Case C‑551/22 P

European Commission

Single Resolution Board

Judgment of the Court (Grand Chamber) of 18 June 2024

(Appeal – Economic and monetary policy – Banking Union – Regulation (EU) No 806/2014 – Single Resolution Mechanism – Resolution procedure applicable where an entity is failing or is likely to fail – Article 18(7) – Adoption by the Single Resolution Board of a resolution scheme – Endorsement of that scheme by the European Commission – Article 86(2) – Act against which proceedings may be brought – Action for annulment – Admissibility)

Appeal – Admissibility – Ground of appeal against the examination of the admissibility of the action before the General Court – Appeal brought by an intervener in the procedure before the General Court – Whether permissible

(Art. 256(1) TFEU; Statute of the Court of Justice, Art. 56)

(see paragraph 50)
Appeal – Admissibility – Decisions against which an appeal may be brought – Judgment of the General Court ruling out the inadmissibility of an action then dismissing that action as being unfounded – Whether permissible

(Art. 256(1) TFEU; Statute of the Court of Justice, Art. 56)

(see paragraph 51)
EU institutions – Exercise of powers – Delegation – Conditions – Delegation of decision-making powers to agencies – Types of delegation and effects – Delegation of implementing powers clearly defined – Powers concerned not appreciably altered – Delegation of a discretionary power implying a wide margin of discretion on the fundamental issues of the policy area concerned – Potential transfer of responsibility

(Art. 290 TFEU)

(see paragraphs 69-73)
EU institutions – Exercise of powers – Delegation – Conditions – Delegation of decision-making powers to the Single Resolution Board (SRB) – Adoption by the SRB of a resolution scheme – Broad discretionary power – Legislative provisions avoiding a transfer of responsibility from the Commission to the SRB

(European Parliament and Council Regulation No 806/2014, Art. 18(1) to (7))

(see paragraphs 75-81)
Action for annulment – Actionable measures – Concept – Measures producing binding legal effects – Preparatory measures – Decision endorsing a resolution scheme from the Single Resolution Board (SRB) – Entry into force – No binding legal effects produced – Precluded – Endorsement decision from the Commission, or the Council of the European Union, definitively laying down the content of that scheme – Included

(Art. 263 TFEU; European Parliament and Council Regulation No 806/2014, Arts 18(1) to (8), and 30(1) and (2))

(see paragraphs 77-81, 83-86, 88, 89, 93, 94)

Résumé

Hearing an appeal brought by the European Commission against the judgment of the General Court of 1 June 2022 in Fundación Tatiana Pérez de Guzmán el Bueno and SFL v SRB, ( 1 ) the Grand Chamber of the Court of Justice upholds that appeal and, giving final judgment on the substance, dismisses as inadmissible the action brought before the General Court by Fundación and Stiftung für Forschung und Lehre against the decision of the Single Resolution Board (SRB) of 7 June 2017 concerning the adoption of a resolution scheme in respect of Banco Popular Español SA ( 2 ) (‘the resolution scheme at issue’), adopted on the basis of Regulation (EU) No 806/2014. ( 3 )

At the end of its analysis, the Court rules that the resolution scheme at issue does not constitute a challengeable act for the purposes of the fourth paragraph of Article 263 TFEU and, consequently, sets aside the judgment under appeal in so far as it declared admissible the action for annulment of that scheme. The Court bases that analysis, in particular, on the principles of delegation of powers to agencies identified in the judgment of 13 June 1958, Meroni v High Authority, ( 4 ) and recalled in the judgment of 22 January 2014, United Kingdom v Parliament and Council. ( 5 )

Findings of the Court

The Court recalls that an action for annulment may be brought, under the fourth paragraph of Article 263 TFEU, read in conjunction with the first paragraph thereof, against all measures or acts adopted by the EU institutions, bodies, offices and agencies, whatever their form, which are intended to produce legal effects binding on and are capable of affecting the interests of a natural or legal person by bringing about a distinct change in their legal position. In order to ascertain whether an act produces such effects and may accordingly form the subject matter of such an action, it is necessary to examine the substance of that act and to assess those effects in the light of objective criteria, such as the content of that act, taking into account, as appropriate, the context in which it was adopted and the powers of the institution, body, office or agency which adopted the act.

As regards, in the first place, the content of the resolution scheme at issue, the Court finds that that scheme had not yet been endorsed at the time of its adoption during the Executive Session of the SRB on 7 June 2017, since it was then notified to the Commission for endorsement, on which its entry into force depended and, in so doing, the production by that scheme of binding legal effects.

As regards, in the second place, the context in which the resolution scheme at issue was adopted, the Court notes that, as stated in its preamble, its legal basis is the SRM Regulation. ( 6 ) The scheme put in place by that regulation is based on the finding ( 7 ) that the exercise of the resolution powers provided for therein falls within the EU policy for the resolution of banking institutions, which only EU institutions may establish, and that there remains a margin of discretion in the adoption of each resolution scheme, given inter alia the considerable impact of the resolution decisions on the financial stability of the Member States and on the European Union as such, as well as on the fiscal sovereignty of the Member States. For those reasons, the EU legislature considered it necessary to provide for the adequate involvement of the Council of the European Union and the Commission, namely involvement that strengthens the necessary operational independence of the SRB while respecting the principles of delegation of powers to agencies.

In that last regard, the Court recalls that in the judgments in Meroni v High Authority and United Kingdom v Parliament and Council, the Court held, in essence, that the consequences resulting from a delegation of powers are very different depending on whether the delegation involves clearly defined executive powers the exercise of which can be subject to strict review in the light of objective criteria determined by the delegating authority, or whether it involves a ‘discretionary power implying a wide margin of discretion which may, according to the use which is made of it, make possible the execution of actual economic policy’. A delegation of the first kind cannot appreciably alter the consequences involved in the exercise of the powers concerned, whereas a delegation of the second kind, since it replaces the choices of the delegator by the choices of the delegate, brings about an ‘actual transfer of responsibility’. The Court notes that, in the case that led to the judgment in Meroni v High Authority, it held that the delegation of powers at issue, in so far as it allowed the bodies concerned a ‘degree of latitude which implies a wide margin of discretion’, could not be considered to be compatible with the ‘requirements of the Treaty’, while stating that, in reserving to itself only the power to refuse its approval of the decisions of those bodies, the High Authority had not retained sufficient powers to avoid such a transfer of responsibility.

According to the Court, the case-law resulting from that judgment is based on the premiss that the balance of powers, which is characteristic of the institutional structure of the European Union, is a fundamental guarantee granted by the Treaties and that to delegate a broad discretionary power would render that guarantee ineffective, by entrusting it to bodies other than those which the Treaties have established to effect and supervise the exercise thereof within the limits of their respective functions. The broad discretionary power referred to in that case-law relates, in particular, to the fundamental issues of the policy area concerned, which imply a wide margin of discretion in order to reconcile various objectives which are sometimes contradictory.

The Court adds that it is apparent, specifically, from that case-law that the applicability of the principles concerning the delegation of powers to agencies identified by that case-law depends not on the individual or general nature of the acts which the agencies are authorised to adopt, but solely on whether the delegation relates to a broad discretionary power or, on the contrary, to executive powers which are precisely delineated.

The scheme put in place by the SRM Regulation ( 8 ) is intended to give concrete expression to the principles identified in the judgment in Meroni v High Authority and recalled in the judgment in United Kingdom v Parliament and Council.

Admittedly, the SRB is responsible for adopting all resolution decisions relating to, inter alia, financial institutions and groups which are considered to be significant for financial stability in the European Union, and for other cross-border groups. ( 9 ) In that respect, it is to adopt a resolution scheme in relation to those entities and groups only when it assesses, on receiving the communication of the ECB’s assessment that the entity concerned is failing or is likely to fail, or on its own initiative, ( 10 ) that the conditions for resolution, ( 11 ) which relate to whether the entity is failing or is likely to fail, the absence of alternative measures with regard to resolution and whether a resolution action is necessary in the public interest, are met. In that case, the SRB adopts ( 12 ) a resolution scheme which places the entity concerned under resolution and determines the application to that entity of the resolution tools ( 13 ) and the use of the Single Resolution Fund.

However, regardless of the wide margin of discretion conferred on the SRB concerning whether and by what means the entity concerned is to be the subject of a resolution procedure, that discretion is circumscribed by objective criteria and conditions delimiting the SRB’s scope of action and relating both to the resolution tools and conditions. ( 14 ) In addition, the SRM Regulation provides for the participation of the Commission and of the Council in the procedure leading to the adoption of a resolution scheme, which, in order to enter into force, must be endorsed by the Commission and, where relevant, the Council.

Therefore the SRB is to inform the Commission of any action it takes in order to prepare for resolution and exchanges, with the Commission and the Council, all information necessary for the performance of their tasks. ( 15 ) Moreover, the Commission is to designate a representative entitled to participate in the meetings of executive sessions and plenary sessions of the SRB as a permanent observer, and that representative is entitled to participate in the debates and is to have access to all documents. ( 16 ) In addition, the SRB is required to transmit the resolution scheme to the Commission immediately after its adoption, and within 24 hours from the transmission, the Commission either endorses that scheme or objects to it with regard to the discretionary aspects of that scheme, excluding those relating to compliance with the criterion of public interest and the amount earmarked for the use of the Single Resolution Fund. ( 17 ) As regards the latter discretionary aspects, the Commission may, within 12 hours from the transmission, propose to the Council to object. ( 18 ) Lastly, 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 SRB. ( 19 ) Once that scheme has been endorsed, the Commission must then fully assume the responsibilities conferred on it by the Treaties.

In the light of all those considerations, the Court concludes that the provisions of Article 18 of the SRM Regulation, on the basis of which the resolution scheme at issue was adopted, are such as to avoid a ‘transfer of responsibility’ within the meaning of the case-law resulting from the judgment in Meroni v High Authority. While conferring on the SRB the power to assess whether the conditions for the adoption of a resolution scheme are met in the present case and the power to determine the tools necessary for the purposes of such a scheme, those provisions confer on the Commission, or, as the case may be, on the Council, the responsibility for the final assessment of the discretionary aspects of the scheme. Those aspects fall within the scope of EU policy for the resolution of credit institutions and involve a balancing of various objectives and interests, relating to the safeguarding of the financial stability of the European Union and the integrity of the internal market, the taking into account of the budgetary sovereignty of the Member States and the protection of the interests of shareholders and creditors.

As regards, in the third place, the SRB’s powers, the Court holds that the interpretation adopted by the General Court, according to which a resolution scheme may produce binding legal effects irrespective of the Commission’s endorsement decision, disregards both the powers conferred on the SRB by the SRM Regulation and the case-law resulting from the judgment in Meroni v High Authority.

While the SRM Regulation provides ( 20 ) that the SRB is responsible for drawing up and adopting a resolution scheme, it does not confer on it the power to adopt an act producing independent legal effects. In the resolution procedure, the endorsement by the Commission is an essential element for the entry into force of the resolution scheme.

That endorsement is also decisive for the content of the resolution scheme at issue. On the one hand, while the SRM Regulation allows the Commission to endorse such a scheme without having raised any objections with regard to its discretionary aspects or proposed to the Council to do so, it also allows the Commission and the Council to substitute their own assessment for that of the SRB as regards those discretionary aspects by objecting thereto, ( 21 ) in which case the SRB is required to modify that scheme, within eight hours, in accordance with the reasons expressed by the Commission or the Council, so that that scheme may enter into force. ( 22 ) On the other hand, an objection by the Council on the ground that the public interest criterion is not fulfilled has the effect of ultimately preventing the resolution under that regulation of the entity concerned, that entity then having to be wound up in an orderly manner in accordance with the applicable national law. ( 23 )

In the present case, as it expressly stressed in the decision endorsing the resolution scheme at issue, ( 24 ) the Commission expressed its ‘agreement’ with the content thereof and with ‘the reasons provided by the SRB of why resolution is necessary in the public interest’. The discretionary aspects of a resolution scheme, which relate both to the establishment of the resolution conditions and to the determination of the resolution tools, are inextricably linked to the more technical aspects of resolution. Contrary to what the General Court held, a distinction, therefore, cannot be drawn between those discretionary aspects and those technical aspects, for the purposes of determining the act against which an action may be brought in the context of a resolution scheme endorsed in its entirety by the Commission.

Thus, it is only by the Commission’s endorsement decision that the resolution action adopted by the SRB in the resolution scheme at issue was definitively fixed and that that action produced binding legal effects, with the result that it is the Commission, and not the SRB, which must answer for that resolution action before the EU judicature.

The Court thus concludes that it is apparent from its content, the context in which it was adopted and the powers of the SRB that the resolution scheme at issue did not produce binding legal effects capable of affecting the interests of a legal or natural person, with the result that it does not constitute an act against which an action for annulment may be brought under the fourth paragraph of Article 263 TFEU.

The Court adds that, first, contrary to what the General Court held, it cannot be inferred from Article 86(1) and (2) of the SRM Regulation that the resolution scheme at issue was capable of forming the subject matter of an action for annulment before the General Court, when it did not constitute the outcome of the resolution procedure at issue, that outcome having materialised only through the endorsement of that scheme by the Commission, and it did not produce independent legal effects.

Indeed, the provisions of a regulation cannot alter the system of remedies laid down by the FEU Treaty. In addition, it is apparent from the very wording of Article 86 of the SRM Regulation that the actions it concerns must be brought before the Court ‘in accordance with Article 263 [TFEU]’, which presupposes that they satisfy the condition, set out therein, relating to the challengeable nature of the contested act.

It is true that the Court notes that, in the judgment of 6 May 2021, ABLV Bank and Others v ECB, ( 25 ) it held, in essence, that a resolution scheme may, as the outcome of a complex resolution procedure, be subject to judicial review before the EU judicature. However, in the case which gave rise to that judgment, the Court of Justice was called upon to assess the legality of a decision of the General Court holding as inadmissible actions for annulment brought not against such a scheme but against preparatory measures of the European Central Bank which had found that entities were failing or were likely to fail. ( 26 ) The considerations set out in that judgment must therefore be read in the light of the Court’s settled case-law on complex procedures from which it is apparent that, in a procedure of that sort, acts adopted during the preparatory stages leading to the adoption of the definitive act cannot, where they do not produce independent legal effects, form the subject matter of an action for annulment.

Secondly, the Court holds that the General Court was wrong in finding, in the judgment under appeal, that the failure to recognise that the resolution scheme at issue is actionable would lead to an infringement of the right of the applicants at first instance to effective judicial protection.

A Commission endorsement decision, such as that at issue in the present case, displays the features of an act against which an action for annulment may be brought under the fourth paragraph of Article 263 TFEU. In an action for annulment brought against such a decision, it is open to the natural or legal persons concerned to plead the illegality of the resolution scheme approved by that institution, thereby giving it binding legal effects, which is capable of guaranteeing them sufficient judicial protection. Moreover, the Court recalls that the Commission is, by that approval, deemed to endorse the information and grounds contained in that scheme, with the result that it must, if necessary, answer to the EU judicature.

( 1 ) 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’).

( 2 ) Decision SRB/EES/2017/08 of the Executive Session of the Single Resolution Board (SRB) of 7 June 2017 on the adoption of a resolution scheme in respect of Banco Popular Español SA.

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

( 4 ) Judgment of 13 June 1958, Meroni v High Authority (9/56, EU:C:1958:7).

( 5 ) Judgment of 22 January 2014, United Kingdom v Parliament and Council (C‑270/12, EU:C:2014:18).

( 6 ) Article 18 in particular.

( 7 ) See, in essence, recitals 24 and 26 of the SRM Regulation.

( 8 ) As is apparent from recitals 24 and 26 of the SRM Regulation.

( 9 ) Pursuant to Article 7(2) of the SRM Regulation.

( 10 ) Pursuant to Article 18(1) and (6) of the SRM Regulation.

( 11 ) Referred to in Article 18(1)(a) to (c) of the SRM Regulation.

( 12 ) On the basis of Article 18(6) of the SRM Regulation.

( 13 ) Referred to in Article 22(2) of the SRM Regulation.

( 14 ) Pursuant to Article 18(1) and (4) to (6) of the SRM Regulation.

( 15 ) Pursuant to Article 30(1) and (2) of the SRM Regulation.

( 16 ) Pursuant to Article 43(3) of the SRM Regulation.

( 17 ) First to third subparagraphs of Article 18(7) of the SRM Regulation.

( 18 ) Third subparagraph of Article 18(7) of the SRM Regulation.

( 19 ) Fifth subparagraph of Article 18(7) of the SRM Regulation.

( 20 ) Pursuant to Articles 7 and 18 of the SRM Regulation.

( 21 ) Article 18(7) of the SRM Regulation.

( 22 ) Seventh subparagraph of Article 18(7) of the SRM Regulation.

( 23 ) Article 18(8) of the SRM Regulation.

( 24 ) Commission Decision (EU) 2017/1246 of 7 June 2017 endorsing the resolution scheme for Banco Popular Español SA (OJ 2017 L 178, p. 15), recital 4, as corrected on 6 December 2017 (OJ 2017 L 320, p. 31).

( 25 ) Judgment of 6 May 2021, ABLV Bank and Others v ECB (C‑551/19 P and C‑552/19 P, EU:C:2021:369, paragraphs 56 and 66).

( 26 ) Within the meaning of Article 18(1) of the SRM Regulation.