicants claim, in essence, that the first series of harmful measures is vitiated by a manifest infringement of their right to property, in so far as those measures were not laid down in law and were adopted without granting them the possibility of exercising their rights of defence and in spite of the existence of less restrictive measures, such as a progressive diminution of deposits depending on their size. In that regard, the applicants had already stated, in their application, that it followed from Article 17(1) of the Charter that any restriction of the right to property had to be both laid down in law and proportionate to the aim pursued.
The Court will examine in turn the conformity of the first series of harmful measures with the requirements that any restriction of the right to property must, first, be in accordance with the law and, secondly, be proportionate to the objective pursued. In doing so, the Court will take into account that, in accordance with paragraph 1.27 of the MoU of 26 April 2013, the uninsured deposits in BoC which were frozen could be converted into shares, which took place in the present case (see paragraphs 32 and 33 above).
(i)

The requirement that any restriction of the right to property must be in accordance with the law
In support of their claim that the harmful measures were not in accordance with the law, the applicants invoke the case-law of ECtHR concerning Article 1 of Additional Protocol No 1 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), which requires that any restriction to the right to property be based on a clear, foreseeable and accessible legal framework.
According to the applicants, no rule of EU law permitted the defendants, at the time of the facts, to adopt the harmful measures, which do not, furthermore, satisfy ‘the requirements of legal certainty, due process, and foreseeability by any legal standard’. Therefore, the harmful measures were adopted by the Governor of the CBC on the basis of the discretionary power granted to him by an imprecise law which neither provides for a clear procedure for compensation, nor for a right to judicial protection, whereas nothing was provided for at Cypriot or EU level to consult the interested parties or to give the shareholders and depositors of the banks concerned the opportunity to express their views.
The Council and the ECB contest the applicants’ line of argument.
It should be noted that, under Article 17(1) and Article 52(1) of the Charter, no one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions in accordance with the law, subject to fair compensation being paid in good time for their loss. For the purposes of determining the scope of that right, it is necessary, in the light of Article 52(3) of the Charter, to take account of Article 1 of Additional Protocol No 1 to the ECHR (see, to that effect, judgment of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission,
C‑402/05 P and C‑415/05 P
,
EU:C:2008:461
, paragraph
). According to the case-law of the ECtHR, the terms ‘in accordance with the law’ not only require that the impugned measure should have some basis in domestic law, but also that it also refer to the quality of the law in question, that it be accessible to the interested parties and foreseeable as to its effects (see, to that effect, ECtHR, 13 July 2010,
Kurić and Others
v
.
Slovenia
, CE:ECHR:2010:0713JUD 002682806, paragraph 363).
It is necessary therefore to examine whether the first series of harmful measures was adopted in the absence of a clear, foreseeable and accessible legislative framework and which provides for compensation and appropriate legal protection.
In that regard, in the first place, it is necessary to note that the harmful measures were taken by the Governor of the CBC, in accordance with the Law of 22 March 2013, which was approved by the Cypriot Parliament.
It is true that, as the applicants, in essence, claim, the Law of 22 March 2013 confers wide powers on the CBC. The latter may, in particular, restructure the debts and obligations of an institution under resolution (section 12(1) of the Law of 22 March 2013, see paragraph 24 above), require, irrespective of the existence of other legislation and statutory provisions, the increase of the capital of such an institution (section 8(1) of the Law of 22 March 2013) and order the sale of certain activities of that institution without it being necessary to obtain the consent of its administrative board or shareholders (section 9(1) of the Law of 22 March 2013). However, the mere fact that there are numerous measures which may be adopted under the Law of 22 March 2013, or that they have a broad scope does not mean that that law lacks clarity, precision or predictability.
In the second place, it must be pointed out that the Law of 22 March 2013 provides for a series of guarantees in favour of the creditors and shareholders of the banks concerned. Firstly, section 3(2)(a) and (b) of that law provides that the shareholders of an institution under resolution are to be the first to be liable for any losses resulting from the implementation of the resolution measures, whereas the creditors of such an institution are liable for those losses only after the shareholders. As regards section 3(2)(d) of that law, it provides that the measures adopted on the basis of that law cannot place the creditors financially in a less favourable position than that in which they would be in the event of the liquidation of the institution in question. Section 12(14) of the law at issue states that, in the event of an implementation of restructuring under section 12(1) of that law of the debts and liabilities of an institution placed under resolution, the affected parties are to receive, in payment of their claims, at least the amount they would have received, under Cypriot law, in the event of the liquidation of that institution (see paragraph 24 above).
Secondly, even assuming that the requirement that any restriction of the right to property be laid down in law requires that the procedure for compensation of the loss resulting from such a restriction be, as the case may be, also laid down in law, it is apparent from section 26(1) of the Law of 22 March 2013 that any party which considers itself to be unduly harmed with respect to its right to property by the resolution measures retains the right to bring an action before the competent national court for compensation. Section 26(2) and (3) of that law states that, if the affected party considers that its financial situation has significantly deteriorated in relation to the situation it would have been in if no resolution measure had been taken and if the bank concerned had been immediately placed in liquidation, it can claim compensation solely for the losses suffered without prejudice to the transaction concluded or any act or measure adopted on the basis of that law.
On that issue, the applicants maintain, first, that, in accordance with section 26(3) of the Law of 22 March 2013, the claims cannot be brought against either the Resolution Authority, except for the case provided for in section 29 of that law, or against the person benefiting from a transfer of activities, goods or assets resulting from the adoption of a resolution measure. The applicants consider that it is, consequently, impossible to understand against whom an action could be taken.
In that regard, it must be noted that the question of identifying against whom an action can be brought seeking compensation for the harm unlawfully caused by a resolution measure adopted under the Law of 22 March 2013 falls within the scope of Cypriot law. The documents in the case file do not allow that question to be answered, which it is not, in any event, for the Court to rule on in the context of the present case. It must, however, be noted that neither the wording of section 26(3) of the Law of 22 March 2013, nor the documents in the case file allow it to be considered that bringing an application for compensation for the harm unlawfully caused by a resolution measure adopted under that law is, in principle, impossible. Moreover, as the applicants acknowledge themselves, section 29 of the Law of 22 March 2013 provides that the liability of the Resolution Authority may be incurred in the event of fraud, bad faith or gross negligence.
Secondly, the applicants claim that section 22 of the Law of 22 March 2013, firstly, provides that a valuation must be effected, for the purposes of the implementation of resolution measures, by the resolution authority and, then, grants the latter a very wide margin of discretion. The applicants maintain that, in accordance with section 22(7) of that law, that valuation cannot be subject to a separate judicial review, but must be examined jointly with the decision taken ‘under this section’. According to the applicants, it results therefrom that the parties who consider that their financial position has deteriorated as a result of a resolution measure have to challenge a valuation which is undertaken at the complete discretion of the resolution authority. It is difficult to see how that valuation could be challenged effectively unless it itself reveals an underpayment.
In that regard, it suffices to observe that nothing in section 22 of the Law of 22 March 2013 allows it to be considered that such an evaluation is capable of binding the national court hearing a claim for compensation. It must therefore be concluded that the applicants have failed to show that that provision would, in practice, make the bringing of such a claim impossible or ineffective.
In the third place, it cannot be considered that the harmful measures do not contain any guarantees allowing the applicants to make their views known. In that regard, it should be noted that the applicable provisions must offer the person concerned a reasonable opportunity of putting his case to the competent authorities. In order to ensure compliance with that requirement, which constitutes a requirement inherent in Article 1 of Protocol No 1 to the ECHR, a comprehensive view must be taken of the applicable procedures (see, to that effect, judgment of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission,
C‑402/05 P and C‑415/05 P
,
EU:C:2008:461
, paragraph
and the case-law cited, and ECtHR, 20 July 2004,
Bäck v
.
Finland
, EC:ECHR:2004:0720JUD003759897, paragraph 56). Therefore, that requirement cannot be interpreted as meaning that the interested person must, in all circumstances, be able to make his views known to the competent authorities prior to the adoption of measures infringing his right to property (see, to that effect, ECtHR, 19 September 2006,
Maupas and Others
v
.
France
, EC:ECHR:2006:0919JUD001384402, paragraphs 20 and 21). That is, in particular, the case where, as in the present case, the measures at issue do not constitute a penalty and are implemented in a context of particular urgency. In that latter regard, it should be noted that, as the ECB pointed out during the hearing, it concerned prevention of an imminent risk of collapse of the banks concerned in order to protect the stability of the Cypriot financial system and, therefore, to prevent contagion to other Member States of the euro area. The establishment of a prior consultation procedure, in the context of which the thousands of depositors and shareholders of the banks concerned could have usefully made their views known to the CBC prior to the adoption of the harmful decrees, would inevitably have delayed the application of measures seeking to prevent such a collapse. The achievement of the objective consisting in protecting the stability of the Cypriot financial system and, therefore, preventing contagion to other Member States of the euro area would have been exposed to serious risks (see, to that effect and by analogy, ECtHR, 21 July 2016,
Mamatas and Others
v
.
Greece
, EC:ECHR:2016:0721JUD006306614, paragraph 139).
In those circumstances, however, the interested person must be able to benefit from judicial proceedings providing the required procedural safeguards, so as to allow the national courts to rule effectively and equitably on the disputes relating to the alleged infringement of the right to property. As is apparent from paragraphs 277 and 279 to 281 above, that is so in the present case.
In the fourth place, as the Commission correctly contends, the absence, at the time of the facts, of Union harmonisation measures in relation to bail-ins of banks does not mean that Member States were precluded from adopting bail-in measures. It also does not follow from that absence that the EU institutions were precluded from lending their support to the implementation, by the Cypriot authorities, of such measures or from requiring the maintenance or continued implementation thereof.
It follows from the foregoing that the applicants have failed to establish that the first series of harmful measures was not laid down in law.
(ii)

The requirement that any restriction of the right to property must be proportionate to the objective pursued
The applicants claim that the first series of harmful measures is not proportionate to the aim pursued, in so far as an excessive burden was imposed on them. First, they would have to pay for the mistakes attributable to the Government of the Republic of Cyprus, to the lack of prior intervention by the EU institutions and to the carelessness of the ECB, whose ‘liberal policy’ in relation to ELA substantially contributed to the accumulation of debt by Laïki. Secondly, the defendants failed to take into account alternative measures which are less restrictive of the applicants’ right to property.
The Council and the ECB contest the applicants’ arguments.
In the first place, it should be noted that, in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
to
), the Court already explicitly ruled on the proportionality of the objective pursued by the first series of harmful measures, holding that those measures did not constitute a disproportionate and intolerable interference impairing the very substance of the right to property of depositors of the banks concerned. The applicants failed to explain why that finding cannot be transposed to the present case. It must therefore be concluded that it applies,
mutatis mutandis
, to the present complaint.
In the second place and in any event, the arguments invoked by the applicants in support of their complaint relating to the lack of proportionality of the first series of harmful measures does not allow, in the present case, a conclusion to be reached which is different from that reached in that regard by the Court in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (
C‑8/15 P to C‑10/15 P
,
EU:C:2016:701
, paragraphs
to
).
In that regard, it should be noted that a restriction of the right to property must not be excessive. First, the restriction at issue must meet the general interest objective pursued and be necessary and proportionate to that end. Secondly, the ‘essential content’, that is to say the substance, of the right to property must not be impaired (see, to that effect, judgments of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission,
C‑402/05 P and C‑415/05 P
,
EU:C:2008:461
, paragraphs
and
; of 13 June 2017, Florescu and Others,
C‑258/14
,
EU:C:2017:448
, paragraphs
and
, and of 27 February 2014, Ezz and Others v Council,
T‑256/11
,
EU:T:2014:93
, paragraph
).
Where, as in the present case, the institutions of the EU are required, in a complex and changing environment, to make technical choices and to undertake forecasts and complex assessments, those institutions must, nevertheless, be granted a wide margin of discretion with respect to the nature and the extent of the measures supported by them or with respect to which they require maintenance or continuous implementation. In such a situation, the condition relating to the unlawfulness of the conduct complained of requires it to be established that the institution concerned manifestly and gravely disregarded the limits of its discretion (see, to that effect, judgments of 16 June 2015, Gauweiler and Others,
C‑62/14
,
EU:C:2015:400
, paragraph
, and of 10 July 2014, Nikolaou v Court of Auditors,
C‑220/13 P
,
EU:C:2014:2057
, paragraph
and the case-law cited).
It is in the light of those principles that it is necessary to examine the applicants’ arguments. More specifically, the Court will examine, first of all, the ability of the first series of harmful measures to contribute to achieving the objective pursued (see paragraphs 293 to 299 below), next, whether it is proportionate and necessary to achieving that objective (see paragraphs 300 to 316 below) and, finally, the question whether the disadvantages created by that series are not disproportionate in relation to that objective (see paragraphs 317 to 323 below).
–
The ability of the first series of harmful measures to contribute to achieving the objective pursued
In accordance with the case-law, it is necessary to determine the ability of the restriction of the right to property examined to contribute to the general interest objective pursued (see, to that effect, judgment of 27 February 2014, Ezz and Others v Council,
T‑256/11
,
EU:T:2014:93
, paragraph
).
In the present case, first, it should be noted that the adoption of the harmful measures was a response to a situation in which, if they were not recapitalised, the banks concerned would have been exposed to a risk of a run as of the expiry of the closure period of the banks ordered on 18 March 2013, so that they would have risked having to cease their operations and would have been threatened by a disorderly default. As the ECB pointed out in reply to the Court’s measures of organisation of procedure, the effects of such defaults were likely to be systematic, threatening the Republic of Cyprus with a sovereign default and risking a spread to other banks, in particular Cypriot banks. The confidence of depositors in those banks and the solvency of the Republic of Cyprus, guarantor of certain debts of Laïki, would have been affected and the stability of the entire Cypriot banking system threatened. As the Commission and the ECB noted, a risk of contagion to other Member States, or to the entire banking system of the euro-zone, could then not be excluded.
In the light of the information in the case file, it cannot be concluded that that analysis of the Cypriot and EU economic and financial situation at the time of the adoption of the harmful measures was vitiated by a manifest error of assessment. In that regard, it must be noted that there is no substantiation of the vague assertions made by the applicants, according to which, due to the small size of the Cypriot economy, its default would have had only a limited impact on the euro-zone. Those assertions ignore, moreover, the size of the Cypriot financial sector, which represented eight times Cyprus’ GDP at the time of the facts, as well as the risk of contagion to other Member States.
According to paragraph 1.26 of the MoU of 26 April 2013, the conversion of 37.5% of the uninsured deposits in BoC sought to allow the latter to reach ‘a core tier one ratio of 9% under the adverse scenario of the stress test by the end of the programme’. According to paragraph 1.27 of that MoU, additional conversions of uninsured deposits, such as those referred to in paragraph 33 above, were intended to ensure that that target can be met by the end-programme. Therefore, in the circumstances described in paragraph 294 above, it was not manifestly unreasonable to consider that those measures were capable of stabilising the financial system, by permitting, as follows also from paragraph 1.26 of the MoU of 26 April 2013, to ‘restore confidence and normalise funding conditions’.
As regards the harmful measure by which BoC had to take over the insured deposits of Laïki, whereas its uninsured deposits would be retained in the legacy entity, it sought, as is apparent from the CBC’s press release of 26 March 2013, to allow the separation of Laïki into a bad bank and a good bank. Therefore, in the circumstances described in paragraph 294 above, it was not manifestly unreasonable to consider that that measure was likely to stabilise the financial system, by avoiding the disorderly default of Laïki.
Secondly, it should be noted that the excessive size of the Cypriot financial sector was one of the principle causes of the banking crisis. As is apparent from the introduction to a report of the IMF of May 2013, the significant internal and external imbalances which affected the Cypriot economy already before the financial crisis had been exacerbated by a weak financial sector of a disproportionate size. Very exposed to Greece, that sector represented more than 800% of the Cypriot GDP, as has already been noted (see paragraph 295 above).
The first series of harmful measures includes, in particular, the application of a haircut to uninsured deposits in BoC and was therefore intended to allow a reduction of the size of the Cypriot financial sector. Therefore, in the circumstances described in paragraph 298 above, it was not manifestly unreasonable to conclude that that haircut would contribute to ensuring the stability of the banking system of the euro area.
–
The proportionality and necessity of the first series of harmful measures
In accordance with the case-law, it is necessary to determine whether the restriction to the right to property examined exceeds the limits of what is appropriate and necessary in order to attain the objectives pursued by the legislation in question. In particular, when there is a choice between several appropriate measures, recourse must be had to the least onerous (see judgment of 27 February 2014, Ezz and Others v Council,
T‑256/11
,
EU:T:2014:93
, paragraph
and the case-law cited).
In the present case, firstly, the applicants claim, in essence, that the alternatives which are less restrictive of their right to property than the first series of harmful measures were not taken into account. According to the applicants, it would have been possible to save the economy of the Republic of Cyprus by imposing less severe burdens on them than those they bore. Secondly, the applicants claim to have been subject to an expropriation and not, in that regard, to have obtained the compensation which could be regarded as fair, for the purposes of Article 17(1) of the Charter.
Firstly, as regards taking alternative, less restrictive, measures into account, it is apparent from the documents in the case file that, as the Council correctly notes, any approach other than that which was finally agreed either was not feasible, or would not have allowed the expected results to be achieved. First of all, it should be noted that the Cypriot authorities adopted the harmful measures only after the Cypriot Parliament rejected a measure which was less onerous for the applicants’ interests than the first series of harmful measures, namely the introduction of a levy on all bank deposits in Cyprus (see paragraph 22 above).
Next, according to a report of the IMF of May 2013, the covering, by the budget of the Republic of Cyprus, of the cost of recapitalising the banks concerned led to an increase in Cypriot public debt to an unsustainable level. It is apparent from paragraph 11 of that report that, in the event of a public capital injection in favour of the banks concerned, that debt would have reached a level of around 150% of Cyprus’ GDP and would have risked increasing still further. According to the IMF, Cypriot taxpayers would have been overburdened, whilst the size of the Cypriot banking sector, which was one of the principle causes of the crisis (see paragraph 298 above), would have remained excessive and continued to threaten the Republic of Cyprus.
Finally, it is apparent from paragraph 11 of the report mentioned in paragraph 303 above that approaches which do not generate debt, such as direct recapitalisation of the banks concerned by the ESM or their outright sale, were not available. As regards leaving the euro area, it would only have partially remedied the Republic of Cyprus’ problems and would have inflicted considerable losses both on taxpayers and on insured depositors.
The applicants take the view, nevertheless, first, that still other measures should have been considered and, secondly, that the defendants failed in their obligation to take account of situations comparable to that of the Republic of Cyprus, namely that of the four other MSCE which previously benefited from financial assistance, namely Ireland, the Hellenic Republic, the Kingdom of Spain and the Portuguese Republic.
First, as regards the existence of less restrictive measures, the applicants claim that it would have been perfectly feasible, even within the time limits in which the bailout measures had to be agreed, to provide for an alternative system of haircut which would have taken account of the size of the deposits with the banks concerned. According to the applicants, it would, in particular, have been possible to provide for either a haircut calculated as a percentage of the amount of a deposit above the threshold of EUR 100000 or a progressive scheme under which the percentage of the haircut would increase above certain thresholds.
It must, however, be noted that the applicants fail to adduce any concrete evidence in support of their claims, which are not, moreover, quantified. The applicants at no time specify the percentage at which or the threshold above which the haircut applies, nor do they establish that the approach they recommend would allow BoC to achieve the core tier one ratio provided for in paragraph 1.26 of the MoU of 26 April 2013.
It is, nevertheless, possible to deduce from the applicants’ claims that that approach would allow only an amount of capital below that released by the first series of harmful measures to be allocated to the recapitalisation of BoC. In view of the requirement to protect insured deposits, the haircut which the applicants have in mind could, just like the first series of harmful measures, relate only to deposits over EUR 100000. But, contrary to those measures, that haircut related only to a percentage of the deposits at issue.
Either that percentage was insufficiently high to allow BoC to achieve the level of equity referred to in paragraphs 1.26 and 1.27 of the MoU of 26 April 2013, in which case the approach recommended by the applicants would not have allowed the objective pursued to be achieved. Or that percentage was sufficiently high for that purpose, in which case the applicants would have suffered losses which were not shown to have been significantly lower than those they suffered as a result of first series of harmful measures. That would be the case even where the haircut actually applied were higher than what was strictly necessary for BoC to achieve a level of equity higher than that referred to in paragraphs 1.26 and 1.27 of the MoU of 26 April 2013. In accordance with paragraph 1.27 of that memorandum, which reproduces the substance of section 6(5) of Decree No 103, it is provided that, should BoC be overcapitalised relative to the core tier one capital target of 9% under stress, a share-reversal process would be undertaken to refund depositors by the amount of over-capitalisation.
In any event, it is necessary to take into consideration the need, for the Cypriot authorities, to act rapidly during the adoption of the harmful measures. Far from constituting, as the applicants, in essence, imply, an indication of an infringement of their right to good administration, the speed with which the harmful measures were adopted testifies to the urgency of the situation of the Republic of Cyprus at the time of the facts. As was stated in paragraph 282 above, it concerned the prevention of an imminent risk of collapse of the banks concerned in order to protect the stability of the Cypriot financial system and, therefore, to prevent contagion to other Member States of the euro area. Developing a differential haircut system as recommended by the applicants in such a context would have required the Cypriot authorities to undertake a particularly sensitive and uncertain approach so as to ensure that the percentages and thresholds chosen allow BoC to meet the core tier one capital target referred to in paragraphs 1.26 and 1.27 of the MoU of 26 April 2013, thereby exposing the recapitalisation of BoC to significant risks (see, to that effect and by analogy, ECtHR, 21 July 2016,
Mamatas and Others v
.
Greece
, EC:ECHR:2016:0721JUD006306614, paragraph 139).
Secondly, as regards the existence of comparable situations, it must be pointed out that the measures to which the grant of financial assistance by the ESM (or by other international organisations, bodies and institutions of the EU or States) may be subject in order to resolve the financial difficulties encountered by a State facing the need to recapitalise its banking system are likely to vary significantly from case to case depending on the experience acquired and on a set of specific circumstances. Those circumstances can include in particular the economic situation of the recipient State, the size of the assistance in relation to the whole of its economy, the prospects of the banks concerned becoming economically viable again and the reasons which led to the difficulties encountered by them, including, where appropriate, the excessive size of the banking sector of the recipient State in relation to its national economy, the development of the international economic environment or an increased likelihood of future ESM interventions (or interventions of other international organisations, bodies and institutions of the EU or States) in support of other States in difficulty which can require a preventive limitation of amounts dedicated to each intervention.
In the present case, the applicants merely compare the size (absolute and relative) of the financial assistance benefiting, on the one hand, the Republic of Cyprus and, on the other hand, Ireland, the Hellenic Republic, the Kingdom of Spain and the Portuguese Republic. Therefore, the applicants fail to show, or even allege, that the respective financial sectors of the other MSCE which benefited from financial assistance, including that of the Hellenic Republic, were, like that of the Republic of Cyprus (see paragraph 298 above), characterised by an excessive size in relation to the size of the respective national economies of those MSCE. It is apparent, by contrast, from the documents in the case file that the respective financial sectors of those Member States experienced imbalances which were less important than those of the Republic of Cyprus. Therefore, a press article dated 20 March 2013 reports the comments of a member of the ECB Executive Board, according to which the Cypriot banking sector presented ‘unique circumstances’, since no other country in Europe has a banking sector in even remotely comparable imbalance.
The applicants also fail to demonstrate that the experience acquired and differences relating to the economic situation of the MSCE concerned or to the prospects of the banks concerned becoming economically viable again, the development of the international economic environment or an increased likelihood of future ESM interventions in support of other States in difficulty which can require a preventive limitation of amounts dedicated to each intervention could not justify a difference in treatment between the Republic of Cyprus, on the one hand, and Ireland, the Hellenic Republic, the Kingdom of Spain and the Portuguese Republic, on the other hand.
Secondly, as regards the grant of fair compensation to the applicants and assuming that the first series of harmful measures can be considered to deprive the applicants of the right to property, it must be noted that, without payment of an amount reasonably related to the value of the assets at issue, a deprivation of property normally constitutes a disproportionate interference with the right to property (see, to that effect, ECtHR, 21 February 1986,
James and Others
v
.
United Kingdom
, EC:ECHR:1986:0221JUD000879379, paragraph 54). As regards securities, the amount of the compensation payable is calculated in relation to the true market value of those securities at the time of the adoption of the contested regulation, and not in relation to its nominal value or the amount the owner thereof hoped to receive at the time of its acquisition (see, to that effect, ECtHR, 21 July 2016,
Mamatas and Others
v
.
Greece
, EC:ECHR:2016:0721JUD006306614, paragraph 112). In the present case, it is not for the Court to assess in an abstract way the amount of hypothetical compensation which the applicants should have received in the circumstances at issue. It is necessary, however, to note that, in the absence of being recapitalised, the banks concerned risked having to cease their activities and would have been threatened with a disorderly default (see paragraph 294 above). The applicants failed to establish that, in those circumstances, the true market value of their assets was such that it was necessary to pay them compensation.
Secondly and in any event, it should be noted that, as follows from paragraphs 277, 279 and 281 above, section 26 of the Law of 22 March 2013 provides that any party which considers itself to have been unfairly harmed in its right to property by resolution measures retains the right to bring an action before the competent national court for compensation. It is, therefore, necessary to conclude that the applicants have not established that they were unlawfully deprived of fair compensation.
It cannot therefore be considered that the first series of harmful measures exceeds the limits of what is appropriate and necessary in order to achieve the objectives pursued.
–
The disadvantages caused by the first series of harmful measures
In accordance with the case-law, it is necessary to determine whether the disadvantages caused by the restriction to the right to property examined are not disproportionate to the objectives pursued (see, to that effect, judgment of 27 February 2014, Ezz and Others v Council,
T‑256/11
,
EU:T:2014:93
, paragraphs
and
).
In that regard, firstly, it should be noted that the establishment of deposits with a bank is not risk-free. At the time of the facts, Article 7(1a) of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (
OJ 1994 L 135, p. 5
), as amended by Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005 amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 92/49/EEC and 93/6/EEC and Directives 94/19, 98/78/EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and 2002/87/EC in order to establish a new organisational structure for financial services committees (
OJ 2005 L 79, p. 9
), and by Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 (
OJ 2009 L 68, p. 3
), obliged the Member States to ensure that the coverage for the aggregate deposits of each depositor be set at EUR 100000 in the event of deposits being unavailable. In those circumstances, depositors had to be aware of the risk of loss, in the event of deposits being unavailable, of all or part of the amounts over EUR 100000 deposited with the banks concerned.
Secondly, it should be noted that section 3(2)(a) and (b) of the Law of 22 March 2013 provides that the shareholders of an institution under resolution are the first to be liable for any losses resulting from the implementation of resolution measures, whereas the creditors of such an institution are liable for those losses only after the shareholders. It follows therefrom that it is only after the shareholders of the banks concerned that their depositors were liable for losses resulting from the implementation of the harmful measures.
Thirdly, it should be noted that the Law of 22 March 2013 guarantees depositors of the banks concerned a level of protection at least as good as that they would have enjoyed in the event of the liquidation of those banks. It is apparent from section 3(2)(d) of that law that the measures adopted on the basis of that law cannot place the creditors financially in a less favourable position than that in which they would be in the event of the liquidation of those banks. Section 12(14) of that law states that, in the event of a restructuring, under section 12(1) of that law, of the debts and liabilities of an institution placed under resolution, the affected parties are to receive, in payment of their claims, at least the amount they would have received, under Cypriot law, in the event of the liquidation of those banks (see paragraph 24 above).
In the present case, it is not contested by the parties that, in the absence of public intervention, the banks concerned would probably have had to be liquidated. In those circumstances, sections 3(2)(d) and 12(14) of the Law of 22 March 2013 allowed it to be guaranteed that the uninsured depositors would not, on account of the application of the first series of harmful measures, be in a less favourable position than that in which they would have been had the Cypriot authorities not intervened (see, to that effect and by analogy, opinion of Advocate General Wahl in Kotnik and Others,
C‑526/14
,
EU:C:2016:102
, paragraph
).
Fourthly, it should be recalled that, according to paragraph 1.27 of the MoU of 26 April 2013, section 6(5) of Decree No 103 provides that, if the contributions of uninsured depositors of BoC exceed what is necessary in order to restore its equity capital, the resolution authority will determine the amount corresponding to overcapitalisation and will treat it as if the conversion had never taken place.
It must therefore be concluded that, in view also of the importance of the objectives pursued (see paragraphs 255 and 256 above), the disadvantages resulting from the application to the applicants of the first series of harmful measures are not manifestly disproportionate.
In the light of the foregoing, it must be concluded that the first series of harmful measures cannot be considered to be a disproportionate and intolerable interference, impairing the very substance of the applicants’ right to property. It cannot therefore be considered that the Council, by adopting Decision 2013/236, required the maintenance or continued implementation of a measure which infringes the applicants’ right to property, or that the Commission and the ECB, by lending their support to the first series of harmful measures, contributed to such an infringement.
It is necessary at present to examine whether, by lending their support to the second series of harmful measures, the Commission and the ECB contributed to an infringement of the applicants’ right to property.
(b)

The second series of harmful measures
The Court will examine the compatibility with the applicants’ right to property, in the first place, of the reduction of the nominal value from EUR 1 for each of their shares to a nominal value of one cent (see paragraphs 327 to 331 below) and, in the second place, the compatibility of the sale of the Greek branches (see paragraphs 332 to 359 below).
(1)

The reduction of the nominal value of ordinary shares in BoC
The applicants do not contest that, like the conversion of uninsured deposits in BoC, the reduction of the nominal value from EUR 1 for each of the ordinary shares in BoC to a nominal value of one cent, provided for by Decree No 103 and which participate in the recapitalisation of BoC referred to in paragraph 1.26 of the MoU of 26 April 2013, sought to restore the equity capital of BoC and thus to ensure the stability of the Cypriot financial system and of the euro area as a whole, in accordance with the case-law cited in paragraph 255 above.
The applicants claim, however, that, for the reasons set out in paragraphs 267, 269, 270, 301, 305 and 306 above, the measure reducing the nominal value of the shares of BoC was not adopted in conditions in accordance with the law, and is not proportionate to the objective pursued.
In that regard, it must be concluded that that measure, which is expressly provided for by Decree No 103, as amended, was adopted in conditions in accordance with the law for reasons similar to those set out in paragraphs 272 to 284 above.
That measure is also proportionate to the objective pursued, since the reasons set out in paragraphs 289 to 325 above apply to it
mutatis mutandis
. In particular, first of all, it should be noted that the reduction of the nominal value of the shares in BoC was designed to contribute to the recapitalisation of that bank, as is referred to in paragraph 1.26 of the MoU of 26 April 2013. As such and in light of the considerations set out in paragraphs 294 to 296 above, that measure was capable of contributing to the objective of ensuring the stability of the Cypriot financial system and that of the euro area as a whole. Next, it must be considered that that measure does not exceed the limits of what is appropriate and necessary in order to achieve that objective. For the reasons set out in paragraphs 302 to 316 above, the less restrictive alternatives referred to by the applicants either were not feasible, or would not have allowed the expected outcome to be achieved. Finally, it must be considered that, in the light also of the importance of the objective pursued, the measure at issue does not create disproportionate disadvantages. First, if the establishment of deposits with credit institutions, such as the banks concerned, is not risk-free, that is all the more the case with respect to the acquisition of shares in such institutions. Unlike depositors, whose deposits are, at least in part, protected in the event of deposits becoming unavailable, shareholders of banks bear, in principle, the full risk of their investments. It must in addition be pointed out that section 3(2)(a) and (b) of the Law of 22 March 2013 provides that the shareholders of an institution under resolution are to be the first to be liable for any losses resulting from the implementation of resolution measures, whereas the creditors of such an institution are liable for those losses only after the shareholders. The shareholders of BoC must therefore have been aware of the risk of losing their investment. Secondly, it should be noted that, like the depositors in BoC, its shareholders benefited from the guarantees referred to in section 12(14) of the Law of 22 March 2013.
Consequently, it cannot be considered that the reduction of the nominal value of the shares of BoC constitutes disproportionate and intolerable interference, impairing the very substance of the applicants’ right to property.
(2)

The sale of the Greek branches
The applicants claim that the sale of the Greek branches cannot be considered to be objectively justified, to be laid down in law or compatible with the principle of proportionality.
It must, however, be noted that the sale of the Greek branches referred to in paragraph 1.24 of the MoU and provided for by Decrees No 96 and 97 was, like the harmful measures previously examined, justified by the public interest objective of ensuring the stability of the Cypriot financial system and that of the euro area as a whole, in accordance with the case-law cited in paragraph 255 above.
It is apparent from the documents in the case file that that sale sought, in the light of the cross exposures between Greece and Cyprus, to prevent a general destabilisation of the financial systems of those two Member States.
In that regard, first, it is apparent from recital 302 of Commission Decision (EU) 2015/455 of 23 July 2014 on the State aid SA.34826 (2012/C), SA.36005 (2013/NN) implemented by Greece for Piraeus Bank Group relating to the recapitalisation and restructuring of Piraeus Bank SA (
OJ 2015 L 80, p. 49
), that the sale of the Greek operations of three Cypriot banks and, in particular, of the Greek branches of the banks concerned, was designed to safeguard the stability of the Greek banking system and ensure that the Cypriot banks could sell businesses before they risk losing any value.
Admittedly, the reasons why the Commission considered the sale of those branches to be necessary in order to ensure the stability of the Greek banking system are not clearly apparent from Decision 2015/455. However, as the applicants, in essence, agreed in their reply to the Court’s measures of organisation of procedure, those reasons are set out in an internal report of the ECB of 27 January 2013. It follows, in essence, from that document that the objective of a possible sale of the Greek branches was to avoid any contagion from the Cypriot banking system to the Greek financial system and, thereby, to maintain the stability of the latter. It concerned preventing a generalised run on banks in Greece in the event either of the bankruptcy of Laïki or a haircut of the deposits in BoC. As the ECB stated in reply to the Court’s measures of organisation of procedure, it was feared that, in light of the general situation in the Republic of Cyprus and on account of the fact that their deposits were subject to the Cypriot deposit guarantee scheme (see paragraph 456 below), the depositors with the Greek banks might withdraw their deposits.
The viability of the Greek branches, or indeed that of the banks concerned, to which they belonged, would have been negatively affected as a result, while the value of their assets would have diminished as a consequence. Such developments would have risked undermining the restored confidence of the public in the Greek banking sector, whose deposits started increasing after two years of pronounced decline. There was a high risk of a run on the banks in Greece, which, in turn, could have exacerbated the weak financing capacity of Greek banks and would have required an increase of ELA granted to those banks to a level potentially exceeding the real capacity of the Eurosystem central banks.
Secondly, it follows from the replies of the applicants, the Commission and the ECB to the Court’s measures of organisation of procedure that the sale of the Greek branches sought also to protect the Cypriot banking system from a contagion effect resulting, in particular, from a possible deterioration of the economic situation in Greece. As is stated in a Commission report of May 2013, to which the latter refers in its reply to the Court’s measures of organisation of procedure, the Cypriot banking system and, in particular, Laïki were particularly exposed to the Greek economic difficulties.
In the light of the foregoing, it is necessary to examine, first, whether the sale of the Greek branches was in accordance with the law and, secondly, whether, in the light of the general interest objective referred to in paragraphs 333 and 334 above, it constitutes a disproportionate and intolerable interference, impairing the very substance of the applicants’ right to property.
In that regard, first, it must be noted that, for reasons similar to those set out in paragraphs 272 to 285 above, the sale of the Greek branches was laid down in law.
Secondly, as regards the proportionality of the sale of the Greek branches, first of all, it must be noted that it was appropriate for achieving the objective pursued by reducing the cross exposures between the Greek and Cypriot banking systems.
Next, it is not apparent from the documents in the case file that the objectives pursued could have been achieved by means of measures which are less restrictive than the sale of the Greek branches. In the context of their plea alleging an infringement of the principle of non-discrimination, the applicants, admittedly, claim that ‘distributing the cost of the bail-in among the Cypriot taxpayers’ would have permitted the objectives to be achieved.
It must, however, be noted that, as the applicants, in essence, confirmed during the hearing, such a measure amounted to a simple undertaking that the cost of the recapitalisation and restructuring of the banks concerned would be borne by the budget of the Republic of Cyprus. Firstly, such an approach would not have been feasible. As the Commission correctly notes in reply to the Court’s measures of organisation of procedure, the Republic of Cyprus did not, at the time of the facts, have the funds necessary for that purpose. It was also deprived of access to international capital markets. In those circumstances, as the applicants acknowledge in their reply to the Court’s measures of organisation of procedure, it is difficult to see how the Republic of Cyprus could have recapitalised the banks concerned without external financial assistance.
It should be noted that the amount of FAF, limited to EUR 10 billion, was calculated according to the financial needs of the Republic of Cyprus in the absence of any public capital injection in favour of the banks. In so far as, according to a report of March 2013 of the Pacific Investment Management Company (PIMCO) (‘the PIMCO report’), the recapitalisation of the banks concerned required, at the end of 2012, a total amount of almost EUR 7.8 billion, the solution suggested by the applicants would have necessitated either an increase of the amount of FAF, or the use of a substantial amount thereof in order to recapitalise the banks concerned.
The first of those two options presented two major difficulties, the applicants at no time explaining how the Republic of Cyprus could have resolved them. First, the ESM was under no obligation to grant the Republic of Cyprus FAF of more that EUR 10 billion. By contrast, the ESM could legitimately consider that it was necessary to limit the size of that envelope in order to safeguard its ability to make future interventions. Secondly, an increase in the amount of FAF for the purpose of recapitalising the banks concerned would have contributed to increasing the Cypriot public debt to an unsustainable level (see paragraph 303 above).
The second of those two options would, in light of the documents in the case file, not have been more viable. First, devoting a substantial share of the EUR 10 billion of FAF to the recapitalisation of the banks concerned would have been incompatible with the conditions for the grant of FAF, which provided that the latter would not be used for that purpose. Secondly, regardless of those conditions, it must be noted that such an approach would necessarily have required a significant reallocation of amounts granted to the Republic of Cyprus in the form of FAF. Therefore, all or part of the EUR 7.8 billion which would then have been devoted to the recapitalisation of the banks concerned could no longer have been devoted to the budgetary needs of the Republic of Cyprus, to the buy-back, by the latter, of bonds or to the recapitalisation of Cypriot banks other than the banks concerned. The applicants themselves acknowledge that, in the absence of financial assistance, the Republic of Cyprus would probably have been incapable of meeting its financial obligations, so that its solvency would have been compromised. In the light of the risks which would have resulted for the stability of the entire euro area, it is thus probable that FAF would not allow the objective of general interest pursued to be achieved.
Secondly, unlike the sales of the Greek branches, the simple fact that the costs of the recapitalization and restructuring of the banks concerned were borne by the budget of the Republic of Cyprus could not have been capable of reducing the cross exposures between the Hellenic Republic and the Republic of Cyprus. Such a measure would have left intact the links between the banks concerned and the Greek banking system.
Finally, as regards the disadvantages caused by the sale of the Greek branches, it is apparent, indeed, from recital 294 of Decision 2015/455, that Piraeus Bank had acquired the loan portfolios of the Greek operations of the three Cypriot banks, including the banks concerned, at a price well below their nominal value. It is also apparent from that recital that the purchase price of those branches had been decreased to reflect the future losses estimated by PIMCO in the framework of a stress test. According to the ECB’s reply to the Court’s measures of organisation of procedure, that test sought to determine the capital needs of the participating banks and was part of an audit of the Cypriot banking system which PIMCO had been entrusted with conducting by the CBC and which that company carried out under the direction of a committee consisting of representatives of the CBC, the Commission, the ECB, the ESM, the European Banking Authority and the IMF as observer. It resulted from that test that the risk of the loan losses exceeding those already reflected in the low purchase price was limited.
The Commission also stated, in recital 298 of Decision 2015/455, that the consideration ultimately paid by the Bank for the acquisition of the Greek activities of the three Cypriot banks concerned, including the Greek branches, was far lower than the book value of the acquired portfolio and even lower than the value of the loans after it was adjusted downward to reflect the future loan losses estimated under the stress test. The Commission concluded therefrom that the acquisition price could be considered to be negative, which is supported by the fact that Piraeus Bank had booked a large negative goodwill after the acquisition and seen its capital increase.
It cannot therefore be excluded that the banks concerned suffered significant financial loss as a result of the sale of the Greek branches. As is apparent from recital 74 of Decision 2015/455:
‘The assets transferred to the [Piraeus] Bank amounted to approximately EUR 18.9 billion and the liabilities amounted to approximately EUR 15 billion. However, the parties to the transaction agreed to take into account the amount of losses that was forecast in the [company] PIMCO report for the banks in Cyprus, under an adverse scenario. According to the PIMCO report, the value of the assets that would be transferred to the [Piraeus] Bank amounted to approximately EUR 16.5 billion. The liabilities transferred amounted to approximately EUR 14.5 billion.’
However, it is apparent from recitals 75 and 303 of Decision 2015/455 that that sale took place in the context of an open, transparent and non-discriminatory procedure, during which three tenderers submitted offers, of which only that of Piraeus Bank was valid.
The applicants do not present any arguments capable of showing that that sale procedure was vitiated. They merely indicate that the price of the Greek branches was calculated on the basis of the valuation carried out by PIMCO in the context of its report, the role of which was essentially to emphasise the capital needs of the banks concerned, without the participation of the management or the shareholders and depositors of those banks, despite the disagreement of their respective management boards, without transparency and in defiance of International Financial Reporting Standards (IFRS).
In that regard, firstly, it must be noted that the applicants’ arguments are based on the premiss that the sale price of the Greek branches was ‘calculated’. However, that premiss is incorrect, since that price was the result of the best offer submitted in the context of an open tendering procedure (see paragraph 351 above).
Secondly, even assuming that the result of the PIMCO report, the aim of which was not specifically to value the Greek branches with a view to sale, but to assess, more generally, the value of Cypriot banks on the basis of a base scenario and an unfavourable scenario, was vitiated by error, the sale of those branches was not, in itself, so vitiated. It is in no way established that the tenderers which participated in the procedure for the sale of the Greek branches were prohibited from offering a price which was different from that resulting from the PIMCO report.
Thirdly, the applicants invoke, in the context of their reply to the Court’s measures of organisation of procedure, an announcement of the CBC of 7 June 2013, from which it follows that the price and conditions of sale of the Greek branches were determined ‘at a political level’ by the Hellenic Republic and the Republic of Cyprus during two Euro Group meetings in March 2013. At the hearing, the applicants pointed out that they invoked that announcement in order to show that the sale of the Greek branches had been carried out following a procedure lacking in transparency, at a price which was not the market price.
The conclusions that the applicants draw from the announcement of the CBC of 7 June 2013 cannot, however, be accepted. Without it being necessary to rule on the probative value of the announcement at issue, it suffices to note that there is nothing in the case file which indicates that the price and conditions agreed by the Greek and Cypriot authorities ‘at a political level’ bound the tenderers participating in the sale of Greek branches.
The conclusions that the applicants draw from a press article of 19 February 2015 entitled ‘Did the troika defraud billions at the expense of thousands of depositors in Cyprus?’ also do not substantiate their position. Contrary to the applicants’ assertions, it in no way results from that article that the Euro Group ‘accepted’ that the sale of the Greek branches should take place at a price significantly below their value. It also does not result therefrom that the ECB ‘conceived and articulated’ that sale and still less that it determined the price thereof. Admittedly, that article states that ‘the ECB and the European Commission devised an ambitious plan’, according to which the Cypriot banks would be forced to sell ‘their branches in Greece in order to guard the Greeks from the Cypriot shock’. For that purpose, however, the article in question relies on the ECB internal report of 27 January 2013 referred to in paragraph 336 above and which examines different scenarios for the separation of the Greek branches and the banks concerned in the light of the risk of contagion to the Greek financial system. However, as the ECB aptly notes, the fact that its services examined such scenarios in an internal document does not mean that the ECB ‘conceived and articulated’ the sale of the Greek branches, or that it played a role in the determination of the sale price. On the contrary, as is apparent from paragraphs 351 to 356 above, that price results from an open, transparent and non-discriminatory procedure.
Consequently, in view also of the importance of the objectives pursued, it cannot be considered that the disadvantages created by the sale of the Greek branches are disproportionate.
The applicants therefore failed to establish that the sale of the Greek branches, provided for by Decrees No 96 and 97 and referred to by paragraph 1.24 of the MoU of 26 April 2013, constituted a disproportionate and intolerable interference, impairing the very substance of their right to property.
In the light of the foregoing, it cannot be considered that the second series of harmful measures is vitiated by an infringement of the right to property. It follows that the Commission and the ECB did not, by lending their support to the two series of harmful measures referred to in paragraphs 256 and 257 above, contribute to an infringement of the applicants’ right to property. The Council also did not, by adopting Decision 2013/236, require the maintenance or continuous implementation of a measure vitiated by an illegality of that nature.
The applicants’ arguments alleging an infringement of Article 14.4 of the ECB Statute and of the right to sound administration, and a failure to act fairly and with consistency, cannot call that conclusion into question.
(c)

The alleged infringement of Article 14.4 of the ECB Statute, the right to sound administration, and the requirement to act fairly and with consistency
In order to show the existence of an infringement of their right to property, the applicants invoke an infringement of Article 14.4 of the ECB Statute, of the obligation to act fairly and with consistence and of the principle of sound administration, which are essential to the principle of proportionality, which is itself one of the conditions which must be satisfied by any restriction of the right to property. In support of that claim, the applicants put forward, in essence, three series of arguments.
In the first place, the applicants claim that the Euro Group infringed the principle of sound administration by deciding on harmful measures in breach of ‘fundamental principles of democracy’. The applicants consider that it follows from those principles that, as a result of their direct knowledge of the society and its needs, the national authorities are, in principle, the best placed to appreciate what is in the public interest. According to the applicants, the adoption of the harmful measures was not really decided by the Cypriot authorities, but was, in reality, imposed by the Euro Group, which is not accountable to any electorate, is not concerned with the national interests of Cyprus and has no direct knowledge of the society and its needs. By contrast, the Euro Group took a decision based on the concerns and requirements of the lenders.
The ECB disputes the applicants’ arguments.
In that regard, it suffices to note that, as is apparent from paragraphs 105 to 133 above, it cannot be considered that the Euro Group required the Republic of Cyprus to adopt the harmful measures. The present argument can therefore only be rejected, without the need to determine whether the alleged infringement of ‘fundamental principles of democracy’ is of any relevance for the purposes of the assessment of the existence of an infringement of the applicants’ right to property.
In the second place, the applicants claim that the ECB disregarded the requirements of fairness and consistency, in so far as it decided to support the bail-in of the banks concerned, even though, in a letter of 11 February 2013, addressed to the respective executive directors of those banks, the Office Director of the Governor of the CBC assured them, on behalf of the Eurosystem, that the rights of their depositors would not be restricted.
The defendants have not taken a position with regard to that argument.
In that regard, without prejudice to the question whether the alleged failure to act fairly and with consistency is of any relevance for the purposes of the assessment of the existence of an infringement of the applicants’ right to property, it suffices to note that that argument is indistinguishable from one of the arguments they invoke in support of their complaint alleging an infringement of the principle of the protection of legitimate expectations, with which it will, consequently, be examined (see paragraphs 407 to 423 below).
In the third place, the applicants criticise the conduct of the ECB in relation to ELA. According to the applicants, that conduct is vitiated by unfairness, inconsistency and an infringement of Article 14.4 of the ECB Statute, and of the principle of sound administration, which the ECB contests.
In support of their arguments, firstly, the applicants put forward, in essence, that the legal framework governing ECB intervention in relation to ELA infringes the principles of sound administration and the requirement of consistency, which are an integral part of the principle of proportionality, and infringes the requirement that any limitations to the right to property must be laid down in law. In that regard, the applicants claim that ELA is subject to the condition that the recipient be solvent. According to the applicants, the concept of solvency for the purposes of ELA is not legally defined. The ECB is therefore not required to determine whether the potential recipient satisfies a strict test of solvency laid down in law, but could, on the contrary, consider a bank to be solvent, and consequently continue to authorise ELA, on the basis of the prospect of a grant of financial assistance.
At the same time, the ECB could, as a result of its participation in the Euro Group and as it did in the present case, decisively influence the decision to grant aid and the conditions to which such a grant was subject. It also participated, as a result of belonging to the troika, in monitoring compliance, by the Republic of Cyprus, with the conditionality. A clear moral hazard follows therefrom, since the ECB can liberally approve ELA in the belief that it can demand its repayment as a condition for any financial assistance.
Secondly, the applicants claim that the ECB acted inconsistently and unfairly by failing to oppose, until 21 March 2013, ELA to the banks concerned, while stating that ELA was reserved to solvent banks. According to the applicants, the ECB was already aware of the insolvency of Laïki before 21 March 2013. In support of their arguments, the applicants invoke, first, the PIMCO report, from which it was apparent that the banks concerned were ‘economically insolvent’, and, secondly, a press article dated 17 October 2014 and referred to in paragraph 149 above, from which it was apparent, in particular, that the Governor of the Bundesbank had already mentioned the insolvency of Laïki during a meeting of the Board of Governors in December 2012.
Thirdly, the applicants complain, in essence, about the inconsistent, disproportionate and unfair character of the ECB’s conduct, in so far as the latter, initially, between October 2011 and March 2013, demonstrated a liberal attitude by hastening to grant Laïki almost unlimited access to ELA, only to, subsequently, on 21 March 2013, suddenly stop ELA.
Fourthly, the applicants add, at the reply stage, that they are not in a position to contest the analysis which led the ECB Board of Governors to adopt its decision of 21 March 2013. According to the applicants, that decision contains no reasoning and might not be the result of a genuine analysis. In that respect, as the applicants clarified at the hearing, that decision is indicative of the unsuitability of the legal framework concerning ELA.
Fifthly, the applicants claim that the conduct of the ECB with regard to ELA constitutes a manifest and grave breach of its discretionary powers under Article 14.4 of its statute.
The defendants contest the applicants’ line of argument.
In that regard, it should be noted that it is the application of the harmful measures that are likely to be the direct source of the financial loss which the applicants claim to have suffered (see paragraph 86 above). As is apparent from paragraphs 134 to 155 above, the ECB did not require the adoption of the harmful measures either by its press release of 21 March 2013, by the decision referred to in that press release, or by the previous decisions ‘to continue the granting of ELA’. In those circumstances, it cannot be considered that possible legal defects affecting those acts are capable of establishing a lack of proportionality of the harmful measures or their infringement of the requirement that any restriction of the right to property be laid down in law. That conclusion is especially pressing with respect to the applicants’ arguments relating to the alleged unsuitability of the legal framework concerning ELA (see paragraphs 370, 371 and 374 above). Since that legal framework is not the same as that in which the harmful measures were adopted (see, in that regard, paragraphs 272 to 284, 329 and 340 above), its alleged unsuitability can in no way demonstrate that those measures were not adopted in accordance with conditions laid down in law.
In any event, it must be noted that the applicants’ arguments do not show that the conduct of the ECB in relation to ELA is vitiated by illegality.
Firstly, the applicants’ criticisms alleging a lack of precision relating to the concept of solvency cannot succeed. The fact that the ECB, in the exercise of its powers under Article 14.4 of the ECB Statute, and of its wide discretion, may interpret or apply a financial concept in the context of a complex economic assessment cannot, in itself, constitute an illegality.
The applicants’ arguments, according to which the multiplicity of functions exercised by the ECB is contrary to the principle of proportionality due to a lack of consistency or an infringement of the principle of sound administration, can also not be accepted. In that regard, it is necessary to note the scope of the requirement for consistency in the context of the assessment of the need for and proportionality of a measure. According to the case-law, a measure is suitable for securing the attainment of the objective pursued only if it genuinely reflects a concern to attain it in a consistent and systematic manner (judgment of 12 January 2010, Petersen,
C‑341/08
,
EU:C:2010:4
, paragraph
). However, the applicants in no way explain how the alleged multiplicity of functions exercised by the ECB and the resulting ‘moral hazard’ are likely to hinder the consistent and systematic attainment of the objective of ensuring the stability of the euro area financial system pursued by the harmful measures. They also fail to establish how that fact is capable of hindering their right to sound administration.
In addition, it must be noted that the documents in the case file do not substantiate the applicants’ arguments relating to the multiplicity of functions exercised by the ECB. As regards the ECB’s participation in the Euro Group, it must be pointed out that the statements of 25 March (see paragraphs 105 to 118 above), 12 April, 13 May and 13 September 2013 (see paragraphs 170 and 171 above) are the only contested acts of which the Euro Group is the author. It is apparent from paragraphs 116 and 117 above that the statement of 25 March 2013 is of a purely informative nature and does not express a definitive opinion relating to the grant of FAF or relating to the conditions which the Republic of Cyprus must satisfy to benefit therefrom. As regards the statements of 12 April, 13 May and 13 September 2013, they are limited, as was noted in paragraph 170 above, to describing very briefly and to welcoming certain measures adopted by the Cypriot authorities, as well as to expressing the opinion that those measures are, in particular, capable of contributing to reducing the financial difficulties confronting the Republic of Cyprus. In those circumstances, it is not possible to consider that the ECB’s participation in Euro Group meetings allowed the ECB to decisively influence the grant of FAF or the conditionality which the Republic of Cyprus had to satisfy in order to benefit therefrom.
As regards the ECB’s participation in the troika, it suffices to note that the monitoring of compliance with the conditionality assumes that the latter had been determined previously. Contrary to what is, in essence, claimed by the applicants, the ECB cannot therefore derive from the monitoring role conferred on it by Article 13(7) of the ESM Treaty the power to request reimbursement as a condition for any financial assistance.
Secondly, it cannot be considered that the ECB behaved inconsistently, arbitrarily or unfairly by not opposing ELA until 21 March 2013, although it had allegedly already been aware of the insolvency of Laïki on an earlier date.
In that regard, it should be noted that, under Article 14.4 of the ECB Statute, the role of the Governing Council of the ECB is limited, in the present case, to verifying whether ELA interfered with the objectives and tasks of the ESCB. In particular, the Governing Council is required, for the purpose of ensuring compliance with the prohibition of monetary financing referred to in Article 123 TFEU and Article 21.1 of the ECB Statute, to verify that ELA was not granted to an insolvent bank (see paragraph 142 above). As was noted in paragraph 143 above, at the time of the facts, the ECB did not have any supervisory powers over EU credit institutions, for which the national supervisors had exclusive competence. In those circumstances, the ECB had to rely on information provided to it by those authorities relating to the solvency of banks benefiting from ELA. According to the ECB’s written submissions, which the applicants have not contested in that regard, from September 2011, the CBC informed the Governing Council of the ECB of its assessment to the effect that the banks concerned remained solvent. Since the financial soundness of those banks steadily deteriorated, as the ECB again contends without being contradicted by the applicants, the assessment of the CBC relating to the solvency of Laïki was increasingly based on the prospect of an imminent grant of financial assistance to the Republic of Cyprus. When that prospect faded due to the rejection, on 19 March 2013, by the Cypriot Parliament, of the introduction of a levy on bank deposits, the Governing Council of the ECB opposed maintaining the existing level of ELA to the banks concerned. As is apparent from the observations of the President of the ECB expressed at the press conference of 4 April 2013, the Governing Council considered, when the decision of 21 March 2013 was taken, that, ‘in the absence of a programme, these banks would not have been solvent and viable’ and that at ‘that moment in time, … there was no programme in place’.
The mere fact that a private company such as PIMCO or a member of the Governing Council of the ECB had already previously expressed an opinion different from that of the CBC with regard to the solvency of Laïki cannot suffice in order to establish that that council should already have altered its assessment — and therefore opposed maintaining the existing level of ELA at an earlier date.
Thirdly, it also cannot be considered that the ECB behaved inconsistently, disproportionately and unfairly by opposing, on 21 March 2013, the maintenance of the existing level of ELA, although it had authorised ELA since October 2011. Far from amounting to an abrupt reversal without any justification, the decision of the Governing Council of the ECB of 21 March 2013 merely responds to a change of circumstances, which was described in paragraph 384 above.
Fourthly, it is necessary to examine the applicants’ argument alleging an absence of or inadequate statement of reasons vitiating the decision of the Governing Council of the ECB of 21 March 2013.
The ECB contends that that argument should be rejected. First, it puts forward that, since it was raised only at the reply stage, that argument is new and, therefore inadmissible.
Secondly, the ECB notes that the decision of the Governing Council of the ECB of 21 March 2013 is not public. According to the ECB, the lack of a statement of reasons for that decision cannot be deduced from that fact that it is not public. Since that decision is addressed to the CBC, it suffices that those reasons were communicated to the CBC’s representative during the meeting of the Governing Council of the ECB.
At the outset, it is necessary to dismiss the plea of inadmissibility raised by the ECB, since a lack or inadequacy of a statement of reasons is an infringement of an essential procedural requirement within the meaning of Article 263 TFEU, and constitutes, as such, a matter of public policy, which the Court may, at any time, decide of its own motion (see, to that effect, judgments of 20 February 1997, Commission v Daffix,
C‑166/95 P
,
EU:C:1997:73
, paragraph
; of 2 April 1998, Commission v Sytraval and Brink’s France,
C‑367/95 P
,
EU:C:1998:154
, paragraph
, and of 2 December 2009, Commission v Ireland and Others,
C‑89/08 P
,
EU:C:2009:742
, paragraph
).
It is therefore necessary to examine the merits of the present argument.
It must be noted that, where an EU institution, such as the ECB in the present case, enjoys broad discretion, the review of observance of certain procedural guarantees is of fundamental importance. Among those guarantees is the obligation, for the ECB, to give sufficient reasons for its decisions (see, to that effect, judgment of 16 June 2015, Gauweiler and Others,
C‑62/14
,
EU:C:2015:400
, paragraph
).
According to the case-law, the statement of reasons required by Article 296 TFEU must be appropriate to the act and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in question in such a way as to enable the interested parties to ascertain the reasons for the measure and to enable the courts of the European Union to exercise their power of review. In that regard, first of all, the obligation to state reasons must be assessed in relation to the circumstances of the case, in particular the contents of the act and the nature of the reasons invoked (see, to that effect, judgment of 1 July 2008, Chronopost and La Poste v UFEX and Others,
C‑341/06 P and C‑342/06 P
,
EU:C:2008:375
, paragraph
). It is not required that the reasons specify all the relevant elements of fact and law, in so far as the question whether the reasons for an act satisfy the requirements of Article 296 TFEU must be assessed in the light of not only its wording, but also its context and all of the legal rules governing the matter in question (see judgment of 6 September 2006, Portugal v Commission,
C‑88/03
,
EU:C:2006:511
, paragraph
and the case-law cited).
Next, a statement of reasons may be implicit, on condition that it enables the interested parties to know the reasons for which the measure at issue was made and provide the competent court with sufficient material for it to exercise its power of review (see, to that effect, judgments of 7 January 2004, Aalborg Portland and Others v Commission,
C‑204/00 P, C‑205/00 P, C‑211/00 P, C‑213/00 P, C‑217/00 P and C‑219/00 P
,
EU:C:2004:6
, paragraph
, and of 8 February 2007, Groupe Danone v Commission,
C‑3/06 P
,
EU:C:2007:88
, paragraph
).
Finally, an examination of whether the obligation to provide a statement of reasons has been satisfied may be undertaken only on the basis of a decision that has been formally adopted. However, other documents, such as a press release, can permit the essential elements of the decision at issue to be known and to allow the interested parties to ascertain the reasons for which that decision was made, and the court to exercise its power of review (see, to that effect, judgment of 16 June 2015, Gauweiler and Others,
C‑62/14
,
EU:C:2015:400
, paragraph
).
In the present case, it should be noted that it is on the sole basis of the press release of 21 March 2013 that the applicants complain that the ECB failed to provide any grounds in support of its decision of that day to oppose maintaining the current level of ELA from 26 March 2013. However, that press release and that decision are not to be considered the same. As is apparent from paragraphs 145 and 146 above, that press release merely refers to the existence of that decision. The latter is not included in the file. It is apparent from the written pleadings of the ECB that that decision has not been published and that its grounds were communicated to the representative of the CBC, who was the sole addressee thereof. In those circumstances, it is necessary to determine whether the press release of 21 March 2013 permits the interested parties to ascertain the reasons for the decision to which it refers and the Court to exercise its powers of review.
In that regard, first of all, it is apparent from the press release of 21 March 2013 that ‘[t]he Governing Council of the [ECB] decided to maintain the current level of [ELA] until … 25 March 2013’ and that ‘[t]hereafter, [ELA] could only be considered if an [EU or IMF] programme [was] in place that would ensure the solvency of the concerned banks’. It follows therefrom, implicitly but necessarily, that the solvency of the banks referred to would not have been ensured in the absence of such a programme. The observations of the President of the ECB expressed during the press conference of 4 April 2013 (see paragraph 384 above) concerning the decision of 21 March 2013 of the Governing Council of the ECB support that interpretation:
‘[ELA] can be extended only to solvent and viable banks. Now, it so happened that in the absence of a programme, these banks would not have been solvent and viable. At that point in time the Governing Council assessed there was no programme in place, and that’s why it had to do what it did.’
Next, it must be noted that, when the press release of 21 March 2013 was published, the existence and nature of the difficulties which faced the Republic of Cyprus and the banks referred to were known. It was also known that the Republic of Cyprus had submitted a request for financial assistance to the president of the Euro Group, that such assistance would be granted to it in the context of a macroeconomic adjustment programme to be set out in the form of a MoU and that the Cypriot Parliament had rejected the imposition of a measure that the Cypriot authorities had undertaken to take for the purpose of mobilising internal resources in order to limit the extent of the financial assistance connected with that programme (see, inter alia, paragraphs 13 to 15, 18 and 20 to 22 above).
Finally, it should be noted that, as is apparent from paragraph 142 above, the rules governing ELA prohibit the grant thereof to insolvent credit institutions.
Consequently, in any event, in the circumstances of the present case, the wording of the press release of 21 March 2013, however laconic it may be, permitted the applicants to understand, in view in particular of the context, from the applicable legal rules and from the observations of the President of the ECB expressed during the press conference of 4 April 2013, that the insolvency of the banks referred to in the absence of a suitable adjustment programme prevented the current level of ELA from being maintained. That press release permits the courts of the European Union to exercise their powers of review. Therefore, the applicants’ argument concerning the reasoning of the decision of the Governing Council of the ECB of 21 March 2013 must be rejected.
Fifthly, as regards the alleged infringement of Article 14.4 of the ECB Statute, it suffices to note that the applicants rely on mere assertions, and in no way explain how the conduct of the ECB with regard to ELA infringes that provision.
Consequently, the applicants have failed to establish that the conduct of the ECB with regard to ELA infringed the principle of sound administration, Article 14.4 of the ECB Statute and the obligations of fairness and consistency. The applicants’ third series of arguments must therefore be rejected.
Since the applicants’ three series of arguments have thus been rejected, it is necessary to reject the plea alleging an infringement of Article 14.4 of the ECB Statute, the requirements of fairness and consistency and of the principle of sound administration.
2.

The existence of a possible infringement of the principle of protection of legitimate expectations
First of all, it should be noted that the principle of protection of legitimate expectations is one of the fundamental principles of the European Union (judgment of 24 March 2011, ISD Polska and Others v Commission,
C‑369/09 P
,
EU:C:2011:175
, paragraph
). The right to rely on that principle presupposes that precise, unconditional and consistent assurances, originating from authorised, reliable sources, have been given to the person concerned by the competent authorities of the European Union. That right applies to any individual whom an institution, body or agency of the European Union, by giving that person precise assurances, has led to entertain well-founded expectations (see judgment of 19 July 2016, Kotnik and Others,
C‑526/14
,
EU:C:2016:570
, paragraph
and the case-law cited).
In the present case, the applicants consider that the defendants committed a serious breach of the principle of protection of legitimate expectations. They claim that the defendants provided them with precise and consistent assurances that the harmful measures would not be imposed on the Republic of Cyprus. Those assurances resulted, firstly, from a letter of 11 February 2013 sent to the respective executive directors of the banks concerned by the Office Director of the Governor of the CBC, on behalf of the Eurosystem, secondly, from the commitment of 21 January 2013 by the Euro Group regarding the possibility of offering FAF on the basis of a political agreement reached in November 2012, thirdly, from the treatment of the MSCE which benefited from financial assistance before the Republic of Cyprus and, fourthly, from the ECB decision to authorise ELA for a significant period of time.
The applicants add that those acts and conduct are capable of giving rise to a legitimate expectation on their part, not only taken individually, but also taken together. According to the applicants, those acts and conduct have a cumulative effect which strengthened the assurance that no bail-in would be adopted.
(a)

The existence of a legitimate expectation derived from the letter of 11 February 2013
The applicants claim that, in a letter of 11 February 2013, addressed to the respective executive directors of the banks concerned, the Head of Governor’s Office of the CBC provided to those directors, on behalf of the Eurosystem, clear, precise, unconditional and lawful assurances that the rights of their depositors would not be restricted (see also paragraphs 366 to 368 above). In that regard, the applicants note, first, that under Article 282(1) TFEU, the Eurosystem is composed of the ECB and the central banks of the MSCE and is to conduct the monetary policy of the Union and, secondly, that the mission statement of the Eurosystem states that it speaks with one voice. Any reasonable observer would therefore presume that the letter at issue bound the Eurosystem, including the ECB, which would have infringed the applicants’ legitimate expectations by subsequently requiring that the Republic of Cyprus comply with the conditionality. If, however, the ECB considered that that letter did not correctly reflect its position, it should have issued a public statement in order to correct the errors affecting it. The ECB, however, did not issue any statement of that sort, thus incurring liability itself.
The defendants contest the applicants’ arguments.
In that regard, in the first place, it should be noted that nothing in the letter of 11 February 2013 allows a prudent and circumspect reader to conclude that its contents are attributable to the Eurosystem or to the ECB.
First of all, that letter is addressed to the respective executive directors of the banks concerned by a person signing in the capacity as Head of Governor’s Office and Communications of the CBC. That person does not at any time claim to be writing on behalf of the Eurosystem. On the contrary, as is apparent from the text itself of that letter, that person merely expresses the opinion of the CBC and makes no reference either to the bodies or to the operating rules of the Eurosystem:
‘Following the publication of an article in the
Financial Times
dated 10 February 2013 and titled “Radical rescue proposed for Cyprus”, the [CBC] wishes to stress that any action aimed at reducing, depriving or restricting the property rights of depositors, contradicts the provisions of the Constitution of the Republic of Cyprus and of Article 1 of Additional Protocol No 1 to the [ECHR], provisions which protect the right to own property and which are crucial to the functioning of a free market economy.
Hence, any suggestion to the contrary is not only legally unfounded but it cannot merit serious consideration.’
It is true that, as the applicants point out, the CBC logo is included in the heading of that letter, followed, below and in capital letters, by the wording ‘Central Bank of Cyprus’ and ‘Eurosystem’.
However, the mere presence of that heading cannot allow a prudent and circumspect reader to consider that that letter is attributable to the Eurosystem. On the contrary, the impression produced by that heading is, first, that the word ‘Eurosystem’ is purely informative, indicating merely that the CBC is a member of the Eurosystem in its capacity as a central bank of a MSCE. Firstly, the letters composing the word ‘Eurosystem’ in the heading of the letter of 11 February 2013 are situated below those composing the wording ‘Central Bank of Cyprus’ and are clearly smaller than the latter.
Secondly, as the applicants themselves acknowledged in response to the Court’s measures of organisation of procedure, the mention ‘Eurosystem’ probably forms an integral part of the CBC logo and is included, as such, on all, or at least the majority, of letters and documents issued by the latter. No conclusion can therefore be drawn from the mere presence of that mention on the letter of 11 February 2013, except that all, or at least the majority, of letters issued by the CBC are attributable to the Eurosystem on the sole ground that they state that the first belongs to the second.
Thirdly, the footer of the letter of 11 February 2013, which identifies the address and the Internet site of the CBC, makes no reference to the Eurosystem.
In the second place, it should be noted that the national central banks carry out two types of function, namely, firstly, those which are provided for by the ECB Statute and, secondly, those which are not. The latter cannot be attributed to the ESCB, or to the Eurosystem. As the ECB correctly notes, Article 14.4 of the ECB Statute provides that the national central banks may perform functions other than those specified in the ECB Statute, unless the ECB Governing Council finds, by a majority of two thirds of the votes cast, that they interfere with the objectives and tasks of the ESCB. Conversely, the functions that the national central banks perform on their own responsibility and liability are not to be regarded as being part of the functions of the ESCB (see paragraphs 138 to 140 above).
At the time of the facts, the ECB Statute does not mention, amongst the objectives of the ECB or the ESCB, the determination of the conditions for recapitalisation or the resolution of financial institutions. They therefore concern functions which are performed on the responsibility and liability of national central banks. In those circumstances, a prudent and circumspect reader could not reasonably consider that an approach adopted by the CBC concerning the determination of the conditions for recapitalisation or the resolution of financial institutions was attributable to the Eurosystem and bound the latter. On the contrary, such a reader should necessarily consider that the CBC expressed itself in the letter of 11 February 2013 in its own name and as a national central bank.
Contrary to what is, in essence, claimed by the applicants, neither Article 282(1) TFEU, nor the Eurosystem mission statement call that conclusion into question.
As regards, in the first place, Article 282(1) TFEU, it must be noted that it concerns exclusively the role of the Eurosystem with respect to monetary policy. That provision is worded as follows:
‘The [ECB], together with the national central banks, shall constitute the … [ESCB]. The [ECB], together with the national central banks of the [MSCE], which constitute the Eurosystem, shall conduct the monetary policy of the Union.’
The applicants therefore could not reasonably deduce from Article 282(1) TFEU that the Eurosystem would guarantee the maintenance of the value of deposits in the banks concerned in the event of the recapitalisation or resolution of those banks.
As regards, in the second place, the mission statement of the ECB and the Eurosystem, it should be noted, firstly, that that statement amounts to a simple declaration of intent devoid of any legal value (see, by analogy, judgment of 23 September 2015, ClientEarth and International Chemical Secretariat v ECHA,
T‑245/11
,
EU:T:2015:675
, paragraph
and the case-law cited) and which was, in that regard, not published either in the L-series of the
Official Journal of the European Union
, which is intended for the publication of legally binding measures, or in the C-series of that journal, which publishes information, recommendations and opinions concerning the European Union (see, by analogy, judgment of 13 December 2012, Expedia,
C‑226/11
,
EU:C:2012:795
, paragraph
). As the ECB rightly pointed out in reply to the Court’s measures of organisation of procedure, that statement is, by its very nature, aspirational and is not intended to impose obligations on its authors, or to exhaustively identify all of the objectives and competences of the members of the Eurosystem.
Secondly, the contents of that statement do not allow the conclusion that the Eurosystem has competence concerning the protection of deposits in the event of the recapitalisation or resolution of a bank. On the contrary, it follows from that statement that the main objective of the Eurosystem is to maintain price stability. Admittedly, that statement states also that the Eurosystem, acting as the main financial authority, seeks to safeguard financial stability and to promote financial integration in the EU. However, a prudent and circumspect reader could not reasonably conclude from such a vague assertion that the Eurosystem was competent to determine the conditions to which the possible recapitalisation or resolution of the banks concerned could be made subject.
Likewise, the indications that ‘[w]hile respecting the legal status of its members, the Eurosystem and its staff shall act and appear as a cohesive and unified entity’ and ‘[i]n that spirit and working as a team, the Eurosystem shall speak with a single voice and be close to the citizens of Europe’ cannot reasonably be interpreted as meaning that any communication from a national central bank which is a member of the Eurosystem is made on behalf of the latter. At issue is, rather, a general and imprecise declaration of intent, which at the most is applicable to the areas in which the Eurosystem is competent.
It must therefore be concluded that the applicants have failed to establish that they could derive from the letter of 11 February 2013 a legitimate expectation that the harmful measures would not be adopted. It therefore cannot, a fortiori, be considered that the ECB, by the acts and conduct subsequent to that letter, infringed that expectation.
(b)

The existence of a legitimate expectation derived from the ‘Euro Group’s commitment of 21 January 2013 as to the possibility of offering FAF on the basis of a political agreement made in November 2012’
The applicants claim that the Euro Group gave rise on their part to a legitimate expectation that the harmful measures would not be adopted, by committing itself, on 21 January 2013, to granting FAF to the Republic of Cyprus on the basis of a political agreement reached in November 2012 and which did not provide for the adoption of those measures. In reply to the Court’s measures of organisation of procedure, the applicants confirmed that the ‘commitment’ to which they referred was the Euro Group Statement of 21 January 2013 described in paragraph 18 above.
The defendants contest the applicants’ arguments.
In that regard, in the first place, it must be noted that there is nothing in the Euro Group Statement of 21 January 2013 which can amount to a precise assurance that FAF is subject solely to the conditions provided for in the draft MoU which was, on that date, in the process of negotiations between the Republic of Cyprus, on the one hand, and the Commission, the ECB and the IMF, on the other hand. In that statement, the Euro Group in no way committed itself to granting the Republic of Cyprus FAF which the latter had requested, but merely described those negotiations in vague and general terms and encouraged the parties concerned to achieve progress in order to finalise the components of the draft MoU.
In the second place, as is apparent from paragraphs 123 to 129 above, the grant of FAF falls within the competence of the ESM, and not that of the Euro Group, which was not even a party to the negotiations with the Republic of Cyprus with a view to finalising the draft MoU referred to in the statement of 21 January 2013. Therefore, even if the latter contains assurances relating to the grant of FAF to the Republic of Cyprus, those assurances do not issue from a competent authority for the purposes of the case-law cited in paragraph 404 above (see, to that effect, judgments of 30 April 2009, Nintendo and Nintendo of Europe v Commission,
T‑13/03
,
EU:T:2009:131
, paragraph
, and of 7 October 2015, Accorinti and Others v ECB,
T‑79/13
,
EU:T:2015:756
, paragraph
).
In the third place, the draft MoU referred to in the Euro Group Statement of 21 January 2013 and established on 29 November 2012 was never concluded. As is apparent from the Euro Group statement of 16 March 2013, the Cypriot authorities committed themselves, in light of the adoption of that draft memorandum, to taking measures which were to be approved by the Cypriot Parliament, including the introduction of a levy on bank deposits (see paragraphs 19 and 22 above). In those circumstances, the applicants could not legitimately expect FAF to nevertheless be granted to the Republic of Cyprus on the basis of that draft MoU.
In the light of the foregoing, it must be concluded that the applicants failed to establish that they could derive a legitimate expectation from the Euro Group Statement of 21 January 2013.
(c)

The existence of a legitimate expectation derived from the treatment reserved to MSCE which benefited from financial assistance before the Republic of Cyprus
The applicants claim that they derived a legitimate expectation that the harmful measures would not be adopted from the fact that the grant of financial assistance to other MSCE, namely Ireland, the Hellenic Republic, the Kingdom of Spain and the Portuguese Republic, had not been made subject to the adoption of bail-in measures.
The defendants have not expressly taken a position on that argument.
In that regard, in the first place, it should be noted that the mere fact that, during the early phases of the international financial crisis, the grant of financial assistance was not subject to the adoption of measures comparable to the harmful measures cannot, in itself, be regarded as a precise, unconditional and consistent assurance capable of engendering a legitimate expectation on the part of the shareholders and depositors of the banks concerned that the grant of financial assistance to the Republic of Cyprus would not be subject to those measures (see, to that effect and by analogy, judgment of 19 July 2016, Kotnik and Others,
C‑526/14
,
EU:C:2016:570
, paragraphs
and
).
In the second place, it must be noted that the measures to which the grant of financial assistance by the ESM (or by other international organisations, institutions and bodies of the European Union or States) in order to resolve financial difficulties affecting a State confronting a need to recapitalise its banking system may be made subject are likely to differ fundamentally from case to case in the light of experience and of all of the specific circumstances (see paragraph 311 above). In those circumstances, in the absence of clear and express engagement by the competent authorities, it is not possible to consider that the applicants could legitimately expect that the grant of FAF would be subject to conditions identical or even similar to those to which the grant of financial assistance to Ireland, the Hellenic Republic, the Kingdom of Spain and the Portuguese Republic were subject.
In the light of the above, it must be concluded that the applicants failed to establish that they were able to derive a legitimate expectation from the fact that the grant of FAF to other MSCE had not been made subject to measures comparable to the harmful measures.
(d)

The existence of a legitimate expectation derived from the fact that the ECB decided to authorise ELA for a considerable period of time
The applicants consider that they are able to derive a legitimate expectation from the fact that the ECB, for a considerable period of time, authorised the CBC to grant ELA to Laïki.
The defendants contest the applicants’ line of argument.
In that regard, it suffices to note that the applicants in no way explain how the fact that the ECB, for a considerable period of time, authorised the CBC to grant ELA to Laïki could have given rise to legitimate expectations on their part that the harmful measures would not be adopted. The applicants therefore failed to establish that they were able to derive a legitimate expectation from that fact.
In the light of the above, it must be held that the applicants were unable to derive any legitimate expectation from the acts and conduct referred to in paragraph 405 above, taken individually. Therefore, those acts and conduct can also not, taken together, when their cumulative effect is taken into account, give rise to a legitimate expectation on their part.
It follows that the applicants’ complaint alleging an infringement of the principle of protection of legitimate expectations can only be rejected.
3.

The existence of a possible infringement of the principle of equal treatment
The principle of equal treatment is a general principle of EU law, enshrined in Articles 20 and 21 of the Charter (judgment of 14 September 2010, Akzo Nobel Chemicals and Akcros Chemicals v Commission and Others,
C‑550/07 P
,
EU:C:2010:512
, paragraph
). The EU institutions are required to comply with that principle as a superior rule of EU law protecting individuals (judgments of 7 October 2015, Accorinti and Others v ECB,
T‑79/13
,
EU:T:2015:756
paragraph
, and of 24 January 2017, Nausicaa Anadyomène and Banque d'escompte v ECB,
T‑749/15
, not published,
EU:T:2017:21
, paragraph
).
It is apparent from settled case-law that the principle of equal treatment requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified (see judgment of 14 September 2010, Akzo Nobel Chemicals and Akcros Chemicals v Commission and Others,
C‑550/07 P
,
EU:C:2010:512
, paragraph
and the case-law cited). The elements which characterise various situations, and hence their comparability, must be determined and assessed, in particular, in the light of the subject matter of the acts at issue, and of the aim they pursue, whilst account must be taken for that purpose of the principles and objectives of the field to which those acts relate (see, to that effect, judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others,
C‑127/07
,
EU:C:2008:728
, paragraph
and the case-law cited).
Since the applicants invoked an infringement of the principle of equal treatment, it is for them to precisely identify the comparable situations which they consider to have been treated differently or the different situations which they consider to have been treated identically (see, to that effect, judgment of 12 April 2013, Du Pont de Nemours (France) and Others v Commission,
T‑31/07
, not published,
EU:T:2013:167
, paragraph
).
In the present case, the applicants claim that the defendants infringed that principle in five respects, which the defendants contest.
(a)

The existence of a possible discrimination vis-à-vis the creditors of Laïki whose claims are based on ELA
The applicants claim that uninsured depositors of Laïki were discriminated against vis-à-vis the creditors thereof whose claims are based on ELA. In so far as the liability of Laïki arising from ELA was transferred to BoC, those creditors could call on BoC, whereas the liability of Laïki with regard to uninsured depositors would be extinguished.
The applicants add that the transfer of the liability of Laïki arising from ELA to BoC placed a significant burden on the latter. Other categories of applicants were also discriminated against as a result. The transfer at issue, first, led to the imposition of severe limits on the claims of depositors of BoC and, secondly, diminished the value of shares of the banks concerned. The ECB, which is behind ELA, as well as the other defendants, thereby favoured their own interests vis-à-vis the interests of the applicants.
The defendants contest the applicants’ arguments.
In that regard, in the first place, it should be noted that the transfer of the debt provided by ELA to the BoC is one of the conditions for the grant of FAF. Paragraph 1.26 of the MoU of 26 April 2013 provides:
‘[BoC] is taking over via a purchase and assumption procedure the Cypriot assets of [Laïki] at fair value, as well as the insured deposits and [ELA] exposure at nominal value. The uninsured deposits of [Laïki] will remain in the legacy entity … .’
In the second place, it should be pointed out that, as the applicants acknowledged in response to the Court’s measures of organisation of procedure, the provision of ELA falls within the competence of the national central banks, since the ECB is competent only to prohibit the latter from granting ELA where it interferes with the objectives and tasks of the ESCB (see paragraphs 137 to 143 above). In accordance with that distribution of competences, only the CBC granted ELA to Laïki and, therefore, had a claim against the latter. In those circumstances, as the ECB correctly contends, only the CBC had, under the loan agreement concluded with Laïki, a right to repayment of the debt resulting from the grant of ELA to the latter. Therefore, the categories of persons who, in the light of the applicants’ arguments (see paragraphs 444 and 445 above), could have been subject to a difference in treatment as a result of the transfer to BoC of the liability of Laïki arising from ELA are the CBC, on the one hand, and the uninsured depositors and shareholders of the banks concerned, on the other hand.
In the third place, it should be noted that, first, a private operator, who, like the uninsured depositors in the banks concerned and the shareholders of BoC, acted solely in its private pecuniary interest, and, secondly, a Eurosystem central bank whose decisions were exclusively driven by public interest objectives, are in a different situation for the purposes of the case-law referred to in paragraph 441 above. The mere fact that depositors and a Eurosystem central bank whose decisions are driven by such objectives hold a single debt security vis-à-vis the same bank does not allow that conclusion to be invalidated, so that the principle of equal treatment cannot require that those two categories of persons be treated identically (see, to that effect, judgments of 7 October 2015, Accorinti and Others v ECB,
T‑79/13
,
EU:T:2015:756
, paragraph
, and of 24 January 2017, Nausicaa Anadyomène and Banque d’escompte v ECB,
T‑749/15
, not published,
EU:T:2017:21
, paragraphs
and
).
In the present case, the CBC acquired the claim arising from ELA in order to contribute to achieving a general interest objective, consisting in stabilising one of the two biggest Cypriot banks and, thereby, the financial system of the country. It follows from paragraphs 138 and 139 above that the CBC granted ELA to Laïki in the exercise of its public powers under Cypriot law. In particular, it is apparent from the ECB’s reply to the Court’s measures of organisation of procedure and from the letter from the CBC annexed thereto that ELA is an instrument seeking to allow the CBC to accomplish the task of ensuring the stability of the financial system conferred on it by the combined provisions of section 6(2)(e) and of section 46(3) of Law 138(I)/2002 on the CBC.
Moreover, it must be noted that, as the Commission and the ECB correctly point out, the debt arising from ELA was secured against the assets of Laïki. As creditor, the CBC was therefore, unlike the uninsured depositors of the banks concerned, a preferred creditor. In so far as it is not contested by the parties that, in the event of the liquidation of a bank, the claims of depositors of that bank are paid in priority to the contribution of its shareholders, the shareholders of BoC cannot, a fortiori, claim that they were in a situation comparable to that of the CBC.
In the light of the foregoing, it must be considered that the respective situations of the CBC, on the one hand, and the uninsured depositors of the banks concerned and the shareholders of BoC, on the other hand, were not comparable. The applicants have therefore failed to establish that the defendants discriminated against those categories of persons vis-à-vis the CBC.
(b)

The existence of possible discrimination vis-à-vis depositors with the Greek branches
The applicants consider that they suffered discrimination on the basis of nationality vis-à-vis depositors with the Greek branches. In that regard, the applicants point out that, whereas the grant of FAF was subject to the adoption, by the Cypriot authorities, of a bail-in measure affecting deposits with the banks concerned in Cyprus, it was not subject to a similar condition concerning deposits which had been made with those same banks in Greece. Those deposits had to be transferred to a Greek bank, as a result of the acquisition by that bank of the Greek branches and could therefore, in principle, remain unaffected. In the absence of any objective justification, such a difference in treatment contravenes the fundamental freedoms guaranteed by the Treaty or are prohibited by Article 180 TFEU.
The defendants contest the applicants’ claims.
It is not disputed by the parties that the Greek branches were branches for the purposes of Article 4(3) of Directive 2006/48/EC the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (
OJ 2006 L 177, p. 1
). As such, firstly, those branches constituted parts without legal personality of the banks concerned and carried out directly all or some of the transactions inherent in the business of financial or credit institutions.
Secondly, under Article 4(1) of Directive 94/19, as amended by Directives 2005/1 and 2009/14, the depositors in those branches were covered by the Cypriot deposit guarantee scheme.
Thirdly, it follows from recital 21 and Articles 40 to 43 of Directive 2006/48 that responsibility for supervising the financial soundness of the Greek branches, and in particular their solvency, belongs to the Cypriot authorities, since the Greek authorities are responsible only for supervising the liquidity of those branches and for monetary policy.
It follows therefrom that the applicant depositors in the banks concerned in Cyprus and the depositors in the Greek branches made deposits in the same banks, covered by the same deposit guarantee scheme and subject to the same rules. In that context, contrary to what is maintained by the Council, there is no reason to consider that a difference relating solely to the place where the deposits were made is, in the circumstances of the present case, sufficient in order to conclude that the situations envisaged are different. In particular, the need to avoid contagion, relied on by the Council, concerns not an objective difference in situation, but the justification for a difference in treatment between two comparable situations. Therefore, the situation of the applicant depositors in the banks concerned in Cyprus and that of the depositors in the Greek branches were comparable.
Unlike the deposits in the Greek branches, the deposits in the banks concerned in Cyprus were subject to bail-in measures. It must therefore be considered that the applicant depositors in the banks concerned in Cyprus were treated less favourably than the depositors in the Greek branches.
That conclusion is not called into question by the ECB’s arguments. First, the ECB contends that any discrimination suffered by the applicants must be regarded as ‘reverse discrimination’, which is not prohibited by EU law.
It is true that, according to settled case-law, EU law does not preclude, in situations which have no factor linking them with any of the situations governed by that law and which are confined in all relevant respects within a single Member State, that nationals of that Member State are treated by that State less favourably than nationals of another Member State (see, to that effect, judgments of 16 June 1994, Steen,
C‑132/93
,
EU:C:1994:254
, paragraph
, and of 1 April 2008, Government of the French Community and Walloon Government,
C‑212/06
,
EU:C:2008:178
, paragraph
).
However, that case-law is not applicable to acts or omissions as a result of which one or more EU institutions contribute to such treatment or require its maintenance or continued implementation. In the present case, it is necessary to determine whether the defendant institutions could lend their support to the adoption and implementation of a MoU making the grant of FAF subject to unequal treatment or to require its maintenance or continued implementation.
Therefore, even assuming that the claims of discrimination between the depositors of Cypriot banks and the depositors in the Greek branches of those banks could be considered to refer to a situation which is confined in all relevant respects within a single Member State, it is not possible to reject the argument of the ECB that any discrimination suffered by the applicants must be regarded as ‘reverse discrimination’, which is not prohibited by EU law.
Secondly, the ECB maintains that the sale of the Greek branches was implemented at market value and, consequently, maintained the capital base of the banks concerned. Therefore, that sale did not induce any additional disadvantage to the applicants.
In that regard, it should be noted that, for the purposes of a complaint that an EU institution has infringed the principle of equal treatment, it is necessary that the treatment at issue result in a disadvantage in comparison with others. However, the existence of such a disadvantage cannot be denied on the sole ground that the difference in treatment at issue did not entail unfavourable economic consequences, since the disadvantage to be taken into account from the point of view of the principle of equal treatment may also be such as to affect the legal situation of the person concerned by that difference in treatment (see, to that effect and by analogy, judgment of 16 December 2008, Arcelor Atlantique et Lorraine and Others,
C‑127/07
,
EU:C:2008:728
, paragraphs
and
). However, the ECB’s arguments relate exclusively to the lack of additional financial loss which the applicants allegedly suffered as a result of the sale of the Greek branches. Therefore, even if proved, that fact cannot, in itself, suffice for the purposes of establishing the lack of discrimination prohibited by EU law. At the most, as moreover the ECB appears to consider, that fact could be relevant for the purposes of assessing the proportionality of a possible difference in treatment in the light of the objective pursued. As a first step, nevertheless, the relevant question remains whether the applicants who are depositors in the banks concerned in Cyprus were in a situation comparable to that of depositors in the Greek branches, which is the case in the present case (see paragraph 458 above).
In accordance with the case-law referred to in paragraph 441 above, it is therefore necessary to examine whether there exists, in the present case, an objective justification for the difference in treatment to which the applicant depositors in the banks concerned were subject as opposed to depositors in the Greek branches.
As was stated in paragraphs 335 to 337 above, that difference in treatment addressed, in particular, the need to prevent any contagion from the Cypriot banking system to the Greek financial system. As the applicants acknowledged in reply to the Court’s measures of organisation of procedure, it is apparent from an internal report of the ECB annexed to the reply that a haircut of the deposits in the Greek banks would have risked triggering deposit flight in Greece, which in turn, could exacerbate the weak financing capacity of the Greek banks, thus potentially calling for an increase of ELA granted to those banks to a level potentially exceeding the real capacity of the central banks of the Eurosystem.
The applicants reply that such a line of argument cannot justify indirect discrimination based on nationality such as they were subject to.
In that regard, it should be pointed out that a difference in treatment is justified if it is, first, based on an objective and reasonable criterion, that is, if the difference relates to a legally permitted aim pursued by the legislation in question and, secondly, it is proportionate to the aim pursued by the treatment concerned (judgment of 16 December 2008, Arcelor Atlantique et Lorraine,
C‑127/07
,
EU:C:2008:728
, paragraph
).
As regards, in the first place, the question whether the difference in treatment between the applicant depositors in the banks concerned in Cyprus and the depositors in the Greek branches was based on an objective and reasonable criterion, it must be noted that, for the reasons set out in paragraphs 255 and 256 above and in the light of the case-law of the ECtHR (see ECtHR, 21 July 2016,
Mamatas and Others
v
.
Greece
, EC:ECHR:2016:0721JUD006306614, paragraphs 103 and 138), the objective of preventing a general destabilisation of the Greek financial system due to contagion by the Cypriot banking system must be considered to be objective and reasonable.
As regards, in the second place, the proportionality of the difference in treatment between the applicants who are depositors in the banks concerned in Cyprus and the depositors in the Greek branches, it should be noted that a difference in treatment is proportionate where it is appropriate for attaining the legitimate objectives pursued and does not exceed what is necessary to achieve those objectives (see, to that effect, judgment of 13 March 2012, Melli Bank v Council,
C‑380/09 P
,
EU:C:2012:137
, paragraph
and the case-law cited).
For reasons similar to those set out in paragraphs 341 to 358 above, it should be noted that that difference in treatment is appropriate to achieve the objectives pursued and does not go beyond what is necessary for that purpose.
Consequently, that fact that FAF, first, was subject to the adoption, by the Cypriot authorities, of a measure ordering a haircut of deposits in the banks concerned established in Cyprus, and, secondly, was not subject to a similar condition concerning deposit liabilities in Greece, was objectively justified and therefore does not constitute an infringement of the principle of equal treatment.
That conclusion cannot be called into question by the applicants’ argument that the Euro Group had previously encouraged the PSI despite the contagion effect that the latter was capable of having on the Cypriot banks.
That argument amounts, in essence, to considering that the stability of the Cypriot financial system was not taken into account at the time of the adoption of certain measures intended to resolve the financial difficulties of the Republic of Cyprus and that, vice versa, so as not to commit a ‘high degree of inconsistency’ incompatible with the principle of proportionality, the stability of the Greek financial system should not have been taken into account at the time of the subsequent adoption of measures seeking to resolve the financial difficulties of the Republic of Cyprus.
It must, however, be noted that the reasons for which the Euro Group or the EU institutions were able to favour the PSI cannot be assessed without taking into consideration the specific circumstances in which the PSI was concluded. As was pointed out in paragraphs 311 and 433 above, the measures governing a grant financial assistance by the ESM (or by other international organisations, bodies or institutions of the Union or States) for the purposes of resolving financial difficulties facing a State confronted with the need to recapitalise its banking system are liable to vary fundamentally from one case to another depending on the experience acquired and a set of specific circumstances.
The applicants have at no time demonstrated that, in the light of the relevant circumstances and the acquired experience, the fact that the Euro Group had previously encouraged the PSI despite the contagion effect that the latter was likely to have on the Cypriot banks justified that the risk of contagion of the Greek banking system not be taken into account in the present case.
Consequently, it is necessary to conclude that the applicants failed to show the existence of an infringement of the principle of equal treatment as a result of the different treatment of their deposits and those in the Greek branches.
(c)

The existence of a possible infringement of the principle of equal treatment based on discrimination vis-à-vis the depositors in the banks concerned whose deposits did not exceed EUR 100000
The applicants claim that those of them whose deposits in the banks concerned exceeded EUR 100000 were subject to discrimination vis-à-vis depositors in those banks whose deposits did not exceed that amount. Deposits of an amount less than or equal to EUR 100000 were entirely covered by the Cypriot deposit guarantee scheme, whereas deposits of a greater amount were covered only up to EUR 100000. The fact that Directive 94/19, as amended by Directive 2005/1 and Directive 2009/14, obliged the Member States to establish a system allowing all the deposits of the same depositor to be covered up to EUR 100000 does not justify preventing uninsured depositors from obtaining compensation in the event of liquidation, nor does it explain why a depositor who holds deposits amounting to EUR 100000 did not suffer from any haircut, whereas a depositor who holds deposits amounting to EUR 1000000 suffered a 90% haircut.
The Council and the ECB contest the applicants’ arguments.
In that regard, it must be noted that the discrimination about which the applicants complain concerns, in reality, two distinct aspects of the harmful measures.
Firstly, at issue is the measure referred to in section 5 of Decree No 104, which provides, in accordance with paragraph 1.26 of the MoU of 26 April 2013, that the debts of Laïki vis-à-vis each of its depositors are transferred to BoC up to EUR 100000, amounts over EUR 100000 remaining with Laiki, pending the latter’s liquidation (see paragraph 35 above). It must be noted that that measure applies without distinction to all of the depositors of Laïki. Contrary to what the applicants, in essence, claim, it does not establish any difference in treatment between those depositors on the basis of the amount of the deposits which they entrusted to that bank.
The mere fact that the transfer to BoC of deposits entrusted to Laïki is subject to a uniform ceiling of EUR 100000 per depositor and is, accordingly, likely to have varying impacts on those depositors on the basis of the amount of their deposits cannot undermine that conclusion. Any differences of that nature result from the application of the guarantee cap of EUR 100000 provided for by Article 7(1a) of Directive 94/19, as amended by Directives 2005/1 and 2009/14, the unlawfulness of which has not been invoked by the applicants. It is a criterion which is both objective and adapted to the needs of the European banking system (see, to that effect and by analogy, judgments of 19 September 2013, Panellinios Syndesmos Viomichanion Metapoiisis Kapnou,
C‑373/11
,
EU:C:2013:567
, paragraph
and the case-law cited, and of 30 September 2009, Arkema v Commission,
T‑168/05
, not published,
EU:T:2009:367
, paragraph
). Recital 16 of Directive 94/19, as amended by Directives 2005/1 and 2009/14, states that the abovementioned guarantee level seeks, first, not to leave too great a proportion of deposits without protection in the interest both of consumer protection and of the stability of the financial system and, secondly, to take into account the cost of funding schemes and not to impose throughout the EU a level of protection which, in certain cases, could have the effect of encouraging the unsound management of credit institutions.
Secondly, at issue are measures for the conversion of shares of BoC, provided for by Decree No 103, as amended, and the substance of which is reproduced in paragraphs 1.26 and 1.27 of the MoU of 26 April 2013. That measure provides that the haircut on the uninsured deposits of BoC applies only to the depositors thereof whose deposits exceed EUR 100000. Consequently, there results therefrom, as the applicants correctly state, a difference in treatment between the depositors of BoC on the basis of whether the amount of deposits they entrusted to the latter exceeds EUR 100000.
However, contrary to what is claimed by the applicants, that difference in treatment in no way constitutes unequal treatment which is prohibited by EU law. As the Council and the ECB aptly note, the depositors whose deposits in the banks concerned exceed EUR 100000 are in a legally distinct situation from that of depositors whose deposits in the banks concerned do not exceed that amount. In accordance with Article 7(1a) of Directive 94/19, as amended by Directives 2005/1 and 2009/14, the deposits of the latter were, in the event of deposits being unavailable, entirely covered by the Cypriot deposit guarantee scheme, whereas those of the former were covered only up to an amount of EUR 100000.
In the light of the foregoing, no unlawful discrimination against the applicants whose deposits in the banks concerned exceeded EUR 100000 can be found in the present case.
(d)

The existence of a possible infringement of the principle of equal treatment based on discrimination vis-à-vis the depositors and shareholders of banks other than MSCE which benefited from financial assistance before the Republic of Cyprus
The applicants consider that they were discriminated against in relation to the depositors and shareholders of banks established in the MSCE which benefited from financial assistance similar to FAF prior to the Republic of Cyprus. Firstly, the applicants claim that the amount of that assistance was on each occasion higher than that of FAF granted to the Republic of Cyprus, but that the deposits and shares in the banks of those Member States were not affected. Secondly, the applicants claim that the Greek banks benefited from aid amounting to EUR 50 billion to offset the PSI effect, although the latter affected the banks concerned more seriously than the Greek banks.
The applicants deduce therefrom that they were indirectly discriminated against on the ground of their nationality, in breach of Article 18 TFEU and of Article 21 of the Charter. As regards the Republic of Cyprus, it was discriminated against vis-à-vis other MSCE which benefited from aid similar to FAF.
The Council and the ECB contest the applicants’ arguments.
In that regard, it must be noted that the measures to which the grant of financial assistance by the ESM may be subject in order to resolve the financial difficulties encountered by a State facing the need to recapitalise its banking system are likely to vary significantly from case to case depending on a range of circumstances other than the size of the assistance in relation to the size of that State’s economy. Among those circumstances there may, as was stated in paragraph 311 above, be included, in particular, the economic situation of the recipient State, the size of the assistance in relation to the whole of its economy, the prospects of the banks concerned becoming economically viable again, the reasons which led to the difficulties encountered by them, including, where appropriate, the excessive size of the banking sector of the recipient State in relation to its national economy, the development of the international economic environment or an increased likelihood of future ESM interventions (or interventions of other international organisations, bodies and institutions of the EU or States) in support of other States in difficulty which can require a preventive limitation of amounts dedicated to each intervention.
In the present case, the applicants, who, in accordance with the case-law cited in paragraph 442 above, were to precisely identify the comparable situations which were treated differently, have not, beyond several references to the size (absolute and relative) of the financial assistance granted to four MSCE concerned, explained how the situation of the latter was, at the time of the facts, comparable to that of the Republic of Cyprus (see paragraphs 311 and 313 above).
In the light of the foregoing, it must be concluded that the applicants have failed to show that they are in a situation comparable to that of depositors and shareholders of banks established in the MSCE which received assistance similar to FAF before the Republic of Cyprus.
It cannot therefore be concluded that the fact that the grant of FAF was subject to the adoption of measures seeking to reduce the size of the Cypriot financial sector, although the grant of financial assistance to other MCSE had not been subject to the adoption of similar measures, constitutes an infringement of the principle of equal treatment with respect to the applicants or, assuming that they are able to invoke an infringement of that principle with respect to a third party, to the Republic of Cyprus.
(e)

The existence of a possible discrimination vis-à-vis the members of the Cypriot cooperative banking sector
It is not disputed by the parties that, first, the Republic of Cyprus recapitalised, by EUR 1.5 billion, the Cypriot central body Co-operative Central Bank (‘the CCB’) and the cooperative credit institutions affiliated to it (together with the CCB, ‘the cooperative banking sector’), and, secondly, the grant of FAF was not subject to the condition that it not be used for that purpose. In that latter regard, the parties are in agreement that the EUR 1.5 billion allocated to the recapitalisation of the Cypriot cooperative banking sector came from FAF.
In contrast, it is not disputed by the parties that the grant of FAF was subject to the condition that the latter not be used in order to recapitalise the banks concerned. The applicants consider, therefore, that they were subject to unlawful discrimination vis-à-vis the members of the cooperative banking sector.
The defendants do not contest that the members of the cooperative banking sector, which were not subject to a bail-in, received more favourable treatment than the applicants. The defendants contend, however, that such a difference in treatment in no way amounted to unlawful discrimination.
Therefore, in accordance with the case-law referred to in paragraph 441 above, it is necessary to examine whether those two categories of person are in a comparable situation and, as the case may be, whether the difference in their treatment was objectively justified.
In reply to the Court’s measures of organisation of procedure, first, the applicants stated that the cooperative banking sector and the banks concerned were in a comparable situation. According to them, the cooperative banking sector and the banks concerned operated in the same market and were in a competitive position vis-à-vis each other. Secondly, the applicants claim that the situation of the members of the cooperative banking sector was in every respect comparable to that of the depositors in the banks concerned. According to the applicants, neither could be held responsible for the circumstances which led the Republic of Cyprus to seek financial assistance.
The Council and the ECB consider, by contrast, that the members of the cooperative banking sector were in a different situation from that of the applicants. The ECB and the Council rely, in essence, on two differences. They relate, firstly, to the relative importance of the banks concerned and the cooperative banking sector from the point of view of financial stability, and, secondly, to the seriousness and nature of the difficulties confronting those two categories of credit institution.
In the first place, concerning the relative importance, from the point of view of financial stability, of the banks concerned and of the cooperative banking sector, the ECB notes that the latter played a major role on the Cypriot market for deposits and credit and that its bail-in had more negative consequences than the bail-in of the banks concerned on domestic economic activity and, consequently, on the budgetary situation of the Republic of Cyprus.
In that regard, it should be noted that it is in principle for the person alleging facts in support of a claim to adduce proof of such facts (order of 25 January 2008, Provincia di Ascoli Piceno and Comune di Monte Urano v Apache Footwear and Others,
C‑464/07 P(I
), not published,
EU:C:2008:49
, paragraph
; see also, to that effect, judgment of 6 March 2001, Connolly v Commission,
C‑274/99 P
,
EU:C:2001:127
, paragraph
). In the present case, the ECB does not adduce any evidence in support of its allegations relating to the economic role of the cooperative banking sector, nor does it establish that the bail-in of the latter had more harmful consequences than that of the banks concerned for the budgetary situation of the Republic of Cyprus. When it was questioned in that regard during the hearing, the ECB did not provide more details.
Therefore, it is necessary to reject the argument of the ECB relating to the respective importance of the banks concerned and of the cooperative banking sector from a financial stability point of view.
In the second place, as regards the difficulties which confronted the credit institutions at issue, the Council and the ECB contend that the banks concerned were in a more serious economic situation than the cooperative banking sector. In particular, as is apparent from the ECB’s written submissions before the Court, which the applicants do not contest in that regard, the cooperative banking sector was not, unlike the banks concerned, insolvent at the time of the facts. It is not disputed by the parties that the banks concerned were insolvent when the harmful measures were adopted. In contrast, it is apparent from section 3.1 of the disclosures made by the CCB in May 2013 under pillar 3 of the Basel framework and from the ECB’s responses during the hearing, that, on 31 December 2012, the consolidated solvency ratios of that central body and of the 92 cooperative credit institutions affiliated to it satisfied the applicable regulatory requirements. Paragraph 20 of the IMF report of May 2013 supports that conclusion, in so far as it notes that the Cypriot cooperative sector had been considered to be in general solvent.
It results from all the above that the major verifiable difference between the applicants and the members of the cooperative banking sector consists in the solvency or insolvency of the banks concerned. For the rest, both cases concern depositors or investors in a Cypriot bank which requires recapitalisation to continue its activities and which needs for that purpose either public resources or a bail-in.
The applicants do not dispute, as such, that solvency can constitute a relevant criterion for the purpose of justifying a difference in treatment between several banks. During the hearing, they nevertheless claimed that the differences invoked by the defendants for that purpose, including that relating to the solvency of the banks at issue, concerned ‘ex post rationalisation of injustice’. The defendants invoked those differences only ‘years later’ to explain why the depositors and shareholders of the banks concerned were targeted.
It must, however, be noted that the documents in the file do not substantiate the applicants’ line of argument. It is apparent from paragraph 11 of the IMF report of May 2013 that the need to distinguish between solvent and insolvent banks was one of the reasons why bail-in of the banks concerned was preferred to an exceptional levy on the insured and uninsured deposits granted to all Cypriot banks. It must therefore be considered that, at the time of the facts, differential treatment of Cypriot banks according to whether they were solvent or not was considered to be desirable.
Consequently, since the situation of companies in the cooperative banking sector is not comparable to that of the applicants, no unlawful discrimination against the latter can be found in the present case.
In light of all the foregoing, it must be concluded that the applicants have not succeeded in showing the existence of an infringement of the principle of equal treatment with regard to them. It cannot therefore be considered that the Council, by adopting Decision 2013/236, required the maintenance or continued implementation of a measure which infringes the principle of equal treatment, or that the Commission and the ECB, by giving their support to the harmful measures, contributed to an infringement of that principle.
It follows that the first condition of non-contractual liability of the EU is not satisfied in the present case, so that the applications for compensation brought by the applicants must be dismissed.
Costs
Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
Since the applicants have been unsuccessful, they must be ordered to pay the costs, as applied for by the Commission, the Council and the ECB.

On those grounds,
THE GENERAL COURT (Fourth Chamber, Extended Composition)
hereby:

1.
Dismisses the action;

2.
Orders Dr. K. Chrysostomides & Co. LLC and the other applicants whose names appear in the annex to bear, in addition to their own costs, those incurred by the Council of the European Union, by the European Commission and by the European Central Bank (ECB).

Kanninen
Schwarcz
Iliopoulos
Calvo-Sotelo Ibáñez-Martín
Reine
Delivered in open court in Luxembourg on 13 July 2018.
E. Coulon
Registrar
H. Kanninen
President
Table of contents

I. Background to the dispute

A. ESM Treaty

B. Financial difficulties of the Republic of Cyprus and request for financial assistance

C. Bank restructuring measures adopted by the Republic of Cyprus

D. Grant of financial assistance to the Republic of Cyprus

II. Procedure and forms of order sought

III. Law

A. The jurisdiction of the General Court

1. The attributability of the harmful measures to the defendants

(a) The question whether the defendants, by means of the contested acts, required the adoption of the harmful measures

(1) The Euro Group Statement of 25 March 2013

(2) ‘The Euro Group Agreement of 25 March 2013’

(3) ‘The decision of the Governing Council of the ECB of 21 March 2013 to demand payment of ELA on 26 March [2013] unless a rescue package was agreed’

(4) ‘[Decisions] to continue the granting of ELA’, allegedly adopted by the ECB

(5) Subsequent acts

(b) The question whether the Republic of Cyprus had a margin of discretion to escape the requirement to maintain or continue to implement the measure consisting in the conversion of deposits in BoC into shares

(c) Conclusion on the attributability to the defendants of the adoption, maintenance and continued implementation of the harmful measures

2. The liability of the Union as a result of certain acts and conduct of the defendants

3. Conclusion on the jurisdiction of the Court

B. Admissibility

1. Compliance with the formal requirements

2. The alleged failure to exhaust domestic remedies

C. Conclusion on the jurisdiction of the Court and the admissibility of the action

D. Substance

1. The existence of a possible infringement of the right to property

(a) The first series of harmful measures

(1) The nature of the examination conducted by the Court in the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P)

(2) The evidence adduced by the applicants in the case giving rise to the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701)

(3) Compliance with the requirements that any restriction of the right to property must be in accordance with the law and proportionate to the objective pursued

(i) The requirement that any restriction of the right to property must be in accordance with the law

(ii) The requirement that any restriction of the right to property must be proportionate to the objective pursued

– The ability of the first series of harmful measures to contribute to achieving the objective pursued

– The proportionality and necessity of the first series of harmful measures

– The disadvantages caused by the first series of harmful measures

(b) The second series of harmful measures

(1) The reduction of the nominal value of ordinary shares in BoC

(2) The sale of the Greek branches

(c) The alleged infringement of Article 14.4 of the ECB Statute, the right to sound administration, and the requirement to act fairly and with consistency

2. The existence of a possible infringement of the principle of protection of legitimate expectations

(a) The existence of a legitimate expectation derived from the letter of 11 February 2013

(b) The existence of a legitimate expectation derived from the ‘Euro Group’s commitment of 21 January 2013 as to the possibility of offering FAF on the basis of a political agreement made in November 2012’

(c) The existence of a legitimate expectation derived from the treatment reserved to MSCE which benefited from financial assistance before the Republic of Cyprus

(d) The existence of a legitimate expectation derived from the fact that the ECB decided to authorise ELA for a considerable period of time

3. The existence of a possible infringement of the principle of equal treatment

(a) The existence of a possible discrimination vis-à-vis the creditors of Laïki whose claims are based on ELA

(b) The existence of possible discrimination vis-à-vis depositors with the Greek branches

(c) The existence of a possible infringement of the principle of equal treatment based on discrimination vis-à-vis the depositors in the banks concerned whose deposits did not exceed EUR 100000

(d) The existence of a possible infringement of the principle of equal treatment based on discrimination vis-à-vis the depositors and shareholders of banks other than MSCE which benefited from financial assistance before the Republic of Cyprus

(e) The existence of a possible discrimination vis-à-vis the members of the Cypriot cooperative banking sector

Costs
(
*1
)	Language of the case: English.
(
)	The list of the other applicants is annexed only to the version sent to the parties.