Provisional text
JUDGMENT OF THE COURT (First Chamber)
11 September 2025 (*)
( Reference for a preliminary ruling – Directive 2014/59/EU – Resolution of credit institutions and investment firms – General principles – Article 34(1)(a) and (b) – Bail-in – Write-down of capital instruments – Effects – Article 53(1) and (3) – Article 60(2), first subparagraph, points (b) and (c) – Protection of the rights of shareholders and creditors – Purchase of capital instruments – Flawed and incorrect information provided in the prospectus to be published, inter alia, when securities are offered to the public – Action for a declaration of nullity in respect of the agreement for the purchase of capital instruments – Action for damages – Actions brought before the adoption of resolution measures )
In Case C‑687/23,
REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decision of 2 November 2023, received at the Court on 15 November 2023, in the proceedings
D.E.
v
Banco Santander SA,
THE COURT (First Chamber),
composed of F. Biltgen, President of the Chamber, T. von Danwitz (Rapporteur), Vice-President of the Court, acting as Judge of the First Chamber, A. Kumin, I. Ziemele and S. Gervasoni, Judges,
Advocate General: T. Ćapeta,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after considering the observations submitted on behalf of:
–        Banco Santander SA, by C. García Vega, J.M. Rodríguez Cárcamo and A.M. Rodríguez Conde, abogados,
–        the Spanish Government, by L. Aguilera Ruiz and A. Gavela Llopis, acting as Agents,
–        the Italian Government, by G. Palmieri, acting as Agent, and by P. Gentili, avvocato dello Stato,
–        the Portuguese Government, by P. Barros da Costa, J. Margarido and A. Rodrigues, acting as Agents,
–        the European Commission, by C. Auvret, P. Němečková and D. Triantafyllou, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 13 February 2025,
gives the following
Judgment
1        This request for a preliminary ruling concerns the interpretation of Article 34(1)(a), Article 53(1) and (3), and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190).
2        The request has been made in proceedings between D.E. and Banco Santander SA, in its capacity as successor to Banco Popular Español SA (‘Banco Popular’), concerning actions for a declaration of nullity and for damages brought by D.E. on account of flawed and incorrect information provided to him in the prospectus to be published, inter alia, when securities are offered to the public, when purchasing capital instruments that were subsequently converted into shares in Banco Popular.
Legal context
Directive 2004/39/EC
3        Recitals 31, 44 and 46 of Directive 2004/39/EC 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) were worded as follows:
‘(31)      One of the objectives of this Directive is to protect investors. Measures to protect investors should be adapted to the particularities of each category of investors (retail, professional and counterparties).
…
(44)      With the two-fold aim of protecting investors and ensuring the smooth operation of securities markets, it is necessary to ensure that transparency of transactions is achieved and that the rules laid down for that purpose apply to investment firms when they operate on the markets. In order to enable investors or market participants to assess at any time the terms of a transaction in shares that they are considering and to verify afterwards the conditions in which it was carried out, common rules should be established for the publication of details of completed transactions in shares and for the disclosure of details of current opportunities to trade in shares. These rules are needed to ensure the effective integration of Member State equity markets, to promote the efficiency of the overall price formation process for equity instruments, and to assist the effective operation of “best execution” obligations. These considerations require a comprehensive transparency regime applicable to all transactions in shares …
The obligations for investment firms under this Directive to quote a bid and offer price and to execute an order at the quoted price do not relieve investment firms of the obligation to route an order to another execution venue when such internalisation could prevent the firm from complying with “best execution” obligations.
…
(46)      A Member State may decide to apply the pre- and post-trade transparency requirements laid down in this Directive to financial instruments other than shares. …’
4        Article 19 of Directive 2004/39, entitled ‘Conduct of business obligations when providing investment services to clients’, provided, in paragraphs 2 and 3 thereof:
‘2.      All information, including marketing communications, addressed by the investment firm to clients or potential clients shall be fair, clear and not misleading. Marketing communications shall be clearly identifiable as such.
3.      Appropriate information shall be provided in a comprehensible form to clients or potential clients about:
–        the investment firm and its services,
–        financial instruments and proposed investment strategies; this should include appropriate guidance on and warnings of the risks associated with investments in those instruments or in respect of particular investment strategies,
–        execution venues, and
–        costs and associated charges
so that they are reasonably able to understand the nature and risks of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis. This information may be provided in a standardised format.’
Directive 2014/59
5        Recitals 45, 49 and 120 of Directive 2014/59 are worded as follows:
‘(45)      In order to avoid moral hazard, any failing institution should be able to exit the market, irrespective of its size and interconnectedness, without causing systemic disruption. A failing institution should in principle be liquidated under normal insolvency proceedings. However, liquidation under normal insolvency proceedings might jeopardise financial stability, interrupt the provision of critical functions, and affect the protection of depositors. In such a case it is highly likely that there would be a public interest in placing the institution under resolution and applying resolution tools rather than resorting to normal insolvency proceedings. …
…
(49)      The limitations on the rights of shareholders and creditors should be in accordance with Article 52 of the Charter [of Fundamental Rights of the European Union (“the Charter”)]. The resolution tools should therefore be applied only to those institutions that are failing or likely to fail, and only when it is necessary to pursue the objective of financial stability in the general interest. In particular, resolution tools should be applied where the institution cannot be wound up under normal insolvency proceedings without destabilising the financial system and the measures are necessary in order to ensure the rapid transfer and continuation of systemically important functions and where there is no reasonable prospect for any alternative private solution, including any increase of capital by the existing shareholders or by any third party sufficient to restore the full viability of the institution. …
…
(120)      [EU] company law directives contain mandatory rules for the protection of shareholders and creditors of institutions which fall within the scope of those directives. In a situation where resolution authorities need to act rapidly, those rules may hinder effective action and use of resolution tools and powers by resolution authorities and appropriate derogations should be included in this Directive. In order to guarantee the maximum degree of legal certainty for stakeholders, the derogations should be clearly and narrowly defined, and they should only be used in the public interest and when resolution triggers are met. …’
6        Article 1(1) of that directive provides:
‘This Directive lays down rules and procedures relating to the recovery and resolution of the following entities:
…
(b)      financial institutions that are established in the [European] Union when the financial institution is a subsidiary of a credit institution or investment firm, or of a company referred to in point (c) or (d), …
(c)      financial holding companies, mixed financial holding companies and mixed-activity holding companies that are established in the Union;
(d)      parent financial holding companies in a Member State, Union parent financial holding companies, parent mixed financial holding companies in a Member State, Union parent mixed financial holding companies;
…’
7        Under Article 2(1) of that directive:
‘For the purposes of this Directive the following definitions apply:
…
(57)      “bail-in tool” means the mechanism for effecting the exercise by a resolution authority of the write-down and conversion powers in relation to liabilities of an institution under resolution in accordance with Article 43;
…’
8        Article 34 of that directive, headed ‘General principles governing resolution’, states, in paragraph 1:
‘Member States shall ensure that, when applying the resolution tools and exercising the resolution powers, resolution authorities take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles:
(a)      the shareholders of the institution under resolution bear first losses;
(b)      creditors of the institution under resolution bear losses after the shareholders in accordance with the order of priority of their claims under normal insolvency proceedings, save as expressly provided otherwise in this Directive;
…
(f)      except where otherwise provided in this Directive, creditors of the same class are treated in an equitable manner;
(g)      no creditor shall incur greater losses than would have been incurred if the institution or entity referred to in point (b), (c) or (d) of Article 1(1) had been wound up under normal insolvency proceedings in accordance with the safeguards in Articles 73 to 75;
…’
9        Article 36 of Directive 2014/59, entitled ‘Valuation for the purposes of resolution’, states:
‘1.      Before taking resolution action or exercising the power to write down or convert relevant capital instruments resolution authorities shall ensure that a fair, prudent and realistic valuation of the assets and liabilities of the institution or entity referred to in point (b), (c) or (d) of Article 1(1) is carried out by a person independent from any public authority, including the resolution authority, and the institution or entity referred to in point (b), (c) or (d) of Article 1(1). Subject to paragraph 13 of this Article and to Article 85, where all the requirements laid down in this Article are met, the valuation shall be considered to be definitive.
2.      Where an independent valuation according to paragraph 1 is not possible, resolution authorities may carry out a provisional valuation of the assets and liabilities of the institution or entity referred to in point (b), (c) or (d) of Article 1(1), in accordance with paragraph 9 of this Article.
3.      The objective of the valuation shall be to assess the value of the assets and liabilities of the institution or entity referred to in point (b), (c) or (d) of Article 1(1) that meets the conditions for resolution of Articles 32 and 33.
…
6.      The valuation shall be supplemented by the following information as appearing in the accounting books and records of the institution or entity referred to in point (b), (c) or (d) of Article 1(1):
(a)      an updated balance sheet and a report on the financial position of the institution or entity referred to in point (b), (c) or (d) of Article 1(1);
(b)      an analysis and an estimate of the accounting value of the assets;
(c)      the list of outstanding on balance sheet and off balance sheet liabilities shown in the books and records of the institution or entity referred to in point (b), (c) or (d) of Article 1(1), with an indication of the respective credits and priority levels under the applicable insolvency law.
…
9.      Where due to the urgency in the circumstances of the case it is not possible to comply with the requirements in paragraphs 6 and 8 or paragraph 2 applies, a provisional valuation shall be carried out. The provisional valuation shall comply with the requirements in paragraph 3 and in so far as reasonably practicable in the circumstances with the requirements of paragraphs 1, 6 and 8.
The provisional valuation referred to in this paragraph shall include a buffer for additional losses, with appropriate justification;
…’
10      Article 48 of that directive, headed ‘Sequence of write down and conversion’, provides:
‘1.      Member States shall ensure that, when applying the bail-in tool, resolution authorities exercise the write down and conversion powers, subject to any exclusions under Article 44(2) and (3), meeting the following requirements:
(a)      Common Equity Tier 1 items are reduced in accordance with point (a) of Article 60(1);
(b)      if, and only if, the total reduction pursuant to point (a) is less than the sum of the amounts referred to in points (b) and (c) of Article 47(3), authorities reduce the principal amount of Additional Tier 1 instruments to the extent required and to the extent of their capacity;
(c)      if, and only if, the total reduction pursuant to points (a) and (b) is less than the sum of the amounts referred to in points (b) and (c) of Article 47(3), authorities reduce the principal amount of Tier 2 instruments to the extent required and to the extent of their capacity;
…’
11      Article 53 of Directive 2014/59, headed ‘Effect of bail-in’, provides:
‘1.      Member States shall ensure that where a resolution authority exercises a power referred to in Article 59(2) and in points (e) to (i) of Article 63(1), the reduction of principal or outstanding amount due, conversion or cancellation takes effect and is immediately binding on the institution under resolution and affected creditors and shareholders.
…
3.      Where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in point (e) of Article 63(1), that liability and any obligations or claims arising in relation to it that are not accrued at the time when the power is exercised shall be treated as discharged for all purposes, and shall not be provable in any subsequent proceedings in relation to the institution under resolution or any successor entity in any subsequent winding up.
4.      Where a resolution authority reduces in part, but not in full, the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in point (e) of Article 63(1):
(a)      the liability shall be discharged to the extent of the amount reduced;
(b)      the relevant instrument or agreement that created the original liability shall continue to apply in relation to the residual principal amount of, or outstanding amount payable in respect of the liability, subject to any modification of the amount of interest payable to reflect the reduction of the principal amount, and any further modification of the terms that the resolution authority might make by means of the power referred to in point (j) of Article 63(1).’
12      Article 60 of that directive, which is entitled ‘Provisions governing the write down or conversion of capital instruments’, reads as follows:
‘1.      When complying with the requirement laid down in Article 59, resolution authorities shall exercise the write down or conversion power in accordance with the priority of claims under normal insolvency proceedings, in a way that produces the following results:
(a)      Common Equity Tier 1 items are reduced first in proportion to the losses and to the extent of their capacity and the resolution authority takes one or both of the actions specified in Article 47(1) in respect of holders of Common Equity Tier 1 instruments;
(b)      the principal amount of Additional Tier 1 instruments is written down or converted into Common Equity Tier 1 instruments or both, to the extent required to achieve the resolution objectives set out in Article 31 or to the extent of the capacity of the relevant capital instruments, whichever is lower;
(c)      the principal amount of Tier 2 instruments is written down or converted into Common Equity Tier 1 instruments or both, to the extent required to achieve the resolution objectives set out in Article 31 or to the extent of the capacity of the relevant capital instruments, whichever is lower.
2.      Where the principal amount of a relevant capital instrument is written down:
…
(b)      no liability to the holder of the relevant capital instrument shall remain under or in connection with that amount of the instrument, which has been written down, except for any liability already accrued, and any liability for damages that may arise as a result of an appeal challenging the legality of the exercise of the write-down power;
(c)      no compensation is paid to any holder of the relevant capital instruments other than in accordance with paragraph 3.
…
3.      In order to effect a conversion of relevant capital instruments under point (b) of paragraph 1 of this Article, resolution authorities may require institutions and entities referred to in points (b), (c) and (d) of Article 1(1) to issue Common Equity Tier 1 instruments to the holders of the relevant capital instruments. …
…’
Decision of the Single Resolution Board
13      By Decision SRB/EES/2017/08 of 7 June 2017, the Single Resolution Board adopted a resolution scheme in respect of Banco Popular, endorsed by the European Commission in its Decision (EU) 2017/1246 of 7 June 2017 (OJ 2017 L 178, p. 15).
The dispute in the main proceedings and the questions referred for a preliminary ruling
14      On 3 October 2009, D.E., as sole director of Lera Blava SLU, subscribed to convertible subordinated bonds that could be exchanged into subordinated bonds issued by Banco Popular.
15      In May 2012, D.E., acting on behalf of Lera Blava, exchanged those bonds for other mandatory convertible subordinated bonds.
16      On 14 January 2013, as payment for outstanding wages, Lera Blava granted D.E. ownership of those bonds. Banco Popular authorised that transfer of ownership on 22 February 2013.
17      On 25 November 2015, those bonds were mandatorily converted into Banco Popular shares.
18      In October 2016, D.E. brought an action against Banco Popular before the Juzgado de Primera Instancia (Court of First Instance, Spain) seeking a declaration of nullity in respect of the purchase of the convertible subordinated bonds due to a defect of consent and an order for the return of the amount initially invested for the purchase of those bonds, plus the statutory interest accrued since the moment of purchase. In the alternative, he sought compensation for the damage caused by Banco Popular’s failure to comply with the information requirements resulting from the EU legislation on markets in financial instruments when those bonds were marketed in 2009 and subsequently converted in 2012.
19      The Juzgado de Primera Instancia (Court of First Instance) upheld that action and ruled that the subscription of the mandatory convertible subordinated bonds was invalid.
20      Banco Popular brought an appeal against the judgment of that court before the Audiencia Provincial (Provincial Court, Spain), which upheld the appeal on the ground that D.E. did not have standing to bring proceedings.
21      D.E. brought an appeal on a point of law against the judgment delivered on appeal before the Tribunal Supremo (Supreme Court, Spain), the referring court in the present case. Before that court, he argued that the Audiencia Provincial (Provincial Court) had wrongly refused to recognise his standing to bring proceedings, even though, in his view, the transfer of ownership of bonds from Lera Blava to its director and sole shareholder was valid.
22      On 7 June 2017, the SRB adopted the resolution scheme in respect of Banco Popular, which was endorsed by the Commission on the same day.
23      That resolution scheme was implemented by a decision of the Fondo de Reestructuración Ordenada Bancaria (Fund for Orderly Bank Restructuring, Spain; ‘the FROB’), which was also adopted on 7 June 2017. By that decision, the FROB, inter alia, reduced Banco Popular’s share capital to zero by writing down all the outstanding shares. As a result of that decision, D.E. ceased to be the owner of the Banco Popular shares that he had obtained after the conversion of the subscribed bonds, without receiving any consideration for them.
24      In addition, the FROB decided to convert Banco Popular’s Tier 2 instruments and to transfer to Banco Santander the new shares issued following that conversion, without the consent of the former holders of those instruments.
25      In 2018, Banco Santander became the universal successor to Banco Popular, by means of a merger by acquisition of Banco Popular, the legal personality of which was extinguished.
26      The referring court notes that there is, in Spain, a large number of disputes in which the purchasers of various Banco Popular capital instruments have brought actions for a declaration of nullity in respect of agreements for the purchase of those instruments and restitution of the price paid for that purchase and/or actions for damages on account of the information contained in the prospectus to be published, inter alia, when securities are offered to the public or admitted to trading.
27      In the judgment of 5 May 2022, Banco Santander (Resolution of Banco Popular) (C‑410/20, ‘the judgment in Banco Santander (Resolution of Banco Popular)’, EU:C:2022:351), the Court held that Article 34(1)(a), Article 53(1) and (3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 preclude, following a total write-down of shares ordered in the context of the resolution of a banking institution, the bringing of actions for damages on the basis of the information provided in the prospectus to be published, inter alia, when securities are offered to the public, or of actions for a declaration of nullity in respect of the subscription agreement for shares against that institution or its successor in law.
28      Following the delivery of that judgment, the referring court is still uncertain as to the scope of the prohibition on any action for damages or for a declaration of invalidity which results, in accordance with the provisions referred to in paragraph 27 above, as interpreted by the Court, from a resolution action. In that regard, it notes that, in the case which gave rise to the judgment in Banco Santander (Resolution of Banco Popular), the actions for damages and actions for a declaration of nullity concerned contracts for the subscription of Banco Popular shares. By contrast, in the cases which gave rise to the judgment of 5 September 2024, Banco Santander (Resolution of Banco Popular II) (C‑775/22, C‑779/22 and C‑794/22, ‘the judgment in Banco Santander (Resolution of Banco Popular II)’, EU:C:2024:679), the contracts at issue were for the subscription of subordinated bonds which were converted into Banco Popular shares before that bank’s resolution.
29      Since the convertible bonds at issue in the dispute before the referring court were also converted into Banco Popular shares before the adoption of resolution actions in respect of that bank, that court asks, in essence, whether D.E. may rely on a claim which has ‘accrued’ within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, in the context of that dispute.
30      In that regard, it notes, first, that, in Spanish law, the term ‘accrued’ refers to the moment at which the right to demand performance of an obligation arises, whereas the term ‘due date’ refers to the end of the period set for the performance of an obligation at the end of which it becomes due. The convertible bonds at issue in the dispute before it fell due on the same day that they were converted into shares, that is to say, before the opening of the resolution procedure in respect of Banco Popular. Furthermore, the judicial decision which acknowledges the liability of the latter for any damage caused when those obligations were taken out is not dispositive in nature, but establishes the existence of that liability and quantifies the damages due on that basis. If the resulting obligation to pay compensation constituted a ‘potential claim’ until it was finally declared by a court, it should already be regarded, even before that finding, as an accrued claim.
31      Second, the referring court points out that the case before it differs from the cases which gave rise to the judgments referred to in paragraphs 27 and 28 above, in that D.E. brought an action for a declaration of nullity of the contract for the subscription of convertible bonds and the action for damages before the resolution of Banco Popular.
32      In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1)      Must Article 34(1)(a) and (b) [of Directive 2014/59], read together with Article 53(1) and (3), as well as Article 60(2), first subparagraph, points (b) and (c), [thereof] be interpreted as meaning that the possible claim or right that arises from a judgment ordering payment of compensation given against the successor entity to Banco Popular Español, S.A. following an action for damages arising from the marketing of a financial product (subordinated bonds necessarily convertible into shares in the same bank) not included among the additional capital instruments to which the resolution measures for Banco Popular refer, which were ultimately converted into ordinary shares in the bank before the bank resolution measures were adopted (7 June 2017), could be considered a liability affected by the write-down or cancellation provision of Article 53(3) of [Directive 2014/59], as an “unaccrued” obligation or claim, such that it would be discharged and would not be enforceable against Banco Santander, as the successor entity to Banco Popular, where the claim from which that judgment ordering payment of compensation arises was brought before the procedure for the resolution of the bank had been concluded?
(2)      Or, conversely, must those provisions be interpreted as meaning that the abovementioned claim or right constitutes an “accrued” obligation or claim – Article 53(3) of [Directive 2014/59] – or “liability already accrued” at the time of the resolution of the bank – Article 60(2)(b) – and, as such, excluded from the effects of the discharge or settlement of those obligations or claims, and, consequently, [that the abovementioned claim or right] is enforceable against Banco Santander, as the successor to Banco Popular, where the claim from which that judgment ordering payment of compensation arises was brought before the procedure for the resolution of the bank had been concluded?’
Admissibility of the request for a preliminary ruling
33      Banco Santander submits that the request for a preliminary ruling is inadmissible on the ground that it was made by the Tribunal Supremo (Supreme Court), without that court having first clarified the question of national law relating to D.E.’s standing to bring proceedings. In the event that D.E. had no standing to bring an action in his own name against Banco Popular, the interpretation sought of the provisions of Directive 2014/59 would be irrelevant to the outcome of the dispute in the main proceedings.
34      In that regard, it should be borne in mind that, according to settled case-law, questions on the interpretation of EU law enjoy a presumption of relevance. The Court may refuse to give a ruling on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 6 March 2025, ONB and Others, C‑575/23, EU:C:2025:141, paragraph 51 and the case-law cited).
35      Moreover, according to equally settled case-law, the justification for a reference for a preliminary ruling is not that it enables advisory opinions on general or hypothetical questions to be delivered but rather that it is necessary for the effective resolution of a dispute (judgment of 6 March 2025, ONB and Others, C‑575/23, EU:C:2025:141, paragraph 52 and the case-law cited).
36      In the present case, it is sufficient to note that, according to the information provided by the Spanish Government, the referring court should dismiss the action in the main proceedings, without it being necessary to examine D.E.’s standing to bring an action in his own name against Banco Popular, if the Court were to reply to the questions referred that the rights arising from an action for a declaration of nullity in respect of the agreement for the purchase of subordinated bonds which are converted into shares and an action for damages based on the failure to comply with the information requirements arising from Directive 2004/39, brought prior to the resolution of the credit institution concerned, do not constitute ‘accrued’ bonds within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59.
37      Consequently, it is not obvious that the interpretation of the provisions of Directive 2014/59 sought by that court bears no relation to the actual facts of the main action or its purpose or that the problem is hypothetical.
38      It follows that the request for a preliminary ruling is admissible.
Consideration of the questions referred
39      By its questions, which it is appropriate to examine together, the referring court asks, in essence, whether the provisions of Article 34(1)(a) and (b), Article 53(1) and (3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 must be interpreted as precluding the rights arising from an action for a declaration of nullity in respect of a contract for the subscription of subordinated bonds which are converted into shares and from an action for damages, based on the failure to comply with the information requirements arising from Directive 2004/39, from being regarded as falling within the category of obligations or claims which have ‘accrued’ at the time of the resolution of the credit institution concerned, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, where those actions were brought before the total write-down of the share capital of that credit institution in the course of resolution proceedings.
40      In that regard, it must be borne in mind that Article 34(1)(a) and (b) of Directive 2014/59 establishes the principle whereby it is the shareholders, followed by the creditors, of a credit institution or investment firm under resolution that are required to bear the first losses incurred as a result of the application of that procedure.
41      Under Article 53(3) of that directive, where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability, that liability and any obligations or claims arising in relation to it that are not accrued at the time of the resolution are to be treated as discharged for all purposes, and are not to be enforceable in any subsequent proceedings in relation to the institution under resolution or any successor entity in any subsequent winding up.
42      Article 60 of that directive, which relates to the write-down or conversion of capital instruments, states, in point (b) of the first subparagraph of paragraph 2, that no liability to the holder of the capital instruments written down, under the resolution decision, is to remain under or in connection with that amount of the instrument, which has been written down, except for any liability already accrued, and any liability for damages that may arise as a result of an appeal challenging the legality of the exercise of the write-down power.
43      It follows that, in the event of a total write-down of the share capital of a credit institution under resolution on the basis of Directive 2014/59, the shareholders of that credit institution may enforce against that institution or its successor entity only those obligations or claims arising from written down capital instruments which had already ‘accrued’ at the time of the resolution, within the meaning of Article 53(3) and Article 60(2)(b) of that directive.
44      As regards the rights arising from actions for damages brought on account of the flawed and incorrect nature of the information given, inter alia, in the prospectus to be published when securities are offered to the public or admitted to trading, as provided for in Article 6 of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ 2003 L 345, p. 64), as well as an action for a declaration of nullity in respect of the contract for the subscription of shares or of subordinated bonds which have been converted into shares brought after the adoption of a resolution decision on the basis of the provisions referred to in paragraph 43 above, the Court has already held that, in view of their retroactive effects, those rights cannot be regarded as falling within the category of ‘accrued’ obligations or claims within the meaning of the latter provisions (see, to that effect, judgments in Banco Santander (Resolution of Banco Popular), paragraphs 41, 42 and 51, and in
Banco Santander (Resolution of Banco Popular II), paragraphs 62 and 85).
45      In the present case, however, the actions for a declaration of nullity and for damages at issue in the main proceedings were brought prior to the resolution of Banco Popular. In that regard, the Commission submits, in essence, that the fact that such actions are brought before resolution is sufficient for the rights deriving therefrom to be regarded as having ‘accrued’ at the time of resolution, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59. By contrast, according to Banco Santander and the Spanish, Italian and Portuguese Governments, the rights arising from such actions must also have been the subject of a final judgment before that time.
46      According to the Court’s settled case-law, it follows from the need for a uniform application of EU law and the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union, having regard not only to the wording of that provision but also to the context in which it occurs and the objectives pursued by the rules of which it is part (judgments of 30 April 2024, M.N. (EncroChat), C‑670/22, EU:C:2024:372, paragraph 109 and the case-law cited, and in
Banco Santander (Resolution of Banco Popular II), paragraph 48).
47      As regards, in the first place, the wording of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, it should be noted that the use of the concept of ‘liability already accrued’ or the reference to accrued claims does not, in itself, provide any indication as to whether actions for a declaration of nullity and for damages must only have been brought at the time of the resolution or, in addition, have already been the subject of a final judgment.
48      That said, Article 53(3) of that directive states that the obligations or claims arising from written-down liabilities, which have not accrued at the time of resolution, are treated as discharged for all purposes, and cannot be enforced against the credit institution under resolution or any successor entity ‘in any subsequent proceedings’. As the Commission rightly points out in its observations submitted to the Court, that clarification is an indication that such obligations or claims remain enforceable against such an institution or such an entity when they are the subject of judicial proceedings brought before resolution. By placing the focus on subsequent procedures, that provision does not in any way rule out the enforceability of those obligations or claims in the context of proceedings pending at the time of resolution.
49      As regards, in the second place, the context of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, first, it is true that, under Article 34(1)(a) and (b) of that directive, the shareholders, followed by the creditors, of a credit institution under resolution are required to bear the first losses incurred as a result of the application of that procedure.
50      However, the principle that shareholders and creditors are liable to bear
those losses is mitigated by the provisions of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, the scope ratione personae of which is necessarily the same as that of Article 34(1)(a) and (b) of that directive. In so far as the first two provisions refer expressly to the obligations and claims arising from a ‘liability’ which is written down or existing against the holder of the written down capital instruments, they apply, inter alia, to the claims and obligations of persons who are shareholders or creditors of a credit institution under resolution. In so far as those obligations or claims have ‘accrued’ at the time of resolution, it follows from Article 53(3) and point (b) of the first subparagraph of Article 60(2) of that directive that they remain enforceable against the credit institution under resolution or any successor entity.
51      It cannot therefore be inferred from Article 34(1)(a) and (b) of Directive 2014/59 that only persons who have lost the status of shareholder or creditor of such an institution, following a final judgment upholding the annulment of the contract for the subscription of the capital instruments at issue, may benefit from the enforceable nature of the obligations or claims which have ‘accrued’, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of that directive, at the time of the resolution.
52      Further, where the resolution procedure involves the application of a ‘bail-in tool’, within the meaning of Article 2(1)(57) of Directive 2014/59, Article 48(1) of that directive provides that, in the exercise of the write-down and conversion powers, resolution authorities are to reduce, in the first place, the different categories of capital instrument. Article 53(1) of that directive provides that the measures permitted by the bail-in for the reduction of the share capital or the conversion or cancellation of those instruments are immediately binding on the affected shareholders and creditors. It thus appears that, in the context of a bail-in, the write-down and conversion of capital instruments contributes directly to the achievement of the objectives of the resolution procedure (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 52).
53      From that perspective, point (c) of the first subparagraph of Article 60(2) and Article 60(3) of Directive 2014/59 provide that no compensation is to be paid to the holders of the relevant capital instruments, other than the cases where such instruments are converted as referred to in paragraph 3 and that, in those cases, compensation is to take the form of an issuance of capital instruments to those holders. By limiting compensation to such an issuance of capital instruments, those provisions make it possible to prevent that compensation from being able retroactively to reduce the amount of capital used for the purposes of resolution (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 54).
54      Accordingly, as regards actions for a declaration of nullity or for damages brought after resolution, the Court has already held that such actions would entail the risk that the amount of the capital instruments subject to a bail-in in the context of the resolution procedure would be retroactively reduced, in so far as they seek compensation or repayment in the amount of the funds paid for the purchase of those capital instruments prior to resolution. Such actions are therefore capable of calling into question whether the objectives pursued by the resolution action were being achieved (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 53).
55      Furthermore, the Court has stated that such actions brought after resolution essentially require the credit institution or investment firm under resolution, or the successor of those entities, to compensate shareholders for the losses incurred as a consequence of the exercise by a resolution authority of the write-down and conversion powers in relation to liabilities of that institution or firm, or require them to reimburse in full the sums invested during the subscription of shares that have been written down as a result of that resolution procedure. Given their retroactive effect, those actions would call into question the entire valuation upon which the resolution decision is based because the breakdown of the capital forms part of the objective data for that valuation and, consequently, would be capable of causing the resolution procedure itself as well as the objectives pursued by Directive 2014/59 to be frustrated (see, to that effect, judgment in Banco Santander (Resolution of Banco Popular II), paragraphs 59 and 62).
56      However, unlike actions for a declaration of nullity and/or for damages brought after resolution, such actions, where they have been brought before resolution, cannot be regarded as having retroactive effect, within the meaning of the case-law cited in the preceding paragraph of the present judgment, and are not capable of calling into question the valuation provided for in Article 36(1) of Directive 2014/59 and the resolution decision based on that valuation. As the Advocate General observed in point 73 of her Opinion, the financial risks arising from pending disputes must be taken into account in the accounts of listed banks.
57      As regards the fact that the valuation may, depending on the circumstances, not account for all the actions brought, the Advocate General rightly noted, in point 72 of her Opinion, that such a level of uncertainty is apparent in any ‘stock-taking’ exercise, and so can be regarded as forming part of the general risk to be accepted in cases of resolution under Directive 2014/59, in particular by the entity acquiring the credit institution under resolution.
58      Article 36(1) of that directive provides for a ‘fair, prudent and realistic valuation’ of the assets and liabilities of such a credit institution, without requiring that those assets and liabilities be valued in full and in minute detail. In particular, where it is not possible to draw up a list of outstanding on balance sheet and off balance-sheet liabilities due to the urgency in the circumstances of the case, the resolution authority may, according to Article 36(9), read in conjunction with paragraphs 2, 3 and 6 thereof, confine itself to a provisional valuation of the assets and liabilities.
59      In those circumstances, it must be held that, where actions for a declaration of nullity and/or for damages have been brought before resolution, they are not capable of calling into question the valuation provided for in Article 36(1) of Directive 2014/59 and the resolution decision based on that valuation.
60      As regards, in the third place, the objectives pursued by Directive 2014/59, it is apparent from recital 49 thereof that the resolution tools should apply only to credit institutions and investment firms that are failing or likely to fail, and only when it is necessary to pursue the objective of financial stability in the general interest. The application of those instruments should therefore be limited to situations of extreme urgency, where the credit institution or investment firm concerned cannot be wound up under normal insolvency proceedings without destabilising the financial system.
61      As stated in recital 45 of that directive, the resolution procedure is intended to reduce moral hazard in the financial sector by making shareholders bear first losses incurred as a result of the liquidation of a credit institution or investment firm, so as to avoid situations where such liquidations might reduce public funds and affect the protection of depositors (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 55 and the case-law cited).
62      Directive 2014/59 therefore establishes the use, in an exceptional economic context, of a procedure that may affect in particular the rights of shareholders and creditors of a credit institution or investment firm, in order to preserve the financial stability of the Member States, by creating an insolvency regime derogating from the ordinary law governing insolvency proceedings, which may only be applied in exceptional circumstances and must be justified by an overriding public interest. The nature of this regime as a derogation implies that the application of other provisions of EU law may be disregarded where these are likely to hinder the implementation of the resolution procedure or deprive it of practical effect (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 56 and the case-law cited).
63      Furthermore, recital 120 of Directive 2014/59 states that the derogations laid down by that directive from the mandatory rules for the protection of shareholders and creditors of institutions which fall within the scope of EU company law directives, which may hinder effective action and use of resolution tools and powers by resolution authorities, should not only be appropriate but should also be clearly and narrowly defined, in order to guarantee the maximum degree of legal certainty for stakeholders (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 57 and the case-law cited).
64      Directive 2004/39, the objective of which was to protect potential investors when they take investment decisions, is one of the ‘Union company law directives’ referred to in recital 120 of Directive 2014/59. Consequently, the latter directive makes it possible to derogate from the provisions of Directive 2004/39, in so far as the application of those provisions could hinder the implementation of a resolution procedure or deprive it of practical effect (see, by analogy, judgment in Banco Santander (Resolution of Banco Popular II), paragraph 58 and the case-law cited).
65      In the light of the considerations set out in paragraphs 56 to 59 above, actions for a declaration of nullity and for damages based on a failure to comply with the information requirements laid down by Directive 2004/39 are not liable to render ineffective or impede the implementation of a resolution procedure, where those actions were brought before the resolution.
66      Furthermore, the provisions of Directive 2014/59 must be interpreted in the light of the fundamental rights guaranteed by the Charter and, in particular, the right to an effective remedy enshrined in Article 47 thereof.
67      In that regard, the Court notes that, according to settled case-law, the right to judicial protection enshrined in Article 47 of the Charter is not absolute and its exercise may be subject to restrictions justified by objectives of general interest pursued by the European Union. Consequently, as is apparent from Article 52(1) of the Charter, restrictions may be imposed on that fundamental right, provided that those restrictions in fact correspond to objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and unacceptable interference that undermines the substance itself of the enshrined right (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 80 and the case-law cited).
68      Furthermore, the Court has also held that, although there is a clear public interest in ensuring, throughout the European Union, strong and consistent protection of investors, that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the financial system (judgment in Banco Santander (Resolution of Banco Popular II), paragraph 81 and the case-law cited).
69      As regards actions for a declaration of nullity and actions for damages brought after the adoption of the resolution decision, in order to obtain repayment of the sums paid at the time of purchase of the capital instruments at issue, it is apparent, in essence, from the case-law arising from the judgments in Banco Santander (Resolution of Banco Popular) (paragraphs 48 to 50) and in
Banco Santander (Resolution of Banco Popular II) (paragraphs 82 to 84) that Article 47 of the Charter, read in conjunction with Article 52(1) thereof, does not preclude an interpretation according to which the provisions of Directive 2014/59 preclude the shareholders of a credit institution under resolution from bringing such actions after resolution.
70      The situation of persons who brought such actions before resolution is substantially different from that of the persons referred to in paragraph 69 above.
71      First of all, as the Advocate General observed, in essence, in point 86 of her Opinion, the interpretation that the rights arising from actions for a declaration of nullity and/or for damages brought before resolution do not constitute obligations or claims
which have ‘accrued’, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, which may be enforced against
the credit institution under resolution and the successor entity, would have the consequence that the resolution decision would render the pending court proceedings devoid of purpose and that those proceedings would therefore have to be closed.
72      The interference resulting from that interpretation with the right guaranteed by Article 47 of the Charter is not made any less severe by the possibility of bringing an action against the resolution decision. According to that interpretation, the resolution decision modifies, with retroactive effect, the legal framework relevant to the resolution of a dispute which has already been brought before the adoption of that decision, or even directly modifies the legal situation underlying that dispute. The possibility of bringing an action against the resolution decision would thus have no bearing on the effects which that decision would have, in that case, from the time of its adoption, on disputes already in progress (see, by analogy, judgment of 29 April 2021, Banco de Portugal and Others, C‑504/19, EU:C:2021:335, paragraphs 63, 65 and 66).
73      Next, the interpretation that the rights arising from actions for a declaration of nullity and/or for damages must have been the subject of a final judgment before resolution in order to be enforceable against the credit institution under resolution or the successor entity would make the enforceability of those rights, under Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, dependent on circumstances which are essentially beyond the influence of the person who brought such actions. The duration of judicial proceedings depends, in particular, on the workload of the court seised and the procedural conduct of the other party.
74      Furthermore, by bringing such actions before the national courts, that person has, in principle, demonstrated the necessary diligence to obtain payment of the claims arising from those actions before resolution, unlike persons who brought such actions after resolution. Accordingly, in view of the maxim iura vigilantibus non dormientibus prosunt, the outcome of actions brought before resolution cannot depend on whether or not they have been the subject of a final judgment at the time of the resolution.
75      Finally, it follows from the considerations set out in paragraphs 56 to 59 above that the rights arising from actions for a declaration of nullity and/or for damages brought before resolution may, unlike rights arising from actions brought after resolution, be taken into account in the context of the valuation provided for in Article 36(1) of Directive 2014/59 and, therefore, that they are not capable of calling into question that valuation and the resolution decision based on that valuation. An interpretation of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of that directive which allows shareholders and creditors to pursue actions for a declaration of nullity and/or for damages which are already pending at the time of resolution is not such as to jeopardise the financial stability of the Union.
76      Furthermore, such an interpretation does not disproportionately interfere with the rights of potential purchasers of a credit institution under resolution and of the successor entity following the resolution. In the light of the considerations set out in paragraphs 56 to 59 above, those persons are also likely to become aware of the liabilities of that institution consisting of the rights arising from actions for a declaration of nullity and/or for damages brought before the resolution, before making their offer with a view to acquiring that institution.
77      In the light of the foregoing considerations, the answer to questions referred is that the provisions of Article 34(1)(a) and (b), Article 53(1) and (3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 must be interpreted as not precluding the rights arising from an action for a declaration of nullity in respect of a contract for the subscription of subordinated bonds which are converted into shares and from an action for damages, based on the failure to comply with the information requirements arising from Directive 2004/39, from being regarded as falling within the category of obligations or claims which have ‘accrued’ at the time of the resolution of the credit institution concerned, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, where those actions were brought before the total write-down of the share capital of that credit institution in the course of resolution proceedings.
Costs
78      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring 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 (First Chamber) hereby rules:
The provisions of Article 34(1)(a) and (b), Article 53(1) and (3), and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council
must be interpreted as not precluding the rights arising from an action for a declaration of nullity in respect of a contract for the subscription of subordinated bonds which are converted into shares and from an action for damages, based on the failure to comply with the information requirements arising from Directive 2004/39/EC 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, from being regarded as falling within the category of obligations or claims which have ‘accrued’ at the time of the resolution of the credit institution concerned, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, where those actions were brought before the total write-down of the share capital of that credit institution in the course of resolution proceedings.
[Signatures]
*      Language of the case: Spanish.