Provisional text
ORDER OF THE GENERAL COURT (Second Chamber)
12 September 2017 (*)
(Action for annulment — Prudential supervision of credit institutions — Specific supervisory tasks conferred on the ECB — Decision to withdraw a credit institution’s licence — Authority to act given by a competent person — No need to adjudicate — Shareholders of the undertaking which is the addressee of the contested measure — Interest in bringing proceedings — Direct and individual concern — Rejection of the plea of inadmissibility)
In Case T‑247/16,
Trasta Komercbanka AS, established in Riga (Latvia), and the other applicants whose names are indicated in the annex, (1) represented by O.H. Behrends, L. Feddern and M. Kirchner, lawyers,
applicants,
v
European Central Bank (ECB), represented by E. Koupepidou and C. Hernández Saseta, acting as Agents, assisted by B. Schneider, lawyer,
defendant,
APPLICATION based on Article 263 TFEU and seeking annulment of ECB Decision ECB/SSM/2016 — 529900WIP0INFDAWTJ81/1 WOANCA‑2016-0005, of 3 March 2016, adopted pursuant to Articles 4(l)(a) and 14(5) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63),
THE GENERAL COURT (Second Chamber),
composed of M. Prek, President, E. Buttigieg and B. Berke (Rapporteur), Judges,
Registrar: E. Coulon,
makes the following
Order
Facts, procedure and forms of order sought by the parties
1 The first applicant, Trasta Komercbanka AS (‘TKB’) is a small Latvian credit institution of limited structural significance providing financial services pursuant to an authorisation granted to it by the Finanšu un kapitāla tirgus komisija (Financial and Capital Markets Commission, Latvia, ‘the FCMC’) in September 1991.
2 The other six applicants are shareholders of TKB (‘the shareholder applicants’). TKB’s two main shareholders are Mr Ivan Furstin, the second applicant, who indirectly holds 32.7% of its capital, and Mr Igor Buimisters, the third applicant, who holds 43.21% of its capital. The fourth, fifth, sixth and seventh applicants are, respectively, companies incorporated under Latvian, Cypriot, Dutch and Luxembourg law through which the second applicant holds a stake in TKB, namely, respectively, SIA C&R Invest, which holds 14.63% of the share capital, Figon Co. Ltd, which holds 3.41% of the share capital, GCK Holding, which holds 7.42% of the capital, and Rikam Holding, which holds 7.29% of the capital. Three other shareholders have a stake of more than 5%, while the remaining shares are held by 34 shareholders.
3 On 5 February 2016, the European Central Bank (ECB) received a proposal from the FCMC to withdraw TKB’s authorisation for taking up the business of credit institutions pursuant to Article 14(5) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63).
4 Having examined, in coordination with the FCMC, whether the EU law and national law criteria warranting the withdrawal of an authorisation were fulfilled, and after having received TKB’s observations on two occasions, the ECB adopted, on 3 March 2016, decision ECB/SSM/2016 — 529900WIP0INFDAWTJ81/1 WOANCA‑2016‑0005, by which it withdrew TKB’s authorisation and rejected its request for suspension of the effects of that decision for one month (‘the contested decision’).
5 On 14 March 2016, at the request of the FCMC, the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga, Latvia) adopted a decision initiating liquidation proceedings against TKB and appointing a liquidator. That court also rejected TKB’s application for the powers of representation of its management body to be maintained as regards the lodging of a request for review with the ECB and the bringing of an action against the contested decision before the Court of Justice of the European Union. No appeal may lie against that judgment.
6 On 17 March 2016, a notice of the opening of liquidation proceedings concerning TKB and of the replacement of TKB’s management by the liquidator was published in the Official Gazette of the Republic of Latvia. On the same day, the liquidator adopted a decision revoking all powers of attorney. On 21 March 2016, a notary published in the Official Gazette of the Republic of Latvia a notice of revocation of all powers of attorney adopted before 17 March.
7 On 3 April 2016, the ECB’s administrative board of review received a request for review from the lawyer who had previously acted during the administrative proceedings on behalf of TKB and the other applicants. By a decision of 30 May 2016, the board of review held that the allegations of procedural and substantive breaches entailed by the contested decision were unfounded and that that decision was sufficiently reasoned and proportionate, while recommending that the governing body of the ECB clarify certain elements.
8 On 13 May 2016, the lawyer representing TKB during the administrative proceedings brought an action for annulment of the contested decision on behalf of TKB and, as a precaution, on behalf of six of its direct and indirect shareholders.
9 On 11 July 2016, the ECB adopted Decision ECB/SSM/2016 — 5299WIP0INFDAWTJ81/2 WOANCA-2016-0005, whereby it again decided to withdraw TKB’s authorisation for taking up the business of credit institutions. As from the date of its adoption, that decision repealed and replaced the contested decision and confirmed the withdrawal of TKB’s authorisation.
10 By a separate document, lodged at the Registry of the General Court on 29 September 2016, the ECB raised an objection of inadmissibility regarding the action against the contested decision under Article 130(1) of the Rules of Procedure of the General Court.
11 By document lodged at the Court Registry on 18 November 2016, the applicants submitted their observations on the objection of inadmissibility.
12 The ECB contends that the Court should:
– declare the action inadmissible;
– order the applicants to pay the costs;
– in the event that the General Court declared the appeal admissible, extend the time limit within which it is to respond as regards the merits of the application.
13 The applicants claim that the Court should:
– declare the action admissible;
– order the defendant to pay the costs.
Law
14 Pursuant to Article 130(1) of the Rules of Procedure, a defendant can request the Court to rule on admissibility without going into the substance of the case. In accordance with Article 130(6) of those rules, the Court can decide to open the oral procedure on the plea of inadmissibility. In the present case, the Court considers that it has sufficient information from the documents before it and decides to give judgment without opening the oral procedure.
15 According to the ECB, TKB’s action is inadmissible because the power of attorney granted to its representative was revoked by the liquidator of that bank and, furthermore, the action brought by the shareholders is inadmissible because they do not have an interest in bringing proceedings, or standing, distinct from that of TKB. In addition, the action has become devoid of purpose in so far as the contested decision was replaced by a new decision.
16 TKB and the shareholder applicants dispute that line of argument.
The applicants’ interest in bringing proceedings against a repealed decision
17 Pursuant to settled case‑law, an action for annulment brought by a natural or legal person is admissible only in so far as that person has an interest in having the contested act annulled. Thus, an applicant’s interest in bringing proceedings must, in the light of the purpose of the action, exist at the time at which the action is brought, failing which the action will be inadmissible. The object of the dispute must, like the interest in bringing proceedings, endure until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage for the party bringing it (see judgment of 8 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 61 and the case-law cited).
18 An applicant’s interest in bringing proceedings does not necessarily end because the act challenged by him has ceased to have effect in the course of proceedings (judgment of 28 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 62).
19 It is apparent from that case-law that the question whether an applicant’s interest in bringing proceedings endures must be assessed in the light of the specific circumstances of the case, taking account, in particular, of the consequences of the alleged unlawfulness and of the nature of the damage claimed to have been sustained (judgment of 28 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 65).
20 In the event of a repeal, an applicant may thus retain an interest in seeking the annulment of an act directly affecting him which has been repealed in order to obtain inter alia a finding, by the EU judicature, that an unlawful act has been committed against him, in order for that finding to then act as the basis for any action for damages aimed at properly compensating the damage caused by the contested act (see, to that effect, judgment of 17 July 2014, Westfälisch-Lippischer Sparkassen- und Giroverband v Commission, T‑457/09, EU:T:2014:683, paragraph 137).
21 In the present case, TKB and the shareholder applicants rely in particular on the possibility of claiming compensation in order to show that the present action has not become devoid of purpose.
22 As stated in paragraph 9 of the present order, the contested decision was repealed by Decision ECB/SSM/2016 — 5299WIP0INFDAWTJ81/2 WOANCA-2016-0005 of 11 July 2016. It therefore produced effects in the period between the date of its entry into force and the date of its repeal, namely between 3 March and 11 July 2016. In particular, the contested decision prohibited TKB, during that period, from carrying on its commercial activity. The annulment of the contested decision is therefore likely, in itself, to have consequences for the legal position of TKB, in particular because it could give rise to an action for damages.
23 Consequently, TKB and the shareholder applicants have demonstrated to the requisite legal standard that they maintained an interest in bringing proceedings against the contested decision despite its repeal.
Lawfulness of the power of attorney of the representative who lodged the appeal on behalf of TKB
24 Pursuant to Article 51(3) of the Rules of Procedure, where the party represented by the lawyer is a legal person governed by private law, the lawyer must lodge at the Registry an authority to act given by that person.
25 In the present case, it is for the General Court to determine the applicable national law and, moreover, to determine whether, by virtue of that right, the liquidator has the power to revoke the authority to act and whether it did revoke it (see, to that effect and by analogy, order of 9 December 2013, Brown Brothers Harriman v OHIM (TRUST IN PARTNERSHIP), T‑389/13, not published, EU:T:2013:691, paragraph 9).
Applicable law
26 Pursuant to Article 10(2)(b) of Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding up of credit institutions (OJ 2001 L 125, p. 15), the law of the Member State in which a credit institution has been authorised applies to the respective powers of the credit institution and its liquidator.
27 It follows that, as acknowledged by the parties, the law applicable to the determination of the liquidator’s powers in the present case is Latvian law.
28 Furthermore, since, under Article 10(2)(b) of Directive 2001/24, the powers of the liquidator are defined by Latvian law, the manner in which those powers are exercised, including the power to terminate contracts in progress, are also governed by that law.
29 Any decision to revoke the lawyer’s power of attorney is directly connected with the liquidation proceedings and stems from the exercise by the liquidator of a prerogative which he draws specifically from the provisions of national law governing, in accordance with EU law, that type of proceedings.
30 Moreover, the failure to apply the law of the State in which the credit institution was authorised to the manner in which the liquidator exercises his powers would render the conflict-of-law rule laid down in Directive 2001/24 redundant by making, in practice, the powers of the liquidator subject to another law than that of the Member State in which a credit institution was authorised.
31 It follows from the foregoing that the manner in which the liquidator revokes the power of attorney of the lawyer who lodged the appeal on behalf of TKB is governed by Latvian law.
Whether the power of attorney was effectively revoked
32 The power of attorney produced by the lawyer who lodged the appeal on behalf of TKB was granted before the opening of the winding-up proceedings. It is not disputed that, on that date, the power of attorney was granted by an authorised person within the meaning of the Rules of Procedure.
33 However, to the extent that the ECB claims that the power of attorney was revoked by a decision of the liquidator published in the Official Gazette of the Republic of Latvia and that, moreover, it is apparent from the documents in the file that a letter of revocation sent by the liquidator had reached the lawyer, it is necessary to determine whether the liquidator was entitled to revoke the power of attorney and whether that decision or the letter did have the effect of revoking that power of attorney.
34 As regards the power of the liquidator to revoke the power of attorney, it is expressly stated in the operative part of the judgment opening the liquidation proceedings of 14 March 2016 that the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga) rejected TKB’s application to maintain its directors power of attorney for the purpose of adopting decisions relating to the administrative proceedings before the ECB and the judicial proceedings before the Court of Justice of the European Union.
35 In those circumstances, TKB’s arguments, based on an interpretation of Latvian law distinct from that of the final decision of the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Vidzeme District Court, Riga) whose judgment is final, and on the former management bodies retaining their powers of representation, which it justifies by referring to a conflict of interest concerning the liquidator and his inability to bring an action on behalf of TKB, are not such as to call into question the existence, under Latvian law, of the liquidator’s power to revoke the power of attorney.
36 In that regard, it must be pointed out in any event that the application of Latvian law does not, contrary to what TKB claims, lead to a breach of EU law and, in particular, of the right to effective judicial protection. The application of Latvian law does not lead to all banks whose approval was withdrawn being deprived of a remedy, but to the responsibility for seeking that remedy being entrusted to the liquidator.
37 Nor may TKB rely on an alleged infringement by the ECB of the nemo auditur principle or of the right to bring an action under Article 24(11) of Regulation No 1024/2013 arising from the fact that the ECB did not prevent its liquidation in order to be exempted from compliance with the requirements of Article 51(3) of the Rules of Procedure. Compliance with the obligations imposed by the Rules of Procedure is not dependent on the conduct of the ECB.
38 In any event, the demonstration of the infringements alleged by TKB is based on the existence of an obligation for the ECB to prevent the FCMC from applying for winding-up proceedings in the event of an authorisation being withdrawn. That obligation has no legal basis. Furthermore, none of the provisions of Regulation No 1024/2013 empowers the ECB to issue directions entitling it to object to a request by a national authority for the opening of winding-up proceedings triggered by the application of national law.
39 Since it has been established that the liquidator is entitled, under Latvian law, to revoke the power of attorney, it is necessary to ascertain whether, by virtue of that law, the decision to revoke the power of attorney which he published in the Official Gazette of the Republic of Latvia, or the letter of revocation which reached the lawyer, effectively revoked the power of attorney.
40 In order to establish that the revocation of the lawyer’s power of attorney by publication is effective, the ECB relies in particular on Article 138 of the Latvian Law on Notaries.
41 Conversely, the lawyer who lodged the appeal on behalf of TKB avails himself of that same provision and of the terms of his power of attorney, under which all communication should be conducted in writing, in order to demonstrate that the power of attorney may only be revoked by means of a notification.
42 He further claims that he was not notified of the revocation of his power of attorney by the liquidator and, therefore, that the power of attorney was not effectively revoked.
43 First, Article 138 of the Law on Notaries, relied on by the parties, governs the notification made by a notary. It is therefore not applicable to any revocation by the liquidator.
44 Secondly, contrary to what the lawyer who lodged the appeal on behalf of TKB claims, it is not stipulated in the power of attorney in question that communications between the parties must observe a specific form.
45 That lawyer may not therefore rely on any obligation for the liquidator to follow a specific form in revoking the power of attorney.
46 Thirdly, in response to a request by the General Court made in the context of a measure of organisation of procedure, that lawyer provided a letter of revocation, signed by the liquidator and dated 31 March 2016, which he states was sent by e-mail on 28 October 2016.
47 The lawyer who lodged an appeal on behalf of TKB may not therefore claim that the revocation of his power of attorney was not effective as from that date.
48 He therefore no longer has an authority to act properly conferred by a person authorised to that end within the meaning of Article 51(3) of the Rules of Procedure.
49 Fourthly, as a condition of admissibility, compliance with the requirement for legal persons to be represented by a lawyer must continue until the final decision, failing which there will be no need to adjudicate (see, to that effect and by analogy, judgments of 7 June 2007, Wunenburger v Commission, C‑362/05 P, EU:C:2007:322, paragraph 42, and of 28 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 61).
50 There is therefore no need to adjudicate on TKB’s application.
51 Since the effective revocation of the power of attorney at issue following the receipt of a letter of revocation signed by the liquidator has been established, it is not necessary to assess the possible effects of the decision to revoke all the powers of attorney that the liquidator has published in the Official Gazette of the Republic of Latvia.
Interest in bringing proceedings and legal standing of shareholders
52 An interest in bringing proceedings and locus standi are distinct conditions for admissibility which must be satisfied by a natural or legal person cumulatively in order for it to be admissible to bring an action for annulment under the fourth paragraph of Article 263 TFEU (see, to that effect, judgments of 27 February 2014, Stichting Woonpunt and Others v Commission, C‑132/12 P, EU:C:2014:100, paragraphs 67 and 68, and of 27 February 2014, Stichting Woonlinie and Others v Commission, C‑133/12 P, EU:C:2014:105, paragraphs 54 and 55).
Interest in bringing proceedings of shareholder applicants
53 According to case-law, an applicant must show that it has a legal interest in bringing proceedings separate from that possessed by an undertaking which it partly controls and which is concerned by a European Union measure. Otherwise, in order to defend its interests in relation to that measure, its only remedy lies in the exercise of its rights as a member of the undertaking which itself has a right of action (judgment of 20 June 2000, Euromin v Council, T‑597/97, EU:T:2000:157, paragraph 50; order of 27 March 2012, European Goldfields v Commission, T‑261/11, EU:T:2012:157, paragraph 21; and judgment of 17 July 2014, Westfälisch-Lippischer Sparkassen- und Giroverband v Commission, T‑457/09, EU:T:2014:683, paragraph 112).
54 That finding is based in particular on the fact that the possibility for shareholders to determine the management and policy of the undertaking in which they own shares, and the interests it must safeguard, precludes a finding that there is a risk of that undertaking adopting procedural decisions contrary to their interests (see, to that effect, order of 15 May 2013, Post Invest Europe v Commission, T‑413/12, not published, EU:T:2013:246, paragraph 29).
55 In the present case, as a result of the liquidation, shareholders are effectively prevented from exercising their rights as shareholders if, as is apparent from paragraphs 34 to 39 of the present order, the powers of the company’s management bodies have been transferred to a liquidator who cannot be influenced by the internal legal remedies of the company which are usually available to shareholders. Accordingly, the shareholders of TKB are not able to exercise their rights as members in order to get TKB to bring an action.
56 In that regard, the ECB argues that the shareholder applicants retain partial control over TKB through the possibility of bringing proceedings entailing the liability of the liquidator. However, liability proceedings do not, as such, make it possible to require TKB to bring an action. The possibility of bringing an action for damages against the liquidator may not therefore be interpreted as equivalent to the exercise of the specific members’ rights by the shareholders, within the meaning of the case-law, which would allow them to require the liquidator to bring an action.
57 Accordingly, shareholders are, in the present case, precluded from exercising their rights as members in order to safeguard the interests of the company. Consequently, the solution adopted by the General Court in the case-law referred to in paragraphs 53 and 54 of the present order may not be applied, by analogy, to the present case and it is therefore necessary to hold that the shareholders have an interest in bringing proceedings.
58 The shareholder applicants have thus established to the requisite legal standard their interest in bringing proceedings.
Whether the shareholders have standing to bring proceedings
59 Under the fourth paragraph of Article 263 TFEU, a natural or legal person may institute proceedings against a decision addressed to another person only if that decision is of direct and individual concern to the former.
– Individual concern to the shareholders
60 According to case-law, persons other than those to whom a decision is addressed may claim to be individually concerned only if that decision 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 those factors distinguishes them individually just as in the case of the person addressed (judgments of 15 July 1963, Plaumann v Commission, 25/62, EU:C:1963:17, and of 13 December 2005, Commission v Aktionsgemeinschaft Recht und Eigentum, C‑78/03 P, EU:C:2005:761, paragraph 33).
61 Moreover, where the contested decision affects a group of persons who were identified or identifiable when that measure was adopted by reason of criteria specific to the members of the group, those persons may be individually concerned by that measure inasmuch as they form part of a limited class of economic operators (see judgment of 23 April 2009, Sahlstedt and Others v Commission, Case C‑362/06 P, EU:C:2009:243, paragraph 30 and the case-law cited).
62 In the present case, on the one hand, the contested decision affects a group of people who were identified or identifiable at the time when it was taken on the basis of criteria specific to the members of the group and, on the other, it affects them by reason of certain qualities peculiar to them or of a factual situation which differentiates them from any other person. The decision affects the shareholder applicants in their particular capacity as shareholders of the bank whose authorisation has been withdrawn and differentiates the 42 direct shareholders of that bank from any other person (see, to that effect, judgment of 22 April 1999, Monsanto v Commission, T‑112/97, EU:T:1999:83, paragraph 58).
63 Consequently, the direct shareholder applicants are individually affected by the contested decision.
– Direct concern to the shareholders
64 According to case-law, for a person to be directly concerned by the measure at issue, the measure must directly affect the legal situation of the individual and leave no discretion to the addressees of that measure who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from the EU rules alone, without the application of other intermediate rules (see judgment of 13 October 2011, Deutsche Post and Germany v Commission, C‑463/10 P and C‑475/10 P, EU:C:2011:656, paragraph 66 and the case-law cited).
65 As regards the question whether the contested decision directly affects the legal situation of the shareholder applicants, the General Court has already ruled that shareholders cannot be regarded as directly and individually concerned by a decision in so far as it does not, of itself, affect the substance or extent of the rights of the shareholders, either as regards their proprietary rights or the ability, conferred on them by those rights, to participate in the management of the company (judgment of 28 October 1993, Zunis Holding and Others v Commission, T‑83/92, EU:T:1993:93, paragraph 35).
66 In the present case, since the contested decision has the effect of withdrawing TKB bank’s authorisation and, accordingly, of preventing it from achieving its object and having an economic activity, it directly affects the legal position of the shareholder applicants.
67 Because of the intensity of its effects, the decision necessarily affects the substance and extent of their rights. In the first place, the right to receive dividends from the profits of a commercial company which is no longer authorised to carry on its business activities necessarily becomes illusory. Secondly, the exercise of voting rights or the right to take part in the management of the company becomes essentially formal, since the effect of the contested decision is to prohibit TKB from achieving its objects.
68 Moreover, the contested decision entails the withdrawal of the authorisation without the adoption of provisional measures by the State or by another institution of the European Union being necessary.
69 The direct shareholder applicants are therefore directly affected by the contested decision.
70 In addition, where admissibility must be established in respect of a single action lodged by a number of applicants and the application is admissible in respect of one of them, there is no need to consider whether the other applicants are entitled to bring proceedings (see, to that effect, judgments of 24 March 1993, CIRFS and Others v Commission, C‑313/90, EU:C:1993:111, paragraph 31, and of 20 October 2016, August Wolff and Remedia v Commission, T‑672/14, not published, EU:T:2016:623, paragraph 18 and the case-law cited). Since the action is admissible for the direct shareholders, it is not necessary to examine whether Mr Ivan Furstin, the second applicant, who is an indirect shareholder, has standing.
71 In the light of the foregoing, the applicants, who are direct shareholders of TKB, are directly and individually concerned by the contested decision.
72 The shareholder applicants’ action is therefore admissible.
Costs
73 Under Article 133 of the Rules of Procedure, a decision as to costs shall be given in the final judgment or in the order closing the proceedings. Since the present order does not close the proceedings, the costs are reserved.
On those grounds,
THE GENERAL COURT (Second Chamber),
Hereby orders:
1. There is no need to adjudicate on the application of Trasta Komercbanka AS.
2. The objection of inadmissibility is dismissed in so far as it concerns the action of the other applicants, whose names are set out in the annex.
3. Costs are reserved.
Luxembourg, 12 September 2017.