ORDER OF THE GENERAL COURT (First Chamber)
8 November 2021 (*)
(Economic and monetary policy – Prudential supervision of less significant credit institutions – Regulation (EU) No 1024/2013 – Specific tasks of the ECB – Refusal to carry out direct prudential supervision – Refusal to give instructions to the Competent Person – Action manifestly lacking any foundation in law)
In Case T‑494/20,
Satabank plc, established in St Julians (Malta), represented by O. Behrends, lawyer,
applicant,
v
European Central Bank (ECB), represented by C. Hernández Saseta, F. Bonnard and A. Lefterov, acting as Agents,
defendant,
ACTION pursuant to Article 263 TFEU seeking annulment of the ECB’s decision of 15 May 2020 refusing to ensure direct supervision of the applicant and to give instructions to the Competent Person concerning it,
THE GENERAL COURT (First Chamber),
composed of H. Kanninen, President, N. Półtorak (Rapporteur) and O. Porchia, Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the dispute
1        The applicant, Satabank plc, is a credit institution governed by Maltese law which had been classified as a less significant institution within the meaning of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63). At the time when the present action was brought, the applicant was subject to direct prudential supervision by the Maltese Financial Services Authority.
2        In October 2018, the Maltese Financial Services Authority appointed a ‘Competent Person’ within the meaning of Maltese law (‘the Competent Person’) to advise and monitor the applicant in the proper conduct of its business. That person’s mandate was subsequently extended to cover all of the applicant’s assets and to assume control of its business.
3        By email of 1 May 2020, the lawyer instructed by the applicant’s shareholders requested the European Central Bank (ECB) to ensure direct prudential supervision with respect to the applicant, in the context of the Single Supervisory Mechanism introduced by Regulation No 1024/2013, and to give instructions to the Competent Person in order to ensure that ‘[the applicant would] no longer [be] denied access to its offices, information, systems, files, documents, staff and financial resources in order to finance legal representation as well as all other resources of the Bank’.
4        By email of 15 May 2020, the ECB refused the applicant’s request (‘the contested act’).
5        On 30 June 2020, the ECB withdrew the applicant’s authorisation as a credit institution.
Procedure and forms of order sought
6        On 27 July 2020, the applicant, represented by the lawyer instructed by its shareholders, brought the present action.
7        By a separate document lodged at the Court Registry on 30 October 2020, the ECB raised a plea of inadmissibility under Article 130(1) of the Rules of Procedure of the General Court, claiming that the Court should:
–        dismiss the action as inadmissible;
–        order the applicant to pay the costs.
8        On 7 January 2021, the applicant lodged its observations on the plea of inadmissibility, claiming that the Court should:
–        dismiss the plea of inadmissibility;
–        order the ECB to pay the costs.
9        By order of 24 March 2021, in accordance with Article 130(7) of the Rules of Procedure, the Court reserved its decision on the plea of inadmissibility raised by the ECB for the final judgment and reserved the costs.
10      The ECB lodged its defence on 12 May 2021.
11      In its application, the applicant claims that the Court should:
–        annul the contested act;
–        order the ECB to pay the costs.
12      In its defence, the ECB contends that the Court should:
–        dismiss the application;
–        order the applicant to pay the costs.
Law
13      Under Article 126 of the Rules of Procedure, where the action is manifestly inadmissible or manifestly lacking any foundation in law, the Court may decide to give a decision by reasoned order without taking further steps in the proceedings.
14      In the present case, the Court, taking the view that it has sufficient information from the documents in the file, has decided, pursuant to that article, to give a decision without taking further steps in the proceedings, notwithstanding the applicant’s request that a hearing be held (see, to that effect, order of 17 May 2017, Cuallado Martorell v Commission, T‑481/16 RENV, not published, EU:T:2017:354, paragraph 34).
Admissibility
15      The ECB raises a plea of inadmissibility in respect of the present action. First, it submits that the contested act could not produce legally binding effects, since the applicant’s request was manifestly outside the scope of its competence to carry out prudential supervision tasks. It adds that that act was merely an explanation of the powers of the ECB, provided to the applicant for information purposes. Second, the ECB asserts that that act is not couched in mandatory terms, and that the information which it contains is thus purely administrative and cannot be understood as affecting the applicant’s legal situation. Third, the ECB submits that its response to the applicant’s request was made in a simple email, the form of which contrasts with the usual form of a decision, and that, for that reason, the act could not have been intended to produce legal effects.
16      The applicant disputes the ECB’s arguments.
17      In that regard, it should be noted that it is for the Court to assess, following the circumstances of each case, whether the proper administration of justice justifies the dismissal of an action on its merits without first ruling on the objection of inadmissibility raised by the defendant (see, to that effect, judgment of 26 February 2002, Council v Boehringer, C‑23/00 P, EU:C:2002:118, paragraph 52).
18      In the present case, it is necessary to examine at the outset the pleas in law put forward by the applicant on the substance, without first ruling on the plea of inadmissibility alleging that the ECB lacks competence to issue the requested instructions to the Competent Person, given, first, the link between the admissibility and the merits of the action and, second, the fact that the action is, for the reasons set out below, manifestly lacking any foundation in law (see, by analogy, judgment of 23 March 2004, France v Commission, C‑233/02, EU:C:2004:173, paragraph 26).
Substance
19      In support of its application for annulment of the contested act, the applicant raises eight pleas in law, alleging, first, unlawful refusal of the ECB to grant its application, in so far as it was based on the ground that an intervention under Article 6(5)(b) of Regulation No 1024/2013 and Article 67 of Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (OJ 2014 L 141, p. 1), does not fall within the competence of the ECB, second, infringement of the right to an effective remedy enshrined in Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’), third, infringement of Article 41 of the Charter, fourth, infringement of Article 17 of the Charter, fifth, infringement of Article 16 of the Charter, sixth, infringement of the ECB’s obligation to intervene under Article 6(5)(b) of Regulation No 1024/2013, seventh, infringement of the principle that the ECB must act in such a way as to make compliance with supervisory obligations possible and, eighth, abuse of power.
The first and sixth pleas
20      In support of the first plea, the applicant claims, in essence, that the ECB rejected its application on the basis of Article 6(5)(b) of Regulation No 1024/2013 and of Article 67 of Regulation No 468/2014, arguing, paradoxically, that it is not the competent authority. The contested decision is thus, the applicant argues, obviously illegal because it is based on self-contradictory reasoning. The applicant adds that the ECB rejected a similar application in the case which gave rise to the order of 24 September 2021, Pilatus Bank v ECB (T‑139/19, not published, EU:T:2021:623), on the sole ground that the bank in that case was no longer a credit institution following the revocation of its authorisation. The ECB, it submits, cannot rely on that ground, which is, in any event, incorrect in the present case, since the contested act was adopted at a time when the applicant still had its authorisation.
21      In support of the sixth plea, the applicant submits that the contested act is illegal because the ECB was under an obligation to carry out direct supervision under Article 6(5)(b) of Regulation No 1024/2013 and Article 67 of Regulation No 468/2014 and to give instructions to the Competent Person. The ECB has, in the applicant’s view, overall responsibility for the Single Supervisory Mechanism. Only the ECB exercises sovereign powers in this context. The national authorities merely assist the ECB as regards a decentralised implementation of the ECB’s supervision. The ECB, the applicant argues, has to ensure the legality of the Single Supervisory Mechanism, especially, but not only, where fundamental principles of due process are infringed.
22      The ECB disputes the applicant’s arguments.
23      As a preliminary point, it should be noted that Article 4 of Regulation No 1024/2013, entitled ‘Tasks conferred on the ECB’, provides, in paragraph 1, that, within the framework of Article 6 of that regulation, the ECB is ‘exclusively competent’ to carry out, for prudential supervisory purposes, the tasks listed in Article 4(1) in relation to ‘all’ credit institutions. It therefore follows from the wording of Article 4(1) of Regulation No 1024/2013 that the ECB has exclusive competence to carry out the tasks referred to in that provision with regard to all of those institutions, and thus with regard to both ‘significant institutions’ and ‘less significant’ institutions (see, to that effect, judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraphs 37 and 38).
24      The national competent authorities are required to assist the ECB in carrying out the tasks conferred to it by Regulation No 1024/2013 by a decentralised implementation of some of those tasks with regard to less significant credit institutions, within the meaning of the first subparagraph of Article 6(4) of that regulation (judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 41).
25      Under Article 6(1) of Regulation No 1024/2013, the ECB is required to carry out its tasks under the Single Supervisory Mechanism, composed of itself and national competent authorities, and is required to ensure the effective and consistent functioning of that mechanism (judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 39).
26      It is in that context that, in accordance with Article 6(6) of Regulation No 1024/2013, national competent authorities are required to carry out and be responsible for the tasks referred to in Article 4(1)(b), (d) to (g) and (i) of that regulation and are authorised to adopt all relevant supervisory decisions in relation to the credit institutions referred to in the first subparagraph of Article 6(4), that is, those which, in accordance with the criteria stated in that latter provision, are ‘less significant’ (judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 40).
27      It should also be noted that the ECB retains important prerogatives even where the national authorities exercise the supervisory tasks referred to in Article 4(1)(b) and (d) to (i) of Regulation No 1024/2013 and that the existence of such prerogatives reveals the subordinate nature of the intervention of the national authorities when they implement those tasks (judgment of 16 May 2017, Landeskreditbank Baden-Württemberg v ECB, T‑122/15, EU:T:2017:337, paragraph 59).
28      Thus, under Article 6(5)(a) of Regulation No 1024/2013, the ECB is required to issue ‘regulations, guidelines or general instructions to national competent authorities, according to which the tasks defined in Article 4 [of that regulation] excluding points (a) and (c) of paragraph 1 thereof are performed and supervisory decisions are adopted by national competent authorities’ (judgment of 16 May 2017, Landeskreditbank Baden-Württemberg v ECB, T‑122/15, EU:T:2017:337, paragraph 60).
29      Although it is true that that subordination does not go so far as to allow the ECB to address individual guidelines to a national authority, that absence is compensated for by the possibility afforded by Article 6(5)(b) of Regulation No 1024/2013 to divest a national authority of direct prudential supervision of an entity. It should be noted in this regard that the terms used in that provision imply that the exercise of that prerogative requires a broad discretion conferred on the ECB, stating as it does that ‘when necessary to ensure consistent application of high supervisory standards, the ECB may at any time, on its own initiative after consulting with national competent authorities or upon request by a national competent authority, decide to exercise directly itself all the relevant powers for one or more credit institutions referred to in paragraph 4’ (judgment of 16 May 2017, Landeskreditbank Baden-Württemberg v ECB, T‑122/15, EU:T:2017:337, paragraph 61).
30      It is in the light of those preliminary observations that the arguments raised by the applicant in its first and sixth pleas in law must be examined.
31      In the present case, it should be noted, first, that, by the letter of 1 May 2020, the applicant asked the ECB to take over direct prudential supervision and to give instructions to the Competent Person in order to ensure that the applicant would no longer be refused access to its offices, information, systems, files, documents, staff and financial resources in order to finance legal representation, as well as to all other resources of the bank.
32      Second, it should be noted that, by the contested act, the ECB identified the applicable legal framework, namely Article 6(5)(b) of Regulation No 1024/2013 and Article 67 of Regulation No 468/2014, under which the ECB may decide to exercise directly the prudential supervision of a less significant credit institution, such as the applicant, when this is necessary to ensure a consistent application of high supervisory standards, and, on that basis, took the view that it could not accede to the applicant’s request. In that regard, the ECB explained as follows:
‘We understand your request to the ECB to take over the direct supervision as a request linked to the ECB giving instructions to the Competent Person so as to ensure that the Bank no longer denies you access to its offices, information, systems, files, documents, staff and resources. The ECB cannot comply with such a request; the ECB cannot give instructions to the Competent Person, this matter falling outside the ECB’s competence.’
33      In the first place, it should be noted that, as is apparent from paragraph 26 above, the national competent authorities are required to carry out and be responsible for the tasks referred to in Article 4(1)(b), (d) to (g) and (i) of Regulation No 1024/2013 with regard to the supervision of less significant credit institutions.
34      In the second place, it should be recalled that, under Article 6(5)(b) of Regulation No 1024/2013, when necessary to ensure consistent application of high supervisory standards, the ECB may at any time, on its own initiative, after consulting the national competent authorities or upon request by a national competent authority, decide to exercise directly itself all relevant powers for a less significant credit institution. In that regard, as is apparent from the case-law referred to in paragraph 29 above, the ECB, in the exercise of that prerogative, enjoys a broad discretion. As the ECB correctly asserts in its defence, it is under no obligation to carry out direct prudential supervision in response to every request. That possibility is given to it solely in order to achieve the objective of ‘[ensuring] a consistent application of high supervisory standards’.
35      In that regard, the applicant’s request that it be placed under direct prudential supervision has the objective, ultimately, that the ECB should give the requested instructions to the Competent Person in order to allow the lawyer appointed by the shareholders of the bank to have access to its premises and resources so that that lawyer can effectively perform his or her representation duties. Such a request, however, manifestly bears no relation to the need to ‘[ensure] consistent application of high supervisory standards’, laid down in Article 6(5)(b) of Regulation No 1024/2013. Moreover, the applicant, in the present case, does not put forward any other ground to justify the ECB deciding to place it under direct prudential supervision, provided for in Article 6(5)(b) of Regulation No 1024/2013 and in Article 67 of Regulation No 468/2014 and coming within the scope of the ECB’s broad discretion.
36      Given that the ECB properly found that it could not accede to the applicant’s request for direct prudential supervision, it also correctly concluded that it could not issue the requested instructions, which do not come within the scope of its competence.
37      Thus, since the applicant’s request was manifestly unrelated to the objective of a consistent application of high supervisory standards, the applicant is not justified in claiming that the ECB, by refusing, in the exercise of its broad discretion, to accede to its request by placing it under direct prudential supervision and by giving the requested instructions to the Competent Person, infringed Article 6(5)(b) of Regulation No 1024/2013 and Article 67 of Regulation No 468/2014.
38      Accordingly, the first and sixth pleas must be rejected as being manifestly unfounded.
The other pleas raised by the applicant
39      By its second, third, fourth and fifth pleas, the applicant claims that the contested act infringes its rights enshrined in the Charter, respectively, in Article 47, relating to its right to an effective remedy, in Article 41, relating to its right to have its affairs handled impartially, fairly and within a reasonable time, in Article 17, relating to its right to property, and in Article 16, relating to its freedom to conduct a business. In that regard, the applicant claims, in essence, that its representatives do not have access to the information, documents, computer systems, staff and resources of the bank, whereas that access is necessary for them to assert the applicant’s rights. Its legal representatives are also prevented from gaining access to the bank’s financial resources for the purpose of financing legal representation by lawyers.
40      The applicant’s pleas concerning the alleged infringements of its rights enshrined in the Charter are, however, irrelevant to the present case and must be rejected, given that the ECB properly refused to ensure direct prudential supervision of the applicant and to give instructions to the Competent Person. Given that the ECB was not in a position to accede to the applicant’s request, the applicant is not justified in claiming that the ECB infringed its rights under the Charter by failing to give instructions to the Competent Person who, as the applicant claims, safeguards its rights.
41      Accordingly, the second, third, fourth and fifth pleas must be rejected as being manifestly unfounded.
42      By its seventh plea, the applicant claims that the contested decision infringes the principle that the ECB must act in a manner that makes compliance with regulatory obligations possible rather than impossible. It is, in its view, illegal for the ECB to cause or tolerate a situation in which the shareholders and the management are deprived of any influence or in which there is no effective management and the lawful representatives of the bank cannot perform their role.
43      In that regard, it follows from the foregoing that the applicant’s arguments in the present case are irrelevant and must be rejected, given that the ECB was manifestly justified in rejecting the applicant’s request that it be placed under direct prudential supervision and that the requested instructions be given to the Competent Person. Thus, that alleged infringement has no bearing on that finding in the light of the scope of the tasks which are entrusted to the ECB vis-à-vis less significant credit institutions.
44      It follows that the seventh plea is manifestly unfounded.
45      By its eighth plea, the applicant alleges that the contested act represents an abuse of power. The contested act is, in its view, part of the ECB’s strategy of depriving banks of their rights in respect of banking supervision. In particular, it asserts that the ECB urges national competent authorities to deprive banks of all of their rights of representation and of any control over their institutional resources and it does so irrespective of prior practice in the relevant Member States. Furthermore, since the judgment of 5 November 2019, ECB and Others v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923), the ECB has, according to the applicant, subscribed to the idea that a bank cannot be deprived of an independent representation, while seeking to undermine any practical effect of that judgment by failing to rectify the effects of the ‘illegal interference with the representation’ and by failing to cooperate with regard to the banks’ access to that representation and to its institutional resources.
46      In that regard, the ECB cannot be accused of having abused its power by declaring that it lacked competence in respect of a request for which it was indeed not competent, as is apparent from the conclusion set out in paragraphs 36 and 37 above.
47      Furthermore, it should be noted that the ECB respected the requirements arising from the judgment of 5 November 2019, ECB and Others v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923). The ECB acknowledged the applicant’s representation for the purposes of bringing the present action. In particular, it also raised no objection in that regard in its response to the applicant’s request that it be placed under direct prudential supervision in order to give to the Competent Person the instructions requested. In that regard, the ECB acknowledged the applicant’s lawyer as a legitimate negotiating partner, as demonstrated by the fact that the email in response to the applicant’s request was sent to him as the applicant’s representative.
48      Accordingly, the eighth plea must be rejected as being manifestly unfounded and the action must be dismissed in its entirety as manifestly lacking any foundation in law.
Costs
49      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 applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the ECB.
On those grounds,
THE GENERAL COURT (First Chamber)
hereby orders:
1.      The action is dismissed.
2.      Satabank plc shall pay, in addition to its own costs, those incurred by the European Central Bank (ECB).
Luxembourg, 8 November 2021.
E. Coulon
H. Kanninen
Registrar
President
*      Language of the case: English.