Provisional text
ORDER OF THE GENERAL COURT (Second Chamber)
19 July 2017 (*)
(Action for annulment — State aid — Aid granted by the Portuguese authorities for the resolution of the financial institution Banco Espírito Santo — Creation and capitalisation of a Bridge Bank — Decision declaring the aid compatible with the internal market — No interest in bringing proceedings — Inadmissibility)
In Case T‑812/14,
BPC Lux 2 Sàrl, established in Senningerberg (Luxembourg), and the other applicants whose names are set out in the Annex to the present order, represented by P. Fajardo, lawyer, J. Webber and M. Steenson, Solicitors, and K. Bacon QC,
applicants,
v
European Commission, represented by L. Flynn and P.-J. Loewenthal, acting as Agents,
defendant,
supported by
Portuguese Republic, represented by L. Inez Fernandes and S. Jaulino, acting as Agents, and by M. Mendes Pereira, lawyer,
intervener,
APPLICATION pursuant to Article 263 TFEU for annulment of Commission Decision C(2014) 5682 final of 3 August 2014 on State aid SA.39250 (2014/N) — Portugal — Resolution of Banco Espírito Santo,
THE GENERAL COURT (Second Chamber),
composed of M. Prek (Rapporteur), President, E. Buttigieg and B. Berke, Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the dispute
1 The applicants, BPC Lux 2 Sàrl and the other legal persons whose names are set out in the Annex to the present order, are subordinated creditors of Banco Espírito Santo (‘BES’) holding Lower Tier 2 Bonds.
2 It was announced in May 2014 that an audit by the Bank of Portugal of the Espírito Santo International Group had concluded that the latter was in a serious financial condition, and this was likely to have a negative impact on the solvency of BES, of which that group was the largest shareholder.
3 On 30 July 2014, BES published its results for the first half of 2014, revealing heavy losses. This was followed in July 2014 by a significant fall in deposits.
4 Against that background, the Portuguese authorities decided to put BES into resolution, which entailed the creation of a temporary credit institution, referred to as the ‘Bridge Bank’, to which the sound business activities of BES were transferred. After those assets and liabilities had been transferred to the Bridge Bank, the other residual assets and liabilities remained within BES, which became known as the ‘Bad Bank’.
5 On 3 August 2014, the Portuguese authorities gave the European Commission notification of a proposal to grant EUR 4 899 million State aid via the Portuguese Resolution Fund (Fundo de Resolução), which was intended to provide the Bridge Bank with initial share capital. Alongside that notification, the Portuguese authorities forwarded to the Commission two reports by the Bank of Portugal: an assessment of the options envisaged for the resolution of BES, which concluded that the creation of a Bridge Bank was the only means of maintaining financial stability in the Portuguese Republic, and a description of the procedure to be followed for the resolution of BES. In line with that report, the Portuguese authorities gave the Commission commitments in respect of both the Bridge Bank and the Bad Bank concerning the orderly winding down of those banks. The commitments common to both those establishments relate to the management of existing assets, the imposition of a salary cap and a prohibition on the use of State aid resources for the acquisition of holdings, the payment of coupons or dividends and advertising.
6 The same day, at the end of the preliminary examination stage, the Commission adopted, pursuant to Article 108(3) TFEU, Decision C(2014) 5682 final on State aid SA.39250 (2014/N) — Portugal — Resolution of Banco Espírito Santo (‘the contested decision’), by which it concluded that the notified measure, namely the injection of EUR 4 899 million capital by the Portuguese authorities into the Bridge Bank, together with the commitments given by those authorities, constituted State aid compatible with the internal market under Article 107(3)(b) TFEU.
7 Annex I to the contested decision sets out the list of commitments given by the Portuguese authorities. Paragraph 5 of the Annex states, inter alia, that no claim of shareholders and holders of subordinated debt or any hybrid instruments may be transferred to the Bridge Bank. Further, paragraph 24 of that Annex specifies that the liquidation of BES was to take place no later than 31 December 2016.
Procedure and forms of order sought
8 By application lodged at the Registry of the General Court on 12 December 2014, the applicants brought the present action.
9 By separate document, lodged at the Court Registry the same day, the applicants requested the Court to adjudicate under the expedited procedure provided for in Article 76a of the Rules of Procedure of the General Court of 2 May 1991. That application was dismissed by decision of the General Court (Fourth Chamber) of 10 February 2015.
10 By separate document, lodged at the Court Registry on 19 December 2014, the applicants lodged an application for interim relief seeking suspension of operation of the contested decision.
11 By order of the President of the General Court of 25 February 2015, the application for interim measures submitted by the applicants was dismissed and the costs reserved.
12 By document lodged at the Registry of the Court on 10 March 2015, the Portuguese Republic applied for leave to intervene in support of the form of order sought by the Commission.
13 By document lodged at the Court Registry on 9 April 2015, the applicants requested confidential treatment of certain Annexes to the application and certain paragraphs of the reply vis-à-vis the Portuguese Republic.
14 By decision of 16 June 2015, the General Court (Fourth Chamber) granted the Portuguese Republic leave to intervene. The Portuguese Republic lodged its statement in intervention on 21 August 2015.
15 On 7 December 2016, the Court put a question to the applicants as to whether they had a legal interest in bringing proceedings for annulment of the contested decision.
16 On 23 January 2017, the applicants replied to the question put by the Court.
17 When the composition of the chambers of the Court was altered, the Judge-Rapporteur was assigned to the Second Chamber, to which this case was, consequently, assigned.
18 The applicants claim that the Court should:
– annul the contested decision;
– order the Commission to pay the costs.
19 The Commission and the Portuguese Republic contend that the Court should:
– dismiss the action as inadmissible;
– order the applicants to pay the costs.
Law
20 Pursuant to Article 129 of its Rules of Procedure, the General Court may, at any time of its own motion, on a proposal from the Judge-Rapporteur and after hearing the main parties, decide to rule by reasoned order on whether there exists any absolute bar to proceeding with the case, such bars including the conditions governing the admissibility of an action (see, to that effect, order of 15 March 2016, Larymnis Larko v Commission, T‑576/14, not published, EU:T:2016:169, paragraph 13 and the case-law cited).
21 In this instance, the Court considers that it has sufficient information from the documents submitted and the arguments presented by the parties during the written procedure. The Court, having all the evidence required in order to give a ruling, therefore decides that there is no need to open the oral part of the procedure.
22 In its defence, the Commission contends that the action is inadmissible as the applicants do not have legal standing to bring proceedings for annulment of the contested decision. The applicants maintain that they have legal standing to bring such proceedings, both on the basis of the criteria set out in the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17, pp. 95, 107) and as ‘interested parties’ within the meaning of Article 1(h) of Council Regulation (EC) No 659/1999 laying down rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1).
23 After hearing the applicants, the Court considers that it is necessary to examine of its own motion whether they have an interest in seeking the annulment of the contested decision.
24 In accordance with 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 the annulment of the contested measure. That interest must be a vested and present interest and be assessed as at the day on which the application is made; it must also continue until the final decision is given in the case (see order of 26 March 2014, Adorisio and Others v Commission, T‑321/13, not published, EU:T:2014:175, paragraph 20 and the case-law cited).
25 In order for such an interest to be present, the annulment of the measure must of itself be capable of having legal consequences or, in accordance with a different form of words, the action must be liable, if successful, to procure an advantage for the party who has brought it (see order of 26 March 2014, Adorisio and Others v Commission, T‑321/13, not published, EU:T:2014:175, paragraph 21 and the case-law cited).
26 The Courts of the European Union may also examine, where appropriate, whether the Commission’s finding has binding legal effects such as to affect an applicant’s interests (see order of 26 March 2014, Adorisio and Others v Commission, T‑321/13, not published, EU:T:2014:175, paragraph 22 and the case-law cited).
27 In their reply to the questions put by the Court, the applicants justified their claim that they have an interest in bringing proceedings for annulment of the contested decision on account of the particularly negative effects of the decision of the Portuguese authorities to put BES into resolution and, in that context, the decision not to transfer their bonds to the Bridge Bank. The applicants submit that the annulment of the contested decision would very significantly increase the likelihood of success in the judicial review proceedings before the national courts and add that the consequence of such success would be either the annulment of the resolution of BES or a right to bring an action for damages.
28 As the applicants themselves acknowledge, the fall in the value of the bonds they hold is attributable to the decision of the Portuguese authorities to have recourse to a resolution procedure entailing the arrangements set out in paragraph 4 above and, in that context, not to transfer bonds of the kind held by the applicants to the Bridge Bank.
29 It is clear that the use of public funding for the Bridge Bank, in the form of the contested aid measure, is merely an extension of the Portuguese Republic’s decision to have recourse to a resolution procedure.
30 Therefore, it is not the public funding of the Bridge Bank which may have had a concrete effect on the value of the applicants’ claims, but the Portuguese authorities’ decision to adopt the resolution procedure in such a way that was prejudicial to the applicants’ interests, a decision which the applicants must challenge before the national courts, as they have done by bringing proceedings before the Tribunal Administrativo de Círculo de Lisboa (Administrative Court, Lisbon, Portugal).
31 In that regard, it should be noted that if the contested decision were to be annulled, that would not have the effect of obliging the Portuguese Republic to reverse its decision to create a Bridge Bank and not to include in the assets of that bank bonds of the kind held by the applicants (see, to that effect, order of 26 March 2014, Adorisio and Others v Commission, T‑321/13, not published, EU:T:2014:175, paragraph 26).
32 Moreover, the fact that the Portuguese Republic gave commitments relating to certain arrangements of the resolution procedure, which the applicants maintain were prejudicial to their interests, does not mean that those arrangements were imposed by the Commission as a condition to ensure that the aid at issue was compatible with the internal market or that the annulment of the contested decision would have any effect on the applicants. By the contested decision, the Commission merely took account of the commitments voluntarily given by the State at the stage at which it was given notification of the contested measure, in order to clarify certain points. Those arrangements were not therefore imposed, as they could have been, by way of a conditional decision adopted on the basis of Article 7(4) of Regulation No 659/1999 (see, to that effect, order of 1 December 2015, Banco Espírito Santo v Commission, T‑814/14, not published, EU:T:2015:936, paragraphs 30 and 31 and the case-law cited).
33 The applicants also justify their claim that they have an interest in bringing proceedings for annulment of the contested decision by reference to the consequences that annulment of the contested decision may have on the judicial review by the Tribunal Administrativo de Círculo de Lisboa (Administrative Court, Lisbon) of the procedure for the resolution of BES, and refer to a statement by the lawyer who has conduct of those proceedings on their behalf before that court and to the application before that court, which are annexed to their reply to the question put by the Court.
34 It is sufficient to observe in that regard that the subject matter of the applicants’ pleadings in the present proceedings is different from that of the pleadings lodged before the Tribunal Administrativo de Círculo de Lisboa (Administrative Court, Lisbon). By their first plea in the present case, the applicants claim, in essence, that the Commission infringed the rules that it imposed upon itself in its Communication on the application, from 1 January 2012, of State aid rules to support measures in favour of banks in the context of the financial crisis (OJ 2011 C 356, p. 7). It is apparent from a reading of the originating application before the Tribunal Administrativo de Círculo de Lisboa (Administrative Court, Lisbon) that the applicants allege, before that court, infringement of the principle of proportionality, as protected by Portuguese constitutional law, not infringement of EU law.
35 Therefore, as the sole issue in the proceedings before the Tribunal Administrativo de Círculo de Lisboa (Administrative Court, Lisbon) is whether a resolution procedure complies with national law and the sole issue in the present proceedings is whether the funding of that resolution procedure is compatible with EU law, any finding by this Court as to whether the Commission had due regard for that Communication can have no effect on the Tribunal Administrativo de Círculo de Lisboa’s (Administrative Court, Lisbon) interpretation of Portuguese constitutional rules.
36 It must therefore be concluded that if the contested decision were annulled, that would procure no advantage for the applicants within the meaning of the case-law cited in paragraph 25 above.
37 In the light of the foregoing, the applicants’ action must be dismissed as they do not have any legal interest in bringing proceedings for annulment of the contested decision, without there being any need to rule on the plea of inadmissibility raised by the Commission alleging that the applicants do not have legal standing to bring such proceedings.
Costs
38 Under Article 138(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicants have been unsuccessful, they must be ordered to pay the costs of these proceedings, as well as those relating to the proceedings for interim relief, in accordance with the form of order sought by the Commission.
39 Article 138(1) of the Rules of Procedure provides that the Member States which intervened in the proceedings are to bear their own costs. The Portuguese Republic must therefore bear its own costs.
On those grounds,
THE GENERAL COURT (Second Chamber)
hereby orders:
1. The action is dismissed as inadmissible.
2. BPC Lux 2 Sàrl and the other parties whose names are set out in the Annex to this order shall bear their own costs and pay the costs incurred by the European Commission in the present proceedings and in the proceedings for interim relief.
3. The Portuguese Republic shall bear its own costs.
Luxembourg, 19 July 2017.