Language of document : ECLI:EU:C:2020:1028

Joined Cases C597/18 P and C598/18 P, C603/18 P and C604/18 P

Council of the European Union

v

Dr. K. Chrysostomides & Co. LLC and Others

 Judgment of the Court (Grand Chamber), 16 December 2020

(Appeals – Economic and monetary policy – Stability support programme for the Republic of Cyprus – Restructuring of Cypriot debt – Decision of the Governing Council of the European Central Bank (ECB) relating to emergency liquidity assistance following a request from the Central Bank of the Republic of Cyprus – Euro Group statements of 25 March, 12 April, 13 May and 13 September 2013 – Decision 2013/236/EU – Memorandum of understanding on specific economic policy conditionality concluded between the Republic of Cyprus and the European Stability Mechanism (ESM) – Right to property – Principle of the protection of legitimate expectations – Equal treatment – Non-contractual liability of the European Union)

1.        Actions for damages – Subject matter – Claim for compensation for damage caused by the Euro Group – Intergovernmental body of an informal nature – No competences of its own – Not a body, office or agency of the European Union – Inadmissibility

(Arts 3 and 13(1) TEU; Arts 119(2), 137 and 340, second para., TFEU; Protocol No 14 annexed to the EU and FEU Treaties, Art. 1)

(see paragraphs 78-80, 84-98)

2.        Actions for damages – Subject matter – Claim for compensation for damage attributable to the European Union – Jurisdiction of the EU judicature – Application for compensation for damage caused by the national authorities – Jurisdiction of the national courts

(Art. 13(1) TEU; Arts 268 and 340, second and third paras, TFEU)

(see paragraphs 106, 107)

3.        Economic and monetary policy – Monetary policy – Implementation – Specific measures to restore financial stability and sustainable growth in Cyprus – Integration of the operations of a domestic bank within another domestic bank and conversion of uninsured deposits in the latter into shares – Specific rules for the implementation of those measures – Margin of discretion of the Member State concerned

(Art. 136(1) TFEU; Council Decision 2013/236, Art. 2(6)(b))

(see paragraphs 110-116, 134)

4.        Appeals – Grounds – Mere repetition of the pleas in law and arguments put forward before the General Court – Error of law relied on not identified – Manifest inadmissibility

(Art. 256 TFEU; Statute of the Court of Justice, Art. 58, first para.; Rules of Procedure of the Court of Justice, Arts 168(1)(d) and 169)

(see paragraphs 127, 158, 169, 179, 199, 201, 205, 206)

5.        Appeals – Grounds – Incorrect assessment of the facts and evidence – Review by the Court of the assessment of the evidence – Possible only where the clear sense of the evidence has been distorted

(Art. 256(1), second subpara., TFEU; Statute of the Court of Justice, Art. 58, first para.)

(see paragraphs 128, 130, 158, 167, 206)

6.        Economic and monetary policy – Economic policy – Coordination of economic policies – European Stability Mechanism – Allocation of powers in respect of the grant of financial assistance – Attributability to the Commission and the European Central Bank of acts carried out by them pursuant to duties conferred by the Treaty establishing the European Stability Mechanism – Precluded

(Treaty establishing the European Stability Mechanism, Art. 13(4))

(see paragraphs 131, 132)

7.        Appeals – Grounds – Inadequate or contradictory reasoning – Admissibility – Scope of the obligation to state reasons – Scope of the Court of Justice’s review of judgments of the General Court

(Art. 256 TFEU; Statute of the Court of Justice, Arts 36 and 58, first para.)

(see paragraphs 142-145)

8.        Economic and monetary policy – Monetary policy – Implementation – Specific measures to restore financial stability and sustainable growth in Cyprus – Conclusion of a memorandum of understanding providing for the restructuring of two domestic banks – Unjustified restriction on the right to property of the depositors, shareholders and bondholders of the banks concerned – No such restriction

(Charter of Fundamental Rights of the European Union, Arts 17 and 52(1))

(see paragraphs 154-157)

9.        Economic and monetary policy – Economic policy – Coordination of economic policies – European Stability Mechanism – Conclusion of a memorandum of understanding providing for the restructuring of two domestic banks – Compatibility with the right to property – Requirement for prior consultation of the depositors and shareholders of the banks concerned – No such requirement

(Charter of Fundamental Rights of the European Union, Arts 17 and 52(1); Treaty establishing the European Stability Mechanism, Art. 12)

(see paragraph 159)

10.      Economic and monetary policy – Economic policy – Coordination of economic policies – European Stability Mechanism – Conclusion of a memorandum of understanding providing for the restructuring of two domestic banks – Conclusion of a memorandum of understanding providing for the conversion of uninsured deposits in a domestic bank into shares and the temporary freezing of other uninsured deposits in that bank – Compatibility with the depositors’ right to property – Assessment as to whether less restrictive measures existed – Taking into account of the urgency of the situation

(Charter of Fundamental Rights of the European Union, Arts 17(1) and 52(1); Treaty establishing the European Stability Mechanism, Art. 12)

(see paragraphs 160-164)

11.      EU law – Principles – Protection of legitimate expectations – Conditions – Precise assurances given by the authorities – Meaning

(see paragraphs 178-182)

12.      Economic and monetary policy – Monetary policy – Implementation – Specific measures to restore financial stability and sustainable growth in Cyprus – Conclusion of a memorandum of understanding providing for the restructuring of two domestic banks – Infringement of the principle of equal treatment – No such infringement

(Council Decision 2013/236; Memorandum of Understanding of 26 April 2013)

(see paragraphs 191-197)


Résumé

The Court of Justice upholds the judgments of the General Court in so far as they dismissed the actions for damages brought by a number of individuals and companies on account of acts and conduct adopted by the EU institutions in connection with financial assistance granted to the Republic of Cyprus that was conditional upon the restructuring of its banking sector. On the other hand, the General Court erred in law in holding that the Euro Group constitutes an EU body established by the Treaties whose acts or conduct might give rise to non-contractual liability of the European Union

During the first months of 2012, several banks established in Cyprus, including Cyprus Popular Bank (‘Laïki’) and Trapeza Kyprou Dimosia Etaireia (Bank of Cyprus; ‘BoC’), encountered financial difficulties. On 25 June 2012, the Republic of Cyprus therefore presented a request for financial assistance to the President of the Euro Group, which stated that such assistance would be provided by either the European Financial Stability Facility or the European Stability Mechanism (ESM) in the context of a macroeconomic adjustment programme that was to be defined in a memorandum of understanding. The negotiation of such a memorandum was conducted by the European Commission together with the European Central Bank (ECB) and the International Monetary Fund (IMF), on the one hand, and the Cypriot authorities, on the other. On 26 April 2013, a memorandum of understanding was thus signed by the Commission on behalf of the ESM, the Minister for Finance of the Republic of Cyprus and the Governor of the Central Bank of Cyprus, and this enabled the ESM to grant financial assistance to the Republic of Cyprus.

A number of individuals and companies that held deposits with Laïki or BoC or were shareholders or bondholders of those banks took the view that the Council of the European Union, the Commission, the ECB and the Euro Group had, in the context of that memorandum of understanding, required the Cypriot authorities to adopt, maintain or continue to implement measures that caused a substantial reduction in the value of their deposits, shares or bonds. They therefore brought actions to establish non-contractual liability before the General Court of the European Union, in order to be compensated for the losses which they claim to have suffered because of those measures.

By two judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others and Bourdouvali and Others v Council and Others, (1) the General Court, first of all, dismissed the pleas of inadmissibility raised by the Council concerning the actions for damages brought by the individuals and companies concerned against the Euro Group. Next, as regards the first condition which must be met in order for the European Union to incur non-contractual liability pursuant to the second paragraph of Article 340 TFEU, a condition which relates to the unlawfulness of the conduct alleged against the EU institution and requires that a sufficiently serious breach of a rule of law intended to confer rights on individuals be established, it held that the individuals and companies that had brought those actions had not succeeded in demonstrating an infringement of their right to property, of the principle of the protection of legitimate expectations or of the principle of equal treatment. As the first condition for establishing non-contractual liability of the European Union was not met in this instance, the General Court dismissed the actions.

Hearing appeals brought by the Council (Cases C‑597/18 P and C‑598/18 P) and by the individuals and companies concerned (Cases C‑603/18 P and C‑604/18 P) and cross-appeals brought by the Council (in Cases C‑603/18 P and C‑604/18 P), the Court, sitting as the Grand Chamber, sets aside the judgments under appeal inasmuch as they dismiss the pleas of inadmissibility raised by the Council in so far as those pleas relate to the actions brought by those individuals and companies directed against the Euro Group and against Article 2(6)(b) of Decision 2013/236. (2) On the other hand, it dismisses the appeals of those individuals and companies.

Findings of the Court

As regards, in the first place, the appeals brought by the Council in Cases C‑597/18 P and C‑598/18 P, the Court points out that, in order for the European Union to incur non-contractual liability under the second paragraph of Article 340 TFEU, there must be unlawful conduct by an ‘EU institution’, a concept which encompasses not only the EU institutions listed in Article 13(1) TEU but also all the EU bodies, offices and agencies that have been established by or under the Treaties and are intended to contribute to the achievement of the European Union’s objectives.

In that connection, the Court observes, first, that the Euro Group is an intergovernmental body for coordinating the economic policies of the Member States whose currency is the euro (‘MSCE’). Second, the Euro Group cannot be equated with a configuration of the Council and is characterised by its informality. Third, it does not have any competence of its own or the power to punish a failure to comply with the political agreements concluded within it. The Court of Justice concludes from this that the General Court was wrong in holding that the Euro Group is an ‘EU’ body established by the Treaties, whose conduct would be capable of giving rise to non-contractual liability of the European Union.

It adds that, since the political agreements concluded within the Euro Group are given concrete expression and are implemented by means, in particular, of acts and action of the EU institutions, inter alia of the Council and the ECB, individuals are not denied their right, enshrined in Article 47 of the Charter of Fundamental Rights of the European Union, to effective judicial protection, given that, as indeed happened in this instance, they may bring an action to establish non-contractual liability of the European Union against those institutions in respect of the acts or conduct that the latter adopt following such political agreements. The Court points out, in particular, that it is for the Commission, as guardian of the Treaties, to ensure that such political agreements are in conformity with EU law, and that any inaction on the part of the Commission in that regard is liable to result in non-contractual liability of the European Union being invoked.

So far as concerns, in the second place, the Council’s cross-appeals in Cases C‑603/18 P and C‑604/18 P, the cross-appeals were intended to contest the determination of the General Court that, first, the Council, by means of Article 2(6)(b) of Decision 2013/236, required the Cypriot authorities to maintain or continue to implement the conversion of uninsured deposits in BoC into shares and, second, those authorities had no margin of discretion for that purpose.

The Court of Justice observes that Article 2(6)(b) of Decision 2013/236 does not lay down specific rules for the implementation of that conversion, with the result that the Cypriot authorities had a significant margin of discretion in that regard, in particular for the purpose of determining the number and value of the shares to be allocated to BoC’s depositors in exchange for their uninsured deposits with that bank. Consequently, it holds that the General Court erred in law in finding that the Republic of Cyprus had no margin of discretion, under that provision, for the purpose of defining the specific rules for that conversion.

So far as concerns, in the third place, the appeals brought by the individuals and companies concerned in Cases C‑603/18 P and C‑604/18 P, those individuals and companies contended that a sufficiently serious breach of their right to property, of the principle of the protection of legitimate expectations, and of the principle of equal treatment was attributable to the acts and conduct of the EU institutions, with the result that the first condition for the incurrence of non-contractual liability by the European Union was met.

In that regard, the Court points out, first of all, that the right to property (3) is not an absolute right and may be subject to limitations. (4) It takes the view, in particular, that, as already held by it in its judgment in Ledra Advertising and Others v Commission and ECB, (5) the measures referred to in the memorandum of understanding of 26 April 2013 cannot be regarded as constituting a disproportionate and intolerable interference impairing the right to property of the individuals and companies concerned.

Next, the Court holds that the fact that, during the early phases of the international financial crisis, the grant of financial assistance to other MSCE was not subject to the adoption of specific measures cannot be regarded as an assurance capable of having engendered a legitimate expectation on the part of the shareholders, bondholders and depositors of Laïki and BoC that that would also be the case in the context of the grant of the financial assistance to the Republic of Cyprus.

Finally, after noting that the general principle of equal treatment requires comparable situations not to be treated differently and different situations not to be treated in the same way, unless such treatment is objectively justified, the Court holds that there is no infringement of this principle. It finds that the companies and individuals concerned were not in a situation comparable to that of the Central Bank of Cyprus, whose action is guided exclusively by public interest objectives, to that of depositors in the Greek branches of Laïki and BoC, to that of depositors in those two banks whose deposits did not exceed EUR 100 000, to that of the depositors and shareholders of banks of other MSCE which benefited from financial assistance before the Republic of Cyprus or to that of members of the Cypriot cooperative banking sector.

In conclusion, the Court dismisses in their entirety the appeals brought by the companies and individuals concerned (Cases C‑603/18 P and C‑604/18 P), sets aside the judgments under appeal inasmuch as they dismiss the pleas of inadmissibility raised by the Council in so far as those pleas relate to the actions directed against the Euro Group and against Article 2(6)(b) of Decision 2013/236 and, giving final judgment on those pleas, (6) upholds them.


1      Judgments of the General Court of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486) and Bourdouvali and Others v Council and Others (T‑786/14, not published, EU:T:2018:487) (‘the judgments under appeal’).


2      Council Decision 2013/236/EU of 25 April 2013 addressed to Cyprus on specific measures to restore financial stability and sustainable growth (OJ 2013 L 141, p. 32; ‘Decision 2013/236’). That decision provides for a series of measures and outcomes with a view to correcting the budget deficit of the Republic of Cyprus and to restoring the soundness of its financial system. The cross-appeals brought by the Council related specifically to Article 2(6)(b) of the decision, which states that the macroeconomic adjustment programme for the Republic of Cyprus is to provide for ‘establishing an independent valuation of the assets of [BoC] and [Laïki] and quickly integrating the operations of [Laïki] into [BoC]. The valuation shall be completed quickly so as to enable the completion of the deposit-equity swap at [BoC]’.


3      Article 17 of the Charter of Fundamental Rights of the European Union.


4      Article 52 of the Charter of Fundamental Rights of the European Union.


5      Judgment of the Court of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701).


6      Pursuant to the second sentence of the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union.