Case T‑415/21
Banca Popolare di Bari SpA
v
European Commission
Judgment of the General Court (Fourth Chamber, Extended Composition) of 20 December 2023
(Non-contractual liability – State aid – Aid granted by the Italian authorities to Banca Tercas – Decision declaring the aid incompatible with the internal market – Limitation period – Continuous damage – Partial inadmissibility – Sufficiently serious breach of a rule of law intended to confer rights on individuals – Causal link)
1. Actions for damages – Limitation period – Point from which time starts to run – Damage of a continuing nature – Interruption of the limitation period – Time-bar applying to the period preceding by more than five years the date of the event which interrupted the limitation period
(Art. 340, second para., TFEU; Statute of the Court of Justice, Arts 46 and 53, first para.)
(see paragraphs 28-54, 67)
2. Actions for damages – Limitation period – Point from which time starts to run – Damage of a non-continuing nature – Date to be taken into consideration – Date of appearance of the prejudicial effects of the act upon the person concerned
(Art. 340, second para., TFEU; Statute of the Court of Justice, Arts 46 and 53, first para.)
(see paragraphs 57-66)
3. Non-contractual liability – Conditions – Unlawfulness – Damage – Causal link – Cumulative conditions – One of the conditions not satisfied – Action for compensation dismissed in its entirety
(Art. 340, second para., TFEU)
(see paragraphs 70-72)
4. Non-contractual liability – Conditions – Unlawfulness – Sufficiently serious breach of a rule of law intended to confer rights on individuals – Rule of law intended to confer rights on individuals – Concept – Article 107(1) TFEU – Included – Principle of sound administration – Included
(Arts 107(1), 108(3) and 340, second para., TFEU; Charter of Fundamental Rights of the European Union, Art. 41)
(see paragraphs 75, 80-100)
5. Non-contractual liability – Conditions – Unlawfulness – Sufficiently serious breach of EU law – Requirement that the institutions manifestly and seriously disregard the limits on their discretion – Commission decision mistakenly finding the existence of aid incompatible with the internal market and ordering its recovery – Particularly complex legal and factual context – No sufficiently serious breach of a rule of law conferring rights on individuals
(Art. 340, second para., TFEU)
(see paragraphs 103-125)
6. Non-contractual liability – Conditions – Causal link – Burden of proof – Commission decision mistakenly finding the existence of aid incompatible with the internal market and ordering its recovery – Damage resulting from a loss of confidence among the customers of the undertaking receiving the aid – Loss of confidence caused by a variety of factors – No direct causal link between the alleged damage and the conduct of the Commission
(Art. 340, second para., TFEU)
(see paragraphs 132-153, 155-161)
Résumé
In 2013, the Italian bank Banca Popolare di Bari SpA (BPB) expressed its interest in subscribing to a capital increase in another Italian bank, Banca Tercas (‘Tercas’), which had been placed under special administration in 2012. That expression of interest was nevertheless conditional on the negative equity of Tercas being covered in full by the Interbank Deposit Protection Fund (‘FITD’).
In 2014, with the approval of the central bank of the Italian Republic, the FITD took action for the benefit of Tercas, covering its negative equity and granting it two guarantees. Subsequently, BPB subscribed to two increases in Tercas’s capital.
By decision of 23 December 2015 (1) (‘the Tercas decision’), the European Commission concluded that the abovementioned action taken by the FITD for the benefit of Tercas, which had been wholly owned by BPB since 1 October 2014, constituted State aid that was incompatible with the internal market, within the meaning of Article 107(1) TFEU, and that had to be recovered from its beneficiary by the Italian Republic.
Nevertheless, by judgment of the General Court of 19 March 2019, (2) upheld on appeal, (3) the Tercas decision was annulled on the ground of infringement of Article 107(1) TFEU.
By letter of 28 April 2021, BPB applied to the Commission for compensation for the damage it had allegedly suffered as a result of the Tercas decision, which it estimated at EUR 228 million. The Commission rejected that application and BPB brought an action to establish non-contractual liability on the part of the European Union under the second paragraph of Article 340 TFEU.
In support of its action, BPB argued that the Tercas decision had caused a loss of confidence in it on the part of its customers, which had caused it to lose deposits and customers (loss of profit), had caused damage to its reputation (non-material damage) and had generated expenditure on measures to mitigate the adverse effects of that decision (actual damage).
In dismissing the action, the General Court set out the conditions governing the establishment of the European Union’s non-contractual liability on account of the Commission’s incorrect application of the State aid rules.
Findings of the Court
The Commission having pleaded the expiry of the five-year limitation period, provided for by Article 46 of the Statute of the Court of Justice of the European Union (‘the Statute of the Court’), for bringing proceedings against the European Union in matters arising from non-contractual liability, (4) the General Court pointed out that that period did not begin to run until the time when the damage to be made good had materialised.
Pointing out that the application for compensation made to the Commission by letter of 28 April 2021 constituted an intervening act causing time to stop running for the purposes of the limitation period, the Court emphasised that, in the case of damage of a continuing nature, the time-bar applied to the period preceding by more than five years the date of the event which interrupted the limitation period and did not affect rights which had arisen during subsequent periods.
In that connection, the Court held that the alleged material damage resulting both from BPB’s loss of direct deposits and from its loss of customers was continuous in nature, since it had accumulated and recurred since the adoption of the Tercas decision. The alleged non-material damage resulting from the damage to BPB’s reputation was also continuous in nature, since the source of that damage was the Tercas decision, which had initially been adopted and made public by means of a press release and had subsequently been published in the Official Journal of the European Union.
It followed that BPB’s action for compensation was not time-barred to the extent that it concerned the reparation of damage resulting from the loss of direct deposits and customers and from the damage to its reputation suffered after 28 April 2016, which is to say, during the period preceding by less than five years the application for compensation that was made on 28 April 2021.
As regards the alleged actual damage consisting in the additional expenditure incurred by BPB on measures to mitigate the adverse effects of the Tercas decision, the Court found that much of that alleged damage was not continuous, since it had actually materialised on a specific date and that the scale of the damage had not increased with the passage of time.
As to the substance, the Court began by pointing out that, in order for the European Union to incur non-contractual liability, three cumulative conditions must be satisfied: there must be a sufficiently serious breach of a rule of law intended to confer rights on individuals, actual damage must be established and there must be a direct causal link between the breach and the damage sustained.
As regards the first of those conditions, the Court pointed out, first, that the error which the Commission had made in its application of Article 107(1) TFEU in the Tercas decision constituted a breach of a rule of law intended to confer rights on individuals, such as BPB. Indeed, in that it provides a definition of the concept of State aid incompatible with the internal market, so as to ensure fair competition among the undertakings of the Member States, Article 107(1) TFEU is intended to protect the interests of individuals and, in particular, of undertakings. Moreover, the application of the concept of State aid contained in Article 107(1) TFEU is closely linked to the application of Article 108(3) TFEU, which establishes the obligation to notify aid measures as well as the prohibition on implementing them before the conclusion of the preliminary examination procedure by the Commission. Given that Article 108(3) TFEU has direct effect, it can be relied on by individuals in order to assert the rights flowing from its application. It is for the purposes of applying the concept of State aid, provided for in Article 107(1) TFEU, that Article 108 TFEU confers power on the Commission to determine whether State aid is compatible with the internal market. Furthermore, the application of Article 107(1) TFEU by the Commission could be contested before the Courts of the European Union by the recipients of the aid, by their competitors and by the Member States.
As to the existence of a sufficiently serious breach, the Court noted, secondly, that account had been taken in the case-law of the complexity of the situations to be regulated, the difficulties in the application or interpretation of the legislation and, more particularly, the margin of discretion available to the author of the act in question. Where the institution concerned has a broad discretion, the decisive criterion for establishing such a breach is whether that institution has manifestly and gravely disregarded the limits on its discretion.
Having regard to those criteria, the Court pointed out that the Commission’s infringement of Article 107(1) TFEU in the Tercas decision, although established in the judgments of the General Court and of the Court of Justice, was nevertheless not automatically a sufficiently serious breach. Recalling that the Commission’s error lay in its analysis of the information on which it had relied in order to establish the involvement of the Italian public authorities in the FITD’s intervention, the General Court also emphasised that the Commission had had to apply the concept of State aid within the meaning of Article 107(1) TFEU in a particularly complex legal and factual context. The fact that, under those circumstances, the Commission had not established to the requisite legal standard that the FITD’s intervention could be imputed to the State is not sufficient for that error to be characterised as a manifest and grave disregard for the limits on its discretion. Consequently, the Commission had not committed a sufficiently serious breach in its infringement of Article 107(1) TFEU.
The Court then considered the condition relating to the existence of a direct causal link between the Commission’s infringement of Article 107(1) TFEU and the damage alleged by BPB. In that connection, it found that, even if the Tercas decision had played a part in the progressive loss of confidence on the part of BPB’s customers, that loss of confidence had also been caused by other factors, and so the decision could not be regarded as the decisive and direct cause of the alleged damage. Consequently, BPB had not proven that there was a causal link between the alleged unlawful conduct of the Commission and the alleged damage.
Accordingly, the Court concluded that, in so far as concerned the damage for which BPB sought compensation that was not time-barred, the conditions for establishing the non-contractual liability of the European Union relating to the existence of a sufficiently serious breach, on the one hand, and the existence of a causal link between the conduct complained of and the damage alleged, on the other, were not satisfied.
The Court therefore dismissed BPB’s action, without finding it necessary to consider the condition for establishing the non-contractual liability of the European Union that actual damage has been suffered.