Joined Cases C‑498/22 to C‑500/22

Novo Banco SA – Sucursal en España

v

C.F.O.

(Request for a preliminary ruling from the Tribunal Supremo)

Judgment of the Court (Fourth Chamber) of 5 September 2024

(Reference for a preliminary ruling – Reorganisation and winding up of credit institutions – Directive 2001/24/EC – Articles 3 and 6 – Reorganisation measure taken in respect of a credit institution – Transfer of the obligations and responsibilities of that credit institution to a ‘bridge bank’ prior to the bringing of a legal action seeking payment of a claim held against that credit institution – Transfer back to the same credit institution of certain of those obligations and responsibilities – Law of the Member State where the proceedings concerned were brought (lex concursus) – Effects of a reorganisation measure in other Member States – Mutual recognition – Effects of a failure to comply with the obligation to publish the reorganisation measure – Articles 17, 21, 38 and 47 of the Charter of Fundamental Rights of the European Union – Right to property – Effective judicial protection – Consumer protection – Directive 93/13/EC – Article 6(1) – Unfair terms – Principles of legal certainty and the protection of legitimate expectations – Whether the ‘bridge bank’ can be sued)

1. Freedom of establishment – Freedom to provide services – Credit institutions – Reorganisation and winding up of credit institutions – Directive 2001/24 – Reorganisation measure taken in respect of a credit institution in the home Member State – Failure to publish that measure – Recognition, by a court in another Member State, of the effects of that measure – Measure which transferred the obligations and responsibilities of the credit institution concerned, in part, to a bridge bank – Whether permissible

   (Charter of Fundamental Rights of the European Union, Arts 21(2) and 47, first para.; European Parliament and Council Directive 2001/24, recitals 4 and 16, Arts 3(2) and 6)

   (see paragraphs 75, 76, 85, 96, 97, operative part 1)

2. Freedom of establishment – Freedom to provide services – Credit institutions – Reorganisation and winding up of credit institutions – Directive 2001/24 – Lawsuits pending – Effects of reorganisation measures on a pending lawsuit – Application of the lex concursus – Exceptions laid down by the directive

   (European Parliament and Council Directive 2001/24, recitals 23 and 30, Arts 2, 3(2) and 32)

   (see paragraph 77)

3. Freedom of establishment – Freedom to provide services – Credit institutions – Reorganisation and winding up of credit institutions – Directive 2001/24 – Reorganisation measure in respect of a credit institution taken in the home Member State – Obligation to publish – Conditions – Rights of third parties affected in the host Member State – Existence of an appeal, in the home Member State, against the decision ordering that measure – Implications of failure to publish that measure for the setting of the time limit for appeal

   (Charter of Fundamental Rights of the European Union, Art. 47; European Parliament and Council Directive 2001/24, Arts 3(1) and (2), 6(1) to (5) and 83(4))

   (see paragraphs 78-80, 82-84, 88-93)

4. Freedom of establishment – Freedom to provide services – Credit institutions – Reorganisation and winding up of credit institutions – Directive 2001/24 – Reorganisation measure in respect of a credit institution taken in the home Member State – Failure to publish that measure – Application of the national rules intended to ensure the safeguarding of rights which persons subject to the law derive from EU law – Conditions – Respect for the principles of equivalence and effectiveness – Compliance with the right to an effective remedy

   (Charter of Fundamental Rights of the European Union, Art. 47; European Parliament and Council Directive 2001/24, Art. 6)

   (see paragraphs 86, 87)

5. Freedom of establishment – Freedom to provide services – Credit institutions – Reorganisation and winding up of credit institutions – Directive 2001/24 – Reorganisation measure in respect of a credit institution taken in the home Member State – Recognition of the effects of the reorganisation measures in the host Member State – Infringement of the principle of non-discrimination on the ground of nationality – None

   (Charter of Fundamental Rights of the European Union, Art. 21(2); European Parliament and Council Directive 2001/24, Art. 3(2))

   (see paragraph 94)

6. EU law – Principles – Protection of legitimate expectations – Conditions – Specific assurances given by the authorities – Reliance on that principle by an individual against a bridge bank set up in the context of reorganisation measures in respect of a credit institution – Not permissible – Fact that the institution concerned was temporarily controlled by a public authority – Irrelevant

   (Charter of Fundamental Rights of the European Union, Art. 47, first para.; European Parliament and Council Directive 2001/24, Art. 3(2))

   (see paragraphs 101-104, operative part 2)

7. Consumer protection – Unfair terms in consumer contracts – Directive 93/13 – Fundamental rights – Right to property – Reorganisation measures taken in respect of a credit institution in the home Member State under Directive 2001/24 – Measures providing for the setting up of a bridge bank – Measures providing for the retention in the liabilities of the credit institution subject to those measures of the obligation to pay sums payable in connection with pre-contractual or contractual liability – Recognition of the effects of such a measure in the host Member State – Whether permissible – Checks to be carried out by the referring court

   (Charter of Fundamental Rights of the European Union, Arts 17, 38 and 52(1); European Parliament and Council Directive 2001/24, Art. 3(2); Council Directive 93/13, Art. 6(1))

   (see paragraphs 109-132, 137-147, operative part 3)

Résumé

Hearing a reference for a preliminary ruling from the Tribunal Supremo (Supreme Court, Spain) in three separate cases, the Court of Justice rules on the interpretation of certain provisions of Directive 2001/24 on the reorganisation and winding up of credit institutions, ( 1 ) of Directive 93/13 on unfair terms in consumer contracts ( 2 ) and of the Charter of Fundamental Rights of the European Union (‘the Charter’), as well as the principles of legal certainty and the protection of legitimate expectations.

The references were made in proceedings between Novo Banco SA – Sucursal en España (‘Novo Banco’) and a number of its customers concerning the effects, on various contracts for financial products and services, of the reorganisation measures taken by the Banco de Portugal (Bank of Portugal) in 2014 and 2015 in respect of Banco Espíritu Santo SA (‘BES’), a Portuguese credit institution, and its Spanish branch (‘BES Spain’), which Novo Banco succeeded, as a bridge bank, and to which certain assets, liabilities and off-balance sheet items of BES were transferred.

In Case C‑498/22, the applicant applied for a declaration of invalidity in respect of a ‘floor’ clause, in a loan contract secured by way of a mortgage concluded initially with BES Spain and then transferred to Novo Banco as a result of the reorganisation measures, taking the view that the clause was unfair, and for reimbursement of sums unduly paid pursuant to that clause. In Case C‑499/22, the applicants applied for the annulment of their financial contracts, the return of the sums received by each party and compensation for the losses incurred as a result of the acquisition of those financial products, on the grounds of an error of consent associated with the provision of deficient information by BES Spain. Novo Banco nevertheless disputed that all the liabilities of BES Spain had been transferred, in particular the liability for claims and compensation associated with the applications for the annulment of certain clauses in contracts concluded by BES Spain. In Case C‑500/22, the applicant, for its part, claimed from Novo Banco, in addition to the return of the nominal value of a senior bond the term of which had ended, payment of the mandatory return on that bond, which had been purchased from BES and had been transferred to Novo Banco as a result of the reorganisation measures taken in 2014. Novo Banco nevertheless took the view that in 2015 the Bank of Portugal had ‘transferred back’ to BES the liabilities associated with that bond, and that it was therefore entitled to refuse to make that payment.

Pointing out that the reorganisation measures taken in respect of BES are a matter of EU law and that they were not published as required in Article 6(1) to (4) of Directive 2001/24, whereas they are likely to affect third parties and in particular to prevent third parties from bringing an appeal against them, the referring court is uncertain, first of all, whether the obligation to recognise the effects of those reorganisation measures in the host Member State is compatible with the principle of effective judicial protection, the principle of equal treatment, the prohibition on any discrimination on grounds of nationality, the principle of legal certainty and the principle of the protection of legitimate expectations. It then raises the question of whether the recognition of the effects of the reorganisation measures constitutes disproportionate interference with the right to property of Novo Banco’s customers. It is uncertain, last, in Case C‑498/22, whether the ‘fragmentation’ of the contractual relationship between the consumer and Novo Banco, resulting from the reorganisation measures at issue effectively requires that consumer to bear the financial consequences of the ‘floor’ clause that a court has found to be unfair, thereby infringing Article 6(1) of Directive 93/13. It therefore referred a number of questions to the Court for a preliminary ruling.

Findings of the Court

In the first place, as regards whether, where the publication provided for in Article 6(1) of Directive 2001/24 has not taken place, EU law ( 3 ) precludes the recognition, by a court in a Member State other than the home Member State, of the effects of a reorganisation measure, adopted in respect of a credit institution before proceedings were brought before that court, which transferred the obligations and responsibilities of that credit institution, in part, to a bridge bank, the Court notes first of all that, under Article 3(2) of that directive, reorganisation measures are, in principle, to be applied in accordance with the law of the home Member State and are to produce their effects in accordance with the legislation of that Member State throughout the Union without further formalities. That directive is therefore based on the principles of unity and universality and establishes as a principle the mutual recognition of reorganisation measures and of their effects. The obligation to publish reorganisation measures ( 4 ) is, for its part, subject to two cumulative conditions. First, those measures must be likely to affect the rights of third parties in the host Member State and, second, an appeal must be available in the home Member State against the decision ordering those measures. ( 5 )

The Court finds that the purpose of Article 6(1) to (4) of Directive 2001/24 is to regulate the information provided to creditors of the credit institution concerned by the reorganisation measures, so that they can, in the home Member State, exercise their right of appeal against decisions ordering reorganisation measures in respect of that institution, in compliance with the principle of equal treatment between creditors. ( 6 ) Since the reorganisation measures apply irrespective of the publication measures required under Article 6, ( 7 ) failure to publish the reorganisation measures adopted in the home Member State does not call into question the principles of unity and universality or the principle of the mutual recognition of the effects of those measures in the host Member State. Such a failure to publish therefore does not lead to those measures being invalid or their effects being unenforceable in the host Member State.

However, it is for the national legal system of each Member State to lay down procedural rules to ensure the safeguarding of rights which individuals derive from EU law, in compliance with the principle of equivalence, the principle of effectiveness and the right to an effective remedy enshrined in the first paragraph of Article 47 of the Charter.

The publication required under Article 6 of Directive 2001/24 is intended to ensure the protection, in the home Member State, of the right of the persons concerned to lodge an appeal against decisions ordering reorganisation measures in respect of a credit institution, including in particular the right of appeal of creditors of that institution established in the host Member State. Accordingly, where the reorganisation measures have not been published in accordance with the requirements laid down in that article, the law of the home Member State must enable the persons whose rights guaranteed by EU law are affected by those measures, where those persons reside in the host Member State, to lodge an appeal against those measures within a reasonable period from the time at which they were notified of them or from the time at which they became aware of or should reasonably have become aware of them.

As regards the principle of non-discrimination on grounds of nationality, guaranteed in Article 21(2) of the Charter, the Court finds that it has neither been claimed nor demonstrated that recognition of the effects of the reorganisation measures in the host Member State, as required under Article 3(2) of Directive 2001/24, is applied differently depending on the nationality of the person subject to the law. Last, as regards the principle of legal certainty, the Court notes that it requires that the rules of law be clear and precise and that their application be foreseeable for those subject to the law, in particular where those rules may have adverse consequences for individuals and undertakings.

In the circumstances of the present case, according to the provisions of Directive 2001/24, the host Member State must ensure that the effects of the reorganisation measures adopted in the home Member State are recognised in its territory, notwithstanding the fact that they have not been published as required by that directive. Since those measures had been the subject of various publicity measures at the time when Novo Banco’s customers brought their respective actions before the Spanish courts, those customers were in possession of all the information necessary to make a decision on whether to bring those actions, in full knowledge of the facts, and to identify with certainty the entity against which those actions should be brought.

EU law ( 8 ) therefore does not preclude, where the publication provided for in Article 6(1) of directive 2001/24 has not taken place, the recognition, by a court of a Member State other than the home Member State, of the effects of a reorganisation measure, adopted in respect of a credit institution before proceedings were brought before that court, which transferred the obligations and responsibilities of that credit institution, in part, to a bridge bank.

In the second place, the Court examines whether EU law ( 9 ) precludes the recognition, in the host Member State, of the effects of a reorganisation measure taken in the home Member State in respect of a credit institution, which transferred the obligations and responsibilities of that credit institution, in part, to a bridge bank acting under the control of a public authority applying EU law, where the customers of that bridge bank claim that they had a legitimate expectation that that bridge bank had subsequently also assumed the liabilities corresponding to all of the obligations and responsibilities of that credit institution in relation to those customers. ( 10 )

In that regard, the Court notes that, since the principle of the protection of legitimate expectations is one of the fundamental principles of the European Union which must be observed by the EU institutions, and by the Member States when they implement EU law, the right to rely on that principle extends to any person in a situation in which an administrative authority has caused that person to entertain expectations which are justified by precise assurances provided to him or her. Nevertheless, in EU law, the right to rely on that principle extends to a person only in respect of precise assurances provided to that person by a public authority.

In the present case, Novo Banco was set up in the form of a credit institution governed by private law and operating in the competitive market for banking and financial services, without any power falling outside the scope of the ordinary law for the purpose of performing a public service mission. The Court finds that it cannot therefore be regarded as an administrative authority implementing EU law, with the effect that an individual cannot, in the present case, rely on the principle of the protection of legitimate expectations.

Consequently, individuals cannot rely on the principle of the protection of legitimate expectations against a bridge bank, a body governed by private law with no powers going beyond the ordinary law, set up in the context of reorganisation measures in respect of a credit institution of which those individuals were initially customers, in order to hold that bridge bank liable in respect of pre-contractual and contractual obligations related to contracts previously concluded with that credit institution. ( 11 ) The mere fact that that credit institution was temporarily controlled by a public authority, with a view to its privatisation, cannot turn that credit institution, which operates on the competitive market for banking and financial services, into a national administrative authority.

In the third and last place, the Court addresses the question of whether Article 17 of the Charter and the principle of legal certainty preclude the recognition, in the host Member State, of the effects of reorganisation measures adopted in the home Member State under Directive 2001/24, which provide for the setting up of a bridge bank and the retention in the liabilities of the bank subject to those measures of the obligation to pay sums payable in connection with pre-contractual or contractual liability. ( 12 ) The referring court was also uncertain whether such recognition is compatible with Article 38 of the Charter ( 13 ) and with Article 6(1) of Directive 93/13. ( 14 )

As regards the right to property enshrined in Article 17(1) of the Charter, the Court states, first, that the protection conferred by that provision concerns rights with an asset value creating an established legal position enabling the holder to exercise those rights autonomously and for the holder’s own benefit. Shares and bonds tradeable on capital markets can be rights of that nature capable of enjoying the protection guaranteed by Article 17(1) of the Charter. In that regard, the claim and the bond at issue in Cases C‑498/22 and C‑500/22 each has an asset value, and their holders can therefore argue that they have a ‘legitimate expectation’ of obtaining effective enjoyment of a property right, and can therefore enjoy the protection guaranteed by Article 17(1) of the Charter. As regards the claim at issue in Case C‑499/22, it will be for the referring court to examine whether that claim satisfies the conditions set out above and, in particular, whether the national case-law recognising the obligation on a credit institution to provide pre-contractual information is sufficiently established to enable a person invoking an infringement of that obligation to have a ‘legitimate expectation’ of obtaining effective enjoyment of that claim.

The Court notes, second, that, according to its own case-law, the adoption, by the home Member State, of reorganisation measures which provide, inter alia, for the transfer of a credit institution’s assets to a bridge bank amounts to regulating the use of property within the meaning of the third sentence of Article 17(1) of the Charter, in a manner liable to infringe the right to property of the creditors of that credit institution, such as the bondholders, whose debt instruments were not transferred to that bridge bank. Accordingly, the Court examines whether, in the light of the conditions set out in that article, read in conjunction with Article 52(1) of the Charter, the effects in the host Member State of the reorganisation measures under which the claims at issue were assigned to the liabilities of BES Spain are provided for by law, respect the essence of the right to property and are proportionate, having regard, inter alia, to the objective of general interest to be met by the reorganisation measures and the recognition of their effects, which is also pursued by the European Union, namely the objective of ensuring the stability of the banking system, in particular that of the euro area, and of preventing a systemic risk.

As regards the alleged infringement of the principle of legal certainty, the Court confirms that the reorganisation measures at issue fall under the seventh indent of Article 2 of Directive 2001/24. The Court also finds that the creditors in the cases in the main proceedings were entitled to expect that certain responsibilities, such as those deriving from the deficiency of the pre-contractual information given by BES Spain, at issue in Case C‑499/22, and certain risks, such as those forming the subject matter of the disputes in Cases C‑498/22 and C‑500/22, would not be transferred to the bridge bank concerned. ( 15 )

As regards, last, whether those measures are compatible with consumers’ right to enjoy a high level of protection, as guaranteed by Article 38 of the Charter and Directive 93/13, the Court notes that, given the nature and significance of the public interest constituted by the protection of consumers, Directive 93/13 obliges the Member States to provide for adequate and effective means to prevent the continued use of unfair terms in contracts concluded with consumers by sellers or suppliers. To do this, it is for the national courts to exclude the application of the unfair terms so that they do not produce binding effects with regard to the consumer concerned, unless the consumer objects. A contractual term held to be unfair must be regarded, in principle, as never having existed, so that it cannot have any effect on the consumer concerned. However, consumer protection is not absolute. Accordingly, although there is a clear public interest in ensuring, throughout the European Union, a strong and consistent protection of investors and creditors, that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the banking system and preventing a systemic risk.

In the present case, the protection of consumers against the use of unfair terms in contracts concluded with a seller or supplier, as established in Article 6(1) of Directive 93/13, cannot go so far as to ignore the allocation of financial liabilities between a failing credit institution and a bridge bank, as such allocation has been determined in the reorganisation measures adopted by the home Member State. If the protection afforded by Directive 93/13 were required to authorise each consumer in the host Member State who is a creditor of the failing credit institution to frustrate recognition of the measures by which the allocation of financial liabilities between that institution and the bridge bank has been decided by the home Member State, the intervention by the public authorities of the home Member State could be rendered ineffective in all the Member States in which the failing credit institution has branches.

Accordingly, Article 6(1) of Directive 93/13, read in the light of Article 38 of the Charter, and Article 17 of the Charter and the principle of legal certainty do not preclude, in principle, the recognition, in the host Member State, of the effects of reorganisation measures adopted in the home Member State under Directive 2001/24, which provide for the setting up of a bridge bank and the retention in the liabilities of the credit institution subject to those measures of the obligation to pay sums payable in connection with pre-contractual or contractual liability.

( 1 ) Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ 2001 L 125, p. 15).

( 2 ) Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29).

( 3 ) Specifically, Article 3(2) and Article 6 of Directive 2001/24, read in the light of Article 21(2) and the first paragraph of Article 47 of the Charter and the principle of legal certainty.

( 4 ) Pursuant to Article 6(4) of Directive 2001/24, it is for the competent authorities of the home Member State to publish an extract of the decision taken, its purpose and legal basis, the time limits for lodging appeals, specifically a clearly understandable indication of the date of expiry of the time limits, and the full address of the authorities or court competent to hear an appeal.

( 5 ) Article 6(1) to (3) of Directive 2001/24.

( 6 ) See recital 12 of Directive 2001/24.

( 7 ) Article 6(5) of Directive 2001/24.

( 8 ) Article 3(2) and Article 6 of Directive 2001/24, read in the light of Article 21(2) and the first paragraph of Article 47 of the Charter and the principle of legal certainty.

( 9 ) Specifically, Article 3(2) of Directive 2001/24, read in the light of the first paragraph of Article 47 of the Charter and of the principle of legal certainty.

( 10 ) The second question in Cases C‑498/22 and C‑499/22.

( 11 ) The Court infers that finding from Article 3(2) of Directive 2001/24, read in the light of the first paragraph of Article 47 of the Charter and of the principle of legal certainty.

( 12 ) The third questions in Cases C‑498/22 and C‑499/22 and the second question in Case C‑500/22.

( 13 ) In Cases C‑498/22 and C‑499/22.

( 14 ) In Case C‑498/22. Under Article 6(1) of Directive 93/12, ‘Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms.’

( 15 ) In Case C‑500/22, the Court finds that the retroactive change in the identity of the debtor in relation to the claim at issue can reasonably be justified by the objective of general interest consisting in ensuring the stability of the banking system and avoiding a systemic risk, but that it is nevertheless for the referring court, in the light of the specific circumstances that gave rise to that case, to determine whether the principle of proportionality has been complied with.