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Language of document : ECLI:EU:C:2014:18

Case C‑270/12

United Kingdom of Great Britain

and

Northern Ireland

European Parliament

and

Council of the European Union

(Regulation (EU) No 236/2012 — Short selling and certain aspects of credit default swaps — Article 28 — Validity — Legal basis — Powers of intervention conferred on the European Securities and Markets Authority in exceptional circumstances)

Summary — Judgment of the Court (Grand Chamber), 22 January 2014

1. Institutions of the European Union — Exercise of powers — Delegation — Conditions — Delegation of decision making powers to the European Securities and Markets Authority — Powers to be clearly defined on the basis of objective criteria amenable to judicial review — Lawfulness

(Arts 263, first para., TFEU and 277 TFEU; European Parliament and Council Regulations No 1095/2010, Art. 9(5), and No 236/2012, Art. 28)

2. Institutions of the European Union — Exercise of powers — Delegation — Financial powers conferred on the European Securities and Markets Authority — Delegating act falling outside the rules governing delegation laid down in Articles 290 TFEU and 291 TFEU — Lawfulness

(Arts 263 TFEU, 265 TFEU, 267 TFEU, 277 TFEU, 290 TFEU and 291 TFEU; European Parliament and Council Regulations No 1092/2002, No 1095/2010 and No 236/2012, Art. 28)

3. Approximation of laws — Measures intended to improve the functioning of the internal market in the financial field — Regulation of short selling and certain aspects of credit default swaps — Article 28 of Regulation No 236/2012 — Power of an EU body to adopt individual measures and decisions — Legal basis — Article 114 TFEU

(Art. 114 TFEU; European Parliament and Council Regulation No 236/2012, Recital 2 and Art. 28)

1. The consequences resulting from a delegation of powers are very different depending on whether it involves clearly defined executive powers the exercise of which can, therefore, 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.

In the light of those criteria, the delegation of powers to the European Securities and Markets Authority (ESMA) under Article 28 of Regulation No 236/2012 on short selling and certain aspects of credit default swaps is compatible with the FEU Treaty, in so far as such powers are precisely delineated and amenable to judicial review in the light of the objectives established by the delegating authority. First, that provision does not confer any autonomous power on the ESMA that goes beyond the bounds of the regulatory framework established by Regulation No 1095/2010, which established that authority. Next, the exercise of the powers under Article 28 of Regulation No 236/2012 is circumscribed by various conditions and criteria which limit the discretion of the ESMA, which, before taking any decision, must examine a significant number of factors set out in Article 28(2) and (3) of Regulation No 236/2012 and the conditions imposed are cumulative. Similarly, the two kinds of measure which ESMA may take under Article 28(1) of Regulation No 236/2012 are strictly confined to those set out in Article 9(5) of Regulation No 1095/2010. Furthermore, under Articles 28(4) and (5) of Regulation No 236/2012, ESMA’s margin of discretion is circumscribed by both the requirement to consult the European Systemic Risk Board and, if necessary, other relevant bodies and by the requirement to notify the competent national authorities concerned of the measure it proposes to take as well as by the temporary nature of the measures authorised, which, established on the basis of best current practice in the field of supervision and sufficient information, are taken to address a threat calling for intervention at EU level.

Lastly, as the institutional framework established by the FEU Treaty, in particular the first paragraph of Article 263 TFEU and Article 277 TFEU, expressly permits Union bodies, offices and agencies to adopt acts of general application, the delegation of powers to a body such as ESMA cannot be governed by conditions other than those set out above.

(see paras 41, 42, 44, 45, 48-50, 53, 65, 66)

2. While the treaties do not contain any provision to the effect that powers may be conferred on a Union body, office or agency, a number of provisions in the FEU Treaty none the less presuppose that such a possibility exists. Under Article 263 TFEU, the Union bodies whose acts may be subject to judicial review by the Court include the bodies, offices and agencies of the Union. The rules governing actions for failure to act are applicable to those bodies pursuant to Article 265 TFEU. Article 267 TFEU provides that the courts and tribunals of the Member States may refer questions concerning the validity and interpretation of the acts of such bodies to the Court. Such acts may also be the subject of a plea of illegality pursuant to Article 277 TFEU. Those judicial review mechanisms apply to the bodies, offices and agencies established by the EU legislature which were given powers to adopt measures that are legally binding on natural or legal persons in specific areas, such as the European Chemicals Agency, the European Medicines Agency, the Office for Harmonisation in the Internal Market (Trade Marks and Designs), the Community Plant Variety Office and the European Aviation Safety Agency.

The European Securities and Markets Authority (ESMA) is vested, under Article 28 of Regulation No 236/2012 on short selling and certain aspects of credit default swap, with certain decision-making powers in an area which requires the deployment of specific technical and professional expertise.

Although that conferral of powers does not correspond to any of the situations defined in Articles 290 TFEU and 291 TFEU, Article 28 of Regulation No 236/2012 forms part of a specific legal framework which includes, in addition to that regulation, Regulation No 1092/2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board and Regulation No 1095/2010 establishing a European Supervisory Authority. Those regulations form part of a series of regulatory instruments adopted by the EU legislature so that the Union may, in view of the integration of international financial markets and the contagion risk of financial crises, endeavour to promote international financial stability.

Consequently, Article 28 of Regulation No 236/2012 must be perceived as forming part of a series of rules designed to endow the competent national authorities and ESMA with powers of intervention to cope with adverse developments which threaten financial stability within the Union and market confidence. To that end, those authorities must be in a position to impose temporary restrictions on the short selling of certain stocks, credit default swaps or other transactions in order to prevent an uncontrolled fall in the price of those instruments. Those bodies have a high degree of professional expertise and work closely together in the pursuit of the objective of financial stability within the Union.

Therefore, Article 28 of Regulation No 236/2012 cannot be regarded as undermining the rules governing the delegation of powers laid down in Articles 290 TFEU and 291 TFEU.

(see paras 79-86)

3. Article 28 of Regulation No 236/2012 on short selling and certain aspects of credit default swaps, which vests the European Securities and Markets Authority with certain decision making powers in the financial field, satisfies all the requirements laid down in Article 114 TFEU.

First, by the expression ‘measures for the approximation’ in Article 114 TFEU, the authors of the FEU Treaty intended to confer on the Union legislature, depending on the general context and the specific circumstances of the matter to be harmonised, discretion as regards the most appropriate method of harmonisation for achieving the desired result, especially in fields with complex technical features.

Moreover, the EU legislature, in its choice of method of harmonisation and, taking account of the discretion it enjoys with regard to the measures provided for under Article 114 TFEU, may delegate to a Union body, office or agency powers for the implementation of the harmonisation sought. That is the case in particular where the measures to be adopted are dependent on specific professional and technical expertise and the ability of such a body to respond swiftly and appropriately.

Furthermore, in certain fields, the approximation of general laws alone may not be sufficient to ensure the unity of the market. Consequently, the concept of ‘measures for the approximation’ of legislation must be interpreted as encompassing the EU legislature’s power to lay down measures relating to a specific product or class of products as well as, if necessary, individual measures concerning those products. Nothing in the wording of Article 114 TFEU implies that the addressees of the measures adopted by the EU legislature on the basis of that provision can only be Member States.

In that context, faced with serious threats to the orderly functioning and integrity of the financial markets or the stability of the financial system in the EU, the EU legislature sought, by Article 28 of Regulation No 236/2012, to provide an appropriate mechanism which would enable, as a last resort and in very specific circumstances, measures to be adopted throughout the EU which may take the form, where necessary, of decisions directed at certain participants in those markets. That provision is in fact directed at the harmonisation of the Member States’ laws, regulations and administrative provisions relating to the supervision of a number of stocks and the monitoring, in specific situations, of certain commercial transactions concerning those stocks, namely net short positions in relation to a financial instrument or a specific class of financial instruments.

Second, with regard to the requirement laid down in Article 114 TFEU that harmonisation measures adopted by the EU legislature must have as their object the establishment and functioning of the internal market, as is apparent from recital 2 in the preamble to Regulation No 236/2012, the EU legislature considered it appropriate to lay down a common regulatory framework with regard to the requirements and powers relating to short selling and credit default swaps and to ensure greater coordination and consistency between Member States where measures have to be taken in exceptional circumstances. Therefore, the harmonisation of the rules governing such transactions is intended to prevent the creation of obstacles to the proper functioning of the internal market and the continuing application of divergent measures by Member States. It follows that the purpose of the powers provided for in Article 28 of Regulation No 236/2012 is in fact to improve the conditions for the establishment and functioning of the internal market in the financial field.

(see paras 102, 105-108, 112-114, 116, 117)