ORDER OF THE GENERAL COURT (Ninth Chamber)
17 November 2021 (*)
(Action for annulment – Prudential supervision of credit institutions – Specific supervisory tasks assigned to the ECB – Decision to withdraw a credit institution’s authorisation – Action becoming devoid of purpose – Interest in bringing proceedings ceasing to exist – No need to adjudicate)
In Case T‑247/16 RENV,
Trasta Komercbanka AS, established in Riga (Latvia), represented by O. Behrends, lawyer,
applicant,
v
European Central Bank (ECB), represented by E. Koupepidou and C. Hernández Saseta, acting as Agents, and by B. Schneider and M. Petite, lawyers,
defendant,
supported by
Republic of Latvia, represented by K. Pommere, acting as Agent,
and by
European Commission, represented by V. Di Bucci and A. Steiblytė, acting as Agents,
interveners,
APPLICATION under Article 263 TFEU seeking annulment of decision ECB/SSM/2016 – 529900WIP0INFDAWTJ81/1 WOANCA-2016-0005 of the ECB of 3 March 2016, adopted 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 European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63),
THE GENERAL COURT (Ninth Chamber),
composed of M.J. Costeira (Rapporteur), President, M. Kancheva and T. Perišin, Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the dispute and events subsequent to the bringing of the action
1 The applicant, JSC Trasta Komercbanka TKB, is a Latvian credit institution, which is small in size and significance, providing financial services under an authorisation granted to it by the Finanšu un kapitāla tirgus komisija (Financial and Capital Market Commission, Latvia; ‘the FCMC’) in September 1991.
2 On 5 February 2016, the European Central Bank (ECB) received a proposal from the FCMC to withdraw the applicant’s authorisation to take up the business of a credit institution pursuant to Article 14(5) of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63).
3 After examining, in coordination with the FCMC, compliance with EU and national law criteria which could justify the withdrawal of authorisation and after receiving the applicant’s observations on two occasions, the ECB adopted, on 3 March 2016, decision ECB/SSM/2016 – 529900WIP0INFDAWTJ81/1 WOANCA-2016-0005, by which it withdrew the applicant’s authorisation and rejected its application for suspension of the effects of the decision for one month (‘the contested decision’).
4 On 3 April 2016, the ECB’s administrative review body received a request for review of the contested decision. By decision of 30 May 2016, that body considered that the allegations of procedural and substantive infringements by the contested decision were unfounded and that that decision was sufficiently reasoned and proportionate, while recommending that the ECB’s management body clarify certain matters.
5 On 11 July 2016, the ECB adopted decision ECB/SSM/2016 – 5299WIP0INFDAWTJ81/2 WOANCA-2016-0005, by which it decided to withdraw the applicant’s authorisation to take up the business of a credit institution (‘the decision of 11 July 2016’). That decision repealed and replaced the contested decision.
Procedure and forms of order sought
6 On 13 May 2016, the applicant brought the present action.
7 On 23 September 2016, the applicant brought an action against the decision of 11 July 2016, registered as Case T‑698/16.
8 By separate document lodged at the Court Registry on 29 September 2016, the ECB raised a plea of inadmissibility under Article 130(1) of the Rules of Procedure of the General Court.
9 By separate document lodged at the Registry on 18 November 2016, the applicant submitted its observations on the plea of inadmissibility.
10 By order of 12 September 2017, Fursin and Others v ECB (T‑247/16, not published, ‘the initial order’, EU:T:2017:623), the Court, first, held that there was no need to adjudicate on the applicant’s action for annulment of the contested decision and, secondly, rejected the ECB’s plea of inadmissibility in so far as it concerned the action brought by the other applicants, who were shareholders of the applicant, in Case T‑247/16.
11 The ECB lodged its defence on 25 October 2017.
12 The ECB, the Commission and the applicants in Case T‑247/16, including the applicant, appealed against the initial order on 24 November, 27 November and 28 November 2017, respectively.
13 On 2 February 2018, on the basis of Article 69(d) of the Rules of Procedure, the President of the Second Chamber decided to stay the proceedings pending the decision on the appeals against the initial order.
14 Following a change in the composition of the Chambers of the General Court, pursuant to Article 27(5) of the Rules of Procedure, the Judge-Rapporteur was assigned to the Ninth Chamber, to which the present case was consequently allocated.
15 On 5 November 2019, the Court of Justice delivered its judgment in ECB and Others v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, the ‘judgment on the appeal’, EU:C:2019:923).
16 By that judgment, first, the Court of Justice held, in the appeal in Case C‑669/17 P, brought inter alia by the applicant, that the ECB’s plea of inadmissibility must be rejected as unfounded in so far as it related to the absence of a valid authority to act as a lawyer for the purposes of being represented before the General Court (judgment on the appeal, paragraphs 54 to 61, 70 to 76, 82 and paragraph 3 of the operative part).
17 Secondly, the Court of Justice held, in the appeal in Case C‑669/17 P, brought inter alia by the applicant, that the ECB’s plea of inadmissibility must be upheld in so far as it related to the action brought by the other applicants in Case T‑247/16 and, accordingly, that the action must be dismissed as inadmissible (judgment on the appeal, paragraphs 116, 119 and paragraph 4 of the operative part).
18 The Court of Justice also referred the present case back to the General Court to rule on the action brought by the applicant for annulment of the contested decision (judgment on the appeal, paragraph 5 of the operative part).
19 Following the judgment on the appeal, the General Court set a new time limit for the submission of the ECB’s defence.
20 The ECB lodged a new defence on 27 January 2020.
21 On 14 February 2020, the President of the Ninth Chamber granted the Republic of Latvia and the European Commission leave to intervene in support of the ECB.
22 On 20 May 2020, the Commission lodged its statement in intervention.
23 On 13 August 2020, the applicant submitted its observations on the Commission’s statement in intervention.
24 On 27 August 2020, the applicant lodged its reply.
25 On 26 October 2020, the ECB lodged its rejoinder.
26 By measure of organisation of procedure of 2 July 2021, the General Court asked the parties to state their views on whether the present action had become devoid of purpose following the adoption by the ECB of the decision of 11 July 2016, by which that institution had repealed the contested decision with retroactive effect, given that the Court of Justice, in the judgment on appeal, had not examined the possible consequences of that replacement.
27 Following the death of Judge Berke on 1 August 2021, by decision of the President of the General Court of 23 August 2021, the present case was assigned to a new Judge-Rapporteur sitting in the Ninth Chamber.
28 By decision of the President of the Ninth Chamber of 23 August 2021, a new judge assessor was designated to complete the formation of the Chamber.
29 The applicant claims that the Court should:
– declare the action admissible;
– annul the contested decision;
– order the ECB to pay the costs.
30 The ECB contends that the Court should:
– declare the action inadmissible;
– in the alternative, declare the action unfounded;
– order the applicant to pay the costs.
Law
31 It should be noted that, in order to establish the inadmissibility of the action, the ECB puts forward various pleas of inadmissibility, including a plea alleging that the applicant’s representative was not authorised to act and a plea alleging that the other applicants in Case T‑247/16, the applicant’s shareholders, did not have standing to bring proceedings, which were the subject of the initial order and the judgment on the appeal.
32 It should be stated that those pleas of inadmissibility were the subject of a final ruling, the Court of Justice having held that the applicant’s action was admissible and that the action brought by the other applicants in Case T‑247/16 was inadmissible. The Court of Justice therefore referred the case back to the General Court for it to rule on the action brought by the applicant for annulment of the contested decision.
33 In addition to those pleas of inadmissibility, the ECB submits that the action should be regarded as having become devoid of purpose and that the applicant no longer has any legal interest in bringing proceedings.
34 Under Article 130(2) and (7) of the Rules of Procedure, if a party so requests, the General Court may declare that the action has become devoid of purpose and that there is no longer any need to adjudicate on it. In the present case, since the ECB has applied for a declaration that the action has become devoid of purpose and that there is no longer any need to adjudicate on it, the Court, taking the view that it has sufficient information from the documents in the file, has decided to rule on that application without taking further steps in the proceedings.
35 In that regard, in its plea of inadmissibility, the ECB submits that the present action must be regarded as having become devoid of purpose in so far as the contested decision had been repealed and replaced by the decision of 11 July 2016, which is based on the same grounds and produces the same legal effects.
36 In its observations on the plea of inadmissibility, the applicant submits that the present action has not become devoid of purpose, submitting, first, the ex nunc effect of the decision of 11 July 2016, secondly, the fact that the contested decision, which has the effect of withdrawing its authorisation, does not have to be confirmed in order for its effects to be maintained, thirdly, the fact that that decision constitutes the basis for its liquidation, which occurred prior to the second decision, and, fourthly, the possibility for it to seek compensation.
37 Furthermore, in response to the measure of organisation of procedure of 2 July 2021, the applicant, supported by the Commission, maintains that it has an interest in the annulment of the contested decision, in essence, for the reasons stated in its observations on the ECB’s plea of inadmissibility. It adds that the General Court held, in the initial order, that the present action had not become devoid of purpose, that that part of the order had become final because it was not the subject of an appeal, and that the Court of Justice held that the present action had not become devoid of purpose.
38 In its reply to the question put by the General Court, the ECB maintains, in essence, its line of argument.
39 As a preliminary point, it should be noted that, even though the Court of Justice held, in paragraph 83 of the judgment on the appeal, that the General Court had not ruled on the substance of the case, referring the case back to the General Court without referring to the other pleas of inadmissibility raised by the ECB, it is clear that it is for the General Court to rule not only on the substance, but also on the pleas of inadmissibility which were not the subject of the appeals before the Court of Justice (see, to that effect, judgment of 9 June 2021, Uniwersytet Wrocławski v REA, T‑137/16 RENV, not published, EU:T:2021:335, paragraph 56). That is also the case, as here, when deciding whether there is no need to adjudicate because the action has become devoid of purpose and there is no continuing interest in bringing proceedings, an issue which, moreover, may be raised by the EU Courts of their own motion (see, to that effect, judgment of 6 September 2018, Bank Mellat v Council, C‑430/16 P, EU:C:2018:668, paragraph 49).
40 The arguments concerning whether the subject matter of the dispute in the main proceedings and the applicant’s interest in bringing proceedings persist were not the subject of the appeals before the Court of Justice. It is therefore for this Court, in the light of the arguments put forward by the parties, to ascertain whether the subject matter of the action and the applicant’s interest in bringing proceedings persist.
41 In that regard, 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 act must be capable, in itself, of having legal consequences and that the action may, through its outcome, procure an advantage for the party which brought it (see, to that effect, judgment of 17 September 2015, Mory and Others v Commission, C‑33/14 P, EU:C:2015:609, paragraphs 55 and 58).
42 That interest must, in the light of the purpose of the action, exist at the stage of lodging the action, failing which it will be inadmissible. That objective of the dispute must continue, like the interest in bringing proceedings, until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage to 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).
43 As is apparent from Article 24(1) of Regulation No 1024/2013, the ECB is to establish an Administrative Board of Review (‘the ABoR’) for the purposes of carrying out an internal administrative review of the decisions taken by it in the exercise of the powers conferred on it by that regulation. According to paragraph 2 of that article, 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 Regulation No 1024/2013, the ECB established the ABoR.
44 It is also apparent from Article 24(7) of Regulation No 1024/2013 that the internal administrative review of ECB decisions in the area of prudential supervision 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.
45 Lastly, according to Article 24(1) of Regulation No 1024/2013, 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, under Article 10(2) of Decision 2014/360, the ABoR’s review is to be limited to examination of the grounds relied on by the applicant as set out in the notice of review. However, according to Article 17(1) of that decision, the assessment of the Supervisory Board is not to be limited to examination of the grounds relied upon by the applicant as set forth in the notice of review, but may also take other elements into account in its proposal for a new draft decision.
46 It is apparent from a combined reading of the provisions referred to in paragraphs 43 to 45 above that the internal administrative review of decisions taken by the ECB in the exercise of the powers conferred on it by Regulation No 1024/2013 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 notice of review. That 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 43 above), is itself endowed with a wider competence.
47 In that context, Article 24(7) of Regulation No 1024/2013 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.
48 For the reasons set out in paragraphs 49 to 51 below, Article 24(7) of Regulation No 1024/2013 establishes an obligation on the part of the ECB to adopt a decision, following the review, which is retroactive to the time at which the original decision took effect, whatever the outcome of that review.
49 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 Regulation No 1024/2013, 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.
50 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 Regulation No 1024/2013.
51 That assessment is, indirectly but necessarily, confirmed by Article 24(8) of Regulation No 1024/2013 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.
52 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 initial decision from the legal order.
53 In the present case, first, it is apparent from the operative part of the contested decision that that decision took effect at 23.00 on the date of its notification to the applicant, in accordance with the third subparagraph of Article 297(2) TFEU. Secondly, it is apparent from the operative part of the decision of 11 July 2016 that, by that decision, the ECB decided to replace the contested decision in its entirety, which it regarded as having been repealed on the date and time of notification of the decision of 11 July 2016 to its addressee. Moreover, it is apparent that the ECB decided that the withdrawal of authorisation remained in force without interruption from 23.00 on the date of notification of the contested decision.
54 It follows from the whole of the operative part of the decision of 11 July 2016 that, notwithstanding the fact that the contested decision was repealed on the date and time of notification of the decision of 11 July 2016, the latter entirely replaced the contested decision with effect from its date of notification, the date on which the withdrawal of the applicant’s authorisation was to take effect.
55 In any event, it should be noted that the decision of 11 July 2016 was adopted following the administrative review initiated against the contested decision and is identical in content to that decision, within the meaning of Article 24(7) of Regulation No 1024/2013.
56 It follows that, by virtue of the decision of 11 July 2016, the ECB, in accordance with the legal framework governing the administrative review procedure (see paragraphs 43 to 49 above), replaced the contested decision with retroactive effect to the time at which the latter took effect.
57 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, order of 12 January 2011, Terezakis v Commission, T‑411/09, EU:T:2011:4, paragraph 15 and the case-law cited).
58 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).
59 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 (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 6 December 1999, Elder v Commission, T‑178/99, EU:T:1999:307, paragraph 21 and 22; and of 9 September 2010, Phoenix-Reisen and DRV v Commission, T‑120/09, not published, EU:T:2010:381, paragraphs 24 to 26).
60 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 is not affected by the potential annulment of the first act.
61 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.
62 It follows that the action has become devoid of purpose and that, consequently, the applicant has lost its interest in seeking annulment of the contested decision. There is therefore no longer any need to rule on the action.
Costs
63 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.
64 In view of the considerations which have led the Court to find that there is no longer any need to adjudicate, it is fair in the circumstances of the case to order that each party is to bear its own costs.
65 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 Republic of Latvia and the Commission shall each bear their own costs.
On those grounds,
THE GENERAL COURT (Ninth Chamber)
hereby orders:
1. There is no longer any need to rule on the action.
2. Trasta Komercbanka AS and the European Central Bank (ECB) shall bear their own costs.
3. The Republic of Latvia and the European Commission shall each bear their own costs.
Luxembourg, 17 November 2021.