OPINION OF ADVOCATE GENERAL
KOKOTT
delivered on 11 April 2019 (1)
Joined Cases C‑663/17 P, C‑665/17 P and C‑669/17 P
European Central Bank
v
Trasta Komercbanka AS,
Ivan Fursin and Others (C‑663/17 P)
and
European Commission
v
Trasta Komercbanka AS,
Ivan Fursin and Others (C‑665/17 P)
and
Trasta Komercbanka AS,
Ivan Fursin and Others
v
European Central Bank (C‑669/17 P)
(Appeal — Action for annulment — Plea of inadmissibility — Regulation No 1024/2013/EU — Prudential supervision of credit institutions — Withdrawal of a credit institution’s authorisation by the European Central Bank — Automatic liquidation of the credit institution concerned under national law — Legal standing of the credit institution in liquidation, represented by the former board of directors — Legal standing of shareholders)
I. Introduction
1. Embedded in the substantive context of banking supervision law, these three appeals, which concern the admissibility of actions brought by a Latvian bank and its shareholders against the withdrawal of a banking licence (authorisation) (2) by the European Central Bank (ECB), raise fundamental questions regarding the EU system of legal remedies.
2. In Latvian law the withdrawal of a banking licence results immediately and incontestably in the bank concerned being wound up. For this reason, the action brought by Trasta Komercbanka (TKB) against the withdrawal of its licence was dismissed as inadmissible by the General Court in accordance with a plea to that effect raised by the ECB. The General Court considered that, as a consequence of the liquidation under national law, the applicant’s board of directors was no longer entitled to represent the bank and to that end to entrust lawyers with the handling of the case. Under those circumstances, the Court ruled that, as an exception, an action brought by shareholders to defend the interests of the bank in respect of the withdrawal of the authorisation was admissible.
3. The ECB and the Commission are challenging this part of the General Court’s decision by their appeals, in which they also deny the legal standing of the shareholders. This reveals the fundamental issue of judicial protection underlying the present case. Should ultimately all routes to the Court of Justice really be blocked? And can it be lawful, in view of the Union’s obligation to ensure effective judicial protection against EU acts having adverse effects, that national law attaches irreversible consequences to the withdrawal of a banking licence which preclude in practice an effective review by the European Union Courts?
4. In the situation at issue, where an EU act directly causes the legal person to which it is addressed to be wound up, it is particularly important who is permitted to represent that legal person in proceedings brought against the act before the European Union Courts.
II. Legal framework
A. EU law
5. Article 14 of Council Regulation No 1024/2013(3) provides as follows:
‘1. Any application for an authorisation to take up the business of a credit institution to be established in a participating Member State shall be submitted to the national competent authorities of the Member State where the credit institution is to be established in accordance with the requirements set out in relevant national law.
…
5. Subject to paragraph 6, the ECB may withdraw the authorisation in the cases set out in relevant Union law on its own initiative, following consultations with the national competent authority of the participating Member State where the credit institution is established, or on a proposal from such national competent authority. These consultations shall in particular ensure that before taking decisions regarding withdrawal, the ECB allows sufficient time for the national authorities to decide on the necessary remedial actions, including possible resolution measures, and takes these into account.
Where the national competent authority which has proposed the authorisation in accordance with paragraph 1 considers that the authorisation must be withdrawn in accordance with the relevant national law, it shall submit a proposal to the ECB to that end. In that case, the ECB shall take a decision on the proposed withdrawal taking full account of the justification for withdrawal put forward by the national competent authority.
…’
B. Latvian law
1. Kredītiestāžu likums (Latvian Law on credit institutions)
6. Section 129 of the Latvian Law on credit institutions (4) provides as follows:
‘1. If the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission, Latvia) cancels, in accordance with the provisions of Section 27(1)(1), (2), (3), (4) and (8) of this Law, the licence (permit) issued for the activities of a credit institution, the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission) shall appoint an authorised representative and submit to a court an application for the liquidation of that credit institution and for the appointment of a liquidator, simultaneously proposing a candidate for the liquidator.
2. After the cancellation of a licence, the meeting of the shareholders of the credit institution shall no longer be entitled to decide on commencement of voluntary liquidation and the appointment of a liquidator.
…’
7. Section 133(4) of the Latvian Law on credit institutions states:
‘The provisions of Chapter XI of this Law, except Sections 160 and 166, and the rights, duties and powers conferred on the administrator by Sections 172 and 1721 of this Law shall apply to a liquidator of a credit institution appointed by a court.’
8. Section 161(1) of that Law reads as follows:
‘After a credit institution has been declared insolvent, the administrator shall assume all the duties, rights and powers of the administrative bodies and the heads of those bodies provided for by law and in the articles of association of the credit institution.’
2. Civilprocesa likums (Latvian Code of civil procedure)
9. Section 5(3) of the Latvian Code of civil procedure (5) provides:
‘If the point of law at issue is governed by European Union legal provisions which are directly applicable in Latvia, Latvian law shall apply in so far as is permitted under the European Union legal provisions.’
10. Section 371 of the Latvian Code of civil procedure governs the content of the application for liquidation to be submitted by the Finanšu un kapitāla tirgus komisija (Latvian Financial and Capital Market Commission) in the cases referred to in Section 129 of the Latvian Law on credit institutions. Paragraph 2 provides:
‘The decision of the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission) by which the licence issued for the activities of a credit institution is cancelled and the documents which confirm the circumstances on the basis of which the licence was withdrawn from the credit institution shall be attached to the application for liquidation.’
11. Section 377(2) of the Latvian Code of civil procedure states:
‘In giving judgment on the liquidation of a credit institution, the court shall appoint a liquidator for the credit institution. The court shall appoint as the liquidator for the credit institution a person proposed by the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission).’
12. Section 387 of the Latvian Code of civil procedure further provides:
‘…
(2) The court may discharge an administrator or liquidator at the request of the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission). Attached to the request shall be the decision of the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission) which expresses a lack of confidence in the administrator or liquidator in connection with the following circumstances:
1. the administrator or liquidator does not comply with the provisions of Section 131(1) or Section 1311(1) of the Law on credit institutions or one of the circumstances referred to in Sections 132 or 1321 has been disclosed;
2. the administrator or liquidator is incompetent;
3. the administrator or liquidator misuses his powers.
(3) The court may, at the request of a creditor or group of creditors or of its own motion, examine the question of the discharge of an administrator or liquidator if it has evidence that the administrator or liquidator has, in the performance of his duties, infringed the provisions of the Law on credit institutions, other legislation or judicial decisions, does not comply with the provisions of Section 131(1) or Section 1311(1) of the Law on credit institutions or one of the circumstances referred to in Sections 132 or 1321 has been disclosed, the administrator or liquidator is incompetent or misuses his powers.’
3. Komerclikums (Latvian Commercial Code)
13. Section 322 of the Latvian Commercial Code, (6) which has the formal heading ‘Rights and duties of liquidators’, reads as follows:
‘(1) Liquidators shall have all the rights and duties of the board of directors and the supervisory board which are not in contradiction with the purposes of the liquidation.
(2) Liquidators shall collect debts including amounts which are due to the company in respect of unpaid capital shares, sell the assets of the company and satisfy the claims of creditors.
(3) Liquidators may only conclude such transactions as are necessary for the liquidation of the company.
…’
III. Background to the dispute and procedure before the General Court
14. The first appellant in Case C‑669/17 P, TKB, is a Latvian credit institution. The second to seventh appellants in that case are shareholders in TKB (‘the shareholders’). From September 1991 TKB provided financial services pursuant to the authorisation for such purposes granted to it by the FCMC.
15. On 5 February 2016, the FCMC proposed, pursuant to Article 14(5) of Regulation No 1024/2013, that the ECB withdraw TKB’s authorisation.
16. On 3 March 2016, having examined, with the FCMC, whether the criteria for the withdrawal of the authorisation were fulfilled, the ECB adopted decision ECB/SSM/2016 — 529900WIP0INFDAWTJ81/1 WOANCA-2016-0005, by which it withdrew TKB’s banking licence. At the same time, it rejected TKB’s request for suspension of the effects of the decision for one month.
17. On 14 March 2016, at the request of the FCMC, the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga, Latvia) initiated liquidation proceedings in respect of the corporate assets of TKB and appointed a liquidator proposed by the FCMC. Before the decision initiating proceedings was adopted, TKB applied for the powers of representation of its board of directors to be maintained for the purposes of lodging of a request for review with the ECB Board of Review and bringing an action for annulment at the General Court. Those applications were rejected by the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga). No appeal may lie against that decision.
18. On 17 March 2016, a notice of the initiation of liquidation proceedings and the appointment of the liquidator was published in the Official Gazette of the Republic of Latvia. On the same date, all powers of attorney previously granted by TKB were revoked by a decision of the liquidator. A notice of revocation was published in the Latvian Official Gazette by a notary on 21 March 2016.
19. On 3 April 2016, TKB, represented by the lawyers authorised by power of attorney by the former board of directors before 17 March 2016, filed a notice of review with the ECB’s Administrative Board of Review against the withdrawal of the authorisation. In its decision of 30 May 2016, the Board of Review held that TKB’s procedural and substantive allegations were unfounded and that the ECB’s decision to withdraw the authorisation was sufficiently reasoned and proportionate overall. However, it instructed the ECB to clarify certain points of the decision. Subsequently, on 11 July 2016, the ECB adopted a new decision to withdraw TKB’s authorisation, (7) which replaced the decision of 3 March 2016.
20. On 13 May 2016, TKB, on the one hand, and the shareholders, on the other, brought an action for annulment at the General Court against the ECB’s decision to withdraw the banking licence. TKB was once again represented by the lawyers authorised by power of attorney by the bank’s former board of directors before 17 March 2016.
21. On 29 September 2016, the ECB thereupon submitted a plea of inadmissibility pursuant to Article 130(1) of the Rules of Procedure of the General Court in respect of both the action brought by TKB and the action brought by the shareholders.
22. By a separate order of 12 September 2017 (‘the order under appeal’), (8) the General Court partially upheld the plea of inadmissibility raised by the ECB. It concurred with the ECB’s argument that the lawyers authorised by the former board of directors did not have a valid power of attorney because they had been appointed by a person no longer authorised to represent. The person now authorised to represent, namely the liquidator, had been able to revoke the powers of attorney with effect for the proceedings before the General Court. For that reason, there was no need to adjudicate on the action brought by TKB.
23. As for the action brought by the shareholders, however, the General Court rejected the plea of inadmissibility raised by the ECB. It found that it had to be accepted that, as an exception, the shareholders had an interest in bringing proceedings in the interest of TKB against the withdrawal of the banking licence in the situation at issue because in that situation the shareholders were denied any possibility of exerting influence under company law. It also found that the shareholders in the present case were to be regarded as individually and directly concerned by the withdrawal of the banking licence.
24. TKB and the shareholders, on the one hand, and the ECB and the Commission, on the other, have appealed against the order of the General Court.
IV. Procedure before the Court of Justice and forms of order sought
25. By its appeal of 24 November 2017 in Case C‑663/17 P, the ECB claims that the Court should:
– set aside the order under appeal in so far as the applicants at first instance, except TKB, are adjudged to have an interest and legal standing for the purposes of bringing an action for annulment of the contested decision (point 2 of the operative part of the order under appeal);
– give a decision on the substance and dismiss the action [brought by the shareholders] as inadmissible; and
– order [the shareholders] to pay the costs.
26. By its appeal of 27 November 2017 in Case C‑665/17 P, the Commission claims that the Court should:
– set aside the order under appeal in so far as it dismissed the plea of inadmissibility as regards the application brought by the shareholders;
– dismiss the action brought by [the shareholders] as inadmissible; and
– order [the shareholders] to pay the costs.
27. By their appeal of 25 November 2017 in Case C‑669/17 P, TKB and the shareholders claim that the Court should:
– set aside point 1 of the operative part of the order under appeal, that is, the decision by the General Court that there is no need to adjudicate on the action for annulment of TKB;
– declare that the action of TKB is not devoid of purpose;
– declare that the action brought by TKB is admissible;
– refer the case back to the General Court for it to determine the claim for annulment, and
– order the ECB to pay the costs, including the costs of the appeal.
28. In their response in Cases C‑663/17 P and C‑665/17 P, TKB and the shareholders contend that the Court should:
– dismiss the appeal;
– declare that the action for annulment [brought by the shareholders] is admissible and that the action is not devoid of purpose, and
– order the ECB and the Commission to pay the costs.
29. In its response in Case C‑669/17 P, the ECB contends that the Court should:
– dismiss the appeal; and
– order [TKB and the shareholders] to pay the costs.
30. By decision of the President of the Court of Justice of 13 March 2018, Cases C‑663/17 P, C‑665/17 P and C‑669/17 P were joined for the purposes of the oral procedure and of the judgment.
31. The parties submitted written observations and presented oral argument at the hearing on 11 February 2019.
V. Legal assessment
32. The ECB was successful in its plea of inadmissibility before the General Court only partially, namely in respect of the action brought by TKB. For that reason, the order of the General Court is being challenged by both sides in the appeal proceedings, while the Commission supports the ECB’s position with a separate appeal.
33. By the appeal in Case C‑669/17 P, first of all, TKB and the shareholders challenge point 1 of the operative part of the order under appeal, by which the General Court declared that there is no need to adjudicate on the action brought by TKB (see under A.).
34. The appeals brought by the ECB in Case C‑663/17 P and by the Commission in Case C‑665/17 P are directed, second, at point 2 of the operative part of the order under appeal, by which the General Court dismissed the plea of inadmissibility raised by the ECB as regards the action brought by the shareholders. As grounds for their appeals, both appellants contest the statements made by the General Court regarding the interest in bringing proceedings and the direct and individual concern of the shareholders. Accordingly, the substance of these appeals can be examined together (see under B.).
A. The appeal in Case C‑669/17 P
35. By their appeal in Case C‑669/17 P, TKB and the shareholders challenge point 1 of the operative part of the order under appeal, by which the General Court decided that there is no need to adjudicate on the action brought by TKB. In the view of the General Court, the action became devoid of purpose because on 17 March 2016 the liquidator revoked all the powers of attorney granted by TKB and by its former board of directors and the appellant had thus no longer been effectively represented before the General Court.
36. In support of their appeal, TKB and the shareholders rely, in substance, (9) on two grounds of appeal: first, an infringement of the principle of effective judicial protection and, second, in the alternative, the claim that the power of attorney granted to the lawyers was not effectively revoked.
1. The admissibility of the appeal
37. The appeal is inadmissible in so far as it was lodged by the shareholders and is directed solely at point 1 of the operative part of the order under appeal. Under the second paragraph of Article 56 of the Statute of the Court of Justice, an appeal may be brought only by a party which has been unsuccessful, in whole or in part, in its submissions. The General Court upheld the submissions of the shareholders with regard to the admissibility of their action.
38. In so far as the appeal was lodged by TKB, its admissibility depends precisely on the substance of the complaints on which TKB bases its appeal. Substance and admissibility must therefore be examined together.
2. The first ground of appeal concerning the infringement of the principle of effective judicial protection
39. By its first ground of appeal, TKB claims in essence that it is incompatible with the obligation to ensure effective judicial protection to accept that, as a consequence of liquidation, the liquidator has an exclusive power of representation in all matters relating to the withdrawal of the licence and, alongside this, his power to revoke the powers of attorney of the lawyers mandated by the board of directors. This would deprive TKB, in law or at least in fact, of a legal remedy with regard to the withdrawal of its banking licence.
40. The General Court dismissed this objection in paragraphs 36 to 38 of the order under appeal. As grounds it stated that, as a legal person, TKB was still entitled to institute proceedings in accordance with the fourth paragraph of Article 263 TFEU, whilst it was for the liquidator to bring an action for annulment on behalf of TKB. As a result of the liquidation and the appointment of the liquidator, the former board of directors could no longer effectively represent TKB and could not therefore authorise legal representatives. That decision now rested with the liquidator, who was thus also able to revoke the powers of attorney of the lawyers who lodged the action for annulment on behalf of TKB.
41. It must therefore be examined whether the General Court was right to rule in paragraph 36 of the order under appeal that the legal protection sought by the bank, namely the annulment of the decision to withdraw its licence, can be effectively achieved by reference to the person of the liquidator. TKB questions this for two reasons.
42. It asserts that the General Court wrongly considered that the liquidator’s mandate included the legal power to challenge the withdrawal of the authorisation. The appellant alleges in essence that the General Court distorted the facts (first part of the first ground of appeal, see under (b)).
43. In addition, it is an error in law to regard the legal remedy through the liquidator as effective within the meaning of Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’). First, the liquidator was appointed by the FCMC, on whose proposal the ECB withdrew the appellant’s authorisation. He could not therefore effectively represent the interests of TKB vis-à-vis those institutions. Second, the board of directors alone had been substantively involved from the beginning in the process concerning the withdrawal of the licence, with the result that the liquidator cannot replace it at the stage of legal proceedings. Third, the liquidator would commit a breach of duty if he attempted to obtain the reinstatement of the licence and thus of the economic activities of the company whose business he is supposed to wind up (second part of the first ground of appeal, see under (c)).
44. However, first of all, it is necessary to clarify the preliminary point whether, contrary to the national rules on the powers of liquidators and the representation of a credit institution in liquidation, EU law can actually give grounds for the retention of the power of representation of the former board of directors for the purposes of bringing an action for annulment (see under (a)).
(a) The interaction of EU law and national law in examining the admissibility of an action for annulment brought by a legal person
45. The question whether a legal person is entitled to bring an action for annulment under the fourth paragraph of Article 263 TFEU against an EU act is solely a matter of EU law. (10) However, because a legal person is not able to carry out procedural acts itself, its prospect of obtaining judicial protection before the European Union Courts is directly connected to the question of the determination of the authorised representative. This question is thus likewise a matter of EU law.
46. In the absence of relevant rules at Union level on the representation of legal persons, regard is had in principle to national law in order to determine the authorised representative. (11) At the same time, however, the Court stresses that national legislation may not impair the right to effective judicial protection if and in so far as recourse is had to the provisions of national law for certain procedural requirements. (12)
47. In the case at issue, on the other hand, the General Court took the view that the final decision of the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga) in any event precluded an action for annulment brought by the bank, represented by the former board of directors. Through that decision, despite a submission to the contrary made by the lawyers, the former board of directors of TKB had been refused the possibility of bringing an action for annulment on behalf of TKB against the ECB’s decision. In paragraph 35 of the order under appeal, the General Court found that that decision is binding even if there is a conflict of interest and even if the liquidator does not have the power to bring an action for annulment on behalf of the appellant.
48. If that assumption were correct, the possibility of effective judicial review of the ECB’s decision, an EU act, would effectively depend on national law. It could even be entirely precluded by national law, for example if the liquidator did not have the power under the relevant domestic rules to bring an action for annulment. However, national law cannot have the final decision whether an EU act may be (effectively) reviewed in an individual case.
49. This idea can be illustrated using various examples from the Court’s case-law.
50. Thus, in Groupement des Agences de voyages, for example, the Court accepted the admissibility of the action for annulment brought by a company in the course of formation which did not have legal personality under national law, even though, according to settled and undisputed case-law, in the absence of EU legislation in this field, regard may be had in principle only to national company law. (13) Nevertheless, the crucial factor from the point of view of effective judicial protection was that an association which is addressee of an EU act must also be able to bring proceedings against that act. (14)
51. Similarly, the Court ruled in PKK that an organisation must still be considered to have legal standing in accordance with the fourth paragraph of Article 263 TFEU, irrespective of its dissolution and the loss of its legal personality, if judicial protection cannot be otherwise ensured. (15) In the orderset aside, the General Court had ruled that in the absence of legal personality such an organisation could not authorise representatives. (16) It had considered that it could not ignore this fact, although it had acknowledged the problem of legal remedies. (17)
52. Those decisions each concerned the retention of legal personality by a legal person for the purposes of bringing an action before the European Union Courts and not the retention of the power of representation of a person acting for them. They are, however, based on the idea that the European Union Courts certainly do not ‘have their hands tied’ in cases where the application of national law would mean that effective judicial protection cannot be granted. (18) Rather, they are also obliged to grant effective judicial protection in such cases.
53. This conclusion is also not invalidated by the fact that, according to the Court’s case-law, a person seeking legal protection in other circumstances is ultimately entitled only to bring actions for damages where national law denies him an effective legal remedy. The cases which were discussed in this connection at the hearing never concerned actions brought by addressees for the purposes of the fourth paragraph of Article 263 TFEU against an EU act addressed to them, but actions brought by non-addressees against EU acts with general effect which require transposition or entail national implementing acts. (19) If national law does not provide for (effective) legal recourse in such cases, an action for annulment cannot be brought instead directly against the underlying EU act, as there is no provision for this in the system under the fourth paragraph of Article 263 TFEU.
54. However, the action brought by the addressee — TKB — in the present case against the EU act adversely affecting it — the ECB’s decision — is readily provided for in the system under the fourth paragraph of Article 263 TFEU and in particular cannot be replaced by an action for damages. In addition, in the case at issue there is not even a theoretical possibility of having the withdrawal of the licence by the ECB reviewed before national courts. (20)
55. An application for interim relief likewise could not have prevented the situation at issue as, for such an application, just as for an action under Article 263 TFEU, the conditions as to admissibility must be satisfied at the time of the decision by the Court of Justice. Following the withdrawal of the licence, however, a liquidator was appointed just 11 days after the adoption of the ECB’s decision, with the result that at the time of the Court’s decision on interim relief the powers of attorney of the litigation lawyers would also have already been revoked. In addition, under Article 278 TFEU the Court may order that the suspension of the application of the contested act, in this case the enforcement of the decision to withdraw the licence, but not the liquidation under national law.
56. The conclusion that regard cannot be had to national law in this case in order to determine the authorised representative for TKB is confirmed, moreover, if we look at parallel proceedings. In a similar case before the General Court, for example, the competent Maltese liquidation tribunal expressly upheld, in its order initiating liquidation proceedings for the bank concerned, the power of representation of the board of directors for the purposes of bringing an action for annulment against the withdrawal of the banking licence before the General Court. (21) There have also been cases in Latvia in which the board of directors was considered still to have the power of representation for the proceedings brought against the withdrawal of the authorisation. (22) If the view taken by the General Court were adopted, the possibility of review of an EU act would thus be made dependent on the legal framework conditions in the Member State in question.
57. By considering in paragraph 35 of the order under appeal that the power of representation and thus the power to revoke the powers of attorney is in any event to be determined on the basis of national law alone, the General Court therefore committed an error in law.
58. However, that error in law can result in the contested order being set aside only if the revocation of the power of attorney by the liquidator is actually likely to prevent the bank obtaining effective judicial protection against the withdrawal of its authorisation. This would not be the case if the legal protection sought by the bank could be achieved equally effectively by the liquidator.
(b) The first part of the first ground of appeal
59. The first paragraph of Article 47 of the Charter describes the principle of effective judicial protection as the right of everyone to an effective remedy before a tribunal. It also follows from the third paragraph of Article 47 of the Charter that access to justice must be ensured. A possibility of seeking a remedy which exists only formally or theoretically, but is ruled out in practice cannot be considered sufficient. (23) The Court thus does not consider a legal remedy to be effective if the sole means of access to a court is available to parties who are compelled to act unlawfully and are then able to defend themselves against the relevant sanction. (24)
60. If the liquidator was not already authorised de jure under Latvian law to challenge the withdrawal of the authorisation, no legal remedy at all would be available to the bank, since a legal person naturally cannot carry out procedural acts itself, but must be represented by a natural person. However, this would not satisfy the requirements for the effectiveness of judicial protection in any case.
61. TKB submitted at first instance that such a restriction of the liquidator’s power of representation followed from Section 322(1) of the Latvian Commercial Code, which restricts his powers to act to transactions which are not in contradiction with the purposes of the liquidation of the company. The General Court, on the other hand, found in paragraph 36 of the order under appeal that Latvian law confers on the liquidator the task of bringing an action for annulment on behalf of the bank.
62. It should be pointed out in this regard that an incorrect assessment of national law by the General Court can be the subject of a complaint in the appeal proceedings if the General Court has distorted national law. (25)
63. In this connection, the Court of Justice determines, first of all, whether the General Court, on the basis of the documents and other evidence submitted to it, distorted the wording of the national provisions at issue or of the national case-law relating to them, or the wording of the academic writings concerning them; second, whether the General Court, as regards those particulars, made findings that were manifestly inconsistent with their content; and, last, whether the General Court, in examining all the particulars, attributed to one of them, for the purpose of establishing the content of the national law at issue, a significance which is not appropriate in the light of the other particulars, where that is manifestly apparent from the documentation in the case file. (26)
64. The appellant would therefore have to claim that the General Court made findings that were manifestly inconsistent with the content of the national provisions at issue or that it attributed to those legal provisions a significance which is not appropriate in relation to the items in the file. (27)
65. It is clear from the case file that TKB takes the view that the liquidator’s ability to act is limited under Section 322(1) of the Latvian Commercial Code to measures which are not in contradiction with the purposes of the liquidation, whilst the ECB cites Sections 133(4) and 161(1) of the Latvian Law on credit institutions to demonstrate that the liquidator enjoys all the powers that would also be enjoyed by a bank’s board of directors.
66. The Latvian legal situation cannot therefore be considered to be sufficiently clear that the General Court’s hypothesis that under Latvian law the liquidator enjoys at least de jure the possibility to challenge the withdrawal of the authorisation by the ECB before the European Union Courts can be regarded as a distortion of the facts for the purposes of the case-law set out in point 63 of this Opinion.
67. It follows that this finding made by the General Court is binding.
(c) The second part of the first ground of appeal
68. It must therefore still be examined whether the General Court was able to hold, without erring in law, that this legal remedy is effective. As is clear from the case-law cited in point 59 of this Opinion, a legal remedy may not also be ineffective de facto.
69. In this connection Advocate General Bobek has stated elsewhere that the question whether a legal remedy is effective must be answered by reference to structural considerations. (28) With this in mind, the existence of a purely formal possibility of a remedy cannot be sufficient if the legal framework conditions are designed such that de facto that possibility cannot be utilised. Otherwise the first paragraph of Article 47 of the Charter would be rendered meaningless.
(1) Is the possibility of the liquidator bringing an action to be considered effective?
70. As regards the possibility of the liquidator bringing an action after liquidation proceedings have been initiated, TKB asserts, first, that having regard to Section 322(1) of the Latvian Commercial Code it would constitute a breach of duty at least by the liquidator to challenge the withdrawal of the authorisation. For this reason, an action brought by the liquidator is merely a theoretical possibility. The ECB objects in this regard that the liquidator has an obligation to the creditors to generate as large an amount as possible for distribution and it could thus be fully in his interest to challenge the withdrawal of the authorisation.
71. It is true, in principle, that a temporary continuation of the business activities of the company concerned may possibly be permitted in view of the liquidator’s obligation vis-a-vis the company’s creditors. Unlike insolvency proceedings, however, the aim of liquidation is the liquidation of the company’s assets and the final termination of the company. If the task of challenging the withdrawal of the licence before the European Union Courts were now to be given to the liquidator, he would be expected to eliminate the cause in law for the winding up of the company. That is not part of his remit, however.
72. This cannot be compared to the situation of an administrator who manages the assets of a company which had to file for insolvency as a result of an EU act adopted in respect of it, such as a competition fine. In that situation there is no problem with handing over to the administrator alone the representation of the company concerned for the purposes of an action for annulment before the European Union Courts. (29) It is in his interest to challenge the competition fine if insolvency can thereby still be averted. A striking example in this regard is offered by a case on which the General Court had to give a ruling. In that case, the administrator appointed after the imposition of the competition fine was even obliged under national law to ensure that the company remained operational. (30) In the present case, however, the situation is precisely the opposite in terms of interests and duties.
73. Second, TKB submits that the bank’s interests can be effectively represented only by the board of directors, which was involved from the beginning in the complex procedure concerning the withdrawal of the licence. Continuity must therefore be ensured in the persons acting on its behalf at the stage of the legal proceedings.
74. It should be stated that the ECB Board of Review did not consider the notice of review lodged by the board of directors against the withdrawal of the licence to be inadmissible and ruled on the substance even though the powers of attorney had been revoked by the liquidator and an order to the contrary had been made by the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga). This suggests that those persons should also be allowed to act for the bank at the stage of legal proceedings. In addition, it is possible to infer from the Court’s abovementioned case-law on the retention of legal personality of legal persons for the purposes of bringing an action before the European Union Courts the principle that the addressee of an EU act, in the form which it took at the time when the EU institutions took action against it, must also be able to bring proceedings against the act adversely affecting it. (31)
75. In addition, third, the liquidator for a bank whose authorisation has been withdrawn is appointed, under Section 377(2) of the Latvian Code of civil procedure, on a proposal from the FCMC. Under Section 387(2) of the Latvian Code of civil procedure, the FCMC may also at any time request the replacement of the liquidator if it no longer has confidence in him. If it is also borne in mind that it was on a proposal from the FCMC that TKB’s authorisation was withdrawn by the ECB, the conflict of interest is obvious. If the liquidator wished to take action against the withdrawal of the authorisation by the ECB, he could thus be replaced at any time at the request of the FCMC, which is on the side of the ECB in this regard.
76. The European Court of Human Rights held in a similar case that the fact that an application for judicial review of the lawfulness of the withdrawal of a banking licence, which had resulted in the liquidation of the bank concerned, could be made only by the liquidator, but no longer by the former board of directors, constituted an infringement of Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). The ECtHR focused in particular on the fact that the liquidator was controlled de facto by the supervisory authority, which could make a request for his replacement to the insolvency court at any time. (32) Although, unlike in that case, the FCMC cannot appoint the liquidator itself in the present case, Section 377(2) and Section 387(2) of the Latvian Code of civil procedure do provide that the court must appoint the person proposed by the FCMC and dismiss him if the FCMC loses confidence in him.
77. The liquidator’s decision not to challenge the withdrawal of the authorisation is thus determined structurally and not by an economic or legal consideration in a specific case. For this reason, there also can be no objection to the fact that TKB did not attempt in the Latvian courts to obtain the replacement of the liquidator appointed by another party. Under the Latvian legal situation, as is clear from the contents of the case file, a liquidator will systematically refrain from taking action against the withdrawal of the banking licence in a case like this. It is not therefore a situation where the board of directors is simply not satisfied with the liquidator’s differing view on the appropriateness of legal action in the individual case. (33)
78. Fourth, a different position is also not justified by the fact that, because of the liquidation of TKB, which is irreversible under Latvian law, the only option is actions for damages, which could also be in the interest of the liquidator. Under the Latvian legal situation, the liquidator is also subject to the abovementioned conflict of interest with regard to a challenge to the withdrawal of the authorisation by subsequently bringing actions for damages. In addition, he would nevertheless formally have to challenge the cause in law for liquidation. Furthermore, this argument amounts to denying effective judicial protection on the ground that the Latvian legal situation precludes a priori effective (primary) judicial protection against the withdrawal of the licence.
79. Under these circumstances, the legal protection sought by TKB cannot be considered to be effectively achieved by the reference to an action to be brought by the liquidator.
(2) Is an action brought by the shareholders an effective alternative remedy?
80. The finding made by the General Court in paragraph 36 of the order under appeal according to which TKB’s right to effective judicial protection is not restricted as a result of the revocation of the powers of attorney and the resulting finding that there is no longer any need to adjudicate could, however, be proved correct on other grounds.
81. This would be the case in particular if an action brought by the shareholders, which the General Court held to be admissible in paragraph 72 of the order under appeal, were likely to achieve the legal protection sought by the bank equally effectively.
82. In the present case, two forms of shareholder action are conceivable: an action brought by shareholders on their own behalf to defend their own rights and an action brought by shareholders on their own behalf to defend the rights of the company (in the form of a representative action). (34)
83. The first variant, an action brought by shareholders against the withdrawal of the authorisation in their own right, in particular to defend their property rights, (35) constitutes a priori an aliud to an action brought by the bank — as holder of the authorisation — to defend its interests in retaining the authorisation and cannot therefore be considered equally effective.
84. The General Court held in paragraph 57 of the order under appeal that in a situation like that at issue the shareholders must enjoy a right to defend the interests of the bank. Irrespective of whether such an action was actually admissible, (36) it also cannot in any event be considered equally effective as an action brought by the bank itself.
85. First, an action which has to be brought by another person is always to be regarded as less effective because the judicial protection effectively depends on the will of a third party. TKB has asserted in this regard in the appeal proceedings that an action brought by shareholders cannot replace an action brought by the bank itself.
86. Second, the shareholders do not have the information or the understanding of the course of the procedure that are necessary to represent the bank’s position effectively.
87. Third, the remedies available before the European Union Courts are designed for the direct judicial protection of the addressee of an EU act having adverse effects. This can be seen from the fact that actions brought by non-addressees are admissible only under particular conditions; for them the Union system of legal remedies is complemented by the national courts. (37) The addressee of an EU act cannot therefore be referred to a legal remedy which is subordinate in this sense and which must be exercised by another person who is not himself the addressee of the act in question. In assessing the admissibility of an action for annulment, effective judicial protection must be ensured, as a matter of priority, for the direct addressee of an EU act.
(3) Interim conclusion
88. The legal protection sought by the bank cannot therefore be achieved effectively either by a reference to the liquidator or by a reference to an action brought by the shareholders. By rejecting, in paragraph 36 of the order under appeal, an infringement of the right to effective judicial protection, the General Court thus committed an error in law.
89. In the light of the foregoing, the first ground of appeal should be upheld.
3. The effects of the substance of the appeal in Case C‑699/17 P
90. The decision of the General Court, in so far as it held that there was no need to adjudicate on the application of TKB, is based on the findings made in paragraphs 35 and 36 of the order under appeal, which state that even the absence of an effective legal remedy following the revocation of the powers of attorney could not result in the relevant national legislation being disapplied and that effective judicial protection is ensured in any case by the liquidator. However, these two hypotheses have proven to constitute errors in law. (38)
91. Therefore, the order under appeal must be set aside in point 1 of the operative part, without the need to consider the substance of the second ground of appeal by which TKB alleges in the alternative that the revocation of the powers of attorney did not comply with national procedural rules.
4. The admissibility of the action brought by TKB before the General Court
92. Under the first paragraph of Article 61 of the Statute of the Court of Justice, if the decision of the General Court is set aside, the Court of Justice is itself to give judgment in the matter, where the state of the proceedings so permits.
93. That is the case here as it follows from the above considerations that the plea of inadmissibility raised by the ECB must be dismissed without the need for a further determination of the facts.
94. According to the findings of the General Court, on 17 March 2016 the liquidator revoked all the powers of attorney granted by TKB and by the former board of directors.
95. In so far as this effectively blocks access to the European Union Courts for TKB, however, it cannot be material in assessing the admissibility of its action. As has already been shown above, the application of national law cannot result in the erosion of the effective judicial protection against EU acts guaranteed by the first paragraph of Article 47 of the Charter. (39)
96. As was explained above, TKB is able to obtain effective judicial protection against the withdrawal of its banking licence only through the action which was brought pursuant to the fourth paragraph of Article 263 TFEU on its behalf by the former board of directors.
97. In this regard, it is clear from points 70 to 79 of this Opinion that in particular the possibility of the liquidator bringing an action on behalf of the bank which still exists formally after the revocation of the powers of attorney cannot be considered effective.
98. Nor can TKB be referred to an action to be brought by the bank’s shareholders, as that is not equally effective as an action brought by the bank itself. (40)
99. Consequently, the liquidator’s power under national law to revoke all powers of attorney is irrelevant from the point of view of EU law in so far as it concerns the power to bring an action under the fourth paragraph of Article 263 TFEU and has the consequence that effective judicial protection can no longer be obtained. Accordingly, the lawyers’ original power of attorney, the validity of which at the time when it was granted is undisputed, must still be regarded as effective.
100. Moreover, the continued validity of the power of representation of the board of directors for the purposes of the action for annulment before the European Union Courts is not affected by the Latvian legal situation. (41) In the same way as recognition of the travel agency’s legal standing in the case mentioned in point 50 of this Opinion did not confer legal personality on it under national law, recognition of the power of representation of the former board of directors in an action under the fourth paragraph of Article 263 TFEU does not restore its status in company law prior to liquidation in national law.
101. It follows that the plea of inadmissibility raised before the General Court must be dismissed in so far as it concerns the action brought by TKB.
B. The appeals in Cases C‑663/17 P and C‑665/17 P
102. By the appeals in Cases C‑663/17 P and C‑665/17 P, the ECB and the Commission challenge point 2 of the operative part of the order under appeal, by which the General Court dismissed the plea of inadmissibility raised by the ECB concerning the action brought by the shareholders.
103. The ECB bases its appeal formally on three grounds of appeal and the Commission formally on two grounds of appeal. In substance, both allege that the General Court erred in law in determining the interest in bringing proceedings (see under 1.) and in determining the legal standing of the shareholders (see under 2.).
1. First ground of appeal: interest in bringing proceedings for shareholders
104. According to the Court’s settled case-law, the applicant’s interest in bringing proceedings requires that the binding legal effects of the contested measure must be capable of affecting the interests of the applicant by bringing about a distinct change in its legal position. (42)
105. According to the case-law referred to in paragraph 53 of the order under appeal, an action for annulment brought by a shareholder in a company is admissible in principle only if he can show an interest of his own in bringing proceedings separate from the interest which the company to which the EU act is addressed has in the annulment of that act. Otherwise he can defend his interest in relation to that EU act only through the exercise of his rights as a member of the company. (43)
106. The reason for this is that the company itself has a right to bring an action against the EU act. An action brought by a shareholder is not therefore necessary and is to be considered subordinate to the direct legal protection of the company as addressee of the act in question. (44)
107. The General Court ruled in paragraph 57 of the order under appeal, however, that the shareholders in the present case can, as an exception, bring proceedings to defend the interests of the bank because they are precluded, because of the liquidation of TKB, from exercising their rights under company law internally vis-à-vis the board of directors.
108. The pivotal point here is the answer to the question whether it can be accepted that the shareholders have an interest of their own in bringing proceedings or can bring an action to defend the interests of the bank. This will determine the requirements to be applied in the next step in examining legal standing. If the shareholders may bring an action to defend the interests of the bank, it can only be relevant, with regard to legal standing, whether the bank is directly and individually concerned by the withdrawal of the authorisation and not the shareholders themselves.
109. This can be inferred from the Court’s case-law on the right of associations to bring actions in the law on State aid. In that field there are repeatedly situations where an association brings an action for annulment on its own behalf to defend the interests of another legal person, generally a member.
110. According to this case-law, an association in which undertakings that are affected by a State aid decision are organised may, in principle, bring an action against such a decision only if it is able to assert an interest of its own in bringing proceedings. An interest of its own in bringing proceedings for the association can be founded, for example, on the preservation of its negotiating position. In such a case, the Court then requires as a next step that the association’s negotiating position is individually and directly affected by the contested decision. (45)
111. The Court has also ruled, however, that an association may also have the right to bring an action on its own behalf in order to defend the interests of its members in the annulment of the decision. In that case legal standing depends on whether the members are individually and directly concerned by the contested decision. (46)
112. This is only logical as it is natural that the association is not individually and directly concerned in its own legal positions when defending the interests of its members. Consequently, if a person is to be permitted to defend the interests of another person, the admissibility of such an action cannot be made subject to the requirement that the applicant itself is concerned. That must apply both to actions brought by associations and to actions brought by shareholders. The General Court also considers in its case-law that the assessments made in case-law regarding the right of action of associations can be applied to the right of action of shareholders. (47)
113. It must therefore be explored whether the shareholders in this case — as assumed by the General Court — may, as an exception, assert the interest which the bank also has in the annulment of the decision. It must first be examined, however, whether the shareholders can show an interest of their own in bringing proceedings and the order under appeal could therefore prove to be correct.
(a) Do the shareholders have an interest of their own in bringing proceedings?
114. The economic interest in retaining the licence, the sole holder of which is the bank, cannot in principle establish for the shareholders an interest of their own in bringing proceedings, as the shareholders’ interest in this respect is coextensive with that of the bank. (48)
115. Where a non-privileged applicant brings an action for annulment against an act that has not been addressed to it, the requirement that the binding legal effects of the measure being challenged must be capable of affecting the interests of the applicant by bringing about a distinct change in his legal position (interest in bringing proceedings) overlaps with the conditions laid down in the fourth paragraph of Article 263 TFEU (in particular direct concern). (49)
116. For this reason, the role of the shareholders in administrative procedure preceding the withdrawal of the licence, which was highlighted at the hearing, also cannot in itself establish for the shareholders an interest of their own in bringing proceedings. Involvement in the procedure does not mean per se that the person involved is concerned by the act ensuing at the end of the procedure. (50)
117. A bank’s shareholders may in particular, however, assert the defending of their property rights as an interest of their own in bringing proceedings, according to the case-law of the General Court. (51) In such cases the General Court examines whether the status of the shareholder as the owner of shares in the company is individually and directly affected by the EU act addressed to the company. (52)
118. According to settled case-law, persons other than those to whom a decision is addressed are individually concerned by that act within the meaning of the fourth paragraph of Article 263 TFEU only if it affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons, and by virtue of these factors distinguishes them individually just as in the case of the person addressed. (53) The criterion of direct concern also requires in this connection that the EU act in question must directly affect the legal situation of those parties and leave no discretion to the authorities responsible for implementing that act, such implementation being purely automatic and resulting from European Union law alone, without the application of other intermediate rules. (54)
119. However, the status of shareholders under company law or their property rights are not — as the ECB and the Commission claim – affected, directly at least, by the withdrawal of the authorisation, as the withdrawal of the banking licence itself has no direct effects on the status of the shareholders and their ownership of shares in TKB. Certain legal effects do occur in the context of the liquidation of the company under national law, as the winding up of the company entail the definitive loss of property rights and rights of membership. However, liquidation takes place subsequent to the withdrawal of the banking licence and is not in any way required by EU law. The legal effects of liquidation do not therefore occur directly within the meaning of the case-law cited.
120. The mere fact that the withdrawal of the authorisation jeopardises the object of the company and may thus be reflected in a loss in the value of shares is not sufficient to establish direct concern. In addition, it would be incompatible with the principles set out in point 105 of this Opinion to confer on shareholders the right to challenge any EU act which might have detrimental effects on the value of the shares of a public limited company.
121. Furthermore, the interest which the shareholders in this case have in securing the future of the company is also not sufficiently separate from the bank’s interest in retaining its licence. (55)
122. It must therefore be stated that the shareholders do not have an interest of their own in bringing proceedings.
(b) An action brought by the shareholders in the interest of the bank?
123. The General Court found in any case in paragraph 57 of the order under appeal that there should be a departure from the principles set out in point 105 of this Opinion in this case and the shareholders should be considered to have an interest in bringing proceedings even though they are not seeking to defend an interest of their own, but the interest of the bank.
124. The General Court stated in support of its view, in paragraphs 54 to 56, that the shareholders in this case were not able to exert influence by which they could force an action on behalf of the bank. It therefore had to be accepted that the shareholders had an interest in bringing proceedings in order to defend the interests of the bank.
125. As has already been explained in point 106 above, however, the reason for the restriction of the shareholders’ right to bring an action is that the company itself has a right to bring an action against the EU act and not that the shareholders can normally exert influence on the company and its board of directors and thus force an action. Such powers are not enjoyed by a meeting of shareholders in every legal order. If the shareholders’ right to bring an action were always to be recognised where the possibilities of exerting influence under company law are restricted, such a right would have to be permitted in any liquidation and insolvency proceedings.
126. It is right that in cases where the shareholders cannot show an interest separate from the interest which the company has in the annulment of the EU act, they cannot bring an action for the simple reason that the company itself has legal standing in this regard. (56) Given that the company has this right to bring an action, it is justified to refer the shareholders in this regard to the exercise of their rights of participation and membership under company law. (57) This is consistent with a normal company structure where the company is represented externally by the board of directors and not by the shareholders.
127. An exception to this principle could therefore be made, according to its spirit and purpose — if at all — not in cases where the shareholders’ rights of participation are restricted, as the General Court held in paragraphs 54 to 56 of the order under appeal, but in cases where the company itself cannot (effectively) bring an action against the EU act in question.
128. As is clear from my statements in connection with the appeal in Case C‑669/17 P, however, there is no such situation here. Rather, it must be assumed that it is still possible for an action to be brought by TKB, represented by the former board of directors. Consequently, there is no reason to depart from the principle reiterated by the General Court in paragraph 53 of the order under appeal that an action for annulment brought by a shareholder in a company is admissible, in principle, only if he can show an interest of his own in bringing proceedings separate from the interest of the company as the addressee of the EU act.
129. By ruling in paragraph 57 of the order under appeal that, in derogation from that principle, the shareholders can be considered to have an interest in bringing proceedings under the present circumstances, the General Court thus made an error in law.
130. The first ground of appeal, in substance, raised by the ECB and the Commission in Cases C‑663/17 P and C‑665/17 P must therefore be upheld.
2. Second ground of appeal: legal standing of the shareholders?
131. Because the shareholders’ interest in bringing proceedings in this case must be rejected, there is no need to examine the objections raised by the appellants in the next step against the shareholders’ legal standing, in particular their individual and direct concern.
132. In accordance with the statements made above, (58) the individual and direct concern of the shareholders in their own legal position is in any case immaterial in an action to defend the interests of the bank. It would have been necessary to examine this point only if the General Court had accepted that the shareholders have an interest of their own in bringing proceedings. (59)
133. As is clear from paragraphs 53 to 57 of the order under appeal, however, the General Court wished to depart from this approach. Accordingly, under these circumstances it would not have had to examine as a next step whether the shareholders, but whether TKB is directly and individually concerned by the withdrawal of the authorisation in its own legal positions. On account of its capacity as the addressee of the EU act in question, that must be the case.
134. Accordingly, an action brought by the shareholders to defend the interests of TKB in the retention of the authorisation is not precluded in any case, as TKB, represented by the board of directors, is able itself to bring an action against the withdrawal of its authorisation by the ECB. (60)
3. Conclusion
135. It follows from the merits of the first ground of appeal by which, in Cases C‑663/17 P and C‑665/17 P, the ECB and the Commission challenge the General Court’s finding that the shareholders in this case have an interest in bringing proceedings that the order under appeal must be set aside in point 2 of the operative part, as in the absence of an interest in bringing proceedings for the shareholders, the General Court could not have accepted the admissibility of the action brought by the shareholders and could have dismissed the plea of inadmissibility raised by the ECB in this regard.
136. At the same time, it follows that the state of the proceedings permits the Court to give judgment in accordance with Article 61(1) of the Statute of the Court of Justice. In the absence of an interest in bringing proceedings, the action brought by the shareholders is inadmissible.
VI. Costs
137. Because, in my view, the case should be referred back to the General Court for the continuation of the proceedings, in so far as it concerns the action brought by TKB, the decision on costs in this regard should be reserved for the final judgment.
VII. Overall conclusion
138. In the light of the foregoing considerations, I propose that the Court should:
(1) Set aside the order of the General Court of the European Union (Second Chamber) of 12 September 2017, Fursin and Others v ECB (T‑247/16, EU:T:2017:623);
(2) Dismiss the plea of inadmissibility raised at first instance by the European Central Bank in so far as it concerns the action brought by Trasta Komercbanka AS;
(3) Dismiss the action brought at first instance by the second to seventh appellants in Case C‑669/17 P as inadmissible;
(4) Order the second to seventh appellants in Case C‑669/17 P to bear the costs of the action brought by them and the appeal lodged by them;
(5) Reserve the decision on costs as to the remainder.