OPINION OF ADVOCATE GENERAL

PITRUZZELLA

delivered on 7 November 2019 ( 1 )

Case C‑480/18

AS ‘PrivatBank’

intervener:

Finanšu un kapitāla tirgus komisija

(Request for a preliminary ruling from the Augstākā tiesa

(Supreme Court, Latvia))

(References for a preliminary ruling – Payment services in the internal market – Directive 2007/64/EC – Articles 2, 20, 21, 51, 75 and 80 to 83 – Scope of Directive 2007/64/EC – Payment services provided in a currency other than the euro or the currency of a Member State outside the euro area – Competent authorities – Prudential supervision – Complaint procedures and out-of-court redress procedures – Non-execution or defective execution of a payment order)

1. The payment services sector is undergoing constant and rapid change in response to continuing innovations in technology, which themselves pose significant challenges for the institutions responsible for determining the regulatory framework for these services. It is a sector of fundamental importance to modern economies, which are reliant on efficient and secure payment systems.

2. In that context, the present request for a preliminary ruling, from the Augstākā tiesa (Supreme Court, Latvia), concerns the interpretation of various provisions of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market, ( 2 ) which laid the foundations for the creation of the single market in payment services and a harmonised legal framework in the European Union for such services. Directive 2007/64 has since been repealed and replaced by Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, ( 3 ) which nevertheless retains the same fundamental structure and leaves a number of provisions unchanged.

3. The present case affords the Court an opportunity to interpret the scope of various provisions of Directive 2007/64 (many of which also appear in Directive 2015/2366) in the context of a dispute which has arisen between a Latvian bank and the Finanšu un kapitāla tirgus komisija (Latvian Financial and Capital Market Commission, ‘the FCMC’) concerning the lawfulness of a decision adopted by that authority regarding a failure to execute a payment order requested by a customer of the Latvian bank.

I. Legal framework

A. EU law

4. Pursuant to Article 1(1) of Directive 2007/64, the Member States must distinguish six specific categories of payment service provider. Those categories, listed in paragraph 1, include ‘credit institutions’ ( 4 ) (point a) and ‘payment institutions’ (point d), as defined in Article 4(4) of the directive. ( 5 )

5. Pursuant to Article 2(1) thereof, Directive 2007/64 applies to payment services provided within the European Union. However, Article 2(2) restricts the objective scope of Titles III and IV of the directive, ( 6 ) providing that ‘Titles III and IV shall apply to payment services made in euro or the currency of a Member State outside the euro area.’

6. Title II of Directive 2007/64 contains the rules which apply to payment services providers and is divided into two chapters: Chapter 1, which is headed ‘Payment institutions’, contains provisions which apply specifically to the category of ‘payment institutions’, while Chapter 2 of Title II contains common provisions which apply to all six categories of payment service provider.

7. Section 3 of Chapter 1 (the chapter dealing with payment institutions) contains Articles 20 to 25 and is headed ‘Competent authorities and supervision’. In particular, Article 20 of Directive 2007/64, headed ‘Designation of competent authorities’, provides that: ‘1. Member States shall designate as the competent authorities responsible for the authorisation and prudential supervision of payment institutions which are to carry out the duties provided for under [Title II] either public authorities, or bodies recognised by national law or by public authorities expressly empowered for that purpose by national law, including national central banks. … 2. Member States shall ensure that the competent authorities designated under paragraph 1 possess all the powers necessary for the performance of their duties. … 5. Paragraph 1 shall not imply that the competent authorities are required to supervise business activities of the payment institutions other than the provision of payment services listed in the Annex and the activities listed in Article 16(1)(a).’

8. It is apparent from paragraph 1 of Article 21 of Directive 2007/64, which is headed ‘Supervision’, that Member States must ensure that ‘the controls exercised by the competent authorities for checking continued compliance with [Title II] are proportionate, adequate and responsive to the risks to which payment institutions are exposed’. The second subparagraph of Article 21(1) provides that, ‘in order to check compliance with [Title II]’, the competent authorities must have powers to take certain specific steps.

9. Article 21(2) of Directive 2007/64 provides that the competent authorities should be able to impose penalties. It stipulates that, ‘without prejudice to the procedures for the withdrawal of authorisations and the provisions of criminal law, the Member States shall provide that their respective competent authorities may, as against payment institutions or those who effectively control the business of payment institutions which breach laws, regulations or administrative provisions concerning the supervision or pursuit of their payment service business, adopt or impose in respect of them penalties or measures aimed specifically at ending observed breaches or the causes of such breaches.’

10. Title IV of Directive 2007/64, headed ‘Rights and obligations in relation to the provision and use of payment services’, contains Articles 51 to 83. The first of these, Article 51, determines the scope of Title IV and provides, in paragraph 1, that ‘where the payment service user is not a consumer, the parties may agree that Article … 75 shall not apply in whole or in part.’

11. Article 75 of Directive 2007/64, within Title IV of the directive, contains the provisions which apply in the case of non-execution or defective execution of a payment transaction. It reads as follows: ‘1. Where a payment order is initiated by the payer, his payment service provider shall … be liable to the payer for correct execution of the payment transaction, unless he can prove to the payer and, where relevant, to the payee’s payment service provider that the payee’s payment service provider received the amount of the payment transaction … in which case, the payee’s payment service provider shall be liable to the payee for the correct execution of the payment transaction. Where the payer’s payment service provider is liable under the first subparagraph, he shall without undue delay refund to the payer the amount of the non-executed or defective payment transaction and, where applicable, restore the debited payment account to the state in which it would have been had the defective payment transaction not taken place. Where the payee’s payment service provider is liable under the first subparagraph, he shall immediately place the amount of the payment transaction at the payee’s disposal and, where applicable, credit the corresponding amount to the payee’s payment account. 2. … In the case of a non-executed or defectively executed payment transaction for which the payee’s payment service provider is not liable under the first and second subparagraphs, the payer’s payment service provider shall be liable to the payer. Where the payer’s payment service provider is so liable he shall, as appropriate and without undue delay, refund to the payer the amount of the non-executed or defective payment transaction and restore the debited payment account to the state in which it would have been had the defective payment transaction not taken place.’

12. Chapter 5 of Title IV of Directive 2007/64 contains provisions relating to complaint procedures (Section 1, Articles 80 to 82) and out-of-court redress procedures (Section 2, Article 83).

13. Article 80 of Directive 2007/64, headed ‘Complaints’, provides: ‘1. Member States shall ensure that procedures are set up which allow payment service users and other interested parties, including consumer associations, to submit complaints to the competent authorities with regard to payment service providers’ alleged infringements of the provisions of national law implementing the provisions of this directive. 2. Where appropriate and without prejudice to the right to bring proceedings before a court in accordance with national procedural law, the reply from the competent authorities shall inform the complainant of the existence of the out-of-court complaint and redress procedures set up in accordance with Article 83.’

14. Pursuant to Article 81 of Directive 2007/64, headed ‘Penalties’: ‘1. Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this directive and shall take all measures necessary to ensure that they are implemented. Such penalties shall be effective, proportionate and dissuasive. 2. Member States shall notify the Commission of the rules referred to in paragraph 1 and of the competent authorities referred to in Article 82 by 1 November 2009 and shall notify it without delay of any subsequent amendment affecting them.’

15. Article 82 of Directive 2007/64, headed ‘Competent authorities’, provides as follows: ‘1. Member States shall take all the measures necessary to ensure that the complaints procedures and penalties provided for in Articles 80(1) and 81(1) respectively are administered by the authorities empowered to ensure compliance with the provisions of national law adopted pursuant to the requirements laid down in this section. 2. In the event of infringement or suspected infringement of the provisions of national law adopted pursuant to Titles III and IV, the competent authorities referred to in paragraph 1 shall be those of the home Member State of the payment service provider, except for agents and branches conducted under the right of establishment where the competent authorities shall be those of the host Member State.’

16. Paragraph 1 of Article 83 of Directive 2007/64, which is the only article in Section 2 of Chapter 5 of Title IV and concerns out-of-court redress procedures, provides as follows: ‘Member States shall ensure that adequate and effective out-of-court complaint and redress procedures for the settlement of disputes between payment service users and their payment service providers are put in place for disputes concerning rights and obligations arising under this directive, using existing bodies where appropriate.’

17. Paragraph 1 of Article 86 of Directive 2007/64, which is headed ‘Full harmonisation’, provides that, without prejudice to certain exceptions which are not relevant to the present case, ‘in so far as this directive contains harmonised provisions, Member States shall not maintain or introduce provisions other than those laid down in this directive’.

B. Latvian law

18. In Latvian law, the rules governing payment services are contained in the Maksājumu pakalpojumu un elektroniskās naudas likums (Law on payment services and electronic money, ‘the Law on Payment Services’).

19. Article 2(3) of that law provides that ‘the provisions of Articles … 99 … and 104 of this law shall apply to payment service providers that provide payment services in Latvia if the payer’s payment service provider and the payee’s payment service provider are established in a Member State and the payment service is provided in euros or in the currency of a Member State.’

20. Article 99 of the Law on Payment Services transposes Article 75 of Directive 2007/64 into Latvian law. Article 99(9) provides that, ‘where a payment transaction is not executed or is incorrectly executed and the payee’s payment service provider is not liable under this article, the payer’s payment service provider shall be liable to the payer.’

21. Article 105 of the Law on Payment Services transposes Articles 80 to 82 of Directive 2007/64 into Latvian law. Article 105(2) confers powers on the FCMC to deal with complaints made by payment service users that are not consumers and which relate to infringement of the provisions of the Law on Payment Services. ( 7 ) Article 105(5) confers on the FCMC corresponding powers to impose penalties on payment service providers.

II. The facts, the main proceedings and the questions referred for a preliminary ruling

22. On 16 November 2011, the company ‘Forcing Development Limited’ (‘the customer’) gave a payment order to AS ‘PrivatBank’ (‘the appellant bank’) to transfer 394 138.12 United States dollars (USD) from an account it held with the appellant bank to the account of a third party held at the Lithuanian bank ‘Snoras Bank’ (‘the Lithuanian bank’).

23. On the same day, the appellant bank debited the amount in question from the customer’s account and at 15.24 hours transmitted the payment order to the Lithuanian bank via the SWIFT system. The appellant bank also transferred funds to its correspondent account with the Lithuanian bank, for payment into the account of the customer’s payee. However, although it was received at 15.24 hours, the payment order was not executed immediately because there were insufficient funds in the appellant bank’s correspondent account.

24. Also on the same day, the central bank of the Lithuanian Republic imposed a moratorium on the Lithuanian bank, which was communicated to it at 15:08 hours, prohibiting it from providing financial services. At 16:20 hours that day, the Lithuanian bank credited the appellant bank’s correspondent account with the funds in question. However, since it was no longer possible for payment transactions to be executed, because of the moratorium, the sum remained on the appellant bank’s correspondent account and the payment to the third party could not be carried out.

25. Despite the customer’s request, the appellant bank refused to credit its account with the funds that remained frozen in the bank’s correspondent account with the Lithuanian bank as a result of the non-execution of the payment order.

26. The customer therefore brought a complaint before the FCMC regarding the appellant bank’s refusal.

27. By decision of 4 July 2013, upheld on 17 October 2013 (‘the contested decision’), the FCMC found that, in accordance with Article 99(9) of the Law on payment services, responsibility for executing the customer’s payment order lay with the appellant bank. It called upon the appellant bank to consider whether changes were needed to its systems and internal control procedures and imposed on it a fine of approximately EUR 140000.

28. Subsequently, in November 2013, pursuant to the terms of its current account agreement, the customer applied to an arbitration tribunal for repayment of the sum in question by the appellant bank. However, that application was dismissed by decision of 4 February 2014, on the ground that the appellant bank had fulfilled its legal obligations.

29. In the meanwhile, the appellant bank had brought an action before the Administratīvā apgabaltiesa (Regional Administrative Court, Latvia) seeking the annulment of the contested decision and compensation for the material damage suffered. It argued that the Lithuanian bank must be regarded as responsible for the failure to execute the payment, as it had transferred the funds to the appellant bank’s correspondent account only after the moratorium had been announced. It also submitted that it was impossible to make provision for such situations in internal control procedures.

30. By judgment of 5 August 2015, the Administratīvā apgabaltiesa (Regional Administrative Court) upheld the contested decision and dismissed the appellant bank’s action. It found that the appellant bank must be regarded as liable for the failure to execute the payment order, in accordance with Article 99(9) of the Law on payment services. It found that the payment order had not been executed in due time before the imposition of the moratorium because there had been insufficient funds in the appellant bank’s correspondence account with the Lithuanian bank. The Lithuanian bank, on the other hand, could not be regarded as responsible for the failure to execute the payment order, since it had not received the funds necessary to execute such orders.

31. The appellant bank brought an appeal on a point of law against that judgment before the referring court. It maintains that the court of first instance exceeded its jurisdiction in ruling on a civil dispute concerning the relationship between the credit institution and the customer without taking account of the decision of the arbitration tribunal, which had already settled the dispute. Given that the arbitration tribunal had found that the failure to execute the payment order could not be attributed to the appellant bank, the FCMC’s imposition of penalties was unjustified. In the appellant bank’s opinion, Article 99 of the Law on payment services does not apply in this case, because the currency of the payment at issue was neither the euro nor the official currency of a Member State and the parties had decided the issue of liability in relation to such payments in a private agreement.

32. It was in that context that the referring court, entertaining doubts as to the consistency of certain provisions of the Law on payment services with Directive 2007/64, decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘1. Is national legislation that confers on the [Latvian Financial and Capital Markets] Commission powers to examine complaints made by payment service users even in relation to payment services that have not been provided in euros or in the currency of a Member State, and thus to find infringements of the Law [on payment services] and to impose penalties, compatible with Article 2(2) of Directive [2007/64]? 2. Are Article 20(1) and (5) and Article 21(2) of Directive [2007/64] to be interpreted as allowing the competent authority also to supervise payment services that are not provided in euros or in the currency of a Member State outside the euro area and to impose penalties with regard to such services? 3. For the purposes of carrying out the supervisory functions provided for in Articles 20 and 21 of Directive [2007/64] or of conducting the complaint procedures provided for in Articles 80 to 82 of Directive [2007/64] does the competent authority have powers to resolve disputes between a payer and a payment service provider which arise from the legal relationships referred to in Article 75 of Directive [2007/64], determining which party is liable for the non-execution or defective execution of a transaction? 4. In carrying out the supervisory functions provided for in Articles 20 and 21 of Directive [2007/64], or in conducting the complaint procedures provided for in Articles 80 to 82 of Directive [2007/64], must the competent authority take account of an arbitration decision settling a dispute between a payment service provider and a payment service user?’

III. Legal analysis

A. The first question

33. By its first question, the referring court essentially asks whether Article 2(2) of Directive 2007/64 is to be interpreted as precluding national legislation that confers on the authority designated in accordance with Article 82 of the directive as having competence to examine complaints relating to alleged infringements on the part of payment service providers of the provisions of national law transposing the directive, powers to examine complaints – and thus to find infringements of the law and to impose penalties – even in relation to payment services that have not been provided in euros or in the currency of a Member State.

34. The referring court points out that, pursuant to Article 2(2) of Directive 2007/64, Title IV of the directive (which contains Articles 80 to 82 governing complaint procedures) applies solely to payment services provided in euros or in the currency of a Member State outside the euro area. It also observes that the Law on payment services ( 8 ) nevertheless confers on the competent authority for such complaints, the FCMC, powers even to examine complaints concerning payment services provided in currencies other than the euro or the currency of a Member State outside the euro area, such as the United States dollar, as in the present case.

35. The referring court is therefore in doubt as to the compatibility of the relevant provisions of Latvian law with Article 2(2) of Directive 2007/64, including in the light of Article 86(1) of the directive, which provides that the Member States must fully harmonise their national legislation with the directive.

36. I would observe in this connection that, by means of Directive 2007/64, the European Union legislature adopted provisions on the transparency of conditions and on information requirements for payment services (Title III) and on rights and obligations in relation to the provision and use of payment services (Title IV). By virtue of Article 2(2) of Directive 2007/64, those provisions apply exclusively to payment services provided in euros or in the currency of a Member State outside the euro area. The EU legislature did not, therefore, by means of Directive 2007/64, lay down rules governing these matters in the case of payment services provided in currencies other than the official currency of one or other Member State.

37. It follows that, this being an area of shared competence, within the meaning of the current Article 2(2) TFEU, ( 9 ) since the EU did not exercise its legislative competence with regard to the rules governing payment services provided in currencies other than the euro or the currency of a Member State outside the euro area, the Member States remained free under Directive 2007/64 to establish a legal regime applicable to such services, exercising their own competence by adopting provisions of national law, albeit in compliance with EU law. ( 10 )

38. Consequently, under Directive 2007/64 there was nothing to prevent a Member State from extending to payment services provided in a currency other than the euro or the currency of a Member State outside the euro area the rules laid down in EU law, including in particular those laid down in the directive for payment services in euros or in the currency of a Member State outside the euro area. ( 11 )

39. The fact that, in accordance with Article 86 thereof, Directive 2007/64 pursues full harmonisation in no way affects the conclusions expressed in the two preceding points. Indeed, the prohibition contained in that provision on maintaining or introducing provisions other than those laid down in the directive solely concerns the matters which fall within the directive’s scope and cannot therefore apply to types of payment service falling outside the directive’s scope.

40. I should, however, point out that Directive 2015/2366 amended the provision concerning the scope of application of Titles III and IV, extending it, on certain conditions, to payment services provided in currencies other than those of the Member States. ( 12 )

41. In light of the foregoing, I think the answer to the first question should be that Article 2(2) of Directive 2007/64 is to be interpreted as not precluding national legislation that confers on the authority designated in accordance with Articles 80 to 82 of the directive as having competence to examine complaints relating to alleged infringements on the part of payment service providers of the provisions of national law transposing the directive, powers to examine complaints – and thus to find infringements of the law and to impose penalties – even in relation to payment services that have not been provided in euros or in the currency of a Member State.

B. The second question

42. By its second question the referring court essentially asks the Court of Justice whether Article 20(1) and (5) and Article 21(2) of Directive 2007/64 are to be interpreted as providing that the competent authority responsible for the authorisation and supervision of payment institutions, pursuant to those provisions, should also supervise and impose penalties in relation to payment services that have not been provided in euros or in the official currency of a Member State outside the euro area.

43. The referring court observes that Articles 20 and 21 of Directive 2007/64 require the Member States to ensure the supervision of payment institutions. It states that the references in Article 20(1) and (3) and Article 21(1) of the directive to ‘this Title’, that is to say Title II of the directive, appear to suggest that the supervisory powers of competent authorities designated in accordance with Articles 20 and 21, and their powers to impose penalties, extend solely to matters falling within the scope of Title II, such as compliance with the provisions on authorisation and on own funds. However, in the referring court’s opinion, Article 20(5) of Directive 2007/64 indicates that the competent authorities must also supervise the provision of payment services and suggests that they may therefore also exercise supervisory functions and have powers to impose penalties in relation to infringements of the provisions of national law transposing the provisions of Titles III and IV of the directive.

44. In those circumstances, and given that the restriction in Article 2(2) of Directive 2007/64 relating to Titles III and IV thereof does not apply to Title II, it is necessary, according to the referring court, to clarify whether Article 20(1) and (5) and Article 21(2) of the directive are to interpreted as permitting the national authority to retain its supervisory function and powers to impose penalties in relation to infringements of the provisions of national law that transpose the provisions of Titles III and IV of the directive, even where the payment services have not been provided in euros or in the currency of a Member State.

45. On this point, I believe, first and foremost, that the provisions of EU law cited in the second question referred for a preliminary ruling are not applicable to the case in the main proceedings and that the second question should therefore be ruled inadmissible.

46. Indeed, it is clear from the wording of Articles 20 and 21 of Directive 2007/64 and from their position within the structure of the directive: Section 3 of Chapter 1 (which is headed ‘Payment institutions’) of Title II, that the provisions of Articles 20 and 21 apply solely to payment institutions, as defined in Article 4(4) of the directive. ( 13 )

47. As has been pointed out in the observations submitted to the Court by the Government of the Czech Republic and, indirectly, by the European Commission, it may be understood from the information given in the order for reference and in the Court’s case file that the payment service providers in the case in the main proceedings must be classified as ‘credit institutions’ within the meaning of Article 1(1)(a) of Directive 2007/64, rather than as ‘payment institutions’ within the meaning of Article 1(1)(d).

48. More specifically, it is expressly stated in the order for reference that the appellant bank is a credit institution and that, for this reason, the contested decision was adopted pursuant to Article 113 of the Latvian law on credit institutions. Moreover, the order for reference also mentions on a number of occasions the obligations incumbent on the appellant bank in its capacity as a credit institution.

49. In those circumstances, I think it must be held that the provisions of Articles 20 and 21 of Directive 2007/64 are not applicable, ratione personae, in the case before the referring court and are therefore irrelevant to those proceedings. ( 14 ) The second question referred for a preliminary ruling should, therefore, in my opinion, be ruled inadmissible.

50. In the alternative, should the Court not find the second question to be inadmissible, I think the following considerations will be relevant.

51. As pointed out by the referring court, it is clear from the wording of both Article 20(1) and Article 21(1) of Directive 2007/64 that the competent authorities to which Section 3 of Chapter 1 of Title II of the directive applies are responsible for procedures for the authorisation of payment institutions and for the prudential supervision of payment institutions with regard to the requirements laid down in Title II, the continued compliance with which they are required to monitor.

52. I would observe in this connection that, since the restriction laid down in Article 2(2) of Directive 2007/64 does not apply to Title II thereof, there can be no doubt that the provisions contained in Section 3 of Chapter 1 of Title II of the directive (in particular, Articles 20 to 23 thereof) apply to all payment institutions subject to the supervisory powers exercised by the competent authorities, regardless of the currency in which those institutions provide payment services, whether it be the euro, the official currency of a Member State outside the euro area, or any other currency.

53. Moreover, the referring court considers that the competent authorities designated in accordance with Article 20(1) of Directive 2007/64 may also be entitled to perform supervisory duties and enjoy related powers to impose penalties in relation to infringements of provisions of domestic law that transpose the provisions of Titles III and IV of the directive. As I have already pointed out, pursuant to Article 2(2) of the directive, Titles III and IV apply solely to payment services provided in euros or in the currency of a Member State outside the euro area. It is on the basis of that premiss that the referring court asks whether these competent authorities may exercise such powers also with regard to payment services provided in currencies other than those of the Member States.

54. However, as the Commission has pointed out in its observations, a distinction must be drawn between the powers to authorise payment institutions and to supervise them prudentially with regard to the requirements laid down in Title II of Directive 2007/64, on the one hand, and compliance with the requirements laid down in Titles III and IV of the directive, on the other.

55. Like the Commission, I take the view that Articles 20 and 21 of Directive 2007/64 do not provide for the competent authorities referred to therein, which are responsible for the authorisation and prudential supervision of payment institutions, also to have powers to check compliance on the part of payment institutions with provisions of domestic law that transpose the provisions of Titles III and IV of the directive and possibly punish infringements thereof.

56. On this point, the referring court refers to the provisions of Article 20(5) of Directive 2007/64. However, I find therein no basis for the attribution of such powers to the competent authorities in question. In fact, Article 20(5) merely stipulates that the provisions of Article 20(1) do not imply that the competent authorities must supervise any business activities of payment institutions other than the provision of payment services and the activities listed in Article 16(1)(a) of the directive, ( 15 ) in which payment institutions may also engage. Thus, Article 20(5) defines the limits of the powers of prudential supervision of the authorities designed in accordance with Article 20(1) of the directive; it does not provide the basis for any extension of those powers beyond the monitoring of compliance with the requirements laid down in Title II of the directive and the imposition of penalties for non-compliance with those requirements.

57. I would also point out in this connection that the Court has already had occasion to hold that the competent authorities referred to in Articles 20 and 21 of Directive 2007/64 are entrusted with the supervision of payment institutions ‘in order to monitor compliance with the provisions of Title II’ of that directive’. ( 16 )

58. Admittedly, in the event that the authority designated, in accordance with Article 20(1) of Directive 2007/64, as responsible for the authorisation and prudential supervision of payment institutions is the same as the authority designated by the Member State, in accordance with Article 82(1) of the directive, ( 17 ) to deal with complaints concerning infringement on the part of payment service providers of the provisions of domestic law that transpose the directive, then the powers of that authority will extend both to prudential supervision and the imposition of penalties in the event of non-compliance on the part of payment institutions with the requirements laid down in Title II of the directive and to finding and punishing infringements on the part of payment service providers of the provisions of domestic law that transpose Titles III and IV of the directive.

59. In light of the foregoing, I regard the second question referred by the national court as inadmissible. In the alternative, I suggest that the Court answer that question by holding that Article 20(1) and (5) and Article 21(2) of Directive 2007/64 are to be interpreted as meaning that the competent authority designated in accordance with Article 20(1) of the directive may carry out supervision and impose penalties only in connection with the requirements laid down in Title II of the directive and compliance therewith on the part of all payment institutions subject to the powers of that authority, regardless of the currency in which those institutions provide payment services.

C. The third question

60. By its third question, the referring court asks the Court of Justice whether, for the purposes of carrying out the supervisory functions provided for in Articles 20 and 21 of Directive 2007/64, or of dealing with the complaints contemplated by Articles 80 to 82 of the directive, the competent authority has powers to resolve disputes between a payer and a payment service provider which arise from the legal relationships referred to in Article 75 of the directive, determining which party is liable for the non-execution or defective execution of a transaction.

61. The referring court considers that, should the Court find that the competent authority can examine complaints or carry out supervision with regard to payment services not provided in euros or in another currency of a Member State, it is necessary to clarify the limits upon its powers in the application of Article 75 of Directive 2007/64.

62. The referring court observes that Article 75 governs the reciprocal legal relationships between the payer, the payee, the payer’s payment service provider and the payee’s payment service provider, as well as the limits upon the liability of each of them. It considers that it follows from the nature of Article 75 that the parties involved in executing a payment may arrive at a solution to a specific situation by mutual agreement or, failing that, by means of a dispute resolution procedure involving all the interested parties in which it is established, in light of all the relevant facts and points of law, which of the parties involved in the payment transaction is liable for its non-execution. The possibilities for dispute resolution are governed by Article 83 of the directive, which concerns out-of-court redress procedures.

63. In that context, the referring court considers it necessary to clarify the relationship between the dispute resolution procedures contemplated by Article 83 of Directive 2007/64, on the one hand, and, on the other hand, the complaint procedures contemplated by Articles 80 to 82 of the directive and the exercise of the supervisory powers contemplated by Articles 20 and 21 of the directive.

1. The jurisdiction of the Court of Justice and the admissibility of the third question referred for a preliminary ruling

64. The third question concerns the interpretation of Articles 20, 21, 75 and 80 to 83 of Directive 2007/64.

65. In the first place, in so far as the third question refers to Articles 20 and 21 of Directive 2007/64, I think that, for the reasons I set out in points 45 to 49 above, it must be ruled inadmissible. ( 18 )

66. In the second place, as regards the interpretation of Articles 75 and 80 to 83 of Directive 2007/64, it must be observed that these are all contained within Title IV of the directive. As I have already mentioned several times, pursuant to Article 2(2) of the directive, Title IV does not apply to payment services provided in a currency other than the euro or the currency of a Member State outside the euro area.

67. It follows that, when it adopted Directive 2007/64, the EU legislature did not provide for the application of the provisions in question to payment services provided in United States dollars (USD), as in the case in the main proceedings.

68. Since the provisions of EU law are not applicable to the facts of the case in the main proceedings, the question arises of whether the Court of Justice has jurisdiction to answer the third question referred for a preliminary ruling.

69. It is clear from the Court’s settled case-law that the Court has jurisdiction to give a preliminary ruling on questions concerning provisions of EU law in situations in which, even if the facts of the case in the main proceedings do not fall within the field of application of EU law directly, provisions of EU law have been rendered applicable by domestic law due to a reference made by that law to the content of those provisions. ( 19 )

70. In such a situation, it is clearly in the interest of the European Union that, in order to forestall future differences of interpretation, provisions or concepts taken from EU law should be interpreted uniformly. ( 20 )

71. Thus, an interpretation by the Court of provisions of EU law in situations not falling within the scope of EU law is warranted where such provisions have been made applicable to such situations by national law directly and unconditionally, in order to ensure that those situations and situations falling within the scope of EU law are treated in the same way. ( 21 )

72. In the present case, the referring court, which alone has jurisdiction to interpret national law under the framework of the system of judicial cooperation enshrined in Article 267 TFEU, ( 22 ) has made clear that the provisions of Directive 2007/64 mentioned in the third question referred for a preliminary ruling have been rendered applicable in Latvian law to situations, such as that at issue in the main proceedings, which do not fall within the scope of the directive itself. ( 23 )

73. More specifically, the referring court has pointed out that the restriction laid down in Article 2(3) of the Latvian Law on Payment Services, which restricts the scope of certain provisions of that law to payment services provided in euros or in the official currency of a Member State, does not apply to Articles 105 to 107 of the law, which transpose Articles 80 to 83 of Directive 2007/64. The referring court infers from that that complaints concerning, inter alia, infringement of Article 99 of the Law on payment services, which transposes into Latvian law Article 75 of Directive 2007/64, may also relate to payment services provided in a currency other than that of a Member State, such as that at issue in the main proceedings, which was provided in United States dollars (USD).

74. In light of that, I think that, in this case, it is clearly in the interest of the European Union that, in order to forestall future differences of interpretation, the provisions taken from EU law should be interpreted uniformly. ( 24 )

75. I therefore think that the Court of Justice does have jurisdiction to answer the third question referred for a preliminary ruling.

2. The substance of the third question

76. As to the substance, first of all, it is appropriate to clarify, as the referring court has requested, the relationship between the complaint procedures contemplated by Articles 80 to 82 of Directive 2007/64, on the one hand, and the out-of-court redress procedures contemplated by Article 83 of the directive, on the other, so as to establish whether or not a competent complaints authority, designated in accordance with Article 82 of the directive, has powers to resolve disputes between private parties and to apply Article 75 of the directive in doing so.

77. As the Commission and the Government of the Czech Republic have rightly observed, the complaint procedures contemplated by Articles 80 to 82 of Directive 2007/64 and the out-of-court redress procedures contemplated by Article 83 of the directive pursue different objectives.

78. The former, as can be gleaned from the wording of the provisions themselves and from recital 50 of Directive 2007/64, concern the processing of complaints submitted to the competent authority. In dealing with complaints, the competent authority must establish whether there has been an infringement, on the part of the payment service provider in question, of the provisions of national law that transpose the provisions of Directive 2007/64. If it finds that there has been such an infringement, it must impose a penalty that is effective, proportionate and dissuasive.

79. The objective of the complaint procedures is thus to ensure that payment service providers actually comply with the relevant provisions of national law. They do not, on the other hand, pursue the objective of resolving disputes between various interested parties relating to the provision of payment services, nor that of establishing civil liability for any loss suffered, nor that of imposing remedies to resolve situations resulting from infringements.

80. Those matters fall within the remit of the competent national courts and tribunals or of the bodies entrusted with the out-of-court settlement of disputes, pursuant to Article 83 of Directive 2007/64.

81. It follows from the foregoing that the competent complaints authority, designated in accordance with Article 82 of Directive 2007/64, does not have powers to resolve disputes between private parties in the context of a complaint procedure, not unless the Member State in question has also appointed it as competent authority for out-of-court redress procedures, in accordance with Article 83 of the directive, which is an option expressly contemplated in recital 52 of the directive, as I have already mentioned.

82. That clarified, the third question asks the Court, in the second place, to determine the scope of the complaint procedures contemplated by Articles 80 to 82 of Directive 2007/64 and, more specifically, to determine whether or not, in the context of such procedures, the competent authority may apply Article 75 of the directive, under which liability for the non-execution or defective execution of a payment order may be established.

83. As I mentioned in point 78 above, the competent complaints authorities are required to establish whether there has been an infringement, on the part of the payment service provider in question, of the provisions of national law that transpose the provisions of Directive 2007/64.

84. Payment service providers are required to comply with the provisions of national law and are subject to the scrutiny of the competent complaints authorities in so far as concerns their compliance with those provisions. It should be noted in this connection that neither Article 80 nor Article 81 of Directive 2007/64 allows exceptions of any kind that would exclude any provision of the directive from the scrutiny of the competent authorities. On the contrary, it is expressly provided in Article 82(2) of the directive that such authorities have competence in the event of the infringement of provisions of national law adopted pursuant, inter alia, to Title IV of the directive, in which Article 75 thereof appears.

85. In my opinion, it follows from what I have said that, when it receives a complaint concerning the non-execution or defective execution of a payment order, the competent authority may, applying the provision of domestic law that transposes Article 75 of Directive 2007/64, verify whether the complaint is well founded, determining, where appropriate, which party is liable for the non-execution or defective execution of the payment order. Any different interpretation would deprive the authority, without any legal basis therefor, of powers expressly conferred on it by Directive 2007/64.

86. However, in the third place, I must point out that, in accordance with Article 51(1) of Directive 2007/64, which concerns the scope of Title IV of the directive, where the user of the payment service is not a consumer, the parties may agree that certain provisions of the directive, including Article 75, are not to apply, in whole or in part.

87. The purpose of that provision may be gleaned from recital 20 of Directive 2007/64, which states that, ‘as consumers and enterprises are not in the same position, they do not need the same level of protection. While it is important to guarantee consumers’ rights by provisions which cannot be derogated from by contract, it is reasonable to let enterprises and organisations agree otherwise.’

88. It follows that, where the user of a payment service is a consumer, the competent complaints authority will always have powers to verify whether a complaint concerning the non-execution or defective execution of a payment order is well founded, applying the provision of national law which transposes Article 75 of Directive 2007/64. However, if the user is not a consumer and it has been decided by agreement that Article 75 should not apply, the criteria laid down in Article 75 will not apply, in whole or in part, depending on the terms agreed by the parties.

89. On the basis of the information contained in the Court’s case file, that would appear to be the situation in the case pending before the referring court, in which the parties have concluded an agreement for the management of the current account which stipulates specific rules governing liability for the non-execution or defective execution of payment orders.

90. Nevertheless, I must point out in this connection that, in its observations, the Latvian Government maintains that, by the contractual terms inserted into the current account agreement between the customer and the appellant bank, the bank has not merely derogated from the provisions of Directive 2007/64, but has created a contractual regime which, in addition to being contrary to fundamental provisions of national law governing the activities of credit institutions, is diametrically opposed to the founding principles of Directive 2007/64 in that it requires the customer alone to bear the adverse consequences of the non-execution or defective execution of payment orders.

91. Clearly, it is not for the Court of Justice but for the referring court to assess whether or not contractual terms agreed by the parties are consistent with provisions of national law. However, on this point I would emphasise that the smooth and efficient functioning of payment systems, and thus, more generally, the proper operation of the single market in payment services which the directive seeks to achieve, ( 25 ) is dependent on the user’s being able to rely on the payment service provider, which is usually the party in a position to assess the risks involved in the payment transaction, to execute the payment transaction correctly and within the agreed time. ( 26 )

92. Leaving aside the position of consumers, who should receive a high level of protection, in so far as concerns relationships between payment service providers and other parties, Directive 2007/64 seeks to strike a balance between the objective of ensuring the proper operation of the single market in payment services and respecting the contractual freedom of the parties concerned. ( 27 ) In my opinion, it is from that perspective that the provisions of Article 51(1) of the directive should be interpreted.

93. In that context, I think that such considerations must be taken into account when assessing any contractual terms relating to payment services that have been concluded by the parties in the exercise of the freedom which they are allowed under the provisions of national law that transpose Directive 2007/64. From that perspective, I would question the consistency with the provisions of national law that transpose Directive 2007/64 – in particular Article 51(1) of the directive – of a contractual regime governing the liability of the payment service provider, concluded pursuant to the provision of domestic law that transposes Article 51(1) of the directive, which requires the customer alone to bear the adverse consequences of the non-execution or defective execution of payment orders, and which is liable to undermine the smooth and efficient functioning of payment systems, and thus, indirectly, of the single market in payment services.

94. In light of the foregoing, I believe that the answer to the third question referred for a preliminary ruling should be that the competent complaints authority, designated in accordance with Article 82 of Directive 2007/64, does not have powers to resolve disputes between private parties in the context of a complaint procedure, not unless the Member State in question has also appointed it as competent authority for out-of-court redress procedures, in accordance with Article 83 of the directive. When it receives a complaint concerning the non-execution or defective execution of a payment order, the competent authority may, applying the provision of domestic law that transposes Article 75 of Directive 2007/64, verify whether the complaint is well founded, determining, where appropriate, which party is liable for the non-execution or defective execution of the payment order. That, however, is not possible in the case of payment service users that are not consumers if the parties have agreed that the provision of national law that transposes Article 75 of the directive should not apply. It is for the referring court to determine whether such a contractual agreement is consistent with the relevant provisions of national law, including those which transpose Directive 2007/64.

D. The fourth question

95. By its fourth question, the referring court asks whether Articles 80 to 83 of Directive 2007/64 are to interpreted as meaning that, in conducting the complaint procedures provided for in those provisions, the competent authority must take account of an arbitration decision settling a dispute between a payment service provider and a payment service user. ( 28 )

96. The referring court observes that, if the authority having competence to deal with complaints, in accordance with Articles 80 to 82 of Directive 2007/64, has the power to apply the provisions of national law that transpose Article 75, it is necessary to determine whether that authority is required to take account of an arbitration decision, such as that given in the present case, which settles a dispute between a payment service provider and a payment service user.

97. However, I must point out that neither Directive 2007/64 nor any other provision of EU law offers any guidance on the matter.

98. According to the settled case-law of the Court, in the absence of EU rules, it is for the domestic legal system of each Member State to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from EU law, such as Directive 2007/64, in compliance with the principles of equivalence and effectiveness. ( 29 )

99. In principle, it is therefore for the law of each Member State to determine what weight must be ascribed to arbitration decisions in the context of the complaint procedures contemplated by Articles 80 to 82 of Directive 2007/64.

100. In regulating those procedures, however, the Member States must ensure the effectiveness of Directive 2007/64 and they must not, therefore, undermine the duties (mentioned in points 78, 79 and 84 above) which the competent authorities perform in the context of complaint procedures nor the powers which the directive confers on those authorities in order for them to perform those duties.

101. In this regard it must be remembered that, as I pointed out in connection with the third question referred for a preliminary ruling, ( 30 ) complaint procedures and dispute-resolution procedures pursue different objectives. In my opinion, it follows from an analysis of those different objectives that, in order to ensure the effectiveness of Directive 2007/64, to which I alluded in the preceding point, the ‘civil-law’ objective pursued by the out-of-court procedures, specifically that of resolving disputes between payment service providers and payment service users, must not undermine the ‘public-law’ objective pursued by the complaint procedures, which is to ensure that payment service providers actually comply with the provisions of national law that transpose Directive 2007/64. Consequently, the procedural autonomy of the Member States cannot, in my view, go so far as to require a competent authority conducting a complaint procedure to conform to an arbitration decision that is at odds with the outcome of the complaint procedure.

102. In light of the foregoing, I think the answer to the fourth question referred by the national court should be that it is, in principle, for the law of each Member State to determine what weight must be ascribed to arbitration decisions in the context of the complaint procedures contemplated by Articles 80 to 82 of Directive 2007/64. In regulating that aspect, the Member States must ensure the effectiveness of the directive and must not, therefore, undermine the duties performed by the competent authorities in the context of complaint procedures. Consequently, a competent authority conducting a complaint procedure cannot be required to conform to an arbitration decision that is at odds with the outcome of the complaint procedure.

IV. Conclusion

103. On the basis of the foregoing considerations, I suggest that the Court answer the questions referred by the Augstākā tiesa (Supreme Court, Latvia) as follows: (1) Article 2(2) of Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market is to be interpreted as not precluding national legislation that confers on the authority designated in accordance with Articles 80 to 82 of the directive as having competence to examine complaints relating to alleged infringements on the part of payment service providers of the provisions of national law that transpose the directive, powers to examine complaints – and thus to find infringements of the law and to impose penalties – even in relation to payment services that have not been provided in euros or in the currency of a Member State. (2) The competent complaints authority, designated in accordance with Article 82 of Directive 2007/64, does not have powers to resolve disputes between private parties in the context of a complaint procedure, not unless the Member State in question has also appointed it as competent authority for out-of-court redress procedures, in accordance with Article 83 of the directive. When it receives a complaint concerning the non-execution or defective execution of a payment order, the competent authority may, applying the provision of domestic law that transposes Article 75 of Directive 2007/64, verify whether the complaint is well founded, determining, where appropriate, which party is liable for the non-execution or defective execution of the payment order. That, however, is not possible in the case of payment service users that are not consumers if the parties have agreed that the provision of national law that transposes Article 75 of the directive should not apply. It is for the referring court to determine whether such a contractual agreement is consistent with the relevant provisions of national law, including those which transpose Directive 2007/64. (3) It is, in principle, for the law of each Member State to determine what weight must be ascribed to arbitration decisions in the context of the complaint procedures contemplated by Articles 80 to 82 of Directive 2007/64. In regulating that aspect, the Member States must ensure the effectiveness of the directive and must not, therefore, undermine the duties performed by the competent authorities in the context of complaint procedures. Consequently, a competent authority conducting a complaint procedure cannot be required to conform to an arbitration decision that is at odds with the outcome of the complaint procedure

( 1 ) Original language: Italian.

( 2 ) Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC (OJ 2007 L 319, p. 1).

( 3 ) Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC (OJ 2015 L 337, p. 35). Directive 2015/2366 repealed and replaced Directive 2007/64 with effect from 13 January 2018. However, given the date of the relevant facts, the case in the main proceedings continues to be governed by Directive 2007/64.

( 4 ) Within the meaning of Article 4(1)(a) of Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (OJ 2006 L 177, p. 1).

( 5 ) Article 4(4) of the directive defines a ‘payment institution’ as ‘a legal person that has been granted authorisation in accordance with Article 10 to provide and execute payment services throughout the [European Union]’.

( 6 ) These concern the transparency of conditions and information requirements for payment services (Title III) and rights and obligations in relation to the provision and use of payment services (Title IV).

( 7 ) More specifically, for infringements of the provisions of Chapters VII, VIII, IX, X, XI, XII, XIII and XIV of the Law on payment services.

( 8 ) The referring court refers to Articles 105 to 107 of the Law on payment services, which transpose into Latvian law Articles 80 to 83 of the directive, but are not subject to the restriction laid down in Article 2(3) of the Law on payment services (see point 19 above).

( 9 ) Directive 2007/64 was adopted on the basis of Article 47(2) EC, on freedom of establishment, and Article 95 EC, which corresponds to the current Article 114 TFEU (on the basis of which Directive 2015/2366 was adopted), which concerns measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. With regard to the internal market, the EU and the Member States have shared competence (see Article 4(2)(a) TFEU).

( 10 ) See, by way of analogy, the judgment of 25 July 2018, Confédération paysanne and Others (C‑528/16, EU:C:2018:583, paragraph 79 et seq.)

( 11 ) It is apparent from the Report from the Commission to the European Parliament and the Council on the application of Directive 2007/64/EC on payment services in the internal market and on Regulation (EC) No 924/2009 on cross-border payments in the Community (COM(2013) 549 final) of 24 July 2013 that a number of Member States extended the rules in Directive 2007/64 to payment services in currencies other than those of the Member States (see Section 3.1.2, p. 3).

( 12 ) See Article 2 of Directive 2015/2366.

( 13 ) Within the meaning of that provision, for the purposes of Directive 2007/64, a ‘payment institution’ is a legal person that has been granted authorisation in accordance with Article 10 to provide and execute payment services throughout the Community.

( 14 ) Moreover, such a finding should have no effect on the national proceedings, since it is clear that, in this case, the FCMC acted upon a complaint and thus under the powers conferred on it in accordance with Articles 80 and 81 of Directive 2007/64, which apply to all payment service providers, including credit institutions. Credit institutions are, moreover, subject to specific rules on prudential supervision which apply only to them.

( 15 ) Pursuant to Article 16(1)(a) of Directive 2007/64, in addition to the provision of the payment services listed in the annex, payment institutions are entitled to engage in ‘the provision of operational and closely related ancillary services such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and the storage and processing of data’.

( 16 ) See the judgment of 10 March 2016, Safe Interenvios (C‑235/14, EU:C:2016:154, paragraph 91). See also point 107 of the Opinion of Advocate General Sharpston in the same case, Safe Interenvios (C‑235/14, EU:C:2015:530).

( 17 ) Recital 52 of Directive 2007/64 makes clear that the Member States may decide that the two authorities referred to in Article 20(1) and Article 80(1) of the directive respectively may in fact be the same body. It states that ‘Member States should determine whether the competent authorities designated for granting authorisation to payment institutions might also be the competent authorities with regard to out-of-court complaint and redress procedures.’

( 18 ) For the reasons I set out in points 51 to 57 of this Opinion, this part of the question is also irrelevant because it does not, in any event, concerns the provision of domestic law that transposes Article 75 of Directive 2007/64.

( 19 ) See, most recently, the judgment of 13 March 2019, E. (C‑635/17, EU:C:2019:192, paragraph 35). See also, to the same effect, the judgments of 21 December 2011, Cicala (C‑482/10, EU:C:2011:868, paragraph 17); of 18 October 2012, Nolan (C‑583/10, EU:C:2012:638, paragraph 45); and of 15 November 2016, Ullens de Schooten (C‑268/15, EU:C:2016:874, paragraph 53).

( 20 ) Judgment of 13 March 2019, E. (C‑635/17, EU:C:2019:192, paragraph 36 and the case-law cited).

( 21 ) Ibidem, paragraph 37 and the case-law cited.

( 22 ) Ibidem, paragraph 38.

( 23 ) See, by analogy, the judgment of 19 October 2017, Europamur Alimentación (C‑295/16, EU:C:2017:782, paragraph 30).

( 24 ) See, to that effect, the judgment of 19 October 2017, Europamur Alimentación (C‑295/16, EU:C:2017:782, paragraph 32). In the present case there is, in my opinion, an even greater such interest, since, as I have observed, in Directive 2015/2366, which repealed Directive 2007/64, the scope of the provisions corresponding to those contained in Title IV of Directive 2007/64 is extended so that they also apply to payment services provided in currencies other than those of the Member States (see point 40 above).

( 25 ) See recital 1 of the directive. On the objectives pursued by Directive 2007/64, see also the judgment of 11 April 2019, Mediterranean Shipping Company (Portugal) – Agentes de Navegação (C‑295/18, EU:C:2019:320, paragraph 45).

( 26 ) See, on this point, recital 46 of Directive 2007/64.

( 27 ) See, for example, recital 47, in fine, of Directive 2007/64.

( 28 ) The fourth question also includes the words ‘In carrying out the supervisory functions provided for in Articles 20 and 21 of Directive 2007/64’. For the reasons I set out in points 45 to 49 above, that part of the question is, in my opinion, inadmissible. For the reasons I set out in points 51 to 57 above, that part of the question is also, in any event, not relevant to the case in the main proceedings (see footnote 18 above).

( 29 ) See, most recently, by analogy, the judgment of 26 June 2019, Craeynest and Others (C‑723/17, EU:C:2019:533, paragraph 54).

( 30 ) See points 76 to 81 above.