1.

After the 2008 global financial crisis, the EU legislature introduced a number of measures referred to as the Banking Union, aiming to protect the EU financial markets from future instabilities.

2.

One such measure is the Single Resolution Mechanism (SRM), established in 2014. ( 2 ) Its main aim is to provide an orderly resolution of failing banks without the use of taxpayers’ money while promoting financial stability. ( 3 ) In a nutshell, if a bank is failing or likely to fail, the Single Resolution Board (SRB) may, under certain conditions, adopt the resolution scheme and the European Commission has 24 hours to approve it.

3.

On 6 June 2017, the SRM was used for the first time, in respect of Banco Popular Español, S.A. (‘Banco Popular’).

4.

The main question raised in the appeal resulting from that resolution is: who is legally responsible for the resolution scheme of Banco Popular, and who should, accordingly, be sued before the EU Courts by an action for annulment? Is it the SRB, which adopted the resolution scheme? ( 4 ) Is it the Commission, which approved it in its entirety? ( 5 ) Or is the resolution of Banco Popular their joint act?

5.

According to the General Court’s judgment of 1 June 2022, Fundación Tatiana Pérez de Guzmán el Bueno and SFL v SRB (T‑481/17, EU:T:2022:311) (‘the judgment under appeal’), ( 6 ) the resolution scheme is a challengeable act and the SRB is legally responsible for it.

6.

In the present appeal, the Commission is challenging the finding that the action lies against the SRB. In its view, the action should have been brought against the Commission itself, since the resolution scheme only enters into force after its endorsement.

7.

The judgment under appeal is one of six pilot cases decided by the General Court, chosen as representative of over a hundred direct actions submitted by natural and legal persons who owned capital in Banco Popular before its resolution. ( 7 )

8.

The resolution procedure set out in the SRM Regulation involves, at different stages, the European Central Bank (ECB), the SRB, the Commission, and potentially the Council of the European Union. Recital 24 of the SRM Regulation provides as follows:

‘Since only institutions of the Union may establish the resolution policy of the Union and since a margin of discretion remains in the adoption of each specific resolution scheme, it is necessary to provide for the adequate involvement of the Council and the Commission, as institutions which may exercise implementing powers, in accordance with Article 291 TFEU. The assessment of the discretionary aspects of the resolution decisions taken by the Board should be exercised by the Commission. Given the considerable impact of the resolution decisions on the financial stability of Member States and on the Union as such, as well as on the fiscal sovereignty of Member States, it is important that implementing power to take certain decisions relating to resolution be conferred on the Council. It should therefore be for the Council, on a proposal from the Commission, to exercise effective control on the assessment by the Board of the existence of a public interest and to assess any material change to the amount of the Fund to be used in a specific resolution action. Moreover, the Commission should be empowered to adopt delegated acts to specify further criteria or conditions to be taken into account by the Board in the exercise of its different powers. Such a conferral of resolution tasks should not in any way hamper the functioning of the internal market for financial services. [The European Banking Authority] should therefore maintain its role and retain its existing powers and tasks: it should develop and contribute to the consistent application of the Union legislation applicable to all Member States and enhance convergence of resolution practices across the Union as a whole.’

9.

Article 18 of the SRM Regulation sets out the procedure of resolution in detail. The following paragraphs of that provision are relevant for the present appeal:

‘7.   Immediately after the adoption of the resolution scheme, the Board shall transmit it to the Commission.

Within 24 hours from the transmission of the resolution scheme by the Board, the Commission shall either endorse the resolution scheme, or object to it with regard to the discretionary aspects of the resolution scheme in the cases not covered in the third subparagraph of this paragraph.

Within 12 hours from the transmission of the resolution scheme by the Board, the Commission may propose to the Council:

For the purposes of the third subparagraph, the Council shall act by simple majority.

The resolution scheme may enter into force only if no objection has been expressed by the Council or by the Commission within a period of 24 hours after its transmission by the Board.

The Council or the Commission, as the case may be, shall provide reasons for the exercise of their power of objection.

Where, within 24 hours from the transmission of the resolution scheme by the Board, the Council has approved the proposal of the Commission for modification of the resolution scheme on the ground referred to in point (b) of the third subparagraph or the Commission has objected in accordance with the second subparagraph, the Board shall, within eight hours modify the resolution scheme in accordance with the reasons expressed.

Where the resolution scheme adopted by the Board provides for the exclusion of certain liabilities in the exceptional circumstances referred to in Article 27(5), and where such exclusion requires a contribution by the Fund or an alternative financing source, in order to protect the integrity of the internal market, the Commission may prohibit or require amendments to the proposed exclusion setting out adequate reasons based on an infringement of the requirements laid down in Article 27 and in the delegated act adopted by the Commission on the basis of Article 44(11) of Directive 2014/59/EU.’

8.   Where the Council objects to the placing of an institution under resolution on the ground that the public interest criterion referred to in paragraph 1(c) is not fulfilled, the relevant entity shall be wound up in an orderly manner in accordance with the applicable national law.’

10.

The facts relevant for the present appeal, as explained in more detail in the judgment under appeal, may be summarised as follows.

11.

The troubles of Banco Popular began in 2016 and culminated on 3 June 2017, when the SRB decided to initiate the marketing procedure of Banco Popular and informed the Fondo de Reestructuración Ordenada Bancaria (Fund for Orderly Bank Restructuring (‘FROB’)) about the marketing requirements.

12.

On 6 June 2017, the ECB found that Banco Popular was failing or likely to fail under Article 18(4)(c) of the SRM Regulation, and communicated that assessment to the SRB, in accordance with the second subparagraph of Article 18(1) of the SRM Regulation. ( 8 )

13.

On 7 June 2017, the FROB informed the SRB that it had received a binding offer from Banco Santander, S.A. (‘Banco Santander’) that same day at 3.12 am, offering to purchase the shares of Banco Popular for the amount of EUR 1. The FROB proposed to the SRB to accept that offer.

14.

At its executive session of 7 June 2017, the SRB accepted Banco Santander’s offer and adopted the resolution scheme. ( 9 ) That scheme was submitted to the Commission for approval at 5.13 am. At 6.30 am, by a decision addressed to the SRB, the Commission approved the resolution scheme.

15.

By an action lodged before the General Court on 2 August 2017, Fundación Tatiana Pérez de Guzmán el Bueno and Stiftung für Forschung und Lehre (SFL) brought an action against the SRB seeking the annulment of the resolution scheme. ( 10 )

16.

The General Court decided, of its own motion, to consider the admissibility of the action and concluded that it was correctly directed against the SRB.

17.

That court found it decisive that the Commission cannot exercise the competences granted to the SRB by amending the resolution scheme or its legal effects. ( 11 ) That is so because the Commission’s approval is required only for the discretionary aspects of the resolution scheme, which has the aim of avoiding a true delegation of powers in the sense of the Court of Justice’s judgment in Meroni. ( 12 )

18.

To reject the Commission’s argument that the resolution scheme is only a preparatory act that it is under no obligation to approve, the General Court relied on the judgment in ABLV Bank and Others. ( 13 ) It distinguished the ECB’s ‘failing or likely to fail’ assessment from the resolution scheme: in ABLV Bank and Others, the Court of Justice found the former assessment did not create legal effects for the appellants, whereas the resolution scheme and its implementation did. ( 14 ) The General Court supported that conclusion by the fact that, unlike the powers of the SRB in respect of the ECB, the Commission cannot oppose the purely technical aspects of the resolution scheme or amend them.

19.

The General Court also rejected the argument of the Parliament and of the Council according to which Article 86 of the SRM Regulation refers only to the SRB’s decisions for which no Commission approval is required. It explained that the resolution scheme is excluded from review by the Appeal Panel, and there is no other exception that would remove it from the review powers of the EU Courts under Article 86 of the SRM Regulation. ( 15 )

20.

Finally, the General Court referred to the principles of legal certainty and effective judicial protection ( 16 ) to support its finding that the resolution scheme is a challengeable act under Article 263 TFEU.

21.

By its appeal lodged on 17 August 2022, the Commission claims that the Court should:

22.

The SRB contends that the Court should:

23.

The SFL contends that the Court should:

24.

The Parliament, intervening in support of the Commission, contends that the Court should uphold the appeal of the Commission in its entirety.

25.

The Council intervened in so far as it supports the rejection of the action for annulment of the resolution scheme based on the merits.

26.

A hearing was held on 13 June 2023, at which the Parliament, the Council, the Commission, the SFL, and the SRB presented oral argument.

27.

The Commission raises three grounds of appeal. First, it argues that the General Court erred in law by concluding that the resolution scheme, as adopted by SRB, produces binding legal effects. Second, the Commission argues that the General Court allowed an action against the wrong defendant, thus breaching the Commission’s rights of defence. Finally, the Commission argues that the General Court’s reasoning is contradictory.

28.

All three grounds of appeal boil down to a single question: was the General Court correct in finding that an action challenging the resolution scheme of Banco Popular can be introduced against the SRB? I will, therefore, analyse those grounds jointly.

29.

My analysis will show that the General Court was wrong. The legally responsible author of the resolution scheme is the Commission and, in a situation such as the one in the present case in which the Commission approved the resolution scheme, an action for annulment can only be brought against that institution.

30.

This conclusion follows from the SRM Regulation by which the EU legislature organised the resolution procedure and distributed tasks to different actors. However, contrary to one of the Commission’s arguments, I am not of the opinion that the Meroni doctrine imposed such a solution. ( 17 )

31.

The EU legislature could have delegated the power to the SRB to independently adopt resolution schemes in individual cases under the conditions in the enabling norm and subject to judicial review. However, it did not. The legislative choice was, rather, not to grant the SRB such an independent power, but to subject it additionally to the approval of the Commission.

32.

To substantiate my findings, I will proceed in the following way. I will first describe the SRB and its role, as well as those of the Commission and the Council under the SRM Regulation (Section A.1.). This will show that there are four different scenarios in order for the resolution procedure to enter into force (Section A.2.). I will then explain that the Meroni doctrine as it stands today did not require the involvement of the Commission or the Council in the decisions adopted by the SRB in individual cases (Section B.1.). I will then show that the legislative choice to do so nevertheless, makes the Commission the legally responsible author of the resolution scheme (Section B.2.). Therefore, the applicants wrongly directed their action against the SRB and the General Court was wrong to allow it.

33.

Recital 31 of the SRM Regulation tells us that the SRB ‘should be a specific Union agency with a specific structure, corresponding to its specific tasks, and which departs from the model of all other agencies of the Union’. ( 18 ) The SRB is one of more than 35 agencies that exist at Union level, each with its specific structure, tasks, and powers. As emphasised by various scholars, the Treaties do not properly account for this process of ‘agencification’ as of yet, ( 19 ) of which the SRB is but one manifestation.

34.

Article 16(1) of the SRM Regulation empowers the SRB to decide whether to proceed with a resolution. The SRB initiates a resolution procedure after the ECB establishes that a credit institution is failing or likely to fail. ( 20 ) However, under certain conditions, the SRB may undertake its own failing or likely to fail assessment. ( 21 ) Thus, although the ECB’s assessment in principle triggers the resolution procedure, the SRB may also initiate it on its own.

35.

The SRB may decide to proceed with the resolution only if it is in the public interest to do so. ( 22 ) If it decides to proceed with the resolution, the SRB also decides on the resolution tool to be used. ( 23 )

36.

All the participants to the procedure before the Court agreed that those choices of the SRB are of a discretionary nature, subject to the control of the Commission. ( 24 )

37.

If the SRB finds that the resolution is in the public interest, the Commission may, within 12 hours of receiving the resolution scheme, propose to the Council to object to the finding that the resolution fulfils the public interest criterion. ( 25 ) In that respect, the SRB’s discretion is constrained by the Commission and the Council.

38.

However, if the SRB finds that the resolution is not in the public interest, the SRM Regulation does not envisage that either the Commission or the Council may disagree. Without the intention to prejudice the future decision of the Court in that respect, ( 26 ) it seems to me that challenging a finding that a resolution is not in the public interest may only be brought against the SRB, as it is the body that issues the final decision on the matter.

39.

Apart from deciding on whether or not to proceed with the resolution, the SRB is empowered to make a number of other individual decisions in the resolution procedure. ( 27 )

40.

For example, the SRB draws up resolution plans ( 28 ) and issues guidelines and instructions for national resolution authorities to ensure an effective and consistent application of its specific powers under the SRM Regulation. ( 29 ) It is empowered to order the credit institution or its parent undertaking to contact potential purchasers in an early intervention, and require from the competent national authority to draft a preliminary resolution scheme. ( 30 )

41.

The SRB also decides on who will conduct a fair, prudent and realistic valuation of the assets and liabilities of a credit institution before deciding on a resolution, and selects a person independent from any public authority to carry out that valuation. ( 31 ) While the resolution is being implemented, the SRB has monitoring and instruction-giving powers in respect of national resolution authorities. ( 32 ) Finally, the SRB has investigatory powers ( 33 ) and may impose penalties on entities not complying with its investigation decisions. ( 34 )

42.

The SRB’s resolution scheme is subject to the approval of the Commission, or for certain questions, by the Council. Before such approval is granted, the resolution scheme adopted by the SRB is not legally binding. That leads me to the four possible scenarios of a resolution scheme entering into force.

43.

The fifth subparagraph of Article 18(7) of the SRM Regulation states that the resolution scheme ‘may enter into force only if no objection has been expressed by the Council or by the Commission within a period of 24 hours after its transmission by the Board’. The remainder of Article 18(7) of the SRM Regulation lays down four scenarios of the resolution scheme entering into force, involving the participation of the SRB, the Commission, and potentially the Council.

44.

The resolution of Banco Popular involves only the first scenario. My analysis leading to the conclusion that the Commission is the only legally responsible actor, against whom the action against a resolution scheme should be brought, applies to that scenario. My intention is not to propose solutions across the board, but I find it important to distinguish the current scenario from the others. That will help us better understand the relationship between the Commission and the SRB for the solution of the present case.

45.

The Commission may endorse the resolution scheme within 24 hours from its transmission by the SRB. ( 35 )

46.

That is what happened in the resolution of Banco Popular. The Commission had no objections and expressly approved the resolution scheme in its entirety.

47.

Given that no objections were expressed in this scenario, the resolution scheme entered into force. ( 36 )

48.

In the resolution of Banco Popular, Article 12.1 of the resolution scheme stated that it should enter into force on 7 June 2017 at 6.30am. That is the moment when the Commission approved the resolution scheme, rather than the time when the SRB transmitted it to the Commission (5.13 am).

49.

Nevertheless, different interpretations of entry into force emerged in this litigation. ( 37 ) On the one hand, the General Court observed that Article 12 of the resolution scheme provided for the time when it enters into force, which led it to conclude that the resolution scheme itself is an act capable of entering into force. ( 38 ) On the other hand, the Commission argues that it is its approval that is decisive for the entry into force of the resolution scheme. ( 39 )

50.

As I will elaborate under Section B.2., it is clear from the wording and the scheme of the SRM Regulation that in this scenario, it is specifically the Commission’s endorsement that makes the resolution scheme a legally binding act.

51.

The second scenario, described by the Commission at the hearing as highly unlikely, is that the Commission remains silent for 24 hours in response to the transmission of the resolution scheme.

52.

Arguably, the fifth subparagraph of Article 18(7) of the SRM Regulation lends support to the conclusion that the resolution scheme would, absent any objections (even in the form of complete silence), enter into force without the Commission’s endorsement.

53.

One possible interpretation is that, in this situation, the only act producing binding legal effects would be the resolution scheme itself. This would go against the Commission’s argument that its endorsement is the essential condition for a resolution scheme to enter into force.

54.

Another way of seeing this scenario is that the Commission’s endorsement here is tacit, and equally acts as the necessary condition for the resolution scheme to enter into force. That is the Commission’s argument in the present appeal.

55.

I can agree with the Commission that this scenario may be assimilated to the first one and that, notwithstanding the lack of an express endorsement, the challenge is to be addressed to the Commission as it is legally responsible for the resolution scheme.

56.

However, one should be cautious with the lack of any express action from the Commission, as this may suggest that its role in the approval of the resolution scheme prepared by the SRB was not genuine but only symbolic. ( 40 ) Given that the resolution of Banco Popular was the first one ever under the SRM Regulation, it is impossible to know whether the Commission would in the future endorse resolution schemes tacitly. For now, we may only trust the Commission that it will not act in this way. ( 41 )

57.

The Commission may object to the discretionary aspects ( 42 ) of the resolution scheme. ( 43 ) In that case, it must provide reasons for its objection. ( 44 )

58.

In the judgment under appeal, the General Court considered that the Commission cannot oppose or amend the purely technical aspects of the resolution scheme. ( 45 ) That court thus concluded that the resolution scheme produces independent legal effects. The SRB also adopted a similar position in its response.

59.

The Commission’s objections indeed might concern only discretionary issues. However, the discretionary part of the scheme is based on conclusions drawn from its non-discretionary parts. For example, the Commission might object to the choice of the resolution tool proposed by the SRB because it draws a different conclusion from the valuation of the bank.

60.

In this scenario, the SRB has eight hours to modify the resolution scheme in accordance with the Commission’s reasons. ( 46 )

61.

In any event, if the Commission objected to the resolution scheme, it may not enter into force without those objections being included. To my mind, in this scenario it also seems reasonable to hold the Commission responsible for the resolution scheme.

62.

The resolution must be necessary in the public interest. ( 47 ) In addition, bail-in is one possible resolution tool, for which the funds from the Single Resolution Fund (‘the Fund’) may be used. ( 48 ) These are the two aspects of the resolution scheme subject to the control of the Council.

63.

Within 12 hours of the transmission of the resolution scheme, ( 49 ) the Commission may propose to the Council to, first, object to the resolution scheme if the resolution is not in the public interest, or, second, to approve or object to the Commission’s proposal for a material modification of the amount of the Fund to be used.

64.

The Council in this scenario acts by a simple majority ( 50 ) and must provide reasons for the exercise of its power of objection. ( 51 )

65.

Where the Council objects to the existence of the public interest, the relevant entity shall be wound up in accordance with national law. ( 52 ) The Council thus has the power to stop the resolution altogether.

66.

Where the Council approves the Commission’s proposal for an objection or a modification of the use of the Fund, the SRB shall modify the resolution scheme accordingly within eight hours. ( 53 )

67.

Similar to the third scenario, the Commission issues objections, but unlike in that scenario, it cannot impose them on the SRB without the agreement of the Council. There are thus several further developments: the Council may agree, but it may also reject the Commission’s position, thus agreeing with the SRB’s original scheme.

68.

What is the challengeable act in this fourth scenario? If the Council’s position results in the rejection of a resolution scheme (for example, for the lack of public interest), the only act that may be challenged is the Council’s position. The resolution scheme does not exist in such a scenario.

69.

However, if the Council disagrees with the Commission and confirms the public interest in the resolution, the scheme may enter into force. And yet, it was not endorsed by the Commission. Who should be the defendant in an action challenging such a scheme: only the Council? The Council and the Commission together? A similar question arises if the amount of the Fund to be used is amended in disagreement between the Council and the Commission.

70.

The SRM Regulation is silent on these matters.

71.

Again, without the intention to preclude a different solution when a concrete question arises, assessing these situations abstractly, I am inclined to conclude that the Commission always needs to be involved in the challenge of the resolution scheme (alongside the Council or even alone). As I will explain under Section B.2., the extent to which the Commission participates in the resolution procedure, as opposed to the Council, favours such a view.

72.

As previously mentioned, I propose the Court find that the General Court wrongly interpreted the SRM Regulation when it found that the resolution scheme of Banco Popular is an act attributable to the SRB, rather than to the Commission. I thus propose the Court uphold the appeal and annul the judgment under appeal. However, my arguments do not align entirely with those of the Commission.

73.

Most importantly, I do not agree with the Commission’s argument that the Meroni doctrine mandates that the resolution scheme be attributed to the Commission. Nevertheless, such an interpretation follows, instead, from the wording and the scheme of the SRM Regulation.

74.

Before presenting the reasons for such a reading of the SRM Regulation (2), I will first explain how the Meroni doctrine should be understood today (1).

75.

One of the arguments on which the Commission relies in the present appeal is that granting discretionary powers to the SRB would contravene the Meroni doctrine and the principle of institutional balance. ( 54 ) Looking into the legislative history, after the intervention of the Council in the legislative procedure, ( 55 ) the SRB was not granted the power to produce binding legal effects for individuals. That was deemed necessary to ensure compliance with the Meroni doctrine.

76.

The doctrine is named after the judgment in Meroni, which was handed down in 1958. ( 56 ) Back then, there was no Commission as we know it today, but the High Authority of the European Coal and Steel Community. The High Authority delegated the powers of financial operation of the ferrous scrap regime to a private body. The Court found that the High Authority was only allowed to transfer clearly defined executive powers, which would need to be entirely under the High Authority’s supervision. ( 57 )

77.

Meroni became the blueprint for assessing the delegation of powers in EU law. ( 58 ) It is often understood as imposing a rule according to which discretionary powers cannot be delegated. ( 59 )

78.

However, precluding delegation of discretionary powers to any body but the Commission does not fit today’s reality. ( 60 ) Many agencies established at EU level have the power to adopt legally binding decisions that necessarily result from a certain level of discretion. ( 61 )

79.

Lord Diplock offered a definition of discretion which I find useful and applicable in the EU context: ‘The very concept of administrative discretion involves a right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred.’ ( 62 )

80.

Discretion necessarily forms part of rule-making: the adoption of rules generally binding for everyone under the same conditions, resulting from policy choices. Such a power is increasingly delegated to the executive. ( 63 ) In the EU, adopting general rules may only be delegated to the Commission. ( 64 ) It may be argued that rule-making in the EU must remain with EU institutions.

81.

Discretion is, however, present in individual decision-making too. ( 65 ) Applying a certain rule to an individual set of facts is rarely, if ever, automatic; ( 66 ) it usually involves making choices. Such discretionary decision-making in individual cases is guided and limited by higher-ranking general rules.

82.

The law on delegation in the EU did not stop developing in 1958. My argument is that the contemporary Meroni doctrine requires a distinction between the delegation of rule-making powers and the discretionary power to adopt individual decisions. The former cannot be delegated to agencies. On the contrary, the latter may, but the exercise of such powers must be sufficiently constrained by the empowering act.

83.

That follows from the case-law developed after Meroni.

84.

The first case of relevance is Romano. ( 67 ) In that case, the Administrative Commission on Social Security of Migrant Workers (‘the Administrative Commission’) was empowered by the Council to fix conversion rates for national bodies in determining the amounts due to a person to recover the difference between the levels of pension entitlements from more than one Member State.

85.

The Court found that a body such as the Administrative Commission could not have been given the power to adopt ‘acts having the force of law’. ( 68 ) The Court referred to Article 155 of the EEC Treaty, which regulated the powers of the Commission. Arguably, then, the mistake of the Council was that it did not delegate that power to the Commission. ( 69 ) In making that conclusion, the Court referred to Articles 173 and 177 of the EEC Treaty [now Articles 263 and 267 TFEU], which at the time did not mention judicial review against decisions of bodies such as the Administrative Commission.

86.

As a consequence, the conversion rate fixed by the Administrative Commission was not binding on national bodies when they determined the amounts of pension to be paid.

87.

The next relevant case is ESMA, also known as the ‘Short Selling’ case. ( 70 ) The European Securities and Markets Agency (ESMA) was established as part of the EU’s response to the financial crisis, with the aim of strengthening the supervision of financial markets at the EU level. ( 71 ) In 2012, ESMA was additionally granted the power to make decisions concerning individual market operators, where it considered that there was a ‘threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system of the Union’. ( 72 )

88.

The United Kingdom sought the annulment of the provision granting ESMA that power. It argued that the Meroni and Romano doctrines were breached, as discretionary powers to issue measures with the force of law were bestowed upon ESMA. In addition, the United Kingdom argued that Articles 290 and 291 TFEU exhaustively regulate delegation and implementation in EU law, to the exclusion of such powers being granted to agencies. ( 73 )

89.

The Court in ESMA addressed the requirements of Meroni in the context of the Lisbon Treaty, and concluded that what remains prohibited is granting a ‘wide margin of discretion’ to an agency. ( 74 ) It found that the powers granted to ESMA are, however, precisely delineated and possible to review judicially. ESMA is empowered to act only when there is a ‘threat to the orderly functioning and integrity of financial markets or to the stability of the whole or part of the financial system in the Union, with cross-border implications’. ( 75 )

90.

The Court did not consider it relevant that the very determination of these broad concepts may in itself involve the use of discretion. ( 76 ) Instead, it placed an emphasis on the need for ESMA to deploy specific technical and professional expertise. ( 77 ) Coupled with what the Court considered to be a sufficient limitation to the exercise of ESMA’s powers, it found that the Meroni prohibition of delegating discretionary powers had not been breached.

91.

The Court then addressed the Romano judgment. Following the proposal of Advocate General Jääskinen, ( 78 ) the Court found that because Articles 263 and 267 TFEU now expressly allow for judicial review of acts of agencies, the limitation from Romano no longer applies. ( 79 )

92.

In making an individual decision concerning a specific market operator, regardless of the constraints of the empowering norm, ESMA most certainly exercised discretion. After the judgment in ESMA, therefore, I conclude that delegating discretion to agencies in individual decision-making is permissible, so long as it is subject to judicial review.

93.

Overall, it is possible to conclude from Romano and ESMA that the power to enact generally applicable acts cannot be delegated to agencies, but that agencies may be granted clearly delineated executive powers that are amenable to judicial review. ( 80 )

94.

Accordingly, granting the SRB the power to decide on a resolution scheme without the Commission’s endorsement would not go against the Meroni doctrine. The SRM Regulation limits and sufficiently precisely guides the exercise of the SRB’s powers: the SRB may proceed with the resolution only if it finds it is in the public interest to do so. That finding is discretionary but not arbitrary, because the SRM Regulation limits it to the requirement of achieving one of the resolution objectives from its Article 14(2). ( 81 ) Furthermore, it requires an assessment of whether those objectives would be harmed if the bank were liquidated under national law. ( 82 )

95.

This leaves room for different solutions in individual cases, but the main policy choices were made in the SRM Regulation: there are enumerated situations where a market intervention is necessary, while demanding a balancing exercise between the results of leaving the bank to its fate on the market and of an EU intervention. Furthermore, had the individual decision been left to the SRB alone, it would have been subject to judicial review by EU Courts.

96.

Delegating the power to adopt individual discretionary decisions to the SRB would be in line with the standards introduced from Meroni to ESMA even without requiring the Commission’s approval for the entry into force of the resolution scheme.

97.

And yet, that is not how the EU legislature organised the resolution procedure. In the next section, I will show that the legislative choices in the SRM Regulation, rather than the Meroni doctrine, are relevant for deciding the present appeal.

98.

The conclusion that the Commission is legally responsible for the resolution scheme and is the proper defendant in this action for annulment follows from the wording and the scheme of the SRM Regulation. It is, thus, a result of the choice made by the EU legislature.

99.

Once the SRB exercises its discretion and adopts a resolution scheme, it must transmit that scheme to the Commission for approval.

100.

That resolution scheme may enter into force only if no objection has been expressed by the Commission or the Council within a period of 24 hours after its transmission by the SRB. It is thus clear that the resolution scheme as adopted by the SRB cannot become a legally binding act without the approval of the Commission (or, in certain situations, the Council).

101.

The General Court concluded based on both Articles 16(1) ( 83 ) and 47 of the SRM Regulation ( 84 ) that the SRB is the real author of the resolution, and should henceforth be the defendant in annulment proceedings. However, the EU legislature designed the resolution procedure so that the independence of the SRB in the adoption of the resolution scheme is not sufficient to bestow on it the legal authorship of that act. Legally, the resolution scheme does not exist if it is not approved by the Commission.

102.

The Commission argues, and I fully agree, that the General Court’s reasoning was contradictory. On the one hand, the General Court recognised that the Commission’s approval of the resolution scheme is a necessary condition for it to enter into force. ( 85 ) On the other hand, it found that the resolution scheme is an act capable of entering into force and producing independent legal effects. ( 86 )

103.

In the present case, the resolution scheme clearly did not produce independent legal effects. It became legally binding only from the moment when the Commission expressly endorsed it.

104.

Some of the confusion in the judgment under appeal results from the fact that one may find two formal acts in the resolution procedure: the resolution scheme adopted by the SRB and the approval adopted by the Commission. If there are two formal acts, which one is challengeable?

105.

That is a misleading question. The concept of a challengeable act is not a matter of form, but of substance. The proper question is, rather, what is challenged in that case? Obviously, the interest of the applicants is in the annulment of the resolution scheme itself, or parts thereof. The Commission’s approval is for them relevant only in as much as without it, there would be no resolution scheme.

106.

In that sense, the Commission’s approval is not an independent act. It relates to the resolution scheme as submitted by the SRB and is meaningless without its content. Therefore, although the Commission’s endorsement is but half a page long, the resolution scheme is the object of the endorsement, and therefore, an integral part of that decision.

107.

By the same token, the resolution scheme cannot be separated from its approval, without which it cannot come into existence. None of the two acts are challengeable separately.

108.

In my view, the challengeable act can only be the resolution scheme as endorsed by the Commission. One may also describe it in reverse: the Commission’s approval is a challengeable act, but the resolution scheme forms an integral part of that approval.

109.

The question remains as to who is to be seen as the legally relevant author of those inseparable acts.

110.

The Commission argues in that respect that the General Court entirely ignored the case-law of the Court of Justice concerning composite procedures. According to that case-law, only the act that puts an end to the entire procedure produces binding legal effects. ( 87 ) That case-law is, as the Commission claims, applicable not only to vertical composite procedures (when both EU and national bodies are involved), but also to horizontal ones, such as the resolution procedure. The Commission argues accordingly that its approval puts an end to the resolution procedure and constitutes, therefore, the challengeable act. However, that is only acceptable if the approval is not separated from the act it approves.

111.

That case-law tells us that the legally relevant author of an act is the body whose decision put an end to the procedure. Since the procedure ends with the approval of the resolution scheme, that body is the Commission. ( 88 )

112.

By its approval, the Commission approves the entire resolution scheme, its technical and discretionary aspects alike. As correctly argued by the Commission at the hearing, those aspects are interdependent and inseparable.

113.

Nothing in the wording of the SRM Regulation suggests that the Commission approves only the discretionary parts of the resolution scheme. Quite the contrary. The second subparagraph of Article 18(7) of the SRM Regulation states that ‘the Commission shall either endorse the resolution scheme, or object to it with regard to the discretionary aspects of the resolution scheme (…)’. ( 89 ) Thus, unlike an objection, which is directed only against its discretionary aspects, an endorsement concerns the resolution scheme in its entirety.

114.

The General Court was thus incorrect to ground its decision in the power of the Commission to object only to the discretionary aspects of the resolution scheme. ( 90 ) Non-discretionary parts are factual, and may be wrong, but they are not a matter of choice. When the Commission approves the resolution scheme, it also necessarily endorses the factual findings based on which discretionary choices were made.

115.

After the Commission’s approval, a resolution scheme starts producing legal effects for third parties and the Commission becomes legally responsible for the entire resolution scheme. It is, therefore, not necessary to include the SRB as co-defendant.

116.

To support its argument relating to the authorship of the challengeable act in the present case, the Commission relied, in its second ground of appeal, on its rights of defence. It claimed that its right to defend the resolution scheme would be limited if it were not the defendant. ( 91 )

117.

That is a topsy-turvy argument. The full possibility to defend the act becomes important only if the Commission is legally responsible for it. The right of defence does not result in the Commission being the legally responsible body, but is rather its consequence. The authorship of the Commission results from the wording and the scheme of the SRM Regulation, according to which that resolution scheme’s legal life begins with the Commission’s approval. Its right to defend the scheme follows from that authorship.

118.

For the same reason, the parallel argument of the SRB that its rights of defence would be breached unless it is a defendant cannot succeed. If the SRB is not intended to be legally responsible for the resolution scheme, there is no reason for it to enjoy the full rights of defence. That, however, does not mean that it cannot intervene in a case against the resolution scheme.

119.

The challengeable act is therefore the Commission’s approval of the resolution scheme of Banco Popular. That approval, the resolution scheme being its integral part, has legal effects and is, therefore, amenable to judicial review. ( 92 )

120.

The General Court’s reasoning based on Article 86(2) of the SRM Regulation, ( 93 ) according to which the resolution scheme as adopted by the SRB constitutes a challengeable act because an appeal may be brought against its decisions, does not affect the previous conclusion. There are other decisions attributable to the SRB, such as, for instance, a decision not to initiate the resolution procedure, which are subject to that provision. ( 94 )

121.

Furthermore, the General Court considered that the resolution scheme independently produces binding legal effects because the FROB is obliged to implement it. ( 95 ) In making that conclusion, the General Court seems to have ignored Article 13 of the resolution scheme, according to which that scheme is addressed to the FROB and shall be communicated to it upon its endorsement by the Commission or the Council. It, therefore, militates in favour of the Commission’s argument that its approval governs the entry into force of the resolution scheme in respect of its addressee, the national resolution authority.

122.

All the foregoing considerations lead to the conclusion that the Commission is the legally responsible author of the resolution scheme.

123.

There is, however, one more issue to be addressed. To ensure effective judicial review by the EU Courts, legally binding measures must contain a statement of reasons. ( 96 ) Without knowing the reasons, it is difficult for the person affected by a measure to construe a meaningful challenge.

124.

The statement of reasons as to how the resolution of Banco Popular satisfies the conditions of the SRM Regulation is provided in the resolution scheme itself. By endorsing that resolution scheme, the Commission also endorses the reasons justifying it and must be prepared to defend them before the EU Courts. ( 97 )

125.

It is not without importance whether the Commission may actually fully defend the justification of the resolution of Banco Popular. That is possible only if the Commission is the genuine author of that act.

126.

According to Article 43(3) of the SRM Regulation, the Commission (and the ECB) have a representative who is entitled to participate in the meetings of executive and plenary sessions of the SRB as a permanent observer, who participates in debates, and who has access to all documents. ( 98 )

127.

In Algebris, ( 99 ) also in the context of the resolution of Banco Popular, the General Court found that the Commission genuinely participated in the preparation of the resolution and properly assessed the resolution scheme that the SRB submitted to it. The fact that it did so in 77 minutes was offset by its participation throughout the entire procedure that led to the resolution scheme, which, by its nature, is a situation of urgency. ( 100 )

128.

The Commission’s approval of the Banco Popular resolution scheme does not seem to be a mere rubber-stamping. By its approval, the Commission endorsed the content of the resolution scheme.

129.

However, the resolution scheme itself was not attached to that endorsement. ( 101 ) In Algebris, in some discrepancy with the judgment under appeal, the General Court found that the Commission’s reference to the resolution scheme and the reasons stated therein sufficiently complied with the duty to state reasons. It considered that ‘the resolution scheme and its statement of reasons form part of the context’ ( 102 ) in which the Commission’s approval was adopted.

130.

Nevertheless, in the present case the question arose at the hearing as to how should individuals bring a direct action under Article 263(4) TFEU if they cannot know the reasons on which the Commission based its approval from the very decision of approval?

131.

The Commission replied that it was impractical to publish the resolution scheme alongside the approval, because it contains confidential information. It maintained that it was nevertheless clear from the approval that it refers to the resolution of Banco Popular, which was published by the SRB on its website and, therefore, publicly available. ( 103 )

132.

I am of the view that the Commission should, in the future, annex the non-confidential version of the resolution scheme to its endorsement that is published in the Official Journal of the European Union. While the high number of direct actions currently pending before the General Court shows that the persons concerned had knowledge of the resolution scheme, publishing the approval and the resolution scheme together would make it clear that by its approval, the Commission endorses the entire resolution scheme, including the reasons on which it is based.

133.

In conclusion, my view is that the resolution scheme has no independent legal existence, and thus cannot be challenged independently of the Commission’s endorsement. A direct action should challenge the Commission’s endorsement of the SRB’s resolution scheme. Therefore, there is a single challengeable act with the Commission as its author.

134.

In light of the foregoing, I propose that the Court should: