CELEX: 62014CJ0127
Reference for a preliminary ruling
Directive 94/19/EC
Point 7 of Annex I
Deposit-guarantee scheme
Exclusion of certain depositors from the deposit-guarantee scheme
Exclusion of a ‘manager’

This request for a preliminary ruling concerns the interpretation of point 7 of Annex I to 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 2009/14/EC of the European Parliament and of the Council of 11 March 2009 (
OJ 2009 L 68, p. 3
) (‘Directive 94/19’).
The request has been made in proceedings between Mr Surmačs and the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission, ‘the FKTK’) concerning its refusal to recognise Mr Surmačs as a depositor entitled to the guarantee laid down by Directive 94/19.
Legal context
EU law
Directive 94/19 was repealed by Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit-guarantee schemes (
OJ 2014 L 173, p. 149
). Since that repeal took effect on 4 July 2015, Directive 94/19 remains applicable to the case in the main proceedings.
The 1st, 16th and 18th recitals in the preamble to Directive 94/19 stated:
‘Whereas, in accordance with the objectives of the Treaty, the harmonious development of the activities of credit institutions throughout the Community should be promoted through the elimination of all restrictions on the right of establishment and the freedom to provide services, while increasing the stability of the banking system and protection for savers;
…
Whereas, on the one hand, the minimum guarantee level prescribed in this Directive should not leave too great a proportion of deposits without protection in the interest both of consumer protection and of the stability of the financial system; whereas, on the other hand, it would not be appropriate to impose throughout the Community a level of protection which might in certain cases have the effect of encouraging the unsound management of credit institutions; whereas the cost of funding schemes should be taken into account; whereas it would appear reasonable to set the harmonised minimum guarantee level at [EUR] 20000; whereas limited transitional arrangements might be necessary to enable schemes to comply with that figure;
…
Whereas a Member State must be able to exclude certain categories of specifically listed deposits or depositors, if it does not consider that they need special protection, from the guarantee afforded by deposit-guarantee schemes;
…’
Under the first subparagraph of Article 3(1) of Directive 94/19:
‘Each Member State shall ensure that within its territory one or more deposit-guarantee schemes are introduced and officially recognised. …’
Article 7(1) and (2) of that directive provided:
‘1.   Member States shall ensure that the coverage for the aggregate deposits of each depositor shall be at least EUR 50000 in the event of deposits being unavailable.
…
2.   Member States may provide that certain depositors or deposits shall be excluded from guarantee or shall be granted a lower level of guarantee. Those exclusions are listed in Annex I.’
Annex I to the directive listed the exclusions referred to in Article 7(2) of the directive. Included in the deposits which could accordingly be excluded from the guarantee were, in point 7 of the Annex, those ‘by a credit institution’s own directors, managers, members personally liable, holders of at least 5% of the credit institution’s capital, persons responsible for carrying out the statutory audits of the credit institution’s accounting documents and depositors of similar status in other companies in the same group’.
In the same way, point 8 of Annex I to the directive provided that ‘[d]eposits by close relatives and third parties acting on behalf of the depositors referred to in 7’ could be excluded from the guarantee.
Latvian law
Directive 94/19 was transposed into Latvian law by the Law on deposit-guarantees (Noguldījumu garantiju likums). The deposit-guarantee fund is composed of contributions from the entities referred to in Article 7 of the law. Under Article 1(7) of the law, the deposit-guarantee fund is managed by the FKTK.
Article 17(4) of the law provides that the fund is not required to guarantee payment of compensation in respect of ‘deposits made by persons holding a significant shareholding in a credit institution, by members of the supervisory board or the administrative board or by its president, by the director of the internal audit service, the institution’s auditor and other employees of the credit institution who carry out and are responsible for the planning, management and supervision of its activity’.
The dispute in the main proceedings and the questions referred for a preliminary ruling
On 21 November 2011 the FKTK adopted Decision No 278, suspending the provision of financial services by Latvijas Krājbanka (‘the bank’). On that date Mr Surmačs held the position in the bank of Vice-President for international and financial law matters. The order for reference states that he was directly subordinate to the President of the administrative board and that he was a member of that board before becoming Vice-President, the position he held on the date of the FKTK’s decision.
By decision of 5 January 2012, the FKTK found that, because of the position which he held in the bank, Mr Surmačs could not be considered to be a depositor covered by the guarantee provided by the Law on deposit-guarantees. That decision was based on Article 17(4) of that law, under which an employee of the credit institution who is responsible for the planning, management and supervision of its activity cannot benefit from the guarantee.
Challenging the justification for the FKTK’s decision on the ground that the position which he held within the bank was in fact an honorary position, devoid of decision-making power, Mr Surmačs brought an action before the Administratīvā apgabaltiesa (Regional Administrative Court), which that court dismissed by decision of 24 April 2013.
Mr Surmačs brought an appeal on a point of law against the decision of the Administratīvā apgabaltiesa before the referring court, claiming, in essence, that a specific assessment of the obligations, rights and responsibilities relating to the position of Vice-President would have established that he did not have the power to make binding decisions or to influence the bank’s activity. Furthermore, according to Mr Surmačs, the Administratīvā apgabaltiesa applied the Law on deposit-guarantees without taking account of Article 7(2) of and point 7 of Annex I to Directive 94/19.
The FKTK contends before the referring court that the function exercised by Mr Surmačs in the bank, at the time of the decision referred to in paragraph 11 of the present judgment, falls within the exclusion in Article 17(4) of the Law on deposit-guarantees and that he should be considered to be a ‘manager’ within the meaning of point 7 of Annex I to Directive 94/19. In addition, according to the FKTK, for the purposes of excluding the guarantee, not only the powers formally granted to Mr Surmačs, but also the influence which he could exercise informally over the bank’s activities, should be taken into account.
In those circumstances the Augstākā tiesa (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1)
Must point 7 of Annex I to Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes be interpreted as meaning that the list set out there of persons who must be regarded as linked to the credit institution in question, and who must be refused the right to guaranteed compensation, is exhaustive?
(2)
May a person who, according to the description of his position, has the power to plan, coordinate and supervise a branch of the credit institution’s activity or the execution of a function, but not the credit institution’s activity in its entirety, and who is not entitled to give orders or make binding decisions on behalf of other persons be regarded as a manager of a credit institution or as any other of the persons mentioned in point 7 of Annex I to the directive? Must the nature of that branch of the credit institution’s activity or of that function be taken into account?
(3)
Must point 7 of Annex I to the directive be interpreted as meaning that a Member State may refuse payment of the guaranteed compensation to a person who, having regard to the rights and obligations set out in the description of his position, cannot be regarded as a manager but who has
de facto
a considerable influence over the credit institution’s managers or the persons personally responsible for that institution? Can merely informal influence, deriving from the authority, skills or knowledge of the person in relation to the credit institution’s activity, be relevant in that context?’
Consideration of the questions referred
The first question
By its first question, the referring court asks, in essence, whether the deposits excluded under point 7 of Annex I to Directive 94/19 are listed exhaustively, so that the Member States cannot provide, in their national legislation, for other categories of depositors to whom the exclusion of the deposit-guarantee applies.
It should be noted, first, that the 18th recital of Directive 94/19 states that certain categories of deposits or depositors may be excluded from the guarantee scheme. According to that recital, such deposits or depositors must be specifically listed.
In that regard, Article 7(2) of Directive 94/19 authorises Member States to exclude from the guarantee or to grant a lower level of guarantee to certain categories of depositors or certain types of deposits, and specifies that those exclusions are listed in Annex I to that directive. There is nothing in the wording of that provision to indicate that that list is illustrative or that the Member States may extend the categories of deposits and depositors laid down in Annex I.
Next, it should be noted that in the explanatory memorandum to its proposal of 4 June 1992 (COM(92) 188 final,
OJ 2002 C 163, p. 6
), which led to the adoption of Directive 94/19, the Commission had clearly stated, at page 18 of that memorandum, that the list of exceptions to the guarantee system provided for in Annex I ‘is limitative and Member States may exclude from the guarantee only the institutions and persons mentioned therein’, with any other exclusion contravening the directive.
Finally, it is clear from the first recital in the preamble to Directive 94/19 that it has the dual objective of protecting savers in the event of the unavailability of deposits made in credit institutions and of increasing the stability of the banking system.
For that purpose, Article 3(1) of the directive requires the Member States to ensure that one or more deposit-guarantee schemes are introduced within their territory. Under Article 7(1) of the directive, those schemes must ensure a minimum level of coverage of EUR 50000 for each depositor.
As an exception to that rule, Article 7(2) of and Annex I to Directive 94/19 authorise the Member States to exclude certain deposits or depositors from the guarantee.
Since the categories laid down in Annex I to Directive 94/19 constitute an exception to the general rule in Article 3 of that directive, they must be interpreted strictly (see, by analogy, judgment in
Fastweb
, C‑19/13,
EU:C:2014:2194
, paragraph 40).
However, as noted by the Advocate General in point 35 of his Opinion, the categories to which point 7 of Annex I to Directive 94/19 refers, in order to determine the deposits or depositors excluded from the guarantee, must be defined in functional terms. Consequently, the exclusion of the deposit-guarantee applies to persons who carry out functions which can be considered, having regard to national law and to the commercial practice of the Member State, as being covered by the concepts referred to in that point of that Annex, irrespective of the actual title of the functions accordingly carried out, which is for the national court to determine.
Having regard to the foregoing considerations, the answer to the first question is that the deposits excluded under point 7 of Annex I to Directive 94/19 are listed exhaustively in that provision, so that the Member States cannot provide, in their national law, for other categories of depositors who are not covered, in terms of the functions carried out, by the concepts listed in that point, in order for the exclusion from the deposit-guarantee to be applied to them.
The second and third questions
By its second and third questions, which should be considered together, the referring court asks, in essence, whether point 7 of Annex I to Directive 94/19 must be interpreted as meaning that the Member States may exclude from the guarantee laid down by that directive, as a manager or person coming under one of the other categories referred to in point 7, certain persons because of the function exercised within the credit institution concerned, such as that exercised by the applicant in the main proceedings.
In that regard, according to the Court’s settled case-law, for the purpose of interpreting a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part (judgment in
Rosselle
, C‑65/14,
EU:C:2015:339
, paragraph 43 and the case-law cited). The origins of a provision of EU law may also provide information relevant to its interpretation (judgment in
Inuit Tapiriit Kanatami and Others
v
Parliament and Council
, C‑583/11 P,
EU:C:2013:625
, paragraph 50).
It should be noted, first, that the literal wording of the provision at issue does not, in itself, provide an answer to the questions from the referring court. Point 7 of Annex I to Directive 94/19 merely lists the categories of depositors who can be excluded from the guarantee, without providing further guidance on the reasons justifying those exclusions or the roles and functions which those depositors are deemed to exercise in order to be covered by the exclusion established by that provision. Nor do such details appear in other provisions of Directive 94/19.
As regards, next, the objectives of Directive 94/19, it should be borne in mind that that legislation seeks, in particular, according to its first recital, to protect savers in their legal relationships with credit institutions. Not having, in most cases, the information or the expertise required to assess the actual financial situation of the credit institution with which they deal, savers are unable to assess the risks of insolvency of those institutions.
In that regard, the 18th recital in the preamble to Directive 94/19 states that only savers who do not ‘need special protection’ may be excluded from the guarantee by the Member States.
Finally, as regards the history of Directive 94/19, it should be recalled that the explanatory memorandum to the Commission proposal (COM(92) 188 final) observes, at page 2, that the directive aims to protect depositors ‘who have insufficient financial knowledge to discriminate between sound and unsound credit institutions’ and, at page 18, that some of the depositors included in Annex I may be excluded from the guarantee because they ‘can hardly be considered as meriting protection because of their lack of economic expertise or economic weakness’. Accordingly, it clearly refers to the persons listed in point 7 of Annex I to Directive 94/19.
It follows from those considerations that the optional exclusion of the depositors listed in point 7 of Annex I to Directive 94/19 is based on the assumption that those persons have, in principle, a level of expertise and information relating to the credit institution to which they entrust their deposits which most depositors do not have. Therefore, the persons covered by one of the categories listed in point 7 of Annex I to Directive 94/19 may, under that provision, be excluded from the guarantee in so far as they have, because of the function which they exercise within the credit institution or because of their relationship with the institution, a level of information and expertise enabling them to know and assess the actual financial situation and risks associated with the activity of that institution.
That finding is supported by an examination of the other exceptions provided for in Annex I to Directive 94/19. Accordingly, one of the reasons for the optional exclusion of ‘close relatives’ and ‘third parties acting on behalf of the depositors referred to in 7’ is that those persons may have the same information as the persons listed in point 7 of Annex I have.
As regards the examination of a situation such as that of the applicant in the main proceedings in the light of those considerations, it is clear from the order for reference that the only category of persons referred to in point 7 of Annex I to Directive 94/19 which he is likely to be covered by that is that of ‘manager’.
In those circumstances, a person in Mr Surmačs’s position could be excluded from the guarantee provided for by Directive 94/19 if, because of the functions exercised, as manager of a credit institution, he was able to have a level of information and expertise to enable him to know and assess the actual financial situation and the risks associated with the activity of that institution.
It is for the referring court to determine whether, in the situation at issue in the main proceedings, Mr Surmačs possessed the information and expertise referred to in paragraph 33 above and was in the situation described in paragraphs 35 and 36 above. To that end, that court will have to take into consideration all the relevant circumstances of the case in the main proceedings and, in particular, the description of the position held by Mr Surmačs, the activities which he actually carried out and the legal and factual relationships between him and the bank’s administrative board. In that context, whether he was responsible for all of the bank’s activity or only a specific part of it is only one of the elements to be taken into account in that determination.
Having regard to those considerations, the answer to the second and third questions is that point 7 of Annex I to Directive 94/19 must be interpreted as meaning that the Member States may exclude from the guarantee laid down by that directive, as a manager, persons who, because of the function exercised within the credit institution, have, irrespective of the title of that function, a level of information and expertise which enables them to assess the actual financial situation and the risks associated with the activity of the credit institution.
Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

1.
The deposits excluded under point 7 of Annex I to Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes, as amended by Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009, are listed exhaustively in that provision, so that the Member States cannot provide, in their national law, for other categories of depositors who are not covered, in terms of the functions carried out, by the concepts listed in that point, in order for the exclusion from the deposit-guarantee to be applied to them.

2.
Point 7 of Annex I to Directive 94/19, as amended by Directive 2009/14, must be interpreted as meaning that the Member States may exclude from the guarantee laid down by that directive, as a manager, persons who, because of the function exercised within the credit institution, have, irrespective of the title of that function, a level of information and expertise which enables them to assess the actual financial situation and the risks associated with the activity of the credit institution.

[Signatures]
(
*1
)	Language of the case: Latvian.