Joined Cases C‑663/17 P, C‑665/17 P and C‑669/17 P
European Central Bank (ECB) and Others
v
Trasta Komercbanka AS and Others
Judgment of the Court (Grand Chamber) of 5 November 2019
(Appeal — Admissibility — Representation of a party before the Court — Power of attorney given to the lawyer — Power of attorney withdrawn by the liquidator of the appellant company — Further steps in the proceedings by the decision-making body of the appellant company — Charter of Fundamental Rights of the European Union — Article 47 — Right to an effective remedy — Regulation (EU) No 1024/2013 — Prudential supervision of credit institutions — Decision to withdraw a credit institution’s authorisation — Action for annulment before the General Court of the European Union — Admissibility — Whether the shareholders of the company whose authorisation has been withdrawn are directly concerned)
1.        Judicial proceedings — Representation of the parties — Action brought by a legal person governed by private law — Power of attorney given to the lawyer — Credit institution in liquidation following a decision by the European Central Bank to withdraw its authorisation — Revocation of the lawyer’s power of attorney by the liquidator of that institution — Further steps in the action for annulment of that decision to withdraw the authorisation brought by the former decision-making body of that institution — Liquidator having a conflict of interests — Fundamental right of the credit institution to effective judicial protection — Admissibility of the action
(Charter of Fundamental Rights of the European Union, Art. 47)
(see paragraphs 57, 59-62, 69-79)
2.        Action for annulment — Natural or legal persons — Measures of direct and individual concern to them — Whether directly concerned — Criteria — Decision to withdraw a credit institution’s authorisation — Determination of whether that decision directly affects the legal situation of the shareholders of that institution — No effect on the right of shareholders to receive dividends and to participate in the management of that credit institution — Lack of direct concern — Inadmissibility
(Art. 263, fourth para., TFEU)
(see paragraphs 102-115)
Résumé
The responsibility for revoking the power of attorney issued to the lawyer of a credit institution, in liquidation following a decision taken by the ECB to withdraw its authorisation, for the purpose of bringing an action before the Courts of the European Union against that decision, cannot be given to a liquidator who has a conflict of interests without infringing the fundamental right of that institution to effective judicial protection as guaranteed by EU law
In the judgment in ECB v Trasta Komercbanka and Others (Joined Cases C‑633/17 P, C‑665/17 P and C‑669/17 P) of 5 November 2019, the Court of Justice, sitting as the Grand Chamber, set aside an order of the General Court (1) by which that court had, first, held that, as the applicant company was no longer represented by a lawyer having a properly conferred authority to act for the purposes of the Rules of Procedure, (2) there was no need to adjudicate on its action for annulment of the decision of the European Central Bank (ECB) to withdraw its authorisation (3) and, second, partially rejected the plea of inadmissibility raised by the ECB, in so far as it concerned the action brought by the other applicants, namely several shareholders of that company.
The appellant company, Trasta Komercbanka, is a Latvian credit institution providing financial services by virtue of an authorisation granted to it by the Financial and Capital Market Commission (‘the FCMC’). After receiving a proposal from the FCMC to withdraw the appellant company’s authorisation and after obtaining observations from that company, the ECB adopted the decision at issue on 3 March 2016. (4) On 14 March 2016, at the request of the FCMC, the Latvian court having jurisdiction adopted a decision ordering that liquidation proceedings be opened in respect of the appellant company and appointed a liquidator. By a judgment not amenable to appeal, that court also rejected that credit institution’s request that the powers of representation of its decision-making body be maintained as regards the lodging of a request for review with the Administrative Board of Review of the ECB (5) and the bringing of an action against the decision at issue before the Courts of the European Union. On 17 March 2016, a notice of the opening of liquidation proceedings in respect of the appellant company and the replacement of the management of that credit institution by the liquidator was published in the Official Gazette of the Republic of Latvia. On the same date, that liquidator adopted a decision revoking all the powers of attorney which had been issued by the appellant company. On 21 March 2016, a notary published in the Official Gazette a notice of revocation of all powers of attorney adopted before 17 March 2016. Following the rejection of its request for review of the decision at issue, the appellant company and several of its shareholders brought an action before the General Court on 13 May 2016 for annulment of the decision at issue. The ECB raised a plea of inadmissibility in respect of that action.
Regarding the appeal in Case C‑669/17 P, in so far as it was lodged by the appellant company, the Court of Justice held that the General Court erred in law in ruling that the application of Latvian law did not lead to an infringement of that company’s right to effective judicial protection and in inferring that the lawyer who had brought the action before it on behalf of the appellant company no longer had a properly conferred authority to act, on behalf of that company, from a person qualified to confer it, given that the power of attorney initially issued to him had been revoked by the liquidator. In that regard, the Court of Justice emphasised the links between the FCMC and the liquidator, characterised by a relationship of trust, as well as the role played by the FCMC in the adoption of the decision at issue. Those elements, coupled with the power of the FCMC to request the discharge of the liquidator if it no longer had confidence in that liquidator, result in the liquidator having a conflict of interests, and the responsibility for any revocation of the power of attorney issued to the appellant company’s lawyer for the purpose of bringing an action before the Courts of the European Union against that decision cannot be given to that liquidator without infringing that company’s right to effective judicial protection within the meaning of Article 47 of the Charter of Fundamental Rights of the European Union. As the appeal lodged by the appellant company is both admissible and well founded, the Court of Justice has decided to refer that case back to the General Court so that it may give a ruling on the substance of the action brought by Trasta Komercbanka. With regard to the appeals in Cases C‑663/17 P and C‑665/17 P, lodged by the ECB and the Commission respectively, the Court of Justice held that the General Court erred in law in finding that the shareholders of the appellant company were directly concerned by the decision at issue. First, by favouring an incorrect criterion, based on the ‘intensity’ of the effects of the decision at issue, the General Court did not, as it was required to do, determine whether that decision might have a direct effect on the legal situation of the shareholders of the appellant company. Secondly, the General Court was wrong to take account of the non-legal, economic effects of the decision at issue on the situation of the shareholders of that company. The right of shareholders to receive dividends and to participate in the management of the appellant company, as a company constituted under Latvian law, has not been directly affected by the decision at issue, as the liquidation of Trasta Komercbanka resulted from a judicial decision taken on the basis of a provision of Latvian law not provided for in EU legislation. The Court of Justice therefore took the view that, as the shareholders of that company were not directly concerned by the decision at issue for the purposes of the fourth paragraph of Article 263 TFEU, it was necessary to uphold the ECB’s plea of inadmissibility in so far as it related to the action brought by those shareholders and, consequently, to dismiss that action as being inadmissible.
1      Order of 12 September 2017, Fursin and Others v ECB (T‑247/16, not published, EU:T:2017:623).
2      Article 51(3) of the Rules of Procedure of the General Court provides that lawyers are required, where the party they represent is a legal person governed by private law, to lodge at the Registry of the General Court an authority to act given by that person.
3      Decision ECB/SSM/2016 — 529900WIP0INFDAWTJ81/1 WOANCA-2016-0005 of the European Central Bank of 3 March 2016 withdrawing the authorisation granted to Trasta Komercbanka. That authorisation consists of a banking licence. The term ‘authorisation’ is used by 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).
4      The decision at issue was adopted on the basis of Article 4(1)(a) and Article 14(5) of Regulation No 1024/2013.
5      That board is provided for in Article 24 of Regulation No 1024/2013.