ORDER OF THE GENERAL COURT (Eighth Chamber)
6 May 2019 (*)
(Action for annulment — Economic and monetary union — Banking union — Single resolution mechanism for credit institutions and certain investment firms (SRM) — Resolution procedure applicable where an entity is failing or is likely to fail — Parent company and subsidiary — Declaration by the ECB that an entity is failing or is likely to fail — Regulation (EU) No 806/2014 — Preparatory measures — Acts not open to judicial review — Inadmissibility)
In Case T‑283/18,
Ernests Bernis, residing in Jurmala (Latvia),
Oļegs Fiļs, residing in Jurmala,
OF Holding SIA, established in Riga (Latvia),
Cassandra Holding Company SIA, established in Jurmala,
represented by O. Behrends, M. Kirchner and L. Feddern, lawyers,
applicants,
v
European Central Bank (ECB), represented by G. Marafioti and E. Koupepidou, acting as Agents, and by J. Rodríguez Cárcamo, lawyer,
defendant,
APPLICATION under Article 263 TFEU seeking annulment of the European Central Bank’s decisions of 23 February 2018 by which the latter declared that ABLV Bank AS and its subsidiary, ABLV Bank Luxembourg SA, were failing or were likely to fail within the meaning of Article 18(1) of Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014 L 225, p. 1),
THE GENERAL COURT (Eighth Chamber),
composed of A.M. Collins, President, R. Barents and J. Passer (Rapporteur), Judges,
Registrar: E. Coulon,
makes the following
Order
Background
1        The applicants, Mr Ernests Bernis, Mr Oļegs Fiļs, OF Holding SIA and Cassandra Holding Company SIA, are direct and indirect shareholders of ABLV Bank AS, which is a credit institution established in Latvia and the parent company of the ABLV group. ABLV Bank Luxembourg SA (‘ABLV Luxembourg’) is a credit institution established in Luxembourg and is one of the subsidiaries of the ABLV group; ABLV Bank is the sole shareholder of ABLV Luxembourg.
2        ABLV Bank is categorised as a ‘significant institution’ and, as such, is subject to supervision by the European Central Bank (ECB) as part of the Single Supervisory Mechanism (‘SSM’) established 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).
3        On 22 February 2018, the ECB sent to the Single Resolution Board (‘the SRB’) its draft assessment concerning whether ABLV Bank and ABLV Luxembourg were failing or were likely to fail, with the aim of consulting the SRB in that regard in accordance with the second subparagraph of Article 18(1) of Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014 L 225, p. 1).
4        On 23 February 2018, the ECB concluded that ABLV Bank and ABLV Luxembourg were failing or were likely to fail within the meaning of Article 18(1) of Regulation No 806/2014. The assessments concerning ABLV Bank and ABLV Luxembourg were
sent to the SRB on the same day. Those assessments
constitute the first and second contested acts respectively (together, ‘the contested acts’).
5        ABLV Bank brought an action against the contested acts, which was registered as Case T‑281/18.
6        On 23 February 2018, the SRB issued two decisions (SRB/EES/2018/09 and SRB/EES/2018/10) concerning ABLV Bank and ABLV Luxembourg respectively, in which it agreed with the assessments as to whether those banks were failing or were likely to fail within the meaning of Article 18(1)(a) of Regulation No 806/2014, but decided that, in the light of the particular characteristics of ABLV Bank and ABLV Luxembourg and their financial and economic situation, resolution action with respect to those banks was not necessary in the public interest.
7        On the same day, those decisions of the SRB were sent to their respective addressees, the national resolution authorities (‘the NRAs’) of Latvia and Luxembourg, the Finanšu un kapitāla tirgus komisija (Financial and Capital Markets Commission, Latvia) (‘the FCMC’) and the Commission de surveillance du secteur financier (Finance Sector Supervisory Commission, Luxembourg) (‘the CSSF’).
8        On 26 February 2018, the shareholders of ABLV Bank resolved to initiate a procedure allowing that bank to wind itself up and submitted to the FCMC an application for approval of its voluntary liquidation plan.
9        On 11 July 2018, the ECB adopted a decision withdrawing ABLV Bank’s authorisation following a request from the FCMC.
Procedure and forms of order sought
10      By application lodged at the Court Registry on 3 May 2018, the applicants brought the present action for annulment.
11      By separate document lodged at the Court Registry on 1 August 2018, the ECB raised a plea of inadmissibility.
12      On 19 September 2018, the applicants lodged their observations on the plea of inadmissibility.
13      The applicants claim that the Court should:
–        reject the plea of inadmissibility;
–        declare the action admissible;
–        annul the contested acts;
–        order the ECB to pay the costs.
14      The ECB contends that the Court should:
–        dismiss the application as inadmissible;
–        order the applicants to pay all the costs.
Law
15      Pursuant to Article 130(1) of the Rules of Procedure of the General Court, the defendant may apply to the Court for a decision on inadmissibility without going to the substance of the case. In accordance with Article 130(6) of those rules, the Court may decide to open the oral part of the procedure on the plea of inadmissibility.
16      In the present case, as the ECB has applied for a decision on inadmissibility, the Court, finding that it has sufficient information from the documents in the case file, has decided to rule on that application without taking further steps in the proceedings.
17      The ECB relies on three pleas of inadmissibility in respect of the action. In its first plea of inadmissibility, the ECB claims that the contested acts are preparatory measures that contain a factual assessment, but do not contain any obligations, and that those documents are not communicated to the institution concerned, but to the SRB; further, it argues that they cannot be the subject of an action for annulment, but that they form the basis for the adoption by the SRB of a resolution scheme or a decision establishing that resolution is not in the public interest. The applicants err in considering assessments concerning whether an entity is failing or is likely to fail (‘a FOLTF assessment’) to constitute decisions, as the ECB has no decision-making power within the framework for the adoption of a resolution scheme. A FOLTF assessment is a necessary condition for the adoption of a resolution scheme. However, a resolution scheme is not a necessary consequence of a FOLTF assessment.
The ECB also notes that Regulation No 806/2014 does not envisage the possibility of bringing an action for annulment against a FOLTF assessment. By contrast, Article 86(2) of that regulation expressly establishes that decisions of the SRB may be the subject of such an action.
18      Further, the ECB claims that, as the applicants have challenged the decisions of the SRB by bringing the action for annulment registered as Case T‑282/18, the alleged legal defects in the FOLTF assessments may therefore be relied on in that action challenging the decisions of the SRB, which could provide sufficient judicial protection to the applicants. In that regard, the ECB points out that it is considering intervening in Case T‑282/18 in support of the form of order sought by the SRB in order to defend the legality of the FOLTF assessments.
19      In its second plea of inadmissibility, the ECB claims that the applicants are not directly concerned by the FOLTF assessments because, first, those assessments did not directly affect their legal situation and, second, those assessments left a wide margin of discretion to the implementing authorities.
20      The ECB states, in particular, that ABLV Bank could have argued in the proceedings before the Luxembourg courts that the FOLTF assessment was unlawful and could have requested judicial protection in that regard, given that it is possible to ask national courts to obtain a preliminary ruling from the Court of Justice. However, ABLV Bank did not advance any such argument before the tribunal d’arrondissement de Luxembourg (District Court, Luxembourg, Luxembourg), but instead argued that the FOLTF assessment had no binding legal effect on that court, as it was a mere factual assessment.
21      In its third plea of inadmissibility, the ECB contests the applicants’ legal interest in bringing proceedings. The ECB claims that, should the Court consider the FOLTF assessments to be acts open to judicial review, the applicants are obliged to establish a legal interest in bringing proceedings that is separate from that of an undertaking under their control in order to contest an EU measure directed against ABLV Bank.
It is the ECB’s submission that none of the arguments put forward by the applicants is sufficient to demonstrate that they have a legal interest in bringing proceedings that is separate from that of ABLV Bank.
Indeed, both ABLV Bank in Case T‑281/18 and its shareholders in the present action rely on the same legal interests in their actions seeking annulment of the FOLTF assessments.
22      In response to the ECB’s first plea of inadmissibility, the applicants put forward various arguments to support the claim that the contested acts changed their legal situation. In the first place, they argue that
those acts constitute formal determinations of non-compliance with regulatory requirements, which must be open to judicial review. In the second place, the contested acts constitute formal negative assessments of each of the banks that must be open to judicial review. In the third place, the contested acts expose the banks to resolution action which would not otherwise be possible. The binding nature of the assessments on the SRB — which, according to the applicants, the ECB appears to accept — means that each bank cannot avoid resolution measures on the grounds that it is not failing or likely to fail even in circumstances where the SRB agrees that that is not the case. In the fourth place, the contested acts result in a substantial transfer of responsibility to the SRB, which alters the legal position of the relevant institution. In the fifth place, the contested acts have resulted in a distinct change in the banks’ legal status, which must be open to judicial review. Finally, in the sixth place, the publication of the contested acts led to the closure of the banks and therefore constituted an interference with the rights of each of the banks and their shareholders.
23      Further, the applicants claim that a declaration that an entity is failing or is likely to fail is a functional equivalent to withdrawing that entity’s licence, and, as such, must also be open to judicial review.
24      In addition, the applicants claim that the wording of the contested acts as a publicly announced declaration is inconsistent with the ECB’s contention that the FOLTF assessment constituted a mere communication of factual information, as that assessment was publicly announced as a highly technical legal determination.
25      The applicants take the view that the contested acts are binding and are definitive determinations. In support of that position, they refer, inter alia, to an extract from the contested acts in the form in which they were published on the ECB’s website, which stated that ‘following the failing or likely to fail determination, the ECB duly informed the Single
Resolution Board (SRB), which determined that resolution action was not necessary as it was not in the public interest for these banks’ and that ‘as a consequence, the winding-up of the banks will take place under the law of Latvia and Luxembourg, respectively’. By those declarations, it is submitted, the ECB made a definitive determination concerning whether the entities were failing or were likely to fail.
26      The applicants argue that allowing a judicial review of a FOLTF assessment solely in connection with the SRB’s decisions undermines the right to an effective remedy, in particular in cases where the ECB’s assessment is not followed by any decision by the SRB.
Further, each EU institution should assume responsibility for its own acts.
27      The applicants claim that the ECB’s second plea of inadmissibility is based on a misconception.
28      Finally, in response to the ECB’s third plea of inadmissibility, the applicants submit that the separate interest requirement applies only to minority shareholders. In addition, the separate interest requirement presupposes that the interests of the company and of its shareholders are generally aligned, which is not the case where the company is in liquidation.
29      As a preliminary point, it should be noted that, according to settled case-law, a natural or legal person may, pursuant to the fourth paragraph of Article 263 TFEU, challenge only measures the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in his legal position (judgment of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 9; orders of 30 April 2003, Schmitz-Gotha Fahrzeugwerke v Commission, T‑167/01, EU:T:2003:121, paragraph 46, and of 31 January 2006, Schneider Electric v Commission, T‑48/03, EU:T:2006:34, paragraph 44).
30      In the case of acts adopted by a procedure involving several stages of an internal procedure, in principle an act is open to challenge only if it is a measure which definitively lays down the position of the institution on the conclusion of that procedure, and not a provisional measure that is intended to pave the way for the final decision (judgments of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 10, and of 27 June 1995, Guérin automobiles v Commission, T‑186/94, EU:T:1995:114, paragraph 39), and the legal defects of which could reasonably be raised in an action brought against it (order of 31 January 2006, Schneider Electric v Commission, T‑48/03, EU:T:2006:34, paragraph 45).
31      The position would be otherwise only if acts or decisions adopted in the course of the preparatory proceedings were themselves the culmination of a special procedure distinct from that intended to permit the institution to take a decision on the substance of the case (judgment of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 11, and order of 9 June 2004, Camós Grau v Commission, T‑96/03, EU:T:2004:172, paragraph 30).
32      Furthermore, an intermediate measure is not capable of forming the subject
matter of an action if it is established that the illegality attaching to that measure can be relied on in support of an action against the final decision for which it represents a preparatory step. In such circumstances, the action brought against the decision terminating the procedure will provide sufficient judicial protection (judgment of 13 October 2011, Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, EU:C:2011:656, paragraph 53; see also, to that effect, judgments of 11 November 1981, IBM v Commission, 60/81, EU:C:1981:264, paragraph 12, and of 24 June 1986, AKZO Chemie and AKZO Chemie UK v Commission, 53/85, EU:C:1986:256, paragraph 19).
33      In the present case, it is necessary to determine, by looking at
the substance of the contested acts, whether, as is argued by the ECB, those acts constitute a communication to the SRB which forms the basis for the adoption by the SRB of a resolution scheme or of a decision establishing that resolution is not in the public interest, but which does not, as such, change the applicants’ legal situation.
34      The contested acts contain a FOLTF assessment issued by the ECB. The latter has no decision-making power within the framework for the adoption of a resolution scheme. Under recital 26 of Regulation No 806/2014, while the ECB and the SRB must be able to assess whether a credit institution is failing or is likely to fail, the SRB has the exclusive power to assess the conditions required for a resolution and to adopt a resolution scheme if it considers that all the conditions are met. In addition, it follows expressly from Article 18(1) of Regulation No 806/2014 that it is for the SRB to assess whether the three conditions set out in that provision are met.
While the ECB does have the power to send an assessment with regard to the first condition, namely whether the entity is failing or is likely to fail, this nevertheless constitutes a mere assessment, which does not in any way bind the SRB.
35      It is not in
dispute that the FOLTF assessments of ABLV Bank and of ABLV Luxembourg were carried out by the ECB after it had consulted the SRB.
36      Therefore, the contested acts must be considered to be preparatory measures in the procedure, which are designed to allow the SRB to take a decision regarding the resolution of the banks in question, and cannot, for that reason, form the subject of an action for annulment.
37      Moreover, it must be noted that the applicants have also brought an action against the decisions adopted by the SRB further to the ECB’s communication of the contested acts under Article 18(1) of Regulation No 806/2014, which has been registered as Case T‑282/18.
38      Thus, and contrary to what is
claimed by the applicants, the contested acts are not capable of being challenged under Article 263 TFEU.
39      That conclusion is not affected by the arguments put forward by the applicants.
40      First, contrary to what is submitted
by the applicants, the contested acts are in no way formal decisions regarding non-compliance by ABLV Bank and its subsidiary with regulatory requirements, but rather are assessments issued by the ECB as to whether those institutions are failing or are likely to fail.
41      Second, the argument that formal negative assessments must be open to judicial review is ineffective in the light of the information set out in paragraph 38 above.
42      Third, it is incorrect to consider that the contested acts expose the banks to resolution action which would not otherwise be possible. It is the SRB that has the exclusive power to adopt such measures, as is pointed out in paragraph 35 above.
43      Fourth, the argument that the contested acts result in a substantial transfer of responsibility to the SRB is irrelevant.
44      Fifth, with regard to whether, as is claimed by the applicants, a distinct change in the banks’ legal status resulting from the contested acts must be open to judicial review, it should be held, in the first place, that the banks’ legal status has not been changed by the contested acts and, in the second place, that that argument is ineffective in any event in the light of the information set out in paragraph 38 above.
45      Finally, in response to the applicants’ sixth argument, it is sufficient to find that it was not the contested acts that were published by the ECB, but rather two announcements, which are not the contested acts. Consequently, that argument is inoperative.
46      With regard to the alleged functional equivalence between a FOLTF assessment and a licence withdrawal, as relied on by the applicants, it should be noted that, while it is true that such an assessment may be based on a finding of fact that the requirements for continuing authorisation are no longer satisfied under Article 18(4)(a) of Regulation No 806/2014, those two acts are not the same. In that regard, suffice it to find that the requirements for withdrawing an authorisation set out in Article 18 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338), are manifestly different from the considerations forming the basis of a FOLTF assessment as set out in Article 18(4) of Regulation No 806/2014.
47      With regard to the alleged difference in wording between the publication on the ECB’s website and the contested acts, it must be noted that, in order to determine whether an act constitutes a decision, it is necessary to ascertain whether, taking account of the substance of that act and the intention of the institution that adopted it, the latter has, at the end of the preliminary examination stage, definitively established its position — by way of the act under consideration — on the measure under review (see, by analogy, judgment of 17 July 2008, Athinaïki Techniki v Commission, C‑521/06 P, EU:C:2008:422, paragraph 46).
In the present case, for the reasons set out in paragraphs 33 to 37 above, it is apparent from the substance of the contested acts that they are not
decisions but preparatory measures.
48      Indeed, it has been accepted by ABLV Bank itself that those FOLTF assessments are a mere factual assessment that has no legal effect. The judgment of the tribunal d’arrondissement de Luxembourg (District Court, Luxembourg) of 9 March 2018 makes an express reference to the fact that ‘the parties agree that the assessments and findings of the ECB and the SRB in respect of the Regulation are not binding on the court hearing the present application’.
49      Having regard to all of those matters, it must be concluded that the contested acts are preparatory measures which do not change the applicants’ legal status. They set out a factual assessment carried out by the ECB as to whether ABLV Bank and its subsidiary are failing or are likely to fail which is in no way binding, but which constitutes the basis for the adoption by the SRB of resolution schemes or decisions establishing that resolution is not in the public interest.
50      In the light of all of the foregoing, the action must be dismissed in its entirety as inadmissible without it being necessary to examine the second and third pleas of inadmissibility raised by the ECB.
Costs
51      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. As the applicants have been unsuccessful, they must be ordered to pay the costs, in accordance with the form of order sought by the ECB.
On those grounds,
THE GENERAL COURT (Eighth Chamber)
hereby orders:
1.      The action is dismissed as inadmissible.
2.      Mr Ernests Bernis, Mr Oļegs Fiļs, OF Holding SIA and Cassandra Holding Company SIA shall bear their own costs and pay those of the European Central Bank (ECB).
Luxembourg, 6 May 2019.
E. Coulon
A.M. Collins
Registrar
President
*      Language of the case: English.