Case T‑79/13

Alessandro Accorinti and Others

v

European Central Bank (ECB)

‛Non-contractual liability — Economic and monetary policy — ECB — National central banks — Restructuring of Greek public debt — Bond buy-back scheme — Bond exchange agreement for the sole benefit of the Eurosystem central banks — Involvement of the private sector — Collective action clauses — Credit enhancement in the form of a purchasing programme designed to support the quality of the bonds as collateral — Private creditors — Sufficiently serious breach of a rule of law conferring rights on individuals — Legitimate expectations — Equal treatment — Liability in respect of a lawful legislative act — Unusual and special damage’

Summary — Judgment of the General Court (Fourth Chamber), 7 October 2015

Economic and monetary policy — Monetary policy — Implementation — Restructuring of Greek public debt by a programme of buying State bonds — Credit enhancement for the sole benefit of national central banks of the Eurosystem designed to enhance the quality of the bonds concerned — Private investors holding such bonds excluded from the benefit of the enhancement — No breach of the principle of equal treatment — No exceeding by the ECB of its powers

See the text of the decision. (see paras 53, 57)

It is only exceptionally, and in order to ensure that the time-limit for bringing an action is not circumvented, that an action for damages will be declared inadmissible, namely where it has been brought jointly with an action for annulment, on the ground that the action for damages seeks, in reality, to have an individual decision addressed to the applicant which had become final withdrawn and that it would, if successful, have the effect of eliminating the legal effects of that decision. Furthermore, where the action for annulment has been brought within the time-limit prescribed in the sixth paragraph of Article 263 TFEU, any circumvention of the said time-limit by bringing an action for damages is precluded at the outset. In that regard, an action for damages is an autonomous form of action, with a particular purpose to fulfil within the system of legal remedies and subject to conditions of use dictated by its specific purpose. Whereas actions for annulment and for failure to act seek a declaration that a legally binding measure is unlawful or that such a measure has not been taken, an action for damages seeks compensation for damage resulting from a measure or from unlawful conduct, attributable to an EU institution or body. That autonomy of action cannot be called into question by the mere fact that an applicant decides to bring actions for annulment and for damages successively. Moreover, the fact that an action for annulment is declared inadmissible does not mean that an action for damages brought subsequently is inadmissible on the sole ground that those actions are based on similar, or even identical, pleas of illegality. Such an interpretation would run counter to the very principle of the autonomy of remedies and would therefore deprive Article 268 TFEU, read with the third paragraph of Article 340 TFEU, of its practical effect. (see paras 60, 61)

See the text of the decision. (see paras 64-66, 116)

As regards the first condition for holding the EU liable under Article 340 TFEU, relating to the unlawfulness of the alleged conduct of the institution or body concerned, there must be established a sufficiently serious breach of a rule of law intended to confer rights on individuals. The decisive test for finding that a breach is sufficiently serious is whether the EU institution or body concerned manifestly and seriously disregarded the limits on its discretion. It is solely where that institution or body has only considerably reduced, or even no, discretion, that the mere infringement of EU law may suffice to establish the existence of a sufficiently serious breach. The disputed conduct of the ECB took place in the context of the tasks conferred on it for the purposes of defining and implementing the EU monetary policy, under Articles 127 TFEU and 282 TFEU and Article 18 of its Statute, in particular by intervening on the capital markets and managing credit operations. Those provisions confer a broad discretion on the ECB, the exercise of which entails complex evaluations of an economic and social nature and of rapidly-changing situations, which must be carried out in the context of the Eurosystem, or even of the European Union as a whole. Thus, any sufficiently serious breach of the legal rules at issue must be based on a manifest and serious failure to have regard for the limits of the broad discretion enjoyed by the ECB when exercising its powers in monetary policy matters. That is even more true because the exercise of that discretion implies the need for the ECB to foresee and evaluate complex and uncertain economic developments, such as the development of capital markets, the monetary mass and the rate of inflation, which affect the proper functioning of the Eurosystem and payment and credit systems, and also to make political, economic and social choices in which it is required to weigh up and decide between the different objectives referred to in Article 127(1) TFEU, the main objective of which is the maintenance of price stability. Moreover, as regards the legislative activity of the institutions, including the adoption by the ECB of measures of general application, the strict approach taken towards the liability of the European Union in the exercise of those legislative activities is attributable to two considerations. First, even where the legality of the measures is subject to judicial review, exercise of the legislative function must not be hindered by the prospect of actions for damages whenever the general interest of the European Union requires the adoption of legislative measures that may adversely affect individual interests. Second, in a legislative context characterised by the exercise of a wide discretion, which is essential for implementing an EU policy, the European Union cannot incur liability unless the institution concerned has manifestly and gravely disregarded the limits on the exercise of its powers. (see paras 67-69)

The right to rely on the principle of the protection of legitimate expectation extends to any person in a situation where an EU authority has caused him or her to have justified expectations. Nevertheless, the right to rely on that principle requires that three conditions be satisfied cumulatively. First, precise, unconditional and consistent assurances originating from authorised and reliable sources must have been given to the person concerned by the EU authorities. Second, those assurances must be such as to give rise to a legitimate expectation on the part of the person to whom they are addressed. Third, the assurances given must be consistent with the applicable rules. Furthermore, whilst the possibility of relying on the protection of legitimate expectations, as a fundamental principle of EU law, is available to any economic operator whom an institution has caused to have justified expectations, the fact remains that, where a prudent and circumspect economic operator is able to foresee the adoption of an EU measure likely to affect his interests, he cannot rely on that principle if the measure is adopted. Nor can economic operators have a legitimate expectation that an existing situation which is capable of being altered by the EU institutions in the exercise of their discretion will be maintained, especially in an area such as monetary policy, the subject-matter of which is constantly being adjusted according to variations in the economic situation. (see paras 75, 76)

The public statements of certain members of the ECB in 2010 and 2011 tending to preclude any restructuring of the Greek public debt do not constitute precise, unconditional and consistent assurances from authorised and reliable sources capable of creating legitimate expectations on the part of private-sector holders of Greek bonds. Having regard, first, to their general nature, second to the fact that the ECB did not have the power to decide on any restructuring of the public debt of a Member State affected by a selective payment default; and, third, the prevailing uncertainty in the financial markets at the time concerning, especially, future developments in the financial situation of the Hellenic Republic, those statements could not be described as precise and unconditional assurances originating from authorised and reliable sources, still less as assurances that that Member State would not adopt a decision on such restructuring. Although the ECB was involved in monitoring developments in the financial situation of the Hellenic Republic within the framework of the ‘troika’ formed by it, the IMF and the Commission, it was not competent to decide on such a measure, which fell mainly if not exclusively within the sovereign power and budgetary authority of the Member States, in particular its legislature, and, to a certain extent, the coordination of economic policy by the Member States pursuant to Article 120 TFEU et seq. In such circumstances, opposition to such a restructuring, such as repeatedly expressed in public by successive Presidents of the ECB in a climate of increasing uncertainty on the part of the financial market players, must be interpreted as having a purely politico-economic scope. In particular, by adopting that approach, their authors sought to warn those players against further deterioration in the economic situation at the time, and even the possible insolvency of the Hellenic Republic, whose potentially defaulting bonds would no longer be acceptable to the ECB and the national central banks as collateral in Eurosystem credit operations and, moreover, against the risks that such a development could entail for the stability of the financial system and the functioning of the Eurosystem as a whole. Moreover, the opposition on the part of the successive Presidents of the ECB was accompanied by the information that, in the event that such a default should none the less occur and the Member States concerned should decide on a restructuring of the public debt, the ECB would require that that restructuring be supported by sufficient guarantees in order to protect its integrity and to maintain the stability and the confidence of the financial markets. It follows that, in that respect also, the ECB did not encourage legitimate expectations that its opposition would be maintained if the Member States concerned decided to carry out such a restructuring, or that it had legal capacity — which it did not — to preclude such an approach. Furthermore, the purchase by an investor of State bonds is by definition a transaction entailing a certain financial risk, because it is subject to the hazards of movements in the capital markets. In the light of the economic situation of the Hellenic Republic and the uncertainties concerning it at the time, investors who acquired Greek bonds during the period when the financial crisis of the Hellenic Republic was at its peak cannot claim to have acted as prudent and circumspect economic operators, able to rely on the existence of legitimate expectations. On the contrary, in the light of the public statements which the applicants invoke in support of their complaints, those investors were supposed to be aware of the highly unstable economic situation that determined the fluctuation of the value of the Greek bonds which they had acquired and also the appreciable risk of at least a selective default by the Hellenic Republic. Furthermore, a prudent and circumspect economic operator apprised of those public statements could not have ruled out the risk of a restructuring of the Greek public debt, given the differing views prevailing in that regard within the euro area Member States and the other bodies involved, such as the Commission, the IMF and the ECB. (see paras 78, 79, 81, 82)

The general principle of equal treatment requires that comparable situations are not treated differently and that different situations are not treated in the same way unless such treatment is objectively justified. The comparability of different situations must be assessed with regard to all the elements which characterise them. Those elements must in particular be determined and assessed in the light of the subject-matter and purpose of the European Union act which makes the distinction in question. The principles and objectives of the field to which the act relates must also be taken into account. In that regard, private investors who purchased Greek bonds solely in their private pecuniary interest, whatever the precise reason for their investment decisions may have been, are in a different situation from that of the Eurosystem central banks whose investment decision was exclusively guided by objectives in the public interest, as referred to in Article 127(1) and (2) TFEU, read with Article 282(1) TFEU and, in particular, the first indent of Article 18(1) of the Protocol the Statute of the ESCB and of the ECB (‘the Statute’) with the objective of maintaining price stability and the sound management of monetary policy, and within the limits set by the provisions of Decision 2010/281 establishing a securities markets programme. Thus, as the situations at issue are not comparable, the conclusion and implementation of an exchange agreement with the aim of exchanging Greek bonds held by the ECB and by the national central banks of the Eurosystem in order to prevent the latter participating in the restructuring of Greek public debt cannot constitute a breach of the principle of equal treatment. Nor, similarly, are private investors and the Eurosystem central banks in comparable situations in the light of the impact on the European economy of the effects of the reduction of the value of their bonds. Having regard to the total value of the Greek bonds and acquired and held by those central banks, any involvement by those banks in the restructuring of the public debt of a Member State of the euro area, irrespective of whether it was lawful or not in the light of Article 123 TFEU, would have been likely to affect the financial integrity of the Eurosystem as a whole and, in particular, its capacity to operate in the financial markets and to refinance the credit institutions pursuant to the first and second indents of Article 18(1) of the Statute. In that regard, it should be pointed out that State bonds are at the same time collateral which those central banks are normally supposed to accept for the purposes of credit operations within the Eurosystem and to maintain access to liquid assets by the national credit institutions. It follows that a complaint that the ECB and the Eurosystem national central banks reserved to themselves the status of preferential creditor to the detriment of the private sector, on the pretext of their monetary policy task, must also be rejected. Moreover, the creation, through the conclusion and implementation of the said exchange agreement, of the alleged preferential creditor status of the Eurosystem central banks in order to escape the restructuring of the Greek public debt cannot be regarded as abusive or as exceeding the limits of the ECB’s powers. On the contrary, those measures form part of the exercise of the ECB’s powers and basic tasks in that they are specifically intended to preserve the central banks’ scope for manoeuvre and to ensure the continuity of the smooth functioning of the Eurosystem. The exchange agreement was intended to avoid the involvement of the Eurosystem central banks in the restructuring of the Greek public debt that would mean sacrificing a part of the value of the Greek bonds held in their respective portfolios. An unconditional involvement of the said central banks in the said restructuring would have risked being classified as intervention having an effect equivalent to that of the direct purchase of State bonds by those central banks, which is prohibited by Article 123 TFEU. (see paras 87, 88, 92, 93, 108, 114)

The fact that Article 1 of the ECB’s Decision 2012/153 on the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic in the context of the Hellenic Republic’s debt exchange offer imposed an obligation on the Hellenic Republic to grant to the national central banks a buy-back scheme to enhance the quality of Greek bonds cannot constitute unequal treatment imputable to the ECB to the detriment of private investors. By seeking only to ensure that those central banks would still be able to accept Greek bonds as appropriate collateral for the purposes of Eurosystem credit operations within the meaning of the second indent of Article 18(1) of the Statute, that obligation therefore ensured that the Eurosystem central banks’ scope for manoeuvre under the provisions of Articles 127(1) and (2) TFEU, read with Article 282(1) TFEU and the first and second indents of Article 18(1) of the Statute was maintained and, accordingly, referred to a situation which was not comparable with the situation of private investors. Since the private investors had purchased and held Greek bonds for exclusively private purposes, they were in a different situation from the Eurosystem central banks on which powers were conferred and duties imposed by the abovementioned provisions. It follows that the said private investors could not claim, in reliance on the principle of equal treatment, the analogous benefit of a scheme involving the buy-back of their bonds by the Greek State. In that regard, the exchange agreement cannot be regarded as abusive or as exceeding the limits of the ECB’s powers, but as forming part of the exercise of the ECB’s powers and basic tasks in that they are specifically intended to preserve the central banks’ scope for manoeuvre and to ensure the continuity of the smooth functioning of the Eurosystem. (see paras 94, 108)

The clause known as ‘par condicio creditorum’ or ‘pari passu’, which assumes that creditors are treated equally in the payout, does not exist in the EU legal order. In that regard, Regulation No 1346/2000, on insolvency proceedings, has noted the existence of widely differing arrangements in that respect in the national legal orders, including the preferential treatment of creditors and merely establishes uniform rules on conflict of laws for the purpose, in particular, of coordinating the distribution of the proceeds of the realisation of assets in order to preserve as much as possible the equal treatment of creditors. Moreover, in so far as a rule which imposed the pari passu principle would entail equal treatment for creditors without taking into account the distinct situations of, in particular, private investors, on the one hand, and the Eurosystem central banks, acting in the exercise of their tasks pursuant to Article 127 TFEU and Article 18 of the Statute, on the other hand, the recognition of such a rule in the EU legal order might well be incompatible with the principle of equal treatment, as laid down in Articles 20 and 21 of the Charter of Fundamental Rights of the European Union. Consequently, it is only where that rule is incorporated in contractual clauses, including those covering the issue and sale of State bonds, governing the relationship between issuer/debtor and holder/creditor of a security, that a pari passu clause can, where appropriate, be legally binding. (see paras 98-101)

See the text of the decision. (see para. 106)