1.

In 2016, the holder of a deposit in a current account opened in the holder’s name at the Korporativna Targovska Banka (‘KTB’) brought an action before a Bulgarian court ( 2 ) seeking an order requiring the Balgarska Narodna Banka (Central Bank of Bulgaria; ‘BNB’) to compensate him for the harm he had sustained as a result of the delay in the reimbursement of that deposit.

2.

The applicant in that dispute claimed that the BNB should have made a declaration as to the unavailability of deposits made at the KTB within the time limit laid down in Directive 94/19/CE. ( 3 ) Having failed to do so, it was responsible for the delay in reimbursement and liable for payment of the default interest which had accrued up until the amount of the deposit was repaid to him.

3.

The competent court made a request for a preliminary ruling which the Court of Justice disposed of in the judgment of 4 October 2018 in Kantarev. ( 4 )

4.

While the judgment in Kantarev was still pending, another Bulgarian court, the Administrativen sad Sofia-grad (Administrative Court, Sofia, Bulgaria) made a request for a preliminary ruling in a similar dispute the subject matter of which was also an action for a declaration of financial liability on the part of the BNB which was based on arguments that are in part the same.

5.

After delivering the judgment in Kantarev, the Court brought it to the attention of the Administrativen sad Sofia-grad (Administrative Court, Sofia) in order to ascertain whether that court wished to proceed with its request for a preliminary ruling. It confirmed that it did.

6.

In accordance with the Court’s instruction, this Opinion will deal with only two of the questions raised on this occasion, which were either not addressed or were addressed from another point of view in the judgment in Kantarev: (a) the concept of ‘deposit due and payable’ referred to in Article 1(3)(i) of Directive 94/19; and (b) the impact of the Recommendation of the European Banking Authority (‘the EBA’) of 17 October 2014. ( 5 )

7.

My analysis being confined to those two questions, I shall refer to the judgment in Kantarev, as appropriate, when setting out the legal framework, describing the facts that dictated the reimbursement of the funds deposited at the KTB and giving my assessment of those questions.

8.

So far as concerns the recitals and relevant articles of this directive, I refer to paragraphs 3 to 6 of the judgment in Kantarev.

9.

Recitals 27 to 29 are worded as follows:

10.

Article 1(2) provides:

‘The Authority shall act within the powers conferred by this Regulation and within the scope of Directive 2006/48/EC, Directive 2006/49/EC, Directive 2002/87/EC, Regulation (EC) No 1781/2006, Directive 94/19/EC and, to the extent that those acts apply to credit and financial institutions and the competent authorities that supervise them, within the relevant parts of Directive 2005/60/EC, Directive 2002/65/EC, Directive 2007/64/EC and Directive 2009/110/EC, including all directives, regulations, and decisions based on those acts, and of any further legally binding Union act which confers tasks on the Authority.’

11.

Article 4(2)(iii) defines ‘competent authorities’ as:

‘with regard to deposit guarantee schemes, bodies which administer deposit-guarantee schemes pursuant to Directive 94/19/EC, or, where the operation of the deposit-guarantee scheme is administered by a private company, the public authority supervising those schemes pursuant to that Directive’.

12.

Article 16 states:

‘1.   The Authority shall, with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law, issue guidelines and recommendations addressed to competent authorities or financial institutions.

…

3.   The competent authorities and financial institutions shall make every effort to comply with those guidelines and recommendations.

Within 2 months of the issuance of a guideline or recommendation, each competent authority shall confirm whether it complies or intends to comply with that guideline or recommendation. In the event that a competent authority does not comply or does not intend to comply, it shall inform the Authority, stating its reasons.

The Authority shall publish the fact that a competent authority does not comply or does not intend to comply with that guideline or recommendation. The Authority may also decide, on a case-by-case basis, to publish the reasons provided by the competent authority for not complying with that guideline or recommendation. The competent authority shall receive advanced notice of such publication.

If required by that guideline or recommendation, financial institutions shall report, in a clear and detailed way, whether they comply with that guideline or recommendation.

…’

13.

Article 17 provides:

‘1.   Where a competent authority has not applied the acts referred to in Article 1(2), or has applied them in a way which appears to be a breach of Union law, including the regulatory technical standards and implementing technical standards established in accordance with Articles 10 to 15, in particular by failing to ensure that a financial institution satisfies the requirements laid down in those acts, the Authority shall act in accordance with the powers set out in paragraphs 2, 3 and 6 of this Article.

2.   Upon a request from one or more competent authorities, the European Parliament, the Council, the Commission or the Banking Stakeholder Group, or on its own initiative, and after having informed the competent authority concerned, the Authority may investigate the alleged breach or non-application of Union law.

…

3.   The Authority may, not later than 2 months from initiating its investigation, address a recommendation to the competent authority concerned setting out the action necessary to comply with Union law.

The competent authority shall, within 10 working days of receipt of the recommendation, inform the Authority of the steps it has taken or intends to take to ensure compliance with Union law.

4.   Where the competent authority has not complied with Union law within 1 month from receipt of the Authority’s recommendation, the Commission may, after having been informed by the Authority, or on its own initiative, issue a formal opinion requiring the competent authority to take the action necessary to comply with Union law. The Commission’s formal opinion shall take into account the Authority’s recommendation.

The Commission shall issue such a formal opinion no later than 3 months after the adoption of the recommendation. The Commission may extend this period by 1 month.

The Authority and the competent authorities shall provide the Commission with all necessary information.

5.   The competent authority shall, within 10 working days of receipt of the formal opinion referred to in paragraph 4, inform the Commission and the Authority of the steps it has taken or intends to take to comply with that formal opinion.

6.   Without prejudice to the powers of the Commission under Article 258 TFEU, where a competent authority does not comply with the formal opinion referred to in paragraph 4 within the period of time specified therein, and where it is necessary to remedy in a timely manner such non-compliance in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system, the Authority may, where the relevant requirements of the acts referred to in Article 1(2) are directly applicable to financial institutions, adopt an individual decision addressed to a financial institution requiring the necessary action to comply with its obligations under Union law including the cessation of any practice.

The decision of the Authority shall be in conformity with the formal opinion issued by the Commission pursuant to paragraph 4.

7.   Decisions adopted under paragraph 6 shall prevail over any previous decision adopted by the competent authorities on the same matter.

When taking action in relation to issues which are subject to a formal opinion pursuant to paragraph 4 or a decision pursuant to paragraph 6, competent authorities shall comply with the formal opinion or the decision, as the case may be.

…’

14.

Article 26(2) reads:

‘Article 16 concerning the Authority’s powers to adopt guidelines and recommendations shall apply to deposit guarantee schemes.’

15.

I refer to the transcription of the relevant Bulgarian legislation that is contained in paragraphs 8 to 25 of the judgment in Kantarev.

16.

I would draw attention only to Article 23(1) and (5) of the Zakona za garantirane na vlogovete v bankite (Law on bank deposit insurance), ( 8 ) which provides as follows:

‘1.   The Fund shall cover the obligations of the bank in question up to the guaranteed amount where the [BNB] has withdrawn the banking licence issued to that commercial bank.

…

5.   The Fund shall begin to reimburse the amounts no later than on the 20th working day following the date on which the licence was withdrawn.’

17.

In 2008, 2010 and 2011, the applicant, BT, and KTB entered into three contracts concerning unlimited deposits in euros and Bulgarian leva (BGN) which were guaranteed by the Bank Deposit Insurance Fund (‘the Fund’) up to BGN 196000 per person.

18.

KTB’s situation in 2014 and the actions of the national authorities were described as follows in the judgment in Kantarev (paragraphs 27 and 28):

‘Since KTB Bank was experiencing a liquidity crisis following mass withdrawals of deposits it held, on 20 June 2014, its representatives made a request to the BNB for that credit institution to be placed under special supervision. They also notified the BNB that the credit institution had suspended payments and all banking transactions. By a decision of the same day, the management board of the BNB placed KTB Bank under special supervision for a period of three months. Performance of the credit institution’s obligations was suspended and its activities limited. Receivers were appointed and instructed by the BNB to have the assets and the liabilities of that institution audited by independent auditors.

… According to the audit, KTB Bank’s financial results were in deficit and it no longer met the requirements for equity capital under EU law. Consequently, by a decision of 6 November 2014, the BNB, first, withdrew KTB Bank’s banking licence, second, agreed that measures should be taken for instituting insolvency proceedings against KTB Bank and, third, decided that the Fund was to be notified.’

19.

By decision of the BNB’s Board of Management of 30 June 2014, effective as from 1 July 2014, interest rates on deposits at KTB were reduced to the average rate on the banking market and a standard interest rate scale was established. ( 9 )

20.

On 1 August 2014, the European Commission sent the Bulgarian Finance Minister a letter of formal notice, in accordance with the procedure laid down in Article 258 TFEU, on grounds of the incorrect transposition of Directive 94/19 and infringement of Article 63 TFEU. ( 10 )

21.

By decision of 16 September 2014, the BNB’s Board of Management extended the supervisory measures until 20 November 2014.

22.

On 17 October 2014, the EBA issued Recommendation EBA/2014/02, directed at the BNB and the Fund, in accordance with Article 17(3) of Regulation No 1093/2010. This stated that the BNB had infringed EU law by not taking the necessary steps to determine the unavailability of deposits in accordance with Article 1(3)(i) of Directive 94/19, by adopting the decision to suspend the fulfilment of all obligations and by not allowing depositors to access guaranteed deposits.

23.

According to recital 27 of that Recommendation, the BNB’s decision of 20 June 2014 to place KTB under special supervision and to suspend its obligations amounted to a finding as to the unavailability of deposits within the meaning of Article 1(3)(i) of Directive 94/19 and, consequently, the Fund had a duty to pay the guaranteed amounts of unavailable deposits.

24.

The applicant’s deposits were repaid in a manner similar to that described in the judgment in Kantarev, ( 11 ) although, according to the data provided by the referring court, the applicant received from the Fund a refund of its guaranteed deposits at KTB in the amount of BGN 196000, together with corresponding interest from 30 June to 6 November 2014. Its other deposits, amounting to BGN 44070 (approximately EUR 22500), were placed on the list of recognised claims, as part of the insolvency proceedings, in the order laid down by the applicable Bulgarian legislation.

25.

On 7 March 2015, the Sofiyski apelativen sad (Court of Appeal, Sofia, Bulgaria) declared 20 June 2014 to be the start date of KTB’s insolvency because it was then that KTB’s net assets had fallen into deficit.

26.

The infringement proceedings instituted by the Commission against Bulgaria were closed on 10 December 2015.

27.

BT brought before the referring court an action for damages ( 12 ) for the harm resulting directly or indirectly from the actions and omissions of the BNB, which, in conjunction with KTB’s intervention, BT claims to be in breach of EU law.

28.

The action comprises two claims:

29.

In order to dispose of those claims, the Administrativen sad Sofia-grad (Administrative Court, Sofia) has submitted to the Court a request for a preliminary ruling comprising various questions of which I shall reproduce those that will be addressed in my analysis:

‘…

…

30.

The request for a preliminary ruling was received at the Court on 6 August 2018.

31.

Written observations have been lodged by the BNB and the Commission. It was not considered necessary to hold a hearing.

32.

In response to a question put by the Court following the delivery of the judgment in Kantarev, the referring court indicated on 9 November 2018 that it was maintaining its request for a preliminary ruling, since its uncertainty not least about the obligation to take into account Recommendation EBA/2014/02 remained.

33.

The referring court wishes to ascertain, in essence, whether the guarantee contained in Directive 94/19 [Article 1(3)(i) in conjunction with Articles 7(6) and 10 thereof] extends to depositors:

34.

If so, the referring court asks whether a contractual clause of this kind should be disapplied in the context of the examination of a claim for damages for harm caused by late payment, within the meaning of Directive 94/19, of the guaranteed amount of deposits.

35.

The judgment in Kantarev was confined to a claim for damages for harm sustained by a person whose deposits at KTB were unquestionably payable (recoverable) even at the time when the deposits were found to be unavailable. The case at issue here, by contrast, is concerned with whether the same provisions of Directive 94/19 also protect a depositor whose deposits at KTB were not payable at that time.

36.

A detailed analysis of the deposit-guarantee mechanism established by Directive 94/19 is, in my view, the route to a proper explanation and application of the Kantarev case-law.

37.

Deposit-guarantee schemes (‘DGSs’) are triggered in accordance with a procedure the essential elements of which are governed by Directive 94/19. The objective of that directive is twofold: to protect depositors ( 13 ) and to ensure the stability of the banking system. ( 14 )

38.

The procedure for implementing the bank deposit guarantee is best understood if it is split into three stages:

39.

The competent national authority has to decide whether or not the deposits in a financial institution are available. For the purposes of taking that decision, Article 1(3)(i) of Directive 94/19 requires that:

40.

The period within which the competent national authority must make that initial decision is very short: ‘no later than five working days after first becoming satisfied that a credit institution has failed to repay deposits which are due and payable’.

41.

The judgment in Kantarev clarified various aspects of the rules governing that initial stage which it is appropriate to recall here:

42.

The judgment in Kantarev did not, however, address the question that is raised by the referring court in this case, that is to say whether the definition of ‘unavailable deposit’ encompasses a deposit which, as a result of a contractual clause, does not have the status of being either due or payable because the contract refers to national law, under which deposits are recoverable only if the banking licence is withdrawn.

43.

In my opinion, a deposit of this kind cannot be classified as an ‘unavailable deposit’ at this initial stage of the procedure. A deposit which is not due or payable, in accordance with the legal and contractual conditions applicable under national law, cannot be taken into account as an unavailable deposit by the competent national authority.

44.

The key to determining when a deposit is due and payable lies primarily in the contractual relationship between the financial institution and its customer. If both agree that the financial institution will not be obliged to repay to the customer the amount of his deposit until a certain point in time, that deposit cannot be said to be due or payable if that point in time has not yet arrived.

45.

Consequently, a deposit of this kind cannot, in and of itself, put the credit institution in the ‘financial situation’ referred to in Article 1(3)(i) of Directive 94/19, whereby it is unable to repay deposits.

46.

However, in addition to having deposits that do not meet the criteria of being due and payable at a given point in time, the financial institution will have many that do meet the criteria. If that were the case, ‘the fact that that credit institution has not paid out certain deposits and that the conditions set out in Article 1(3)(i) of Directive 94/19 are satisfied [would be] sufficient for a determination that all deposits held by that institution are unavailable’. ( 24 )

47.

In short, the declaration of unavailability ‘is related to the objective financial situation of the credit institution and concerns the deposits held by that institution as a whole and not each of the deposits which it holds’. ( 25 )

48.

At the second stage of the procedure, the competent national authority must decide which deposits are to be repaid by the DGS. ( 26 )

49.

Directive 94/19 provides for these purposes that:

50.

The DGS must repay (in the amounts guaranteed, of course) all deposits held by a banking institution which has been affected by a declaration of unavailability, with the exception of those that are caught by a ground for exclusion. That premiss has a number of consequences for the present dispute.

51.

In the first place, as I have already stated, the determination as to the credit institution’s inability to repay deposits is governed exclusively by the conditions laid down in Article 1(3)(i) of Directive 94/19. Neither this nor any other provision of the directive allows that determination to be subject to additional or different conditions.

52.

In the judgment in Kantarev, the Court held that the determination as to the unavailability of deposits cannot be made contingent upon the prior presentation of an unsuccessful request to withdraw funds (paragraph 81), upon the insolvency of the credit institution or the withdrawal of its banking licence (paragraph 51) or upon a credit institution’s having been previously placed under the special supervision of the banking authorities (paragraph 60).

53.

National legislation that imposes those or any other conditions not laid down in Article 1(3)(i) would infringe that provision, as well as Article 10(1) of Directive 94/19.

54.

In the second place, the determination of unavailability is made by the competent authority after it has assessed the difficulties faced by the credit institution, on account of its financial situation, in repaying deposits. Although, as I have also stated, it would be illogical for the adoption of that decision to be based exclusively on deposits scheduled to become payable in the future, the assessment by the competent authority, once it has become a decision, affects all deposits held by that credit institution. ( 28 )

55.

Hence the general rule, thereafter, requiring the repayment of all deposits held by the financial institution, whether or not they are due and payable (with the exception of those provided for in the exhaustive list contained in Article 2 of Directive 94/19).

56.

In other words, both deposits which are due and payable and those that do not meet those two criteria will be repayable in the case where the credit institution finds itself in an objective situation of being financially incapable of meeting its repayment obligations. That situation affects both its past and present obligations (deposits which are due and payable) and its future obligations (deposits which are not due or payable).

57.

At the intermediate stage, therefore, all deposits held by the credit institution must be identified by the competent authority in order for the DGS then to be able, where appropriate, to repay them at a later date. It is this interpretation of Article 1(3)(i) and Article 10(1) of Directive 94/19 that is most consistent with the objectives of Directive 94/19 (to protect depositors and ensure the stability of the financial system).

58.

If those deposits held by a credit institution subject to a DGS which are not due or payable were not repayable at that stage by the guarantee mechanism, depositors would run the risk of not being able to recover their savings in the future in proceedings for the reorganisation and winding-up of a credit institution in difficulty. What is more, the stability of the financial system would suffer from customers’ lack of confidence in the security of their medium- and long-term deposits.

59.

At this stage, the DGS repays or pays out the deposits. According to Article 7(1a), first subparagraph, of Directive 94/19, the amount which the Member States guarantee to repay is EUR 100000.

60.

Repayment must be effected within a short period of time (20 days) ( 29 ) so as to ensure that depositors are not deprived of their savings and are not, as a result, unable to meet their daily expenses. The stability of the banking system also calls for swift reimbursement. ( 30 )

61.

The reimbursement of deposits by a DGS is uncoupled from any proceedings for the reorganisation or winding-up of the credit institution, as this is the only way of being able to make pay-outs swiftly, within a period of 20 days from the decision as to unavailability. ( 31 ) Any uncertainty that might be prompted in this regard by recital 12 of Directive 2009/14 ( 32 ) has been resolved by the Court to the effect that such proceedings do not affect the availability or reimbursement of deposits. ( 33 )

62.

Neither can the repayment of deposits be made conditional on the existence of an unsuccessful prior claim by the depositor. ( 34 ) Article 10(3) of Directive 94/19 states that the 20-day time limit for reimbursement may not be invoked by a guarantee scheme in order to deny the benefit of guarantee to any depositor who has been unable to assert his claim to payment under a guarantee in time.

63.

If the DGS fails to comply with the 20-day time limit for repaying guaranteed deposits, depositors may also claim payment of the corresponding interest. ( 35 )

64.

Article 7(6) of Directive 94/19 states that ‘Member States shall ensure that the depositor’s rights to compensation may be the subject of an action by the depositor against the deposit-guarantee scheme’.

65.

Depositors may therefore use the remedies available to them in their domestic legal systems to seek the annulment of decisions and omissions on the part of a DGS and to claim compensation for the harm sustained by them as a result of that scheme.

66.

I would recall that, according to the Court, Article 1(3)(i) of Directive 94/19 ‘has direct effect and constitutes a rule of law intended to confer rights on individuals’. ( 36 )

67.

In their actions before the national courts, depositors may avail themselves of the principle of the primacy of EU law. Under that principle, the national court must refrain from applying any provision of domestic law that is contrary to Directive 94/19: ( 37 ) so far as this case is concerned, it must refrain from applying a provision of national law that is contrary to Article 1(3)(i) of that directive. ( 38 )

68.

That duty is independent of whether or not the Bulgarian legislature transposed that provision of Directive 94/19 into the domestic implementing provision. ( 39 )

69.

The principle of primacy also means that, where the domestic provision that is incompatible with EU law is incorporated into the content of a contractual clause, the national court may extend to that clause the consequences inherent in its incompatibility with EU law. It makes no difference whether the parties’ argument to that effect is advanced in an action for damages for the harm sustained or in another kind of action before the courts.

70.

In the circumstances at issue, there is nothing to stop the national court from applying the principle of primacy if: (a) the national provision makes the duty of the DGS to repay holders of deposits that are not yet due or payable subject to the condition of prior withdrawal of the licence held by the financial institution whose deposits have been declared unavailable; and (b) that same legislative provision is included in a contractual provision allowed by domestic law.

71.

I am prompted, on the basis of the foregoing considerations, to suggest the following reply to the fourth question referred for a preliminary ruling:

Article 1(3)(i) in conjunction with Articles 7(6) and 10 of Directive 94/19 must be interpreted as meaning that:

72.

The second question concerns Recommendation EBA/2014/02, adopted under Article 17(3) of Regulation No 1093/2010. The referring court wishes to ascertain: (a) whether depositors, despite not being the addressees of that recommendation, may rely on it in proceedings [for damages] for the harm caused by the infringement of EU law; and (b) whether that recommendation is valid.

73.

The EBA is competent to intervene in the application of EU directives on DGSs, in accordance with Article 1(2) of Regulation No 1093/2010. ( 40 )

74.

In the performance of that function, the EBA may approach the ‘competent [national deposit-guarantee] authorities’. ( 41 ) It must do so, according to recital 20 of Regulation No 1093/2010, in order to promote a consistent approach to ensure a level playing field and the equitable treatment of depositors across the Union.

75.

The EBA’s powers in relation to DGSs are reflected in its ability to:

76.

EBA recommendations are not legally binding. As their name indicates, they do not contain an instruction but simply an invitation to act. They fall within the category provided for in the fifth paragraph of Article 288 TFEU. ( 47 )

77.

However, the first subparagraph of Article 16(3) of Regulation No 1093/2010 calls upon the competent authorities and financial institutions to make every effort to comply with those recommendations.

78.

Understood in this way, those recommendations have some legal effect, albeit not a binding one: the competent national authorities must confirm within a period of two months whether they comply with the recommendation, intend to comply with it or do not intend to comply with it. In the last-mentioned scenario, they are required to provide reasons for their decision (second subparagraph of Article 16(3) of Regulation No 1093/2010) and the EBA must publish both the fact of non-compliance and the reasons for it. ( 48 )

79.

EBA recommendations based on Article 17(3) of Regulation No 1093/2010 exhibit some features which differentiate them from those under Article 16:

80.

A national authority that is the addressee of a recommendation under Article 17(3) is at risk, if it does not comply with that recommendation, ( 50 ) of being the subject of the infringement proceedings to which I shall refer later. In a way, those recommendations are (or may come to be) the first step in those proceedings, ( 51 ) which the EBA conducts with support from the Commission.

81.

Recommendations under Article 17(3) are also open to challenge by those concerned before the Board of Appeal of the European Supervisory authorities, pursuant to Article 60 of Regulation No 1093/2010.

82.

The non-final nature of EBA recommendations under Article 17(3) of Regulation No 1093/2010 and the fact that they do not have binding legal effects impact on their invocability and their openness to judicial review. In particular, those features rule out any direct review of their legality via an action for annulment under Article 263 TFEU.

83.

This is because, according to the Court’s case-law, actions for annulment may be brought only against binding legal acts, ( 52 ) depending on their actual content, the context in which they were adopted and the powers of the institution that adopted them. ( 53 )

84.

EBA recommendations may nonetheless be relied upon in a dispute before a national court that calls for an interpretation of the binding provisions of EU law to which those recommendations are linked. ( 54 )

85.

Before addressing this issue, I must refer to the procedure, provided for in Article 17(1) to (8) of Regulation No 1093/2010, ( 55 ) for converting, with the Commission’s intervention, EBA recommendations into binding decisions.

86.

As soon as the EBA identifies a supposedly incorrect or inadequate application of the provisions of EU law by a national authority, it sends that authority a recommendation informing it of the measures it must take.

87.

If the competent national authority does not comply with that recommendation and persists in its non-compliance, the Commission may intervene. It does so by issuing a formal opinion in which it urges the authority to take the measures necessary to comply with EU law.

88.

In the final stage of the procedure, the EBA may adopt an individual decision, addressed to a financial institution, requiring that institution to take the measures necessary to comply with its obligations under EU law, including the cessation of any practice, provided that the provisions in question are directly applicable. ( 56 )

89.

Decisions adopted by the EBA at this final stage must comply with the Commission’s formal opinion and are to prevail over any previous decision adopted on the same matter. They are, therefore, legal acts binding on the competent authorities bound by the formal opinion issued by the Commission. ( 57 )

90.

The referring court asks whether a depositor (in this case, BT) may rely on Recommendation EBA/2014/02 in the proceedings which it has instituted against the BNB.

91.

Recommendation EBA/2014/02, adopted under Article 17(3) of Regulation No 1093/2010, was, as I have already said, addressed to the BNB and the Fund and called upon them to take the relevant action to comply with Directive 94/19 and bring to an end the infringement of Article 1(3)(i) thereof.

92.

Before Recommendation EBA/2014/02 was issued, the Commission had already commenced infringement proceedings (Article 258 TFEU) against Bulgaria, and had sent that Member State a letter of formal notice (1 August 2014), although it did not subsequently take those proceedings any further. ( 58 )

93.

Recommendation EBA/2014/02 was not therefore followed by a formal opinion from the Commission and, as a result, the EBA did not issue a decision under Article 17(6) of Regulation No 1093/2010 either. ( 59 )

94.

The referring court is uncertain whether Recommendation EBA/2014/02 is compatible with EU law (Directive 94/19 and Regulation No 1093/2010). In order to address that uncertainty, I shall refer both to the invocability in the abstract of EBA recommendations before the national courts, and to the invocability of the recommendation at issue here.

95.

According to the Court’s settled case-law, ‘even if recommendations are not intended to produce binding effects, the national courts are bound to take them into consideration for the purpose of deciding disputes submitted to them, in particular where the recommendations cast light on the interpretation of national measures adopted in order to implement them or where they are designed to supplement binding EU provisions’. ( 60 )

96.

I agree with Advocate General Bobek ( 61 ) that the obligation on national courts to ‘take recommendations into consideration’ in cases where they are called upon to decide disputes in which they apply binding EU law related to those recommendations is not consistent with the duty of ‘conform interpretation’ within the meaning of the case-law in Von Colson and Kamann. ( 62 )

97.

If national courts are required to have regard to recommendations (including those issued by the EBA) when applying binding EU law in the Member States, it follows logically that they should be able to make references to the Court of Justice for a ruling on the interpretation of the content of such recommendations. ( 63 ) However, can they do so in order to question the validity of those measures?

98.

At first sight, given that a recommendation is not open to a direct review of its legality by means of an application for annulment, it might be thought not to be open to an indirect review of its legality either, that is to say by means of a reference for a preliminary ruling on its validity. Would there be any point in invalidating a measure which does not have binding legal effects?

99.

If I am not mistaken, the Court has not as yet ( 64 ) given a categorical ruling in this regard. The judgment in Grimaldi appears to recognise by implication the possibility of making a reference for a preliminary ruling on the validity of recommendations ( 65 ) and Advocate General Bobek recognises that possibility explicitly. ( 66 )

100.

From my point of view, the most consistent approach is to recognise the possibility of making a reference for a preliminary ruling on the validity of recommendations, on the basis that the national court is required to take those measures into consideration when interpreting a binding provision of EU law. It would not be logical for that national court to have regard, for interpreting purposes, to a recommendation the validity of which it questions precisely because it considers it to be incompatible with EU law but does not have standing to say so. ( 67 )

101.

EBA recommendations based on Article 17(3) of Regulation No 1093/2010 are, as I have said, one of the factors that the competent court must take into account in settling the dispute. I would recall that the court’s objective in such a dispute is to determine whether the breach of EU law is sufficiently serious and thereby meets one of the three conditions upon which the liability of a State for failure to comply with EU law is contingent. ( 68 )

102.

An EBA recommendation may be taken into consideration by the national court in settling a dispute only if the content of that recommendation is consistent with the provisions of EU law the application of which it may facilitate. If the national court considers, as here, that this is not the case, it has standing to make a reference for a preliminary ruling to the Court of Justice, which alone has jurisdiction to make such a declaration of incompatibility.

103.

According to the referring court, the compatibility of Recommendation EBA/2014/02 with EU law is questionable because: (a) it is directed at a national authority (the BNB) which is not competent to determine the unavailability of deposits in relation to KTB, and is not addressed to the financial institutions; and (b) it may not be consistent with recital 27 of Regulation No 1093/2010, inasmuch as Article 1(3)(i) of Directive 94/19 does not lay down clear and unconditional obligations.

104.

In accordance with Article 4(2)(iii) of Regulation No 1093/2010, ‘competent authorities’ are, ‘with regard to deposit guarantee schemes, bodies which administer deposit-guarantee schemes pursuant to Directive 94/19/EC, or, where the operation of the deposit-guarantee scheme is administered by a private company, the public authority supervising those schemes pursuant to that Directive’.

105.

Those authorities may include, in addition to the DGS, the authority responsible for determining the unavailability of deposits, which, in many Member States, is the national central bank. ( 69 )

106.

In turn, Article 1(3)(i) of Directive 94/19 ‘leaves it to the discretion of the Member States to designate the authority responsible for determining whether deposits are unavailable’. ( 70 )

107.

In Kantarev, the referring court and the Court of Justice took it as read that the BNB was the authority competent to determine the unavailability of deposits in accordance with Article 1(3)(i) of Directive 94/19. ( 71 ) In this case, on the other hand, the referring court appears to construe the BNB’s arguments as indicating the opposite. ( 72 )

108.

Since 25 March 2014, the date of entry into force of an amendment to the Zakona za kreditnite institutsii, ( 73 ) the BNB has, in accordance with Article 1(2)(1) of that law, been the competent authority in the Republic of Bulgaria for supervising banking institutions within the meaning of Article 4(1)(40) of Regulation (EU) No 575/2013. ( 74 )

109.

The new law on the bank deposit guarantee (Zakon za garantirane na vlogovete v bankite) of 2015 incorporates into Bulgarian law Directive 2014/49, which designates as being competent to determine the unavailability of deposits the authority responsible for prudential supervision under Regulation No 575/2013. ( 75 ) There is therefore no doubt that the BNB has been the authority competent to determine the unavailability of deposits in Bulgaria since 14 August 2015.

110.

According to the Commission, the supervisory authority was also competent to determine the unavailability of deposits, even prior to 14 August 2015.

111.

It is my view, however, that, up until the adoption of Directive 2014/49, no provision of EU law established such a parallel. Recital 50 of that directive states that, ‘given the divergences in administrative practices relating to DGSs in Member States, Member States should be free to decide which authority determines the unavailability of deposits’.

112.

In those circumstances, it falls to the referring court to determine, in accordance with the Bulgarian law applicable at the time of the BNB’s actions in relation to KTB, whether or not the authority competent to determine the unavailability of deposits was the BNB.

113.

It must not be forgotten that the Court has already held in the judgment in Kantarev that the failure by the Bulgarian authorities to determine the unavailability of deposits at KTB constituted a sufficiently serious breach of Article 1(3)(i) of Directive 94/19. ( 76 )

114.

So far as concerns the need for Recommendation EBA/2014/02 to be concerned with directly applicable requirements of EU law (in this case, Directive 94/19), Article 17(6) of Regulation No 1093/2010 lays down that condition only for the purposes of enabling the EBA to adopt decisions directed at financial institutions and calling upon them to comply with obligations imposed by provisions of EU law.

115.

The last sentence of recital 27 of Regulation No 1093/2010 ( 77 ) refers to such final decisions by the EBA, but not to the recommendations which it may adopt at the start of the procedure. This is only logical in the case of a binding EBA decision, but not in the case of a recommendation which has no binding legal effects.

116.

In any event, as I have already explained, Article 1(3)(i) of Directive 94/19 has direct effect, in accordance with the judgment in Kantarev, with the result that both that provision and a recommendation relating to it may be relied on by individuals before the referring court. ( 78 ) Consequently, the uncertainty in relation to that aspect of Recommendation EBA/2014/02 is unfounded.

117.

According to Recommendation EBA/2014/02, ( 79 ) the BNB had failed to comply with Article 1(3)(i) of Directive 94/19 inasmuch as it had not made a declaration as to the unavailability of deposits within a period of 5 days from when KTB ceased to be able to repay deposits that were due and payable.

118.

The EBA took the view that the BNB’s decision to place KTB under special supervision and to impose a temporary suspension of its obligations amounted to a declaration as to the unavailability of deposits within the meaning of Article 1(3)(i) of Directive 94/19.

119.

The judgment in Kantarev invalidates that equation. Indeed, the Court held in that judgment that the unavailability of deposits must be determined by an express act of the competent national authority and cannot be inferred from other acts of the national authorities (such as the BNB’s decision to place KTB under special supervision) nor presumed from circumstances such as those in that dispute. ( 80 )

120.

Consequently, the referring court must not take that aspect of Recommendation EBA/2014/02 into consideration when interpreting EU law, inasmuch as it is incompatible with Article 1(3)(i) of Directive 94/19.

121.

In the light of the foregoing, I suggest that the Court reply to the Administrativen sad Sofia-grad (Administrative Court, Sofia, Bulgaria) as follows: