Case T‑360/21
(Published in extract form)
Portigon AG
v
Single Resolution Board (SRB)
and
European Parliament
and
Council of the European Union
and
European Commission
Judgment of the General Court (Eighth Chamber, Extended Composition) of 29 May 2024
(Economic and monetary union – Banking union – Single resolution mechanism for credit institutions and certain investment firms (SRM) – Single Resolution Fund (SRF) – Decision of the SRB on the calculation of the 2021 ex ante contributions – Plea of illegality – Legal basis of Regulation (EU) No 806/2014 – Article 114 TFEU – Equal treatment – Commission’s margin of discretion – SRB’s margin of discretion – Obligation to state reasons)
1. Approximation of laws – Measures intended to improve the functioning of the internal market in the field of finance – Regulations on the approximation of the provisions of the Member States concerning the resolution of institutions in the banking union – Regulation No 806/2014 – Directive 2014/59 – Power of the Single Resolution Board (SRB) to set the ex ante contribution and to manage the financial means of the Single Resolution Fund (SRF) – Legal basis – Article 114 TFEU
(European Parliament and Council Regulation No 806/2014, recitals 1 to 4, 9, 12, 19 and 107 and Arts 67 and 76; European Parliament and Council Directive 2014/59, recitals 3 to 5, 9, 10, 103, 104 and 108 and Arts 100 and 101)
(see paragraphs 41, 42, 48, 53-57)
2. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Ex ante contributions to the Single Resolution Fund (SRF) – Nature – No fiscal nature – Insurance-based logic seeking to ensure the stability of the financial sector as a whole – Financing by the financial sector as a whole – Contributions directly allocated solely for the financing of expenditure of that sector which is necessary for the functioning of that sector – Legal basis – Article 114(2) TFEU
(Art. 114(2) TFEU; European Parliament and Council Regulation No 806/2014, Arts 67(2) and (4), 69 and 70; European Parliament and Council Directive 2014/59, recitals 3, 5, 103, 105 to 107 and Arts 32 and 101 to 103)
(see paragraphs 61-66, 68-76)
3. EU institutions – Exercise of powers – Power conferred on the Commission to adopt delegated acts – Scope – Complex assessments and evaluations – Broad discretion – Directive 2014/59 establishing a framework for the recovery and resolution of credit institutions and investment firms – Establishment of the criteria for adjusting ex ante contributions – Judicial review – Limits
(Art. 290 TFEU; European Parliament and Council Regulation No 806/2014, recital 41; European Parliament and Council Directive 2014/59)
(see paragraphs 106, 108, 113, 114)
4. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Single Resolution Board (SRB) – Powers – Determination by the SRB of additional risk indicators and sub-indicators for the adjustment of the calculation of the ex ante contributions to the Single Resolution Fund (SRF) according to the risk profile of the credit institutions – Alleged delegation of power from the Commission to the SRB – None – SRB’s broad discretion
(Art. 290(1) TFEU; Commission Delegated Regulation 2015/63, Art. 6(1)(d))
(see paragraphs 141, 144, 148, 152, 156-160)
5. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Ex ante contributions to the Single Resolution Fund (SRF) – Exclusion of certain allegedly risk-free liabilities from the calculation of those contributions – Exclusion of the fiduciary liabilities of a credit institution in that calculation – Not permissible
(European Parliament and Council Regulation No 806/2014, Art. 70(2); Commission Delegated Regulation 2015/63, Art. 5(1)(e); European Parliament and Council Directive 2014/59, Art. 103(2) and (7))
(see paragraphs 223, 224, 411, 412)
6. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Ex ante contributions to the Single Resolution Fund (SRF) – Account taken of the fiduciary liabilities of a credit institution in the calculation of those contributions – Principle of including those liabilities in the balance sheet of the institution concerned – Possibility of derogation offered to Member States permitting institutions to disclose those liabilities off the balance sheet – No distortions of competition on account of those accounting differences between the different national laws
(Art. 114 TFEU; European Parliament and Council Regulation No 806/2014, Art. 70(2), second subpara., point (b); European Parliament and Council Directive 2014/59, Art. 103(2); Council Directive 86/635, Art. 10(1))
(see paragraphs 229-232, 237-239)
7. Acts of the institutions – Statement of reasons – Obligation – Scope – Explanations regarding the reasons for the measure provided by the author during the proceedings before the EU judicature – Conditions – There must be no contradictions and the explanations must be consistent with those reasons
(Art. 296, second para., TFEU)
(see paragraphs 265, 266)
8. Acts of the institutions – Statement of reasons – Obligation – Scope – Decision of the Single Resolution Board (SRB) establishing the ex ante contributions to the Single Resolution Fund (SRF) – Obligation for the SRB to communicate to the institutions concerned the method of calculating those contributions and the method of determining the amount of the annual target level
(Art. 296, second para., TFEU; European Parliament and Council Regulation No 806/2014; Council Regulation 2015/81, Art. 4; Commission Delegated Regulation 2015/63, Arts 4 to 9; European Parliament and Council Directive 2014/59)
(see paragraphs 268, 269)
9. Economic and monetary policy – Economic policy – Single resolution mechanism for credit institutions and certain investment firms – Ex ante contributions to the Single Resolution Fund (SRF) – Credit institution undergoing restructuring – Increase in the adjusting multiplier of those contributions according to the risk profile of the institution concerned – Condition – Receipt by that institution of extraordinary public financial support – State aid granted to the institution concerned before the entry into force of the EU rules – Inclusion
(Art. 107(1) TFEU; Commission Delegated Regulation 2015/63, Arts 3, first para., and 6(8)(a); European Parliament and Council Directive 2014/59, Arts 2(1)(28) and 103(7)(e))
(see paragraphs 442, 443, 445, 446, 457)
Résumé
Hearing an action for annulment, which it upholds, the General Court annuls the decision of the Single Resolution Board (SRB) setting the 2021 ex ante contributions (1) to the Single Resolution Fund (SRF), on account of the SRB’s failure to fulfil its obligation to state reasons relating to the determination of the annual target level. Furthermore, the Court rules on the compatibility of Regulation No 806/2014 (2) and, for the first time, that of Directive 2014/59, (3) taken together, with Article 114(1) and (2) TFEU, providing clarifications as to the concept of ‘fiscal provisions’, having regard to the characteristics of the ex ante contributions. Moreover, the Court provides clarifications regarding the powers of the SRB in determining risk indicators and sub-indicators concerning the adjusting multiplier of the ex ante contributions according to the risk profile of the credit institutions, drawing a distinction between the delegation of power to the European Commission within the meaning of Article 290 TFEU and the grant of discretion to the SRB, and regarding the account taken of public financial support, prior to Directive 2014/59, in the calculation of that multiplier.
Portigon is a credit institution established in Germany. On 14 April 2021, the SRB adopted the contested decision in which it set (4) the 2021 ex ante contributions to the SRF of credit institutions and certain investment firms, one of which was the applicant.
Findings of the Court
In the first place, as regards the pleas alleging that provisions of Regulation No 806/2014 and of Directive 2014/59 are unlawful in the light of the provisions of the Treaties, which the Court rejects, the applicant contested, in particular, the legal basis – namely Article 114 TFEU – pursuant to which the provisions at issue were adopted, on the one hand, and the choice to apply paragraph 1 of that article, whereas the ex ante contributions are fiscal in nature and, therefore, fall within the scope of paragraph 2 thereof.
To begin with, as regards the challenge to the legal basis relied upon, the Court notes that the choice of legal basis for an EU measure must rest on objective factors that are amenable to judicial review, which include the aim and the content of that measure. Legislative acts adopted on the basis of Article 114(1) TFEU must, first, comprise measures for the approximation of the provisions laid down by law, regulation or administrative action in the Member States and, second, have as their object the establishment and functioning of the internal market.
First of all, the Court notes that Article 114 TFEU may be used as a legal basis only where it is actually and objectively apparent from the legal act that its purpose is to improve the conditions for the establishment and functioning of the internal market. It is clear, from the recitals of Regulation No 806/2014, that that regulation seeks to weaken the ties between the perceived fiscal position of individual Member States and the funding costs of banks and undertakings operating in those Member States, as well as to place the responsibility of financing the stabilisation of the financial system on the financial industry as a whole. Thus, Regulation No 806/2014 establishes, inter alia, uniform rules and a uniform procedure for the resolution of institutions, which should be applied by the SRB, in order to address the threats encountered. Similarly, Directive 2014/59 establishes, inter alia, harmonised rules and a harmonised procedure for the resolution of institutions, in order to address the concerns of the EU legislature set out in the recitals of that directive. The SRF and the national financing arrangements are essential elements of those rules and that procedure, which make it possible, as is apparent from Regulation No 806/2014 and from Directive 2014/59, to ensure the efficient exercise of resolution powers and to contribute to the financing of the resolution tools while ensuring their efficient application. In order to ensure sufficient financial means in the SRF and the national financing arrangements, they are financed, inter alia, by the ex ante contributions paid by the institutions.
Consequently, the payment of those contributions ensures the efficient application of the uniform or harmonised rules and the uniform or harmonised procedure for the resolution of institutions, and therefore the purpose of Regulation No 806/2014 and Directive 2014/59 is to improve the conditions for the establishment and functioning of the internal market.
Furthermore, as regards the condition laid down in Article 114(1) TFEU, namely that the EU measure concerned must comprise measures for the approximation of the provisions laid down in Member States, it is apparent, first, that there was no unified decision-making process for the resolution of institutions in the Union and, second, that there were significant substantive and procedural differences between the laws, regulations and administrative provisions governing the insolvency of the institutions in the Member States. In that context, the EU legislature established rules and a procedure, which are uniform within the banking union and harmonised between the Member States, for the resolution of institutions, as well as a uniform procedure for the collection of the ex ante contributions in order to ensure the efficient application of those rules and procedures.
The Court concludes that Regulation No 806/2014 and Directive 2014/59 satisfy the conditions set out in Article 114(1) TFEU.
Secondly, with regard to the choice to apply Article 114(1) TFEU, whereas the contributions come within the scope of the provisions of Article 114(2) on account of their fiscal nature, the Court holds that the provisions of Regulation No 806/2014 and of Directive 2014/59 which require institutions to pay ex ante contributions and specify the methods for their calculation do not constitute ‘fiscal provisions’ within the meaning of Article 114(2) TFEU.
A levy paid by economic operators in a particular sector is not fiscal in nature in a situation where, in particular, it is directly allocated solely to the financing of expenditure in that sector and where that expenditure is necessary for the functioning of that sector in order, in particular, to stabilise it. That reasoning also applies in the case of ex ante contributions, which follow an insurance-based logic and which are paid by economic operators in a particular sector in order to finance exclusively expenditure of that sector.
It is true that, since Regulation No 806/2014 and Directive 2014/59 do not establish any automatic link between the payment of the ex ante contribution and the resolution of the institution concerned, the ex ante contributions cannot be regarded as insurance premiums which could be paid monthly and reimbursed. The fact remains that the institutions benefit in two respects from the SRF and the national financing arrangements, which are financed specifically by their ex ante contributions. First, where institutions are failing or are likely to fail, their financial situation may be remedied in the context of a resolution procedure which may be initiated in their favour. Such a procedure thus allows the financial means of the SRF or of the national financing arrangements to be used for the benefit of such institutions, it being recalled that those means were provided by the institutions’ contributions. Second, all institutions benefit from their ex ante contributions through the stability of the financial system, which is ensured by the SRF and the national financing arrangements.
It follows that it is from an insurance-based rather than a tax-based perspective that the SRF and the national financing arrangements seek to ensure the stability of the financial sector as a whole, with the objective of ensuring protection against its own crisis for the benefit of all institutions. That insurance-based purpose is also reflected in the calculation of the ex ante contributions, given that they are not the result of applying a certain rate to a basis of assessment but rather are the result of the setting of a final target level, and thereafter of an annual target level, which is then divided between the institutions. It follows from the foregoing that the institutions pay the ex ante contributions in an insurance-based logic, it being recalled that those contributions are directly allocated solely to the financing of the expenditure of the financial sector of which those institutions are part and that that expenditure is necessary for the functioning of that sector in order, inter alia, to stabilise it should certain institutions fail and to limit contagion effects.
In the second place, as regards the plea alleging that the sub-delegation of power by the Commission to the SRB is unlawful, the Court, in accordance with its related case-law, (5) recalls that the provisions in Article 6(5) to (7) and Article 7(4) of Delegated Regulation 2015/63(6), which relate to risk pillar IV, confer discretion on the SRB. However, the grant of such discretion does not equate to a delegation of power by the Commission to the SRB within the meaning of Article 290(1) TFEU.
In that regard, the Court draws a distinction between such a power of delegation as provided for in Article 290(1) TFEU (7) and the power to apply – legislative or non-legislative – acts of general application to persons or situations falling within the scope of such acts. However, first, Delegated Regulation 2015/63 does not contain any provision by which the Commission conferred on the SRB a delegated power for the purpose of adopting acts of general application which supplement or amend certain elements of Directive 2014/59, Regulation No 806/2014 or that delegated regulation. By contrast, several provisions of that delegated regulation (8) confirm the power granted to the SRB by Directive 2014/59 and by Regulation No 806/2014 to apply those acts of general application by calculating the ex ante contributions of the institutions which fall within their scope. Second, despite the name given to risk pillar IV, contained in Article 6(1)(d) of Delegated Regulation 2015/63, namely ‘Additional risk indicators to be determined by the resolution authority’, the main principles regarding the application of that risk pillar were specified by the Commission itself in Article 6(5) to (8) of that delegated regulation. Similarly, the Commission determined the rules governing the weight applied to the risk indicators within that risk pillar in Article 7(4) of the delegated regulation.
The Court therefore takes the view that Delegated Regulation 2015/63 did not confer on the SRB the power to adopt acts of general application within the meaning of Article 290(1) TFEU, and it rejects this plea of illegality.
In the third and final place, as regards the assignment by the contested decision of the classification of an ‘institution undergoing restructuring’ to the applicant, on account of public financial support granted before the entry into force of Directive 2014/59, which resulted in an increase in its risk adjustment multiplier , the Court recalls that Article 6(5)(c) of Delegated Regulation 2015/63 provides that risk pillar IV consists, amongst other risk indicators, of the risk indicator ‘extent of previous extraordinary public financial support’. Pursuant to Directive 2014/59, (9) read together with Delegated Regulation 2015/63, (10) ‘extraordinary public financial support’ means State aid within the meaning of Article 107(1) TFEU, or any other public financial support at supranational level, which, if it were granted at national level, would constitute State aid, provided in order to preserve or restore the viability, liquidity or solvency of an institution.
In the present case, the Court finds, first, that the applicant underwent restructuring after receiving State aid within the meaning of Article 107(1) TFEU. Second, the fact that that aid was granted before the entry into force of Directive 2014/59 has no bearing on the fact that that aid falls within the scope of Article 6(5)(c) of Delegated Regulation 2015/63, read together with Article 2(1)(28) of that directive. Neither the wording of Article 2(1)(28) of Directive 2014/59 nor that of Article 6(8)(a) of Delegated Regulation 2015/63 contains any provision which limits the temporal application of the latter provision.
The Court therefore considers that the SRB was right to take the view that the applicant fell within the scope of Article 6(8)(a) of Delegated Regulation 2015/63 and to apply to it, in accordance with that provision, the maximum value for the risk indicator ‘extent of previous extraordinary public financial support’.