Provisional text
JUDGMENT OF THE COURT (First Chamber)
30 April 2024 (*)
(Failure of a Member State to fulfil obligations – Article 259 TFEU – Directive 2014/49/EU – Deposit guarantee schemes (DGSs) – Article 14(3) – Transfer of the activities of a credit institution from the DGS of one Member State to the DGS of another Member State – Transfer to the DGS of the host Member State of the contributions paid to the DGS of the home Member State during the 12 months preceding the transfer of the activities – Obligation – Failure to transfer contributions – Effectiveness – Principle of sincere cooperation)
In Case C‑822/21,
ACTION for failure to fulfil obligations under Article 259 TFEU, brought on 30 December 2021,
Republic of Latvia, represented by J. Davidoviča, K. Pommere and I. Romanovska, acting as Agents,
applicant,
supported by:
Republic of Estonia, represented by M. Kriisa, acting as Agent,
Republic of Lithuania, represented by K. Dieninis and V. Kazlauskaitė-Švenčionienė, acting as Agents,
European Commission, represented by E. Ljung Rasmussen and A. Nijenhuis, K. Simonsson and D. Triantafyllou, acting as Agents,
interveners,
v
Kingdom of Sweden, represented by H. Shev and O. Simonsson, acting as Agents,
defendant,
THE COURT (First Chamber),
composed of A. Arabadjiev, President of the Chamber, T. von Danwitz, P.G. Xuereb (Rapporteur), A. Kumin and I. Ziemele, Judges,
Advocate General: J. Richard de la Tour,
Registrar: A. Calot Escobar,
having regard to the written procedure,
after hearing the Opinion of the Advocate General at the sitting on 7 September 2023,
gives the following
Judgment
1 By its application, the Republic of Latvia asks the Court to declare that the Kingdom of Sweden has failed to fulfil its obligations under Article 14(3) of Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes (OJ 2014 L 173, p. 149) and Article 4(3) TEU.
Legal context
European Union law
2 Recitals 3 and 37 of Directive 2014/49 are worded as follows:
‘(3) This Directive constitutes an essential instrument for the achievement of the internal market from the point of view of both the freedom of establishment and the freedom to provide financial services in the field of credit institutions, while increasing the stability of the banking system and the protection of depositors. In view of the costs of the failure of a credit institution to the economy as a whole and its adverse impact on financial stability and the confidence of depositors, it is desirable not only to make provision for reimbursing depositors but also to allow Member States sufficient flexibility to enable [deposit guarantee schemes (DGSs)] to carry out measures to reduce the likelihood of future claims against DGSs. Those measures should always comply with the State aid rules.
…
(37) Deposit protection is an essential element in the completion of the internal market and an indispensable complement to the system of supervision of credit institutions on account of the solidarity it creates among all the institutions in a given financial market in the event of the failure of any of them. Therefore, Member States should be able to allow DGSs to lend money to each other on a voluntary basis.’
3 Article 10 of Directive 2014/49, headed ‘Financing of DGSs’, provides in paragraphs 1 and 2:
‘1. Member States shall ensure that DGSs have in place adequate systems to determine their potential liabilities. The available financial means of DGSs shall be proportionate to those liabilities.
DGSs shall raise the available financial means by contributions to be made by their members at least annually. This shall not prevent additional financing from other sources.
2. Member States shall ensure that, by 3 July 2024, the available financial means of a DGS shall at least reach a target level of 0.8% of the amount of the covered deposits of its members.
Where the financing capacity falls short of the target level, the payment of contributions shall resume at least until the target level is reached again.
If, after the target level has been reached for the first time, the available financial means have been reduced to less than two-thirds of the target level, the regular contribution shall be set at a level allowing the target level to be reached within six years.
The regular contribution shall take due account of the phase of the business cycle, and the impact procyclical contributions may have when setting annual contributions in the context of this Article.
Member States may extend the initial period referred to in the first subparagraph for a maximum of four years if the DGS has made cumulative disbursements in excess of 0.8% of covered deposits.’
4 Article 14 of that directive, headed ‘Cooperation within the Union’, states in paragraphs 3 and 4:
‘3. If a credit institution ceases to be member of a DGS and joins another DGS, the contributions paid during the 12 months preceding the end of the membership, with the exception of the extraordinary contributions under Article 10(8), shall be transferred to the other DGS. This shall not apply if a credit institution has been excluded from a DGS pursuant to Article 4(5).
If some of the activities of a credit institution are transferred to another Member State and thus become subject to another DGS, the contributions of that credit institution paid during the 12 months preceding the transfer, with the exception of the extraordinary contributions in accordance with Article 10(8), shall be transferred to the other DGS in proportion to the amount of covered deposits transferred.
4. Member States shall ensure that [DGSs] of the home Member State exchange information referred to under Article 4(7) or (8) and (10) with those in host Member States. The restrictions set out in that Article shall apply.
If a credit institution intends to transfer from one DGS to another in accordance with this Directive, it shall give at least six months’ notice of its intention to do so. During that period, the credit institution shall remain under the obligation to contribute to its original DGS in accordance with Article 10 both in terms of ex-ante and ex-post financing.’
Swedish law
5 Paragraph 13 of the lag om insättningsgaranti (Law on deposit guarantees, SFS 1995, No 1571) provides that the Swedish guarantee authority is to decide annually on the amount of the contributions due and that those contributions are to be paid within one month of the date of that decision.
6 Under Paragraph 14 of that law, where a credit institution is transferred, in whole or in part, and becomes subject to another DGS, the contributions it paid during the 12 months preceding the transfer are to be transferred to the other DGS.
Background to the dispute
7 Nordea Bank AB is a European financial services group with its head office in Sweden and is a member of the Swedish DGS. Until 30 September 2017, the group operated in Estonia, Latvia and Lithuania through branches.
8 On 1 October 2017, Nordea Bank transferred the activities of its branches in those three Member States to the subsidiaries of DNB Banka AS established in those States. On the same day, the activities of those branches transferred from being under the Swedish DGS to being under the Estonian, Latvian and Lithuanian DGSs.
9 By decision of 3 October 2017, the Swedish deposit guarantee authority decided not to transfer to the Latvian DGS contributions which had been paid to the Swedish DGS by Nordea Bank in respect of deposits connected with the activities of its Latvian branch (‘the decision of the Swedish DGA of 3 October 2017’). In that decision, the Swedish deposit guarantee authority (‘the Swedish DGA’) found that, during the 12 months preceding the date of the transfer of the activities of Nordea Bank's branch to the Latvian DGS, namely during the period from 1 October 2016 to 30 September 2017, it had not paid any contribution to the Swedish DGS, with the result that the conditions for transferring the contributions, laid down in Article 14(3) of Directive 2014/49, had not been satisfied.
10 Under Swedish law, Nordea Bank had one month to pay its annual contribution from each decision of the Swedish DGA. For 2016, the annual decision of the Swedish DGA is dated 2 September 2016, and Nordea Bank paid its contribution to the Swedish DGS on 30 September 2016. With regard to 2017, Nordea Bank paid its contribution on 13 October 2017, in accordance with the annual decision of the Swedish DGA of 14 September 2017. The Swedish DGS therefore did not receive a contribution between 1 October 2016 and 30 September 2017, that is to say, the 12-month period preceding the transfer concerned.
11 By decisions similar to the one referred to in paragraph 9 of the present judgment, the Swedish DGA also decided not to transfer to the Estonian and Lithuanian DGSs the contributions paid by Nordea Bank to the Swedish DGS in respect of deposits connected with the activities of its Estonian and Lithuanian branches.
12 The Republic of Latvia did not challenge the decision of the Swedish DGA of 3 October 2017 before the Swedish courts.
13 However, by letter of 27 March 2019, the Latvian deposit guarantee authority invited the European Commission to express its view on how Article 14(3) of Directive 2014/49 is to be interpreted.
14 In its reply sent by letter of 9 October 2020, the Commission stated that the wording of that provision was indistinct and that it did not provide for specific scenarios for action to be taken in cases where a national deposit guarantee authority has taken the decision to extend the period for payment of contributions, thus leaving the door open to different interpretations of that provision.
15 The deposit guarantee authorities of the three Baltic States initiated a mediation procedure with the Swedish DGA before the European Banking Authority (EBA), which closed the case in 2019, without the parties having reached an agreement.
Pre-litigation procedure
16 On 10 May 2021, the Republic of Latvia lodged a complaint with the Commission, on the basis of the second paragraph of Article 259 TFEU, asking it to issue a reasoned opinion on the ground that, by refusing to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank for the 12-month period preceding the transfer of that branch’s activities, the Kingdom of Sweden had infringed EU law and, in particular, Article 14(3) of Directive 2014/49.
17 In accordance with the third paragraph of Article 259 TFEU, the Commission invited the Kingdom of Sweden to submit its observations on that complaint.
18 On 22 June 2021, the Kingdom of Sweden submitted its written observations to the Commission.
19 On 1 July 2021, the Republic of Latvia and the Kingdom of Sweden were heard by the Commission. The Kingdom of Sweden stated that if the contributions had been paid during the 12 months preceding the change in DGS affiliation, the amount of the contributions to be transferred to the Latvian DGS would have amounted to approximately EUR 500 000.
20 On 30 July 2021, the Commission issued a reasoned opinion in which it concluded, first, that the Kingdom of Sweden had infringed Article 14(3) of Directive 2014/49, read in conjunction with Article 10(1) of that directive, and, second, that it had not infringed Article 4(3) TEU.
Procedure before the Court
21 By document lodged at the Court Registry on 30 December 2021, the Republic of Latvia brought the present action for failure to fulfil obligations under Article 259 TFEU.
22 In its application, it claims that the Court should:
– hold that the Kingdom of Sweden has failed to fulfil its obligations under Article 14(3) of Directive 2014/49, in so far as, by refusing to transfer to the Latvian DGS the contributions that had been paid by the Latvian branch of Nordea Bank to the Swedish DGS in respect of the 12-month period preceding the transfer of the activities of that branch, in accordance with that provision, the Kingdom of Sweden has acted contrary to the objective pursued by that directive and has not ensured the effectiveness of the provisions;
– hold that the Kingdom of Sweden has failed to fulfil its obligations under Article 4(3) TEU, in so far as, by refusing to transfer to the Latvian DGS the contributions that had been paid by the Latvian branch of Nordea Bank to the Swedish DGS in respect of the 12-month period preceding the transfer of the activities of that branch, in accordance with Article 14(3) of Directive 2014/49, the Kingdom of Sweden has adversely affected the integration of the single market and in so doing undermined the mutual trust between EU Member States, which is a pre-requisite for cross-border integration;
If the Court finds that the Kingdom of Sweden has failed to fulfil its obligations under Article 14(3) of Directive 2014/49 and Article 4(3) TEU, the Republic of Latvia claims that the Court should:
– order the Kingdom of Sweden to put an end to the infringement by transferring from the Swedish DGS to the Latvian DGS the full amount of the contributions paid by the Latvian branch of Nordea Bank, calculated for the 12-month period preceding the transfer of that branch’s activities, in accordance with Article 14(3) of Directive 2014/49;
– if Article 14(3) of Directive 2014/49 can be interpreted strictly, to specify whether it is compatible with the objective of that directive and the obligation of the Swedish DGS to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank; and
– order the Kingdom of Sweden to pay the costs.
23 By decisions of 19, 25 and 30 May 2022, the Republic of Estonia, the Republic of Lithuania and the Commission respectively were granted leave to intervene in support of the form of order sought by the Republic of Latvia.
24 The Republic of Estonia supports the first, third and fifth heads of claim in the application.
25 The Republic of Lithuania supports all the heads of claim in the application.
26 The Commission supports the first head of claim in the application.
27 The Kingdom of Sweden contends that the Court should:
– dismiss the action brought by the Republic of Latvia; and
– order the Republic of Latvia to pay the costs.
The action
Admissibility
Arguments of the parties
28 In the first place, the Kingdom of Sweden disputes the admissibility of the present action in its entirety. That Member State argues, in essence, that the interpretation of Article 14(3) of Directive 2014/49 cannot be called into question in an action for failure to fulfil obligations under Article 259 TFEU. First, that directive provides for only minimum harmonisation. Second, while acknowledging that Article 259 TFEU does not require that national remedies be exhausted, the Kingdom of Sweden states that the decision of the Swedish DGA of 3 October 2017 was not challenged by the Republic of Latvia before a Swedish court.
29 In addition, the Kingdom of Sweden draws attention to the fact that it is clear from the case-law of the Court that the purpose of an action for failure to fulfil obligations is to find and put an end to infringements of EU law by a Member State and that an action is inadmissible if it merely seeks an interpretation of EU law. The action brought by the Republic of Latvia seeks above all to clarify the interpretation of Article 14(3) of Directive 2014/49.
30 In the second place, as regards the first head of claim relating to the infringement of Article 14(3) of Directive 2014/49, the Kingdom of Sweden observes that although, during the hearing held by the Commission on 1 July 2021, the Republic of Latvia had invoked Article 14(3) of Directive 2014/49 and Article 10 of that directive in the form of order sought in its application, that Member State has not claimed that the Kingdom of Sweden has failed to fulfil its obligations under the latter provision. The Court cannot therefore examine whether the Kingdom of Sweden has failed to fulfil its obligations under that provision.
31 As regards the second head of claim relating to infringement of the principle of sincere cooperation laid down in Article 4(3) TEU and the line of argument relied on in support of that head of claim, the Kingdom of Sweden observes that, during the administrative procedure, the Republic of Latvia alleged infringement of the principle of equal treatment on the ground that the Republic of Finland was in a similar situation to that of the Republic of Latvia. That situation is allegedly clear from the fact that, on 1 October 2018, Nordea Bank transferred its head office to Finland and the contributions that had been paid to the Swedish DGS during the 12-month period preceding that transfer were transferred to the Finnish DGS by decision of the Swedish DGA. In its application, the Republic of Latvia claims, in support of that head of claim, that, by misinterpreting Directive 2014/49, the Kingdom of Sweden infringed the principle of sincere cooperation. The Kingdom of Sweden therefore argues that the Republic of Latvia altered its line of argument as compared with the line of argument that it had put forward during the administrative procedure and that that head of claim, as formulated, must therefore be rejected as inadmissible.
32 Lastly, as regards the third head of claim by which the Republic of Latvia requests that the Court order the Kingdom of Sweden to arrange for the Swedish DGS to pay the contributions at issue to the Latvian DGS, the Kingdom of Sweden submits that that third head of claim is tantamount to requesting that the Court order the Kingdom of Sweden to pay compensation. Since the purpose of an action for failure to fulfil obligations cannot be to make such a request, that request must be rejected.
33 First, the Republic of Latvia replies that the Kingdom of Sweden’s argument that Directive 2014/49 provides for only minimal harmonisation concerns not the admissibility, but the substance of the case.
34 Second, it submits that no provision of EU law requires that national remedies be exhausted before an action for failure to fulfil obligations can be brought before the Court.
35 Third, it states that its application for a declaration that the Kingdom of Sweden has failed to fulfil its obligations is based on an infringement of Article 14(3) of Directive 2014/49, read in conjunction with Article 10(1) of that directive, and submits that, in its complaint of 10 May 2021, it had asked the Commission to issue a reasoned opinion, within the meaning of the third paragraph of Article 259 TFEU, as regards the obligation of the Swedish DGS to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank calculated for the 12-month period preceding the transfer of the activities of that branch, in accordance with Article 14(3) of Directive 2014/49. It therefore neither extended nor altered the cause of action in its application.
36 Fourth, it submits that, by its third head of claim, it is not asking the Court to order the Kingdom of Sweden to pay compensation, but to order it to put an end to the infringement found. According to the Republic of Latvia, the failure to fulfil obligations alleged against the Kingdom of Sweden must not only be established, but must also cease. In the present case, the only form that such cessation can take is a payment to the Latvian DGS of the contributions that the Kingdom of Sweden refused to transfer, which is not compensation.
Findings of the Court
37 As regards, in the first place, the admissibility of the present action in its entirety, the Court notes, as regards, first, the Kingdom of Sweden’s argument that Directive 2014/49 provides for only minimal harmonisation, that that argument, which relates to the question of the interpretation of that directive, concerns the merits of the action for failure to fulfil obligations. That argument does not therefore concern the admissibility of that action.
38 As regards, second, the fact that the Republic of Latvia did not challenge the decision of the Swedish DGA of 3 October 2017 before a Swedish court, suffice it to note that national legal remedies do not need to have been exhausted for an action for failure to fulfil obligations brought on the basis of Article 259 TFEU to be admissible.
39 As regards, third, the Kingdom of Sweden’s argument that the present action for failure to fulfil obligations is inadmissible since it seeks above all to clarify the interpretation of Article 14(3) of Directive 2014/49, the Court points out that the procedure established in Article 259 TFEU is designed to obtain a declaration that the conduct of a Member State is in breach of EU law and to terminate that conduct (see, to that effect, judgment of 16 October 2012, Hungary v Slovakia, C‑364/10, EU:C:2012:630, paragraph 67 and the case-law cited).
40 It is true that an action under that provision concerning future possible infringements or limited to seeking an interpretation of EU law is inadmissible (see, to that effect, judgment of 16 October 2012, Hungary v Slovakia, C‑364/10, EU:C:2012:630, paragraph 68).
41 However, by its action, the Republic of Latvia is not requesting merely an interpretation of Article 14(3) of Directive 2014/49. As the Advocate General observed, in essence, in point 40 of his Opinion, it asks the Court to declare that, by refusing to transfer to the Latvian DGS the contributions that had been paid by the Latvian branch of Nordea Bank to the Swedish DGS in respect of the 12-month period preceding the transfer of that branch’s activities, as referred to in Article 14(3), the Kingdom of Sweden failed to fulfil its obligations under that provision, so that the latter can put an end to the alleged failure to fulfil obligations, and it was only for that purpose that the Republic of Latvia claims, before the Court, that the Swedish DGS misinterpreted that provision.
42 The third argument raised by the Kingdom of Sweden, challenging the admissibility of the action for failure to fulfil obligations in its entirety, must therefore be rejected.
43 As regards, in the second place, the admissibility of the heads of claim or arguments relied on by the Republic of Latvia, the Court points out, as regards, first, the Kingdom of Sweden’s argument that the Republic of Latvia cannot rely, in its action, on an infringement of Article 10 of Directive 2014/49, that an action brought on the basis of Article 259 TFEU is circumscribed by the pre-litigation procedure provided for in that article and must be based on the same grounds and pleas as those put forward in the course of that procedure, with the result that an objection which was not made in the complaint submitted to the Commission is inadmissible at the stage of proceedings before the Court (see, by analogy, judgments of 10 May 2012, Commission v Netherlands, C‑368/10, EU:C:2012:284, paragraph 78, and of 17 April 2018, Commission v Poland (Białowieża Forest), C‑441/17, EU:C:2018:255, paragraph 65 and the case-law cited).
44 However, that requirement cannot go so far as to mean that in every case the statement of objections set out in the complaint submitted to the Commission and the form of order sought in the application must be exactly the same, provided that the subject matter of the proceedings as defined in that complaint has not been extended or altered (see, by analogy, judgment of 17 April 2018, Commission v Poland (Białowieża Forest), C‑441/17, EU:C:2018:255, paragraph 66 and the case-law cited).
45 In the present case, it should be noted, as the Advocate General stated, in essence, in point 48 of his Opinion, that Article 10(1) of Directive 2014/49 was relied on by the Republic of Latvia during the administrative procedure before the Commission solely in support of its interpretation of Article 14(1) of that directive, in order to establish that the latter provision had been infringed, as is apparent from the Commission’s reasoned opinion. Similarly, in the application, the applicant relies on Article 10(1) of that directive, as part of the context of which Article 14(1) of Directive 2014/49 forms part, a part which, it argues, confirms its interpretation of the latter provision, which, in its first head of claim, it asks the Court to find has been infringed.
46 Accordingly, the Republic of Latvia did not, by relying on Article 10(1) of that directive in the grounds of its application to confirm its interpretation of Article 14(1) of that directive, extend its cause of action as defined during the administrative procedure before the Commission.
47 Second, as regards the Kingdom of Sweden’s argument that the second head of claim, as formulated in the application, should be rejected as inadmissible because, in its application, the Republic of Latvia altered its line of argument in support of that head of claim as compared with what it had argued before the Commission, the Court points out that, by that head of claim, the Republic of Latvia maintains, in essence, that the Swedish DGS’s refusal to transfer to the Latvian DGS the contributions at issue paid by the Latvian branch of Nordea Bank to the Swedish DGS is contrary to the principle of sincere cooperation and the principle of equality, given that, in a comparable legal situation, the Swedish DGS transferred the contributions which it had received to the Finnish DGS, in accordance with Article 14(3) of Directive 2014/49.
48 In its complaint of 10 May 2021, the Republic of Latvia had also alleged that, by refusing to transfer the contributions at issue, the Kingdom of Sweden had infringed the principle of sincere cooperation referred to in Article 4(3) TFEU and the principle of equal treatment between the DGSs of the Member States.
49 Consequently, contrary to what the Kingdom of Sweden maintains, the Republic of Latvia did not alter its line of argument in support of that head of claim in its application as compared with what it had maintained during the administrative procedure before the Commission.
50 Third, as regards the Kingdom of Sweden’s argument that the third head of claim asking the Court to order the Kingdom of Sweden to pay compensation is inadmissible, the Court notes that, by that head of claim, the Republic of Latvia asks the Court, in essence, to order the Kingdom of Sweden to put an end to the infringement found by the Court by transferring, from the Swedish DGS to the Latvian DGS, the total amount of the contributions paid by the Latvian branch of Nordea Bank to the Swedish DGS in respect of the 12-month period referred to in Article 14(3) of Directive 2014/49.
51 It is clear from the Court’s case-law that, in an action for failure to fulfil obligations, all that can be sought is a finding that the failure to fulfil obligations alleged exists with a view to bringing that situation to an end. The Court cannot be asked, for example, in an action for failure to fulfil obligations, to require a Member State to adopt a particular line of conduct in order to comply with EU law (see, to that effect, judgment of 2 April 2020, Commission v Poland, Hungary and Czech Republic (Temporary mechanism for the relocation of applicants for international protection), C‑715/17, C‑718/17 and C‑719/17, EU:C:2020:257, paragraph 56 and the case-law cited).
52 Consequently, since, by the third head of claim, the Republic of Latvia is asking the Court to order the Kingdom of Sweden to pay it the contributions at issue, that head of claim goes beyond what may be sought in an action for failure to fulfil obligations, as the Advocate General observed, in essence, in point 42 of his Opinion, and must therefore be declared inadmissible.
53 The finding made in the preceding paragraph is without prejudice to the Member State’s obligation under Article 260(1) TFEU to take the necessary measures to comply with the judgment of the Court, if the Court finds that that Member State has failed to fulfil an obligation under the Treaties.
54 Lastly, as regards the fourth head of claim, the Court notes that, by that head of claim, the Republic of Latvia asks the Court, ‘if Article 14(3) of Directive 2014/49 can be interpreted strictly, to specify whether it is compatible with the objective of that directive and the obligation of the Swedish DGS to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank’.
55 In that regard, the Court points out that, since the conditions for admissibility of an action and of the objections set out therein are a matter of public policy, the Court may consider them of its own motion in accordance with Article 150 of its Rules of Procedure (see, to that effect, judgment of 29 April 2010, Commission v Germany, C‑160/08, EU:C:2010:230, paragraph 40).
56 The request contained in the fourth head of claim in the application goes beyond what may be sought in an action for failure to fulfil obligations, in accordance with the case-law cited in paragraph 51 of the present judgment.
57 The fourth head of claim must therefore also be declared inadmissible.
Substance
58 The Republic of Latvia puts forward two objections in support of its action. By its first objection, it claims that the Kingdom of Sweden has failed to fulfil its obligations under Article 14(3) of Directive 2014/49. By its second objection, it claims that the Kingdom of Sweden has infringed the principle of sincere cooperation laid down in Article 4(3) TEU.
The first objection, alleging infringement of Article 14(3) of Directive 2014/49
– Arguments of the parties
59 The Republic of Latvia states, as a preliminary point, that it does not dispute the transposition of Directive 2014/49 into Swedish law, but it submits that the Kingdom of Sweden did not correctly apply the requirements of Article 14(3) of that directive by refusing to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank to the Swedish DGS, calculated in respect of the 12-month period preceding the transfer of the activities of that branch to the Latvian DGS.
60 In that regard, the Republic of Latvia, supported by the interveners, submits, first of all, that that provision must not be interpreted strictly and must be interpreted as meaning that a DGS, of which a credit institution becomes a new member, must receive the contributions from that credit institution which were calculated and paid in respect of the 12-month period preceding the transfer to that DGS, irrespective of when they were actually paid. The decisive factor is therefore the fact that the credit institution’s contributions to the original DGS were calculated and claimed for the period at issue and not the time at which the contributions claimed were paid or recorded in the accounts of that DGS.
61 It goes on to submit, again supported by the interveners, that, by favouring a literal interpretation of Article 14(3) of Directive 2014/49 and refusing to transfer the contributions concerned to the Latvian DGS, the Kingdom of Sweden did not ensure the effectiveness of that provision and undermined the attainment of the objectives of that directive, which, according to recital 3 thereof, is intended to facilitate the freedom of establishment and the freedom to provide financial services and to contribute to the stability of the banking system and the protection of depositors.
62 Furthermore, the Kingdom of Sweden’s approach undermines mutual trust between the Member States since the DGS of one Member State, which a member of a DGS of another Member State intends to join, can no longer count on a transfer of contributions from the DGS of that other Member State.
63 The Republic of Latvia submits, lastly, that a general obligation to pay annual contributions also follows from Article 10(1) of Directive 2014/49, which requires the DGS of the Member States to raise their available financial means by contributions to be made by their members at least annually. As the Commission noted in the reasoned opinion, the Kingdom of Sweden’s interpretation of Article 14(3) and Article 10(1) of Directive 2014/49 undermines the rights of the DGS of the host Member State (‘the receiving DGS’) which, from the date of the transfer, must assume liability for the covered deposits of the credit institution.
64 The Republic of Estonia states, first of all, that although it follows from Article 10(1) of that Directive that it is for the Member States to establish how regularly and when the contributions must be paid, it is clear that the levying and payment of those contributions must take place at least once every year. If a Member State does not ensure that the contributions are levied and paid at least annually, it cannot meet its obligation under Article 14(3) of that directive to ensure that, if a credit institution ceases to be a member of a DGS and joins the DGS of another Member State, the contributions paid during the 12 months preceding the end of its membership of the original DGS are transferred to the receiving DGS.
65 It argues that, in the present case, the contributions were paid to the Swedish DGS irregularly because no contribution was paid to it during the 12 months preceding the transfer of the activities of the Latvian branch of Nordea Bank to the Latvian DGS. In order to fulfil its obligations under Article 10(1) and Article 14(3) of Directive 2014/49, the Kingdom of Sweden should therefore have taken the view that contributions had been paid during that 12-month period.
66 Next, the Republic of Estonia submits that, in the light of Article 14(4) of that directive, under which, if a credit institution intends to transfer from one DGS to another in accordance with that directive, it is to give at least six months’ notice, the Swedish deposit guarantee authority must have had at its disposal, long before the transfer, the information that the activities of the Nordea Bank branch were going to be transferred from the Swedish DGS to the Latvian DGS. It could therefore have ensured that contributions were levied in such a way that the obligation under Article 14(3) of Directive 2014/49 could be fulfilled.
67 Lastly, the Republic of Estonia notes that the EBA stated, in its opinion of 8 August 2019 on the eligibility of deposits, coverage level and cooperation between deposit guarantee schemes, which is available on the website of that authority, that the date on which a credit institution decides to pay its contributions poses problems in practice. The EBA therefore proposed, in that opinion, to amend Article 14(3) of Directive 2014/49 – a proposal which the Republic of Estonia supports – in order to ensure legal clarity and avoid problems similar to those encountered in the present case.
68 The Commission adds that the contributions payable each year to a DGS by its members under Article 10(1) of Directive 2014/49 may be regarded as consideration for the guarantee of deposits for a certain period. The obligation, laid down in Article 14(3) of Directive 2014/49, to transfer contributions where part of the activities of a credit institution moves to another DGS would thus be based on the basic rule relating to the financing of the scheme set out in Article 10(1) of that directive. The intention of the EU legislature was that, in the event that a bank is restructured, funds would always be available to be transferred to the receiving DGS in order to enable it to fulfil its obligations under that scheme.
69 Moreover, according to the Commission, Article 14(3) of Directive 2014/49 is intended to make up for the increase in the financial risk for the receiving DGS in the event of a transfer from one DGS to another of the financial liability for part of the covered deposits of a credit institution, for example, through the restructuring of that credit institution. Any other interpretation would have serious consequences for the achievement of the internal market and undermine both confidence in the DGS and cooperation between the competent authorities of the Member States.
70 The response of the Kingdom of Sweden is that, first, the wording of Article 14(3) of Directive 2014/49 is clear and unambiguous. It provides that the contributions paid during the 12-month period preceding the transfer to the receiving DGS are to be transferred to that DGS. That provision therefore covers the total amount of the contributions paid during that period, irrespective of the period to which they relate.
71 Second, it argues that the context of Article 14(3) of Directive 2014/49 also does not support the interpretation advocated by the Republic of Latvia and the interveners.
72 The fact that Article 10(1) of that directive states that contributions must be paid at least annually does not mean that a contribution, which has been paid, can be regarded as relating to a specific 12-month period. Nor is it possible to argue that Article 10(1) of Directive 2014/49 imposes a specific payment date in relation to a 12-month period.
73 In addition, it claims that, under Article 10(2) of that directive, Member States are to ensure that, by 3 July 2024, the available financial means of a DGS shall at least reach a target level of 0.8% of the covered deposits of its members. That directive gives the Member States a wide margin of discretion in determining the amount of contributions and, in addition, the possibility of not levying contributions once the target level has been reached. Applying the option of ceasing to levy contributions after the target level has been reached could indeed lead to cases where there is no need to transfer contributions where activities are transferred. Article 10(2) of Directive 2014/49 does not therefore guarantee that funds are always available to be transferred to the receiving DGS, contrary to what is claimed by the Commission.
74 Third, it claims that there are general and systemic reasons for applying Article 14(3) of Directive 2014/49 as worded. Such an application provides clarity as regards which funds may be transferred. However, an interpretation according to which that provision must be regarded as covering payments which were not made during the 12-month period preceding the transfer would involve a certain number of ambiguities and would be difficult to apply.
75 Fourth, the Kingdom of Sweden states that it is apparent from the EBA’s opinion of 8 August 2019, cited in paragraph 67 of the present judgment, that the collection of contributions from members of a DGS, pursuant to Directive 2014/49, does not take full account of the liability that may be transferred between different DGSs. It is also apparent from that opinion that Article 14(3) of that directive does not make provision for an exhaustive solution as regards the transfer of funds and that the EBA recommended, in that context, that that provision be amended. Thus, gaps in that provision cannot be remedied by an interpretation of the existing provisions.
76 Fifth, the Kingdom of Sweden notes that, as is apparent from the Commission’s reasoned opinion, during exchanges which took place in October 2020 between the deposit guarantee authorities of the three Baltic States and the Commission, the Commission stated that that directive provided for minimum harmonisation as regards the transfer of contributions. There is therefore no need to interpret the provision in question other than on the basis of its wording.
77 Sixth, it submits that, contrary to what the Commission maintains, a literal interpretation of Article 14(3) of Directive 2014/49 has no serious consequences for the achievement of the internal market. The contributions which may be transferred under that directive should rarely be so large that they can be regarded as essential in order for the receiving DGS to be able to fulfil its obligations. Thus, the fact that the Swedish DGS did not transfer contributions to the Latvian DGS did not lead to a corresponding increase in the contributions levied by the Latvian DGS.
78 Further, the interpretation which it advocates does not entail an undue advantage in favour of the Swedish DGS. It notes, in that regard, that the transfer of the activities of Nordea Bank from the Swedish DGS to the Finnish DGS led to contributions being paid from the Swedish DGS to the Finnish DGS because the Swedish DGS received contributions during the 12-month period preceding that transfer. Consistent application of Article 14(3) of that directive merely produced different results due to the different factual circumstances.
– Findings of the Court
79 By its first objection, the Republic of Latvia, supported by the interveners, claims that the Kingdom of Sweden has failed to fulfil its obligations under Article 14(3) of Directive 2014/49 by refusing, on the basis of an incorrect interpretation and application of that provision, to transfer to the Latvian DGS the contributions which Nordea Bank had paid to the Swedish DGS in respect of deposits connected with the activities of the Latvian branch in respect of the 12-month period preceding the transfer of the activities of that branch to the Latvian DGS.
80 The Kingdom of Sweden argues that that refusal does not constitute a failure to fulfil obligations, since Article 14(3) of Directive 2014/49 requires the contributions to be transferred to have been paid during the 12-month period preceding the transfer. Since no contribution was paid by Nordea Bank in respect of the activities of its Latvian branch during that period, the conditions of that provision were not satisfied according to that Member State.
81 According to the Court’s settled case-law, it is necessary, when interpreting a provision of EU law, to consider not only its wording but also its context and the objectives of the legislation of which it forms part (judgment of 21 December 2023, G. K. and Others (European Public Prosecutor’s Office), C‑281/22, EU:C:2023:1018, paragraph 46 and the case-law cited).
82 As regards the wording of the second subparagraph of Article 14(3) of Directive 2014/49, it should be recalled that, under that subparagraph, if some of the activities of a credit institution are transferred to another Member State and thus become subject to another DGS, the contributions of that credit institution paid during the 12 months preceding the transfer, with the exception of certain extraordinary contributions, are to be transferred to the other DGS in proportion to the amount of covered deposits transferred.
83 It follows from the expression ‘the contributions … paid’ that that provision is based on the premiss that contributions were in principle paid during that 12-month period and must therefore be transferred to the receiving DGS in the event of a transfer of activities to another Member State. That interpretation is borne out by the expression ‘in proportion to’, which establishes a very clear link between the transfer of contributions and the transfer of the deposit guarantee.
84 Thus, the wording of that provision does not rule out the possibility that contributions relating to the 12-month period preceding the transfer, but levied by the Swedish DGS outside that period, must be transferred to the receiving DGS.
85 As regards the context of Article 14(3) of Directive 2014/49, it should be noted that that provision must be interpreted in the light of Article 10(1) of that directive, which lays down the detailed rules for the financing of DGSs.
86 Under the second subparagraph of Article 10(1) of that directive, DGSs are to raise the available financial means by contributions to be made by their members at least annually. As the Commission notes, it follows from that provision that the contributions paid by the members to the DGS may be regarded as being consideration for the deposit guarantee for a certain period.
87 It is therefore consistent with the broad logic of the DGS that, in the event of the transfer of certain activities from a credit institution to another Member State and, consequently, the transfer of liability for the covered deposits to the DGS of that other Member State, the consideration for the deposit guarantee should also be transferred to the receiving DGS.
88 Thus, the effectiveness of Article 14(3) of Directive 2014/49 requires that, in order to comply with the obligation arising from that provision, the Swedish DGA must transfer to the Latvian DGS the contributions paid to it by Nordea Bank which relate to the 12 months preceding the transfer of Nordea Bank’s activities to the Latvian DGS, taking into consideration the periods to which Nordea Bank’s contributions relate, and not the exact date on which those contributions had been paid to it.
89 It is true that, under Article 10(2) of that directive, relied on by the Kingdom of Sweden in its written pleadings, Member States are to ensure that, by 3 July 2024, the available financial means of a DGS reach at least a target level of 0.8% of the amount of the covered deposits of its members. Therefore, Member States may decide no longer to raise contributions once and for as long as the target level is reached. Indeed, if a Member State took such a decision, the DGS of that Member State might, in the event of a transfer of activity from one of its members to the DGS of another Member State, have no contribution to transfer to the receiving DGS because it would not itself have received any contribution.
90 However, the interpretation advocated by the Kingdom of Sweden of Article 10(2) of Directive 2014/49 presupposes, first, that the target level is reached and, second, that, by way of exception to the principle that a credit institution pays at least annually a contribution to the DGS of which it is a Member State, a Member State decides not to levy contributions. The fact that, in such a situation, no contribution was paid during the 12 months preceding the transfer and could not be transferred is a logical consequence of such a decision not to demand payment of those contributions, and is irrelevant in situations where, on the contrary, a Member State has not taken such a decision and has demanded the payment of contributions in respect of the 12-month period preceding the transfer.
91 As regards the objective pursued by Article 14(3) of Directive 2014/49, the Court notes that that provision is intended to compensate the receiving DGS for the financial risk linked to the transfer of covered deposits of the credit institution. That objective bears out the interpretation that the Kingdom of Sweden should have taken into account the periods to which the contributions paid by Nordea Bank relate and not the exact date of the payments. That interpretation is the only one capable of ensuring that an original DGS, which no longer bears the risk associated with the covered deposits transferred to a Member State other than the Member State of the original DGS, does not retain, as is the case here, contributions paid which relate to the 12-month period preceding the transfer solely because they were paid to the DGS after that period.
92 In addition, the Court points out that that directive aims, more generally – as is apparent from recital 3 thereof – first, to protect depositors in the event that the deposits made with a credit institution which is a member of a DGS are unavailable and, second, to ensure the stability of the banking system, by avoiding the phenomenon of massive withdrawals of deposits not only from a credit institution in difficulty but also from healthy institutions following a loss of public confidence in the soundness of that system (see, by analogy, judgment of 25 March 2021, Balgarska Narodna Banka, C‑501/18, EU:C:2021:249, paragraph 51 and the case-law cited).
93 Only an interpretation according to which, in the event of a transfer of the activities of a credit institution to another Member State, the original DGS, which no longer bears the risk associated with the covered deposits transferred, must transfer to the receiving DGS all the contributions that were paid to it by that credit institution which relate to the 12-month period preceding that transfer, contributes to the attainment of that dual objective since it enables the receiving DGS to receive consideration for the risk associated with the covered deposits transferred, which contributes to its financial stability and to the protection of the depositors of the credit institutions affiliated to that DGS.
94 Lastly, that interpretation is supported by recital 37 of Directive 2014/49, which refers to liability among all institutions in a given financial market. The arrival of a new credit institution within a DGS automatically increases the total amount of covered deposits and is liable to result in a call to contribute to that DGS. The arrival of that new establishment should therefore be accompanied by the transfer of the contributions that it has paid to the original DGS which relate to the 12-month period preceding the transfer, so that it can contribute to solidarity within the receiving DGS.
95 It follows from the findings above that the first objection must be upheld and that it must be held that, by refusing to transfer to the Latvian DGS the contributions that had been paid by the Latvian branch of Nordea Bank to the Swedish DGS in respect of the 12-month period preceding the transfer of the activities of that branch to the Latvian DGS, the Kingdom of Sweden failed to fulfil its obligations under Article 14(3) of Directive 2014/49.
The second objection, alleging infringement of Article 4(3) TEU and of the principle of equal treatment
– Arguments of the parties
96 The Republic of Latvia, supported by the Republic of Lithuania, submits that the refusal of the Swedish DGS to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank in respect of the period referred to in Article 14(3) of Directive 2014/49 is contrary to the principle of sincere cooperation and to the principle of equal treatment, given that the Swedish DGS transferred, in a comparable legal situation, contributions that it had received from Nordea Bank to the Finnish DGS, in accordance with Article 14(3) of Directive 2014/49, following the transfer of Nordea Bank’s head office to Finland.
97 The Kingdom of Sweden replies that, since the transfer of Nordea Bank’s head office to Finland took place on 1 October 2018, and, since contributions had been paid to the Swedish DGS on 13 October 2017 and 28 September 2018, they were paid during the 12-month period preceding the transfer, namely the period from 1 October 2017 to 30 September 2018. Thus, the Swedish DGS also applied, in that case, Article 14(3) of Directive 2014/49, in accordance with its wording, in line with the application of that provision in the decision of the Swedish DGA of 3 October 2017. The difference in outcome therefore results exclusively from the time when the payments were made. The Kingdom of Sweden therefore disputes the Republic of Latvia’s assertion that its conduct was unfair, when it applied that provision uniformly.
– Findings of the Court
98 The Court points out that it is apparent from case-law that a failure to fulfil the general obligation of sincere cooperation following from Article 4(3) TEU may be found only in so far as it covers conduct distinct from that which constitutes the infringement of the specific obligations alleged against the Member State (judgment of 14 July 2022, Commission v Denmark (PDO Feta), C‑159/20, EU:C:2022:561, paragraph 75 and the case-law cited).
99 As the Advocate General stated, in essence, in point 80 of his Opinion, it is apparent from the arguments of the Republic of Latvia, summarised in paragraph 96 of the present judgment, that, by its second objection, alleging infringement of Article 4(3) TEU, that line of argument concerns the refusal of the Swedish DGS to transfer to the Latvian DGS the contributions paid by the Latvian branch of Nordea Bank in respect of the period referred to in Article 14(3) of Directive 2014/49, namely the same conduct as that constituting the infringement of the specific obligation contained in that provision.
100 Accordingly, there is no need to make a finding that the general obligation laid down in Article 4(3) TEU has not been fulfilled that is separate from the finding made above that the more specific obligation of the Kingdom of Sweden under Article 14(3) of Directive 2014/49 has not been fulfilled.
101 The Republic of Latvia’s argument, alleging infringement of the principle of equal treatment, also relates to the refusal of the Swedish DGS to transfer the contributions at issue to the Latvian DGS, with the result that there is also no need to find a separate infringement of that principle, as the Advocate General observed, in essence, in point 81 of his Opinion.
102 It follows from the foregoing that the present objection must be rejected.
103 In the light of all the findings above, the Court holds that,
by refusing to transfer to the Latvian DGS the contributions that had been paid by the Latvian branch of Nordea Bank to the Swedish DGS in respect of the 12-month period preceding the transfer of the activities of that branch to the Latvian DGS, the Kingdom of Sweden failed to fulfil its obligations under Article 14(3) of Directive 2014/49.
Costs
104 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. Under Article 138(3) of those rules of procedure, where each party succeeds on some and fails on other heads, the parties are to bear their own costs unless, if it appears justified in the circumstances of the case, the Court orders that one party, in addition to bearing its own costs, pay a proportion of the costs of the other party.
105 In the present case, both the Republic of Latvia and the Kingdom of Sweden have applied for costs against the other party. Moreover, the Kingdom of Sweden has been unsuccessful in the context of the first objection raised by the Republic of Latvia, and the latter has been unsuccessful in the context of its second objection.
106 Consequently, the Court holds that the Republic of Latvia and the Kingdom of Sweden must be ordered to bear their own costs.
107 In application of Article 140(1) of the Rules of Procedure, under which the Member States and institutions which have intervened in the proceedings are to bear their own costs, the Republic of Estonia, the Republic of Lithuania and the Commission are to bear their own costs.
On those grounds, the Court (First Chamber) hereby:
1. Declares that, by refusing to transfer to the Latvian deposit guarantee scheme (DGS) the contributions that had been paid by the Latvian branch of Nordea Bank AB to the Swedish DGS in respect of the 12-month period preceding the transfer of the activities of that branch to the Latvian DGS, the Kingdom of Sweden failed to fulfil its obligations under Article 14(3) of Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes;
2. Dismisses the action as to the remainder;
3. Orders the Republic of Latvia, the Kingdom of Sweden, the Republic of Estonia, the Republic of Lithuania and the European Commission to bear their own costs.
[Signatures]