ORDER OF THE GENERAL COURT (Ninth Chamber, Extended Composition)
20 December 2021 (*)
(Action for annulment – Economic and monetary policy – Prudential supervision of credit institutions – Specific supervisory tasks assigned to the ECB – Decision to withdraw a credit institution’s authorisation – Replacement of the contested measure in the course of the proceedings – Action which has become devoid of purpose – Loss of interest in bringing proceedings – No need to adjudicate – Action for damages – Manifest inadmissibility)
In Case T‑321/17,
Heikki Niemelä, residing in Ohain (Belgium),
Mika Lehto, residing in Espoo (Finland),
Nemea plc, established in St Julians (Malta),
Nevestor SA, established in Ohain,
Nemea Bank plc, established in St Julians,
represented by A. Meriläinen, lawyer,
applicants,
v
European Central Bank (ECB), represented by C. Hernández Saseta and A. Witte, acting as Agents, and by B. Schneider, lawyer,
defendant,
supported by
European Commission, represented by A. Steiblytė and A. Nijenhuis, acting as Agents,
intervener,
APPLICATION, first, under Article 263 TFEU, for annulment of the decision of the European Central Bank of 23 March 2017, ECB/SSM/2017 – 213800JENPXTUY75VSO/1 WHD‑2017‑0003, withdrawing Nemea Bank plc’s authorisation to operate as a credit institution and, second, under Article 268 TFEU, seeking compensation for the damage allegedly suffered by the applicants,
THE GENERAL COURT (Ninth Chamber, Extended Composition),
composed of M. Van der Woude, President, S. Papasavvas, M. J. Costeira, M. Kancheva (Rapporteur) and T. Perišin, Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the dispute
1 The fifth applicant, Nemea Bank plc, is a less significant Maltese credit institution providing financial services pursuant to an authorisation granted to it by the Maltese Financial Services Authority (‘the MFSA’) and, as such, subject to direct supervision by the Maltese national competent authority, namely the MFSA.
2 The third and fourth applicants, Nemea plc and Nevestor SA, are two direct shareholders of the fifth applicant. The first and second applicants, Mr H. Niemelä and Mr M. Lehto, are two indirect shareholders, through their participation in the two direct shareholders, in their capacity as members of the Board of Directors and ultimate owners or effective beneficiaries of the fifth applicant.
3 On 25 January 2017, after consulting the national resolution authority, the MFSA submitted a draft decision to the European Central Bank (ECB) to withdraw the fifth applicant’s authorisation to operate as a credit institution, pursuant to Article 80 of Regulation (EU) No 468/2014 of the ECB of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (‘the SSM Framework Regulation’) (OJ 2014 L 141, p. 1).
4 On 13 March 2017 the Supervisory Board of the ECB approved the draft decision to withdraw authorisation from the fifth applicant and set a time limit of three days for it to comment on that draft, in accordance with Article 31 of the SSM Framework Regulation.
5 On 15 March 2017, the fifth applicant submitted its observations on the draft decision to withdraw its authorisation to operate as a credit institution.
6 On 23 March 2017, the ECB adopted Decision ECB/SSM/2017 – 213800JENPXTUY75VSO/1 WHD-2017-0003, by which it withdrew the fifth applicant’s authorisation to operate as a credit institution (‘the contested decision’) pursuant to Article 4(1)(a) and Article 14(5) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the ECB concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63) (‘the SSM Regulation’).
7 On 22 April 2017, the Administrative Board of Review of the ECB (‘the ABoR’) received a request from the applicants for a review of the contested decision.
Facts subsequent to the contested decision
8 On 19 June 2017, the ABoR adopted an opinion in which it proposed that the contested decision be replaced by an identical decision. On 30 June 2017, the Governing Council of the ECB, following the opinion of the ABoR and on the basis of a proposal from the Supervisory Board, adopted Decision ECB/SSM/2017-213800JENPXTUY75VS 07/2 (‘the decision of 30 June 2017’) which, as stated in its operative part, replaced the contested decision, in accordance with Article 24(7) of the SSM Regulation.
Procedure and forms of order sought
9 By application lodged at the Registry of the General Court on 22 May 2017, the applicants brought the present action.
10 By separate document lodged at the Court Registry on 25 October 2017, the ECB raised an objection of inadmissibility under Article 130 of the Rules of Procedure of the General Court.
11 The applicants submitted their observations to ECB’s objection of inadmissibility on 19 December 2017.
12 By order of 13 July 2018, the General Court reserved its decision on the objection of inadmissibility until final judgment, on the basis of Article 130(7) of the Rules of Procedure.
13 By document lodged at the Court Registry on 18 October 2017, the European Commission applied for leave to intervene in support of the form of order sought by the ECB. The applicants submitted their observations on that application on 16 November 2017.
14 By decision of 23 July 2018, the President of the Second Chamber of the General Court granted the application for leave to intervene.
15 By document lodged at the Court Registry on 27 August 2018, the ECB lodged its defence.
16 By document lodged at the Court Registry on 22 October 2018, the Commission lodged its statement in intervention, on which the applicants lodged their observations on 9 November 2018.
17 The applicants lodged their reply on 22 October 2018. The ECB lodged its rejoinder on 28 January 2019.
18 By a document lodged at the Court Registry on 20 February 2019, the applicants requested that an oral hearing be held.
19 By document lodged at the Court Registry on 27 February 2019, the applicants requested that the proceedings be stayed pending delivery of the judgment of the Court of Justice on the appeal brought against the order of 12 September 2017, Fursin and Others v ECB (T‑247/16, not published, EU:T:2017:623). The ECB submitted its observations on that application on 22 March 2019.
20 By decision of the President of the Second Chamber of the General Court of 1 April 2019, the proceedings were stayed.
21 Following the partial renewal of the Court, the Judge-Rapporteur was assigned to the Ninth Chamber, to which the present case was assigned.
22 Following delivery of the judgment of 5 November, ECB v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923), the Court asked the parties to submit their observations on the consequences to be drawn from that judgment in the present case. The Commission replied on 8 January 2020, the applicants and the ECB on 9 January 2020.
23 On a proposal from the Ninth Chamber, the Court decided, in application of Article 28 of the Rules of Procedure of the General Court, to refer the case to a formation of the Court with an extended composition.
24 By decision of the President of the General Court of 27 August 2021, the present case was assigned to a new Judge-Rapporteur, sitting in the Ninth Chamber, and a new Judge was designated to complete the formation.
25 The applicants claim, in essence, that the Court should:
– annul the contested decision;
– amend that decision in order to suspend the operation thereof and allow or order the shareholders to dispose of their shares in the fifth applicant within a reasonable period;
– order the ECB to compensate them for the damage suffered as a result of the adoption of that decision;
– order the ECB to pay the costs.
26 The ECB contends that the Court should:
– dismiss the application for annulment as inadmissible, or, in the alternative, as unfounded;
– dismiss the application for suspension of operation of the contested decision as inadmissible;
– dismiss the claim for damages as inadmissible or, in the alternative, as manifestly unfounded;
– order the applicants to bear the costs.
27 The Commission contends that the Court should:
– dismiss the action as inadmissible as regards the second applicant;
– in any event, dismiss the action as unfounded;
– order the applicants to bear the costs.
Law
28 As a preliminary point, as regards the second head of claim, seeking the amendment of the contested decision in order to suspend the implementation thereof or order the shareholders to dispose of their shares in the fifth applicant within a reasonable period, it is clear that it is not for the Court to amend a decision submitted for its review on the basis of Article 263 TFEU (see, to that effect and by analogy, order of 4 May 2020, Comprojecto-Projectos e Construções and Others v ECB and Banco de Portugal, T‑90/20, not published, EU:T:2020:204, paragraph 10 and the case-law cited).
The application for annulment
29 Under Article 131(1) of the Rules of Procedure, if the General Court declares that the action has become devoid of purpose and that there is no longer any need to adjudicate on it, it may at any time, of its own motion, on a proposal from the Judge-Rapporteur and after hearing the parties, decide to rule by reasoned order.
30 In the present case, it should be noted that the ECB argues that, in view of the adoption of the decision of 30 June 2017, the action has become devoid of purpose and the applicants no longer have a legal interest in bringing proceedings for annulment of the contested decision.
31 According to the applicants, since the ECB did not withdraw its decision to withdraw the fifth applicant’s authorisation to operate as a credit institution, the content and effects of the contested decision have remained unaltered since 23 March 2017.
32 Furthermore, in response to the measure of organisation of procedure of 2 July 2021, the applicants maintain, as does the Commission, that they have a legal interest in the annulment of the contested decision, and add that they should have been informed in 2017 of the loss of legal interest on account of the adoption of the decision of 30 June 2017 and of the need to bring an action against that decision.
33 In its reply to the question put by the Court, the ECB disputes those arguments.
34 In that connection, it should be recalled that an action for annulment brought by a natural or legal person is admissible only in so far as that person has an interest in having the contested act annulled. Such an interest, which is an essential and fundamental prerequisite for any legal proceedings, requires that the annulment of that measure must be capable, in itself, of having legal consequences and that the action, if successful, may procure an advantage for the party which has brought that action (see judgment of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraphs 55 and 58).
35 That interest in bringing proceedings must, in the light of the purpose of the action, exist at the stage of lodging the action, failing which the action will be inadmissible. That purpose must, like the interest in bringing proceedings, continue until the final decision, failing which there will be no need to adjudicate; this presupposes that the action must be capable, if successful, of procuring an advantage for the party bringing it (see judgment of 7 June 2007, Wunenburger v Commission, C‑362/05 P, EU:C:2007:322, paragraph 42 and the case-law cited).
36 As is apparent from Article 24(1) of Regulation No 1024/2013, the ECB is required to establish an ABoR responsible for carrying out an internal administrative review of decisions taken by the ECB in the exercise of the powers conferred on it by that regulation. Under Article 24(2), the ABoR is to be composed of five individuals of high repute, from Member States and having a proven record of relevant knowledge and professional experience, excluding current staff of the ECB, as well as current staff of competent authorities or of other national or EU institutions, bodies, offices and agencies. By Decision 2014/360/EU of 14 April 2014 concerning the establishment of an Administrative Board of Review and its Operating Rules (OJ 2014 L 175, p. 47), adopted on the basis of Article 24 of the SSM Regulation, the ECB established the ABoR.
37 It is clear from Article 24 of the SSM Regulation that ECB supervisory decisions may be the subject of an administrative review which, according to Article 24(7), consists of three stages. In the first place, the ABoR issues an opinion to the Supervisory Board for the purpose of drawing up a new draft decision. In the second place, the Supervisory Board takes account of the opinion of the ABoR and submits a new draft decision to the Governing Council within the time limits laid down in Article 17(2) of Decision 2014/360. The new draft decision is to ‘abrogate the initial decision, replace it with a decision of identical content, or replace it with an amended decision’. In the third place, the new draft decision is to be deemed adopted unless the Governing Council objects within a maximum period of 10 working days.
38 Lastly, under Article 24(1) of the SSM Regulation, the scope of the internal administrative review is to pertain to the procedural and substantive conformity, with that regulation, of decisions taken by the ECB in the exercise of the powers conferred on it by that regulation. It is true that, pursuant to Article 10(2) of Decision 2014/360, the ABoR’s review is limited to examination of the grounds relied on by the applicant as set out in the request for review. However, under Article 17(1) of that decision, the assessment of the Supervisory Board is not be limited to examination of the grounds relied upon by the applicant as set forth in the request for review, but may also take other elements into account in its proposal for a new draft decision.
39 It is apparent from a combined reading of the provisions mentioned in paragraphs 36 to 38 above that the internal administrative review of decisions taken by the ECB in the exercise of the powers conferred on it by the SSM Regulation consists, taken as a whole, of a complete reassessment of the case, which is not limited to the grounds relied on in support of the request for review. This feature of the administrative review procedure is reflected in the fact that, under Article 17(1) of Decision 2014/360, the Supervisory Board, after taking into account the opinion of the ABoR, established for the purposes of a review of ECB decisions with increased independence and expertise (see paragraph 36 above), is itself endowed with a wider competence.
40 In that context, Article 24(7) of the SSM Regulation provides that the review procedure may lead to three outcomes. The first consists in the simple abrogation of the initial decision. The second consists in replacing the initial decision with an identical decision. The third consists in replacing the initial decision with an amended decision.
41 Article 24(7) of the SSM Regulation lays down an obligation on the part of the ECB to adopt a decision, following the review, that is retroactive to the time at which the original decision took effect, whatever the outcome of that review.
42 In particular, if the Supervisory Board and the Governing Council consider that the initial decision, pursuant to which the credit institution’s authorisation was withdrawn, is valid, the Governing Council does not simply reject the request for review on the merits, but rather, in accordance with Article 24(7) of the SSM Regulation, adopts a decision that is identical to the one subject to that review. Nevertheless, in such a case, it is not possible to withdraw the same authorisation a second time. A decision identical in content to the reviewed decision can therefore only replace the latter with retroactive effect to the time at which the reviewed decision took effect.
43 That interpretation, which results from the nature of the measures at issue, is also valid where the Supervisory Board and the Governing Council consider that withdrawal of authorisation is not justified or that the shortcomings identified can be remedied by less onerous measures. In such a situation, the act repealing the withdrawal of authorisation or imposing those measures must have retroactive effect so as to cancel ex tunc the withdrawal of the credit institution’s authorisation and, where appropriate, replace it with the measure considered to be the most appropriate. In the absence of such retroactive effect, the review decision could only have effect if a new authorisation was granted in accordance with the procedure laid down in Article 14 of the SSM Regulation.
44 That assessment is, indirectly but necessarily, confirmed by Article 24(8) of the SSM Regulation and by Article 9(1) of Decision 2014/360, according to which the request for review is not to have suspensory effect on the application of the contested decision. It follows that the replacement of the reviewed decision by an amended decision must be made with retroactive effect to the time at which the reviewed decision took effect, as otherwise the final decision cannot have any practical effect.
45 It is also apparent from the foregoing analysis that the replacement of the initial decision by an identical or amended decision at the end of the review procedure results in the definitive disappearance of the original decision from the legal order.
46 In the present case, first, in accordance with the third subparagraph of Article 297(2) TFEU, the decision of 23 March 2017 took effect on the day of its notification to the applicants. Second, it is apparent from point 3 of the decision of 30 June 2017 that, by that decision, the ECB decided to replace in its entirety the decision of 23 March 2017, which it considered to have been repealed on the date of its notification to its addressee.
47 Thus, the decision of 30 June 2017 repealed and replaced the decision of 23 March 2017 with effect from that date, on which the withdrawal of approval was to take effect.
48 In any event, it should be noted that the decision of 30 June 2017 was adopted following the administrative review initiated against the decision of 23 March 2017 and is identical in content to that decision, within the meaning of Article 24(7) of the SSM Regulation.
49 It follows that, by virtue of the decision of 30 June 2017, the ECB, in accordance with the legal framework governing the administrative review procedure (see paragraphs 36 to 42 above), replaced the contested decision with retroactive effect to the time at which the latter took effect.
50 The disappearance of the subject matter of the proceedings can, inter alia, result from the withdrawal or replacement of the contested act in the course of the proceedings (see, to that effect, judgment of 1 June 1961, Meroni and Others v High Authority, 5/60, 7/60 and 8/60, EU:C:1961:10, pp. 109 to 111; orders of 17 September 1997, Antillean Rice Mills v Commission, T‑26/97, EU:T:1997:131, paragraphs 14 and 15; and of 12 January 2011, Terezakis v Commission, T‑411/09, EU:T:2011:4, paragraph 15).
51 An act which is withdrawn and replaced disappears completely and with ex tunc effect from the legal order of the European Union and therefore a judgment annulling a withdrawn act would not entail any additional legal consequences by comparison with that withdrawal (see, to that effect, orders of 28 May 1997, Proderec v Commission, T‑145/95, EU:T:1997:74, paragraph 26; of 6 December 1999, Elder v Commission, T‑178/99, EU:T:1999:307, paragraph 20; and of 9 September 2010, Phoenix-Reisen and DRV v Commission, T‑120/09, not published, EU:T:2010:381, paragraph 23).
52 It follows that, in the event of withdrawal of the contested act, the applicant retains no interest in obtaining its annulment and the action against it becomes devoid of purpose, with the result that there is no longer any need to adjudicate (judgment of 1 June 1961, Meroni and Others v High Authority, 5/60, 7/60 and 8/60, EU:C:1961:10, pp. 109 to 111; orders of 9 September 2010, Phoenix-Reisen and DRV v Commission, T‑120/09, not published, EU:T:2010:381, paragraphs 24 to 26; and of 24 March 2011, Internationaler Hilfsfonds v Commission, T‑36/10, EU:T:2011:124, paragraphs 46, 50 and 51).
53 That conclusion is even more evident where, as in the present case, the contested act has been replaced, with retroactive effect, by an identical act, which would not be affected by the potential annulment of the first act.
54 Consequently, in a legal context which organises an administrative review giving rise to the adoption of acts intended to replace, with retroactive effect, the acts which were the subject of that review, the interests of the affected parties are fully protected by the possibility of seeking annulment of the act adopted following the review in question and compensation for any damage caused by the adoption of that review.
55 It follows that the action, in so far as it seeks annulment of the contested decision, has become devoid of purpose and, as a consequence, there is no longer any need to adjudicate on the application for annulment or to rule on the application for measures of inquiry related thereto made by the applicants.
The claim for compensation
56 Under Article 126 of the Rules of Procedure, where it is clear that the Court has no jurisdiction to hear and determine an action or where the action is manifestly inadmissible or manifestly lacking any foundation in law, the Court may, on a proposal from the Judge-Rapporteur, at any time decide to give a decision by reasoned order without taking further steps in the proceedings.
57 In the application, the applicants put forward a head of claim seeking an order that the ECB compensate them in the amount of EUR 10 million plus statutory interest. In the context of the pleas seeking annulment of the contested decision, they mention the existence of irreparable damage resulting from the immediate implementation of the contested decision and from the failure to suspend the effects of that decision. Then, in the reply, they increased their claim for damages to the sum of EUR 100 million.
58 The ECB contends that the claim for damages is inadmissible.
59 According to settled case-law, applicable mutatis mutandis to the non-contractual liability of the ECB provided for in the third paragraph of Article 340 TFEU, the European Union’s non-contractual liability under the second paragraph of Article 340 TFEU for the unlawful conduct of its institutions or bodies is subject to the satisfaction of a set of conditions of a cumulative nature, namely the unlawfulness of the conduct alleged against the EU institution or body, the fact of damage and the existence of a causal link between the alleged conduct and the damage complained of (see judgment of 7 October 2015, Accorinti and Others v ECB, T‑79/13, EU:T:2015:756, paragraph 65 and the case-law cited).
60 Pursuant to the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union, applicable to the procedure before the General Court, in accordance with the first paragraph of Article 53 of that Statute and Article 76(d) of the Rules of Procedure, an application must contain the subject matter of the proceedings, the pleas in law and arguments relied on and a summary of those pleas in law. Those elements must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the action, if necessary, without any further information. In order to guarantee legal certainty and the sound administration of justice, it is necessary, in order for a plea to be admissible, that the essential matters of law and fact relied on are stated coherently and intelligibly in the application itself. The application must, accordingly, specify the nature of the grounds on which it is based, with the result that a mere abstract statement of the grounds does not satisfy the requirements of the Rules of Procedure (see order of 11 March 2021, Techniplan v Commission, T‑426/20, not published, EU:T:2021:129, paragraph 19 and the case-law cited).
61 In order to satisfy those requirements, an application seeking compensation for damage allegedly caused by an institution must indicate with sufficient precision the manner in which the various conditions for reparation of the alleged damage are satisfied. It follows that such an application must contain the evidence making possible identification of, first, the conduct which the applicant alleges against the institution, second, the reasons for which the applicant considers that there is a causal link between that conduct and the damage which he claims to have suffered, and, third, the nature and extent of that damage (see order of 12 September 2018, RE v Commission, T‑257/17, not published, EU:T:2018:549, paragraphs 55 and 56 and the case-law cited).
62 In the present case, it is clear that, in the application, the applicants neither develop nor substantiate to the requisite legal standard the conduct of the ECB which they claim gives rise to unlawfulness capable of rendering the European Union liable. In particular, they have failed to clarify the causal link between the alleged damage and the effects which the contested decision might have produced before being replaced by the decision of 23 March 2017. Similarly, the claims made by the applicants at the reply stage are in no way capable of making up for that obvious shortcoming. It is in fact clear from the case-law that, when examining whether the application complies with the requirements of Article 76(1) of the Rules of Procedure, the content of the reply is, by definition, irrelevant. In particular, the admissibility, permitted by case-law, of pleas and arguments put forward in the reply as amplifications of pleas in the application cannot be raised with the aim of compensating for a failure, arising during the initiation of the action, to comply with those requirements, without rendering the latter provision devoid of purpose (see, by analogy, judgment of 25 October 2012, Arbos v Commission, T‑161/06, not published, EU:T:2012:573, paragraph 59 and the case-law cited).
63 Consequently, the claim for damages must be held to be manifestly inadmissible.
Costs
64 Under Article 137 of the Rules of Procedure, where a case does not proceed to judgment the costs are to be in the discretion of the Court. Under Article 134(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.
65 In view of the considerations which have led the Court to find that there is no longer any need to adjudicate on the application for annulment, it is fair in the circumstances of the case to order that each of the main parties bear its own costs.
66 Since the applicants have been unsuccessful in their claim for compensation, they must be ordered to bear their own costs and to pay those incurred by the ECB in relation to the claim for compensation, in accordance with the form of order sought by the ECB.
67 Under Article 138(1) of the Rules of Procedure, the Member States and institutions which have intervened in the proceedings are to bear their own costs. Accordingly, the Commission must be ordered to bear its own costs.
On those grounds,
THE GENERAL COURT (Ninth Chamber, Extended Composition)
hereby orders:
1. There is no longer any need to adjudicate on the application for annulment.
2. The claim for compensation is dismissed as inadmissible.
3. Heikki Niemelä, Mika Lehto, Nemea plc, Nevestor SA and Nemea Bank plc and the European Central Bank (ECB) are ordered each to bear their own costs in relation to the application for annulment.
4. Heikki Niemelä, Mika Lehto, Nemea, Nevestor and Nemea Bank are ordered to bear their own costs and pay those incurred by the ECB in relation to the claim for compensation.
5. The European Commission is ordered to bear its own costs.
Luxembourg, 20 December 2021.
E. Coulon | | M. van der Woude |