Joined Cases C‑551/19 P and C‑552/19 P

ABLV Bank AS and Others

v

European Central Bank

Judgment of the Court (Third Chamber), 6 May 2021

(Appeal – Economic and monetary union – Banking union – Regulation (EU) No 806/2014 – Resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism (SRM) and a Single Resolution Fund – Article 18 – Resolution procedure – Conditions – Entity failing or likely to fail – Declaration by the European Central Bank (ECB) that an entity is failing or is likely to fail – Preparatory measure – Act not open to judicial review – Inadmissibility)

1. Action for annulment – Actionable measures – Concept – Measures producing binding legal effects – Preparatory measures – Not included – Assessment by the European Central Bank determining that a credit institution is failing or is likely to fail – Inadmissibility

   (Art. 263 TFEU; European Parliament and Council Regulation No 806/2014, Art. 18(1)(a))

   (see paragraphs 39-44, 46-49)

2. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Adoption of a resolution scheme – Conditions – Requirement of speed – Separate functions of the Single Resolution Board (SRB) and the European Central Bank (ECB) – Responsibility of the SRB

   (European Parliament and Council Regulation No 806/2014, Arts 18(1)(a) and 86(2))

   (see paragraphs 55, 56, 60-75)

Résumé

The appellants are ABLV Bank AS, a credit institution established in Latvia and the parent company of the ABLV group (Case C‑551/19 P), and shareholders of ABLV Bank AS (Case C‑552/19 P). ABLV Bank Luxembourg SA is a credit institution established in Luxembourg and is one of the subsidiaries of the ABLV group; ABLV Bank is the sole shareholder of ABLV Bank Luxembourg. Those two institutions were considered to be significant and, as such, were subject to supervision by the European Central Bank (ECB) as part of the single supervisory mechanism introduced by the Regulation on the Single Supervisory Mechanism ( 1 ) (‘the SSM Regulation’).

On 13 February 2018, the United States Department of the Treasury (United States of America) announced proposed measures to prevent the ABLV group from accessing the financial system in US dollars (USD). Following that announcement, the group found itself in difficulty, triggering the launch of an assessment as to whether a resolution should be adopted as provided for by the Regulation on the Single Resolution Mechanism ( 2 ) (‘the SRM Regulation’).

The resolution procedure is a complex procedure which, depending on the case, may involve several European authorities, such as the ECB, the Single Resolution Board (‘the SRB’), the European Commission and the Council of the European Union, as well as the national resolution authorities concerned.

In the present case, on 18 February 2018, the ECB requested the Finanšu un kapitāla tirgus komisija (Financial and Capital Markets Commission, Latvia), Latvia’s national resolution authority, to impose a moratorium to enable ABLV Bank to stabilise its situation. It also invited the Commission de surveillance du secteur financier (Financial Sector Supervisory Commission, Luxembourg), Luxembourg’s national resolution authority, to adopt similar measures with respect to ABLV Bank Luxembourg.

In accordance with the SRM Regulation, on 22 February 2018 the ECB sent to the SRB its draft assessment as to whether ABLV Bank and ABLV Bank Luxembourg were failing or were likely to fail. On 23 February 2018, it concluded that ABLV Bank and ABLV Bank Luxembourg were failing or were likely to fail. ( 3 ) On the same day, however, the SRB found that a resolution measure was not necessary in the public interest in the case of those banks. ( 4 )

By applications of 3 May 2018 lodged at the General Court, ( 5 ) the appellants sought annulment of the acts of the ECB by which it was concluded that the banks were to be deemed to be failing or to be likely to fail. By orders of 6 May 2019, the General Court dismissed the actions as being inadmissible, finding that the contested acts were preparatory measures in the procedure designed to allow the SRB to take a decision. ( 6 )

The Court of Justice dismisses the appellants’ appeals. In its judgment, it distinguishes the functions of the SRB and the ECB.

Findings of the Court

By their first ground of appeal, the appellants submitted that, in order to assess the admissibility of the actions, the General Court should have taken account of the ECB’s assessment of the banks’ failure.

The Court considers that the General Court did not infringe the case-law according to which, in order to assess the admissibility of an action, it is necessary to analyse the substance of the contested act by reference to the objective criteria of its content, the context in which it was adopted and the powers of the institution which adopted it. Moreover, the General Court did not err in law when it also took account of the ECB’s intention, albeit leaving that subjective criterion to play a complementary role.

According to the Court, it is incorrect to presume that all acts of the institutions are in the nature of a decision, unless it is clearly stated that that is not the case. Such a presumption would run counter to the case-law referred to by the Court. In response to the appellants’ arguments, the Court notes that the ECB’s assessment of the proportionality of the proposed measure is not sufficient evidence that that assessment is binding. Any measure must comply with the general principles of EU law, including the principle of proportionality, and the proportionality of a measure may therefore be analysed in an intermediate measure during an administrative procedure comprising several stages. As to the fact that the ECB communicates and publishes the acts in question, that does not mean that it intended to make them binding or that those acts are binding in their own right. As regards the ECB’s statement regarding the inevitable liquidation of the credit institutions, the Court notes that such a liquidation did not arise because of the acts of the ECB, but by a decision of the shareholders following the SRB’s decision that it was not necessary, in the public interest, to apply resolution schemes.

Before addressing the second ground of appeal, the Court sets out the characteristics of the SRM Regulation. One of the objectives of that regulation is to adopt decisions speedily, so that financial stability is not jeopardised. Recognition of the decisional nature of the assessment, by the ECB, as to whether an entity is failing or is likely to fail could significantly affect the speediness of that procedure. Furthermore, the Court notes that the fact that provision is made for judicial review only in respect of decisions of the SRB ( 7 ) would seem to confirm that the legislature did not intend to confer a decision-making power on the ECB in this area.

The Court notes that the SRB may adopt a resolution scheme only if three conditions are met ( 8 ): the entity is failing or is likely to fail, there is no reasonable prospect that any measures other than resolution would prevent its failure within a reasonable timeframe, and a resolution action is necessary in the public interest.

The Court states that the ECB’s assessment that an entity is failing or is likely to fail concerns only one of those conditions. It also notes that the ECB has a primary role in respect of the assessment because of its expertise and its access to supervisory information. However, the SRB may itself carry out the assessment as to whether an entity is failing or is likely to fail, for example where the ECB considers that there is no failure, and the SRB has exclusive competence to determine whether the three conditions are met. It is not bound by the ECB’s assessment and may not agree with that assessment. On the contrary, it is for the SRB to correct an irregularity since it is against the SRB’s decisions that provision is made for judicial remedies. ( 9 )

According to the Court, the ECB has particular expertise as supervisory authority. However, the distinction between supervision and resolution of credit institutions has no bearing on the nature of the assessment as a preparatory measure: a measure withdrawing an entity’s authorisation is therefore not equivalent to an assessment as to whether an entity is failing or is likely to fail.

( 1 ) Within the meaning of Article 6(4) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63).

( 2 ) Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014 L 225, p. 1).

( 3 ) According to point (a) of the first subparagraph of Article 18(1) of the SRM Regulation.

( 4 ) Within the meaning of point (c) of the first subparagraph of Article 18(1) and Article 18(5) of the SRM Regulation.

( 5 ) Cases T‑281/18 and T‑283/18.

( 6 ) By applications also lodged at the General Court on 3 May 2018, the appellants brought actions for annulment of the decisions of the SRB of 23 February 2018 (T‑280/18 and T‑282/18). Those actions are pending before the General Court.

( 7 ) Article 86(2) of the SRM Regulation.

( 8 ) Points (a) to (c) of the first subparagraph of Article 18(1) of the SRM Regulation.

( 9 ) Article 86(2) of the SRM Regulation.