Judgment — ECLI:EU:C:2018:209
Date: 2018-03-22
Language of the case: Lithuanian
Court formation: Fifth Chamber
Subject matter: Right of establishment;Free movement of capital;Internal market - Principles;Freedom to provide services
Procedure: Reference for a preliminary ruling;Reference for a preliminary ruling - decision unnecessary
Origin: Lithuania

summary, I believe that the funds in Case C‑109/16 cannot be classified as a ‘deposit’ within the meaning of Article 1(1) of Directive 94/19 either, without prejudice to the fact that that directive does not preclude national law from treating these funds and those at issue in Case C‑688/15 as deposits, provided that the effectiveness of the guarantee scheme laid down therein is respected. B. Cover under the investor-compensation scheme laid down in Directive 97/9 (question 2 in Case C‑109/16) 129. Recital 9 of Directive 97/9 recognises that, in certain circumstances, ‘it may … be difficult to distinguish between deposits covered by Directive 94/19/EC and money held in connection with investment business’. Furthermore, some debts will be eligible for protection under Directive 94/19 and under Directive 97/9. Article 2(3) of Directive 97/9 prohibits double compensation in those cases. 130. The referring court asks whether the funds at issue in Case C‑109/16 — which, as I have already observed, do not constitute a deposit under Directive 94/19 — fall within the scope of Directive 97/9. 1. Arguments of the parties 131. IID maintains that those funds are not covered by Directive 97/9. Snoras did not act as an investment firm but rather as a firm issuing bonds, so that the harm suffered by the customers flows from the materialisation of the investment risk, which as such is excluded from the scope of the directive. 132. In the same vein, the Lithuanian Government submits that Snoras cannot be regarded as a firm providing investment services, because it does not match the definition laid down in Directive 2004/39 in that it acted as a bond issuer and not an investment firm. The harm suffered by Mr Raišelis is inherent in the risk involved in any investment. 133. The Commission argues that, regardless of the wording of the Lithuanian version, Article 2(2) of Directive 97/9 must be interpreted as meaning that the cover is to apply to debts arising as a result of the inability of an investment firm to repay to investors money owed to or belonging to them, which that firm holds on its own account in relation to investment business. It is immaterial whether the money is deposited in an account in the name of the investment firm or the investor. 2. Analysis of the question 134. As is clear from its title, (30) Directive 97/9 is not aimed at the protection of investments, that is, it does not seek to cover or remove the financial risk inherent in all securities investments. Its aim is to protect investors. More specifically, or in particular, its aim is to protect ‘the small investor’, as recital 4 of that directive states. 135. This entails insuring the risk ‘of an investment firm being unable to meet its obligations to its investor clients’, (31) in other words, to protect those clients against non-fulfilment of the obligations relating to ‘the provision of … investment services’ and ‘the performance of … investment activities’. (32) That amounts to protecting an investor against the possibility that the firm whose professional assistance the investor has sought for the purpose of making an investment may become insolvent or, in general, be ‘… unable to meet its obligations to its investor clients’. 136. In short, the directive guarantees that savers (or at least some of them) (33) are able to invest with the confidence that there is a guarantee scheme which protects them, up to certain limits, and which covers ‘money and instruments held by an investment firm’ (34) where that firm is unable to meet its obligations. 137. Accordingly, it is, once again, a guarantee overlaying the use of the usual mechanisms available to the parties to a contract under civil or company law. Irrespective of the contractual or non-contractual liability of investment firms which do not treat their clients with the honesty, impartiality and professionalism required, or which provide their clients with ambiguous or misleading information about the risks those clients are assuming, the guarantee scheme in Directive 97/9 is applied objectively. However, that does not avoid the risk that the investment, once made, will suffer the rigours of the logic of the market . 138. The Lietuvos Aukščiausiasis Teismas (Supreme Court) appears to conclude, as an established fact, that in the circumstances of Case C‑109/16, Snoras acted as an investment firm. (35) That court’s uncertainties relate specifically to the classification of Mr Raišelis as an investor and, accordingly, to his possible right to protection under Directive 97/9. 139. The Court must assume, therefore, for the purposes of answering the question submitted to it by the referring court, that in this case Snoras satisfied the necessary conditions for classification as an investment firm. (36) 140. On that basis, it must be observed that the financial transaction that Mr Raišelis attempted to carry out could not be completed because of the insolvency of an entity (Snoras) which was both the issuer of the bonds to which its customer wished to subscribe and the investment firm to which the customer had entrusted that transaction. 141. In those circumstances, it is difficult to identify whether the financial loss suffered by Mr Raišelis was due to one or other of the roles Snoras played in relation to him. It is for the referring court to determine into which of those categories the facts of the main proceedings fit. If the national court concludes, first, that Snoras acted as an investment firm and, second, that the bond subscription came under the financial services contract concluded with Mr Raišelis, it will have to examine the extent to which the ‘inability’ of Snoras creates the obligation to pay compensation, for which purpose the referring court requests an interpretation of Article 2(2) of Directive 97/9. 142. That question must be viewed in the context of a significant difference between the Lithuanian wording of the provision and the rest of the language versions. The latter state that cover is to be provided ‘for claims arising out of an investment firm’s inability to repay money owed to or belonging to investors and held on their behalf in connection with investment business’. (37) However, the Lithuanian version refers only to money belonging to investors but does not mention money which the investment firm owes to investors. (38) 143. As I shall set out below, the wording of the applicable provision includes a reference to money owed to investors, (39) which is what specifically interests the referring court. Since that court did not find those words in the Lithuanian version of the provision, it asks the Court of Justice if they can be inferred by interpretation. 144. The Lietuvos Aukščiausiasis Teismas (Supreme Court) seeks to ascertain whether Article 2(2) of Directive 97/9 must be interpreted ‘as also covering claims for repayment of funds that an investment firm owed to investors and that are not held in the name of the investors’. (40) 145. The answer must be yes, first, because the majority of the language versions (except the Lithuanian version) of the provision are worded in the same way. In such cases, there is no need to infer, by interpretation, a requirement which, unequivocally and unconditionally, must be considered to be part of the very wording of the provision. Second, it is the approach which best meets the aim of the provision of protecting investors. 146. Moreover, the article in question is sufficiently clear, precise and unconditional for it to be relied on by individuals, as will be explained below. C. The direct effect of Directives 94/19 and 97/9 (questions 1 and 3 of Case C‑109/16) 147. The referring court also asks whether Article 2(2) of Directive 97/9 can be relied on directly by individuals before the courts. 148. The Commission submits that it can, for the reference in that article to ‘the legal and contractual conditions applicable’ does not preclude the section of the provision relating to the repayment obligation from being sufficiently clear, precise and unconditional and from creating individual rights, because those ‘conditions’ relate only to the methods of payment of compensation. 149. The uncertainty was resolved by the judgment of 25 June 2015, Indėlių ir investicijų draudimas and Nemaniūnas, (41) in which the Court held that ‘Directive 97/9 is, in so far it concerns the delimitation of the cases protected, sufficiently clear, precise and unconditional to be relied on directly by individuals.’ 150. The same is true of Article 1(1) of Directive 94/19 and of the definition of ‘deposit’ laid down therein, about the direct effect of which the referring court also asks. 151. At all events, and as was also the case in Indėlių ir investicijų draudimas and Nemaniūnas, (42) the referring court must ‘determine whether … IID which, it is common ground, has responsibility for guaranteeing the protection of deposits and of investments vis-à-vis investors in the event of the insolvency of investment firms’ meets the conditions to be satisfied by ‘entities against which the provisions of a directive that are capable of having direct effect may be relied upon’. Inter alia, it must be ‘a body, whatever its legal form, which has been made responsible, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals’. (43) VI. Conclusion 152. In the light of the foregoing considerations, I propose that the Court reply as follows to the Lietuvos Aukščiausiasis Teismas (Supreme Court, Lithuania): (1) Article 1(1) of 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, must be interpreted as meaning that the definition of ‘deposit’ does not include: – funds transferred from a personal bank account, with the account holder’s consent, to another bank account opened in the name of a credit institution for the purpose of subscribing to a future issue of bonds by that institution; – funds transferred, under the same conditions, for the purpose of acquiring shares in a bank which have been the subject of a public offer for sale. (2) Directive 94/19 does not preclude the legislation of a Member State from protecting such funds as guaranteed deposits, provided that this does not undermine the effectiveness of the protection scheme laid down by that directive. (3) Article 2(2) of Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes applies where an investment firm is unable to repay the money it owes to its customers. (4) Article 1(1) of Directive 94/19 and Article 2(2) of Directive 97/9 are sufficiently clear, precise and unconditional to be relied on directly before the courts by individuals against bodies which, whatever their legal form, have been charged with providing a public service and which have, for that purpose, special powers beyond those which result from the normal rules applicable in relations between individuals, a matter which it is for the national court to determine. 1 Original language: Spanish. 2 Case C‑671/13, EU:C:2015:418. 3 Directive 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). 4 Directive of the European Parliament and of the Council of 3 March 1997 on investor-compensation schemes (OJ 1997 L 84, p. 22). 5 Council Directive of 10 May 1993 on investment services in the securities field (OJ 1993 L 141, p. 27). 6 Directive of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (OJ 2004 L 145, p. 1). 7 Directive of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) (OJ 2006 L 177, p. 1). 8 Žin., 2002, n.º 65-2635. Law on deposit insurance which transposes Directives 94/19 and 97/9 into Lithuanian law (‘LDI’). 9 Case C‑671/13, EU:C:2015:129, point 36. 10 Advocate General Cruz Villalón went on to state: ‘While the debts concerned have that feature in common, they differ in that only certificates of deposit are concerned with debts which can be transferred or, as the case may be, negotiated.’ 11 However, the question of whether they are transferrable or non-transferrable instruments is not decisive. Whilst, in principle, the ‘repayment obligation excludes the possibility that the debt may be transferred or negotiated since, strictly speaking, it is a deposit entrusted to the institution’ (Opinion of Advocate General Cruz Villalón in Indėlių ir investicijų draudimas and Nemaniūnas, C‑671/13, EU:C:2015:129, point 37), Article 1(1) of Directive 94/19 also concerns certificates of deposit, that is, a type of ‘deposit’ characterised by the fact that it may be transferred (Opinion of Advocate General Cruz Villalón in Indėlių ir investicijų draudimas and Nemaniūnas, C‑671/13, EU:C:2015:129, point 39), which, in the words of the judgment of 25 June 2015, given in that case (C‑671/13, EU:C:2015:418), at paragraph 36, means that ‘the claim to the debt which that certificate entails may be traded.’ The point relating to negotiability was, moreover, important in enabling the Court to hold that Article 7(2) of Directive 94/19 in conjunction with point 12 of Annex I to that directive do not preclude a rule of national law which excludes from the deposit guarantee certificates of deposit issued by the insured itself, ‘provided that such securities are negotiable’ (judgment of 25 June 2015, Indėlių ir investicijų draudimas and Nemaniūnas, C‑671/13, EU:C:2015:418, paragraph 38). 12 Similarly, Article 5 of Directive 2006/48 relating to the taking up and pursuit of the business of credit institutions reserves to ‘credit institutions … [the] carrying on [of] the business of taking deposits or other repayable funds from the public’. My emphasis. 13 As occurs, in certain circumstances, with credit institutions themselves, according to Article 2 of the directive. 14 Those listed in Annex I, as referred to in Article 7(2) of the directive. 15 The 16th recital of Directive 94/19 also refers to ‘consumer protection’. 16 Financial instruments which Cortés, L.J., ‘Contratos bancarios (II)’, in Uría, R. and Menéndez, A., Curso de Derecho Mercantil, vol. II, Civitas, Madrid, 2001, p. 541, defines as ‘títulos valores, a la orden, transmisibles por endoso de modo que el titular puede enajenarlos recuperando los fondos invertidos o depositados a plazo sin que se cancele o ponga fin al contrato con la entidad de crédito’ (securities, payable to order and transferable by endorsement, meaning that the holder can transfer them and recover funds invested or deposited on a fixed-term basis without cancellation or termination of the agreement with the credit institution). 17 Recital 6 of Directive 2006/48. 18 My emphasis. 19 First and second recitals of Directive 94/19. 20 Fourth recital of Directive 94/19. 21 Judgment in Vervloet and Others, C‑76/15, EU:C:2016:975, paragraph 67. 22 Loc. cit. 23 IID makes this assertion at point 70 of its written observations in Case C‑688/15, citing the judgment given by the Lietuvos aukščiausiasis teismas (Supreme Court) on 2 October 2013 (civil case No 3K 3 470/2013). The Commission also referred to that case at the hearing. 24 An approach which is not prohibited by EU law, although the Court has held that ‘the scheme established by that measure must, as is made clear in recital 9 of Directive 97/9, meet the requirements of both directives’ (judgment of 25 June 2015, Indėlių ir investicijų draudimas and Nemaniūnas, C‑671/13, EU:C:2015:418, paragraph 45). 25 See, to that effect, judgment of 21 December 2016, Vervloet and Others (C‑76/15, EU:C:2016:975, paragraph 83). 26 A bond is a financial instrument which, essentially, records a loan of capital, consisting of funds which must be repaid to the lender within the period and in accordance with the conditions stipulated at the appropriate time. 27 As stated in the judgment of 25 June 2015, Indėlių ir investicijų draudimas and Nemaniūnas (C‑671/13, EU:C:2015:418, paragraph 38), Article 3(4) of the LDI excludes from the deposit guarantee ‘debt securities (certificates of deposit) issued by the insured itself’. The Court held that that exclusion was compatible with Directive 94/19, in so far as ‘such securities are negotiable.’ At the hearing, the Lithuanian Government confirmed that Lithuanian law has not been amended in that regard. It is, therefore, for the referring court to examine whether or not the bonds at issue satisfy that condition, for the purposes of their possible exclusion from the deposit guarantee. 28 On the same lines, the Italian and Portuguese versions use the expressions ‘debiti rappresentati da titoli’ and ‘dívidas representadas por títulos’, respectively. 29 Other language versions confirm the importance of the form of evidence of the debt. Thus, the English version states ‘any debt evidenced by a certificate’ while the German states ‘Forderungen, die das Kreditinstitut durch Ausstellung einer Urkunde verbrieft hat’. 30 Directive ‘on investor-compensation schemes’. 31 Recital 4 of Directive 97/9. 32 Article 4(1)(1) of Directive 2004/39. 33 In accordance with Article 4(2) of Directive 97/9, Member States ‘may provide that certain investors shall be excluded from cover by schemes or shall be granted a lower level of cover. Those exclusions shall be as listed in Annex I.’ 34 Recital 8 of Directive 97/9. 35 According to point 22 of the order for reference, in addition to the bond subscription agreement, Mr Raišelis concluded with Snoras a contract for financial services to a non-professional client. 36 The premiss in question does not arise in Case C‑688/15, in which all the indications are that Snoras did not provide investment services. Perhaps that is why the referring court has focused in its questions in that case on the scope of Directive 94/19 and whether the funds at issue may be classified as a ‘deposit’. 37 See, in that connection, the Spanish version and other versions, like the English (‘repay money owed to or belonging to investors and held on their behalf in connection with investment business’); the French (‘rembourser aux investisseurs les fonds leur étant dus ou leur appartenant et détenus pour leur compte en relation avec des opérations d’investissement’); the German (‘Gelder zurückzuzahlen, die Anlegerngeschuldetwerden oder gehören und für deren Rechnung im Zusammenhang mit Wertpapiergeschäften gehalten werden’); the Italian (‘rimborsare i fondi dovuti o appartenenti agli investitori e detenuti per loro conto in relazione ad operazioni d’investimento’); and the Portuguese (‘reembolsar os investidores dos fundos que lhessejam devidos ou que lhes pertençam e que sejam detidos por sua conta no âmbito de operações de investimento’). 38 ‘[G]rąžinti pinigus, priklausančius investuotojams ir laikomus jų vardu ryšium su investicine veikla’. Article 2(12) of the LDI is also worded in those terms. 39 As the judgment of the Court of 7 July 2016, Ambisig (C‑46/15, EU:C:2016:530, paragraph 48), observes, ‘the wording used in one language versions of a provision of EU law cannot serve as the sole basis for the interpretation of that provision, or be made to override the other language versions in that regard. The provisions of EU law must be interpreted and applied in a uniform manner, in the light of the versions established in all the languages of the European Union. Where there is a divergence between the various language versions of a provision of EU law, the provision in question must be interpreted by reference to the general scheme and the purpose of the rules of which it forms part’. 40 Wording of the second question in Case C‑109/16; my emphasis. 41 Case C‑671/13, EU:C:2015:418, paragraph 58. 42 Judgment of 25 June 2015, C‑671/13, EU:C:2015:418, paragraph 59. 43 Loc. cit.