OPINION OF ADVOCATE GENERAL
RICHARD DE LA TOUR
delivered on 27 April 2021 (1)
Joined Cases C‑584/20 P and C‑621/20 P
European Commission
v
Landesbank Baden-Württemberg,
Single Resolution Board (SRB) (C‑584/20 P)
and
Single Resolution Board (SRB)
v
Landesbank Baden-Württemberg (C‑621/20 P)
(Appeal – Economic and monetary union – Banking Union – Single Resolution Mechanism for credit institutions and certain investment firms (SRM) – Single Resolution Fund (SRF) – Fair hearing – Rule that the parties should be heard – Plea raised of the court’s own motion – Authentication of the decision at issue – Calculation of 2017 ex ante contributions – Obligation to state reasons – Business secrecy – Legality of Delegated Regulation (EU) 2015/63)
I. Introduction
1. The primary objective of the Single Resolution Mechanism (SRM), (2) which is the second pillar of the Banking Union, is to ensure that bank failures within that union are managed effectively and give rise to the least possible cost to taxpayers and the real economy. The Single Resolution Board (SRB), an agency of the European Union responsible for overseeing the effective and consistent functioning of the SRM, takes the decision to commence bank resolution proceedings, while operationally that decision will be implemented in cooperation with the national resolution authorities.
2. The SRB is the owner of the Single Resolution Fund (SRF), which serves to fund resolution actions. The SRF is funded by contributions from credit institutions and certain investment firms in the euro area. (3) The transfer of contributions at EU level is governed by an intergovernmental agreement. (4)
3. The mutualisation of funding will be completed by the end of 2023 since, by that date, contributions will be payable exclusively to the SRF, and no longer in part, in a decreasing proportion each year, to the national resolution authorities. The methods for calculating those contributions have been the subject of many discussions and lengthy negotiations among the Member States. (5)
4. Those contributions are calculated annually so that, by the end of the initial period of eight years, the SRF will hold funds representing at least 1% of the amount of covered deposits of all credit institutions authorised in all the participating Member States. However, the annual total of those contributions must not exceed 12.5% of the target level.
5. Institutions’ contributions are calculated as a flat contribution according to the size of the institution, and/or are adjusted to the institution’s risk profile. (6)
6. Banking resolution therefore not only reduces the economic and budgetary cost of any future bank failures, but also seeks to moderate certain risk behaviour within the institutions – the biggest of which were certain of being rescued by the State and, ultimately, taxpayers – and, consequently, by limiting that moral hazard, to reduce the likelihood of such failures.
7. By decision of 11 April 2017 on calculation of the 2017 ex ante contributions to the SRF (SRB/ES/SRF/2017/05), (7) the SRB set the amount of the ex ante contributions for 2017 payable to the SRF by each institution, including Landesbank Baden-Württemberg (‘LBBW’).
8. An action having been brought before it by LBBW, by judgment of 23 September 2020, Landesbank Baden-Württemberg v SRB, (8) the General Court of the European Union annulled the decision at issue in so far as it concerned that bank.
9. The European Commission, as an intervener at first instance, and the SRB each brought an appeal against that judgment.
10. In determining those appeals, the Court of Justice has an opportunity to give a ruling on, first, the detailed rules for authenticating an annex to a decision of the SRB and, second, the methods that the SRB should use for calculating the ex ante contributions under the SRM.
11. Specifically, the appellants are asking the Court to give a ruling, in any event, on the legality of the provisions of Delegated Regulation 2015/63 on the calculation of ex ante contributions. The General Court found those provisions to be unlawful because the calculation methods in question are inherently opaque, as a result of the need to preserve business secrecy because of the use of figures relating to other institutions, and because that opacity is in breach of the obligation to state reasons laid down in Article 296 TFEU.
12. I will propose, first, that the Court should set aside the judgment under appeal on the ground that the General Court, on the one hand, infringed the rule that the parties should be heard when it assessed the authentication of the annex to the decision at issue and, on the other, erred in law in respect of the extent of the obligation to state reasons and in respect of the legality of Delegated Regulation 2015/63. Second, I will propose that the Court should itself dispose of the case on those two questions and should, in a fresh ruling, annul the decision at issue in so far as it concerns LBBW, on the ground that the annex to that decision was insufficiently authenticated and that that decision did not contain an adequate statement of reasons. I will also propose that the Court should reject the plea that the disputed provisions of Delegated Regulation 2015/63 are unlawful, subject to the qualification that the SRB provide greater transparency in respect of certain aggregate third-party confidential data.
II. Legal context
A. Directive 2014/59
13. Article 102(1) and (2) of Directive 2014/59 provides:
‘1. Member States shall ensure that, by 31 December 2024, the available financial means of their financing arrangements reach at least 1% of the amount of covered deposits of all the institutions authorised in their territory. Member States may set target levels in excess of that amount.
2. During the initial period of time referred to in paragraph 1, contributions to the financing arrangements raised in accordance with Article 103 shall be spread out in time as evenly as possible until the target level is reached, …’
14. Article 103 of that directive provides:
‘1. In order to reach the target level specified in Article 102, Member States shall ensure that contributions are raised at least annually from the institutions authorised in their territory including Union branches.
2. The contribution of each institution shall be pro rata to the amount of its liabilities (excluding own funds) less covered deposits, with respect to the aggregate liabilities (excluding own funds) less covered deposits of all the institutions authorised in the territory of the Member State.
Those contributions shall be adjusted in proportion to the risk profile of institutions, in accordance with the criteria adopted under paragraph 7.
…
7. The Commission shall be empowered to adopt delegated acts in accordance with Article 115 in order to specify the notion of adjusting contributions in proportion to the risk profile of institutions as referred to in paragraph 2 of this Article, taking into account all of the following:
(a) the risk exposure of the institution, including the importance of its trading activities, its off-balance sheet exposures and its degree of leverage;
(b) the stability and variety of the company’s sources of funding and unencumbered highly liquid assets;
(c) the financial condition of the institution;
(d) the probability that the institution enters into resolution;
(e) the extent to which the institution has previously benefited from extraordinary public financial support;
(f) the complexity of the structure of the institution and its resolvability;
(g) the importance of the institution to the stability of the financial system or economy of one or more Member States or of the Union;
(h) the fact that the institution is part of an IPS [(institutional protection scheme)].
…’
B. Regulation (EU) No 806/2014
15. Article 67 of Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010, (9) provides:
‘1. The [SRF] is hereby established. It shall be filled in accordance with the rules on transferring the funds raised at national level towards the [SRF] as laid down in the Agreement [on the transfer and mutualisation of contributions to the SRF].
2. The [SRB] shall use the [SRF] only for the purpose of ensuring the efficient application of the resolution tools and exercise of the resolution powers referred to in Part II, Title I and in accordance with the resolution objectives and the principles governing resolution referred to in Articles 14 and 15. Under no circumstances shall the Union budget or the national budgets be held liable for expenses or losses of the [SRF].
3. The owner of the [SRF] shall be the [SRB].
4. Contributions referred to in Articles 69, 70 and 71 shall be raised from entities referred to in Article 2 by the national resolution authorities and transferred to the [SRF] in accordance with the Agreement [on the transfer and mutualisation of contributions to the SRF].’
16. Article 69(1) and (2) of that regulation states:
‘1. By the end of an initial period of eight years from 1 January 2016 …, the available financial means of the [SRF] shall reach at least 1% of the amount of covered deposits of all credit institutions authorised in all of the participating Member States.
2. During the initial period referred to in paragraph 1, contributions to the [SRF] calculated in accordance with Article 70, and raised in accordance with Article 67(4), shall be spread out in time as evenly as possible until the target level is reached, but with due account of the phase of the business cycle and the impact that pro-cyclical contributions may have on the financial position of contributing institutions.’
17. Article 70(1) and (2) of that regulation provides:
‘1. The individual contribution of each institution shall be raised at least annually and shall be calculated pro-rata to the amount of its liabilities (excluding own funds) less covered deposits, with respect to the aggregate liabilities (excluding own funds) less covered deposits, of all of the institutions authorised in the territories of all of the participating Member States.
2. Each year, the [SRB] shall, after consulting the [European Central Bank (ECB)] or the national competent authority and in close cooperation with the national resolution authorities, calculate the individual contributions to ensure that the contributions due by all of the institutions authorised in the territories of all of the participating Member States shall not exceed 12.5% of the target level.
Each year the calculation of the contributions for individual institutions shall be based on:
(a) a flat contribution, that is pro-rata based on the amount of an institution’s liabilities excluding own funds and covered deposits, with respect to the total liabilities, excluding own funds and covered deposits, of all of the institutions authorised in the territories of the participating Member States; and
(b) a risk-adjusted contribution, that shall be based on the criteria laid down in Article 103(7) of Directive [2014/59], taking into account the principle of proportionality, without creating distortions between banking sector structures of the Member States.
…’
C. Delegated Regulation 2015/63
18. Article 4 of Delegated Regulation 2015/63 provides:
‘1. The resolution authorities shall determine the annual contributions to be paid by each institution in proportion to its risk profile on the basis of information provided by the institution in accordance with Article 14 and by applying the methodology set out in this Section.
2. The resolution authority shall determine the annual contribution referred to in paragraph 1 on the basis of the annual target level of the resolution financing arrangement by taking into account the target level to be reached by 31 December 2024 in accordance with paragraph 1 of Article 102 of Directive [2014/59] and on the basis of the average amount of covered deposits in the previous year, calculated quarterly, of all the institutions authorised in its territory.’
19. Article 5 of that delegated regulation sets out the principles for the risk adjustment of the basic annual contributions.
20. Article 6 of that delegated regulation defines the risk pillars and indicators, and their relative weighting is laid down in Article 7 of the same delegated regulation.
21. Article 9 of Delegated Regulation 2015/63 provides:
‘1. The resolution authority shall determine the additional risk adjusting multiplier for each institution by combining the risk indicators referred to in Article 6 in accordance with the formula and the procedures set out in Annex I.
2. Without prejudice to Article 10, the annual contribution of each institution shall be determined for each contribution period by the resolution authority by multiplying the basic annual contribution by the additional risk adjusting multiplier in accordance with the formula and the procedures set out in Annex I.
3. The risk adjusting multiplier shall range between 0.8 and 1.5.’
D. Delegated Regulation (EU) 2017/747
22. Article 3(1) and (4) of Commission Delegated Regulation (EU) 2017/747 of 17 December 2015 supplementing Regulation (EU) No 806/2014 of the European Parliament and the Council with regard to the criteria relating to the calculation of ex ante contributions, and on the circumstances and conditions under which the payment of extraordinary ex post contributions may be partially or entirely deferred, (10) provides:
‘1. When assessing the phase of the business cycle and the impact that pro‑cyclical contributions may have on the financial position of contributing institutions in accordance with Article 69(2) of Regulation [No 806/2014], the [SRB] shall take into consideration at least the following indicators:
(a) the macroeconomic indicators set out in the Annex, to identify the phase of the business cycle;
(b) the indicators set out in the Annex, to identify the financial position of the contributing institutions.
…
4. In any given contribution period, the level of annual contributions may be relatively lower than the average of the annual contributions calculated in accordance with Articles 69(1) and 70(2) of Regulation [806/2014] only where the [SRB] verifies that based on conservative projections the target level can be reached at the end of the initial period.’
III. Background to the dispute
23. LBBW is a credit institution established in Germany and is a member of the institutional protection scheme of the Sparkassen-Finanzgruppe (Savings Banks Finance Group, Germany).
24. On 26 January 2017 LBBW sent its declaration for the purposes of calculating the 2017 ex ante contribution to the Bundesanstalt für Finanzmarktstabilisierung (Federal Agency for Financial Market Stabilisation, Germany) (‘the FMSA’), the German resolution authority.
25. By the decision at issue, under Article 54(1)(b) and Article 70(2) of Regulation No 806/2014, the SRB in its executive session determined the amount of the ex ante contribution of each institution, including LBBW, for 2017.
26. By assessment notice of 21 April 2017, received on 24 April 2017, the FMSA informed LBBW that the SRB had set its 2017 ex ante contribution to the SRF and indicated the amount to be paid to the Restrukturierungsfonds (Restructuring Fund, Germany). The FMSA attached two documents to the assessment notice, namely a version in German of the text of the decision at issue, without the annex to which that text refers, and a document entitled ‘Details of the (risk-adjusted) calculation: 2017 ex ante contributions to the [SRF]’.
IV. The proceedings before the General Court and the judgment under appeal
27. By document lodged at the Registry of the General Court on 30 June 2017, LBBW brought an action for annulment of the decision at issue.
28. By document lodged at the Registry of the General Court on 29 September 2017, the Commission sought leave to intervene in support of the forms of order sought by the SRB, leave being granted by decision of 13 November 2017.
29. The General Court made the following orders:
– on 12 February 2019, a measure of organisation requesting the SRB, first, to produce a complete copy of the decision at issue and the annex thereto and all of the interim decisions on the basis of which it had calculated the contribution; second, to set out the procedure for adopting the decision at issue together with supporting documents; third, to specify the date on which the table of intervals for the risk adjusting multiplier was first published on the internet; and, fourth, to indicate the values of the multiplier for the institutional protection scheme indicator and those for the risk adjusting multiplier that had been applied to other institutions;
– on 10 April and 9 September 2019 respectively, measures of inquiry requiring the SRB to produce confidential and non‑confidential versions of the documents and information referred to in the preceding measure of organisation and to supplement the reply to the first measure of inquiry; and
– a measure of inquiry of 10 October 2019 by which the General Court removed from the case file the confidential version of all the documents produced by the SRB and ordered the production of new non-confidential versions of other documents because the versions produced initially contained redacted passages that were in reality relevant to the dispute and non-confidential.
30. The General Court accepted, first, that LBBW had standing to bring an action on the ground that, although SRB decisions on calculation of the ex ante contributions to the SRF are addressed to the national resolution authorities, those decisions are of direct and individual concern to the institutions which owe those contributions. Second, the General Court declared the plea of illegality made against a number of provisions of Delegated Regulation 2015/63 to be admissible.
31. The General Court, after recalling that the European Union Courts are required to raise of their own motion the plea relating to matters of public policy alleging infringement of essential procedural requirements, which includes failure to authenticate the act at issue and failure to state, or adequately state, reasons, found that the requirement to authenticate the decision at issue was not satisfied in the present case. The General Court held that the annex to that decision, which contained the amounts of the ex ante contributions payable by LBBW, was an essential element of that decision and was not in any way inextricably linked to that decision, the only document of the two to have been signed.
32. In the interests of the proper administration of justice the General Court also examined together three other pleas in law relied upon by LBBW, that is to say, pleas alleging infringement of the obligation to state reasons and infringement of the right to effective judicial protection and the plea of illegality relating to a number of provisions of Delegated Regulation 2015/63.
33. In respect of infringement of the SRB’s obligation to state reasons, while not disputing that the data relating to other institutions and used to calculate the contributions was confidential, the General Court noted that, beyond the explanations in general terms contained in its text, the decision at issue contained barely any information regarding the calculation of LBBW’s contribution. It therefore found that, since calculation of the contribution was based interdependently on that non-disclosable data, that calculation was inherently opaque. The General Court concluded that the method of calculation applied adversely affected LBBW’s ability effectively to challenge the decision at issue.
34. The General Court upheld LBBW’s plea of illegality against a number of provisions of Delegated Regulation 2015/63. It found that the fact that the calculation was opaque, thereby preventing LBBW from verifying its accuracy, was due, at least in part, to the calculation method defined by the Commission in that delegated regulation, that method not having been imposed on the Commission by Regulation No 806/2014 or Directive 2014/59 with regard to ex ante contributions to resolution financing arrangements.
35. In the light of the foregoing, the General Court held that the decision at issue also had to be annulled, in so far as it concerned LBBW, on the ground that it infringed the obligation to state reasons and the right to effective judicial protection.
V. The proceedings before the Court of Justice and the forms of order sought by the parties
36. By its appeal in Case C‑584/20 P the Commission claims that the Court should:
– set aside the judgment under appeal, and
– order LBBW to pay the costs.
37. By its appeal in Case C‑621/20 P the SRB claims that the Court should:
– set aside the judgment under appeal;
– dismiss LBBW’s application, and
– order LBBW to pay the costs.
38. LBBW claims that the appeals should be dismissed and the appellants ordered to pay the costs.
39. By decisions of 4 and 8 December 2020, the President of the Court granted the applications by the Commission and the SRB for these cases to be heard under the expedited procedure established in Articles 133 to 136 of the Rules of Procedure of the Court of Justice.
40. By decision of the President of the Court of 12 February 2021, Cases C‑584/20 P and C‑621/20 P were joined for the purposes of the oral procedure and the judgment.
41. By orders of 25 February 2021, the Fédération bancaire française (French Banking Federation) was granted leave to intervene in support of the forms of order sought by LBBW.
42. By order of 12 March 2021, the Kingdom of Spain was granted leave to intervene in support of the forms of order sought by the SRB and the Commission.
VI. Analysis
43. In support of its appeal in Case C‑584/20 P, the Commission relies on five grounds of appeal. In the first ground of appeal it submits that the General Court distorted the clear sense of the facts and infringed the rule that the parties should be heard as well as SRB’s rights of defence. In the second ground of appeal the Commission claims that the General Court erred in law by declaring the plea of illegality against Delegated Regulation 2015/63 to be admissible without stating reasons for that finding. In the third ground of appeal, it submits that the General Court misinterpreted Articles 69(1) and 70(2) of Regulation No 806/2014 in respect of the target level and the basic annual contribution. In the fourth ground of appeal, the Commission argues that the General Court misinterpreted Articles 4 to 7 and Article 9 of Delegated Regulation 2015/63 and Annex I thereto by characterising the adjustment of contributions in proportion to the risk profile as ‘interdependent’. In the fifth ground of appeal the Commission claims that the General Court incorrectly extended the obligation to state reasons under Article 296 TFEU.
44. In its appeal in Case C‑621/20 P, the SRB relies on two grounds of appeal. In the first ground, it alleges an infringement of Article 85(3) of the Rules of Procedure of the General Court, distortion of the clear sense of the evidence and infringement of its right to a fair hearing. In the second ground it alleges an infringement of Article 296 TFEU and of Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’).
45. The first ground of appeal in both appeals can be examined together. The same applies to the second ground of the SRB’s appeal and the fifth ground of the Commission’s appeal.
A. First ground of appeal in Cases C‑584/20 P and C‑621/20 P: the General Court distorted the clear sense of the facts by incorrectly characterising the annex to the decision at issue as being ‘in no way inextricably linked to’ that decision and infringed the rule that the parties should be heard as well as SRB’s rights of defence
1. Arguments of the parties
46. The Commission submits that the General Court distorted the clear sense of the facts by finding that an essential element of the decision at issue, that is to say, the annex containing the amounts of the individual ex ante contributions, was not authenticated because it was not inextricably linked to that decision which, alone, had been signed by the President of the SRB.
47. The Commission takes the view that, by making that finding, the General Court distorted the clear sense of the facts put before it since (i) the signed decision at issue referred explicitly to the annex thereto; (ii) that signed decision and the annex thereto were sent to the members of the SRB’s executive session in a single email, as a result of which (iii) they were jointly approved by email; (iv) the routing slip referred to two electronic documents under the same code number, and (v) the handwritten signature on that routing slip in combination with the handwritten signature on the decision has the effect of authenticating the annex to the decision. The Commission states that those factors create an ‘overall experience creating a presumption of a link’, which the General Court disregarded. Moreover, the General Court dismissed the argument to that effect put forward by the SRB at the hearing before the General Court, on the ground that it was submitted at a late stage.
48. The Commission also claims that the General Court infringed the rule that the parties should be heard and the SRB’s rights of defence by failing to allow the parties to debate a plea in law supporting annulment that was raised by the court of its own motion, to the effect that there was no inextricable link between the signed decision at issue and the annex thereto, all the more so when the decision‑making process leads to a single overall document with a single code number.
49. The SRB for its part submits that the issue of authentication of the annex to the decision at issue was not raised either by LBBW in the application at first instance or at the time of the measures of organisation and inquiry, which related only to the procedure by which that decision was adopted and production of a complete copy of the decision, or in the report for the hearing, even though during the proceedings LBBW had expressed doubts as to whether the data in that annex was authenticated and even though, at the hearing, the SRB had explained the authentication process using the ARES (Advanced Records System) document system, in which the body of that decision and the annex thereto were stored after the written procedure and which was used to generate both the routing slip which was signed, by hand, by the President of the SRB, as was the body of the decision at issue to which the date and decision number had been added.
50. The SRB considers, in the first place, that the General Court infringed Article 85(3) of its Rules of Procedure by refusing to accept as admissible the observations made at the hearing which nevertheless, first, substantiated the responses given to the measures ordered by the General Court; second, responded to LBBW’s submissions of 6 November 2019 on the lack of authentication; third, answered the questions put by the General Court at the hearing; and, fourth, could not have been made previously because the matter of authentication was raised by the General Court of its own motion only at the hearing.
51. The SRB also criticises the General Court for distorting the clear sense of the evidence by finding that the routing slip contained nothing to prove that the annex to the decision at issue was available in ARES and that there was no evidence establishing an inextricable link between that annex and that decision signed by hand by the President of the SRB.
52. Last, the SRB considers that the General Court infringed its right to a fair hearing by raising a plea of its own motion without placing the SRB in a position to take notice of that plea before the hearing, without accepting the offer of additional evidence made at the hearing and without informing the SRB, by that time at the latest, that the evidence of authentication was insufficient.
53. LBBW asserts that the question whether the annex to the decision at issue was authenticated was in contention from the time the General Court ordered the first measure of organisation, which related to production of a complete copy of that decision, including the annex thereto, and that this was confirmed by the second order relating to measures of inquiry which requested production of the decision in its original format. According to LBBW, since there is long‑established case-law of the Court of Justice on the authentication of decisions, (11) the SRB and the Commission should have identified the link between that annex and that decision, the reference code and ARES in their replies to the orders for measures of inquiry. LBBW concludes from the foregoing that the ground of appeal alleging infringement of Article 85(3) of the Rules of Procedure of the General Court is unfounded and that, in any event, the SRB submitted new facts and arguments at the hearing without prior warning, thereby preventing LBBW from expressing its view and infringing the rule that the parties should be heard.
54. LBBW adds that the ground of appeal alleging distortion of the clear sense of evidence is unfounded because the SRB has not provided evidence that the signed decision at issue and the annex thereto were inextricably linked and is merely proposing a different construction of the evidence produced while offering vague criticism of the General Court’s analysis of the evidence. LBBW states that the General Court did not distort the clear sense of the evidence when it found, first, that the number on the routing slip corresponded to an internal reference code with no probative value as regards authentication; second, that the attached documents referred to on that routing slip were unidentified; and, third, that the link between the word ‘ARES’ and the reference, both appearing on the routing slip, was not proven.
2. Assessment
(a) Infringement of the rule that the parties should be heard, the right to a fair hearing and SRB’s rights of defence as a result of the plea raised of the General Court’s own motion
55. It should be noted at the outset that the appellants are not disputing the case-law relied upon by the General Court according to which the court must raise of its own motion a plea involving a matter of public policy where there is an infringement of essential procedural requirements, (12) which include the fact that an act is not authenticated. (13)
56. The authentication of acts is intended to guarantee legal certainty by ensuring that the text adopted, the authorship and content of which in particular must be certain, becomes definitive. The infringement of an essential procedural requirement can lead to annulment of the decision with no requirement to prove other harm. (14) That case-law has been applied in relation to disputed 2016 ex ante contributions (15) and the annulments ordered on that ground were not challenged before the Court of Justice.
57. Nevertheless, in common with any plea, a plea raised by the court of its own motion must be the subject of a debate where the arguments of the parties are heard. Although that debate may take place in connection with measures of organisation, (16) measures of inquiry (17) or in response to oral questions, it is nevertheless necessary to establish that it took place.
58. In the present case, LBBW did not raise the matter of authentication as a plea supporting annulment although, in its reply to the last measure of inquiry, it did express doubts as to the ‘security of the decision-making process and the authenticity of the data in the annexes’ because documents were sent electronically to the members of the SRB, and as to the nature of the file containing the annex (an Excel file) since it could be changed at any time and did not guarantee ‘the accuracy of the final calculation …, even at the [SRB]’.
59. Nor is it apparent from documents issued by the General Court (the measure of organisation, measures of inquiry, report for the hearing, transcript of the hearing or judgment under appeal) that the General Court explicitly opened that plea, as such, to debate where the arguments of the parties were heard.
60. However, in its appeal and at the hearing before the Court of Justice, the SRB stated that the matter of authentication of the annex was addressed at the hearing before the General Court, since that is the reason it gives to explain the delay in producing evidence relating to ARES.
61. It should be noted that the Court of Justice has held that the General Court failed to have regard to the rule that the parties should be heard when it annulled a decision on the basis of a plea involving a matter of public policy raised of its own motion without having first invited the parties, in the course of the written or oral procedures, to submit their observations on that plea. (18)
62. Further, it is common ground that the requests to produce documents related to the complete copy of the decision at issue, including the annex thereto, and to the original format of the files. However, as noted in point 56 of this Opinion, authentication relates, inter alia, to the content of that decision. The SRB’s reasoning is therefore untenable in so far as it argues that the requests to produce documents were intended only to verify the procedure by which the decision at issue was adopted but not the content of that decision. In fact, during the written procedure the SRB itself produced the routing slip, which was of no relevance other than to prove a link between that decision and the annex thereto.
63. Accordingly, it is apparent that the documents produced during the written procedure were the subject of a debate when the arguments of the parties were heard. The question therefore arises whether the parties’ statements on the conduct of the hearing are sufficient to establish that there was an invitation to debate the plea raised by the General Court of its own motion at the hearing.
64. It seems to me that we are approaching the extreme limit of what can constitute evidence of an invitation to the parties to engage in debate on a plea raised of the court’s own motion. Accordingly, since there is no mention in the General Court’s case file of the parties being informed of this plea raised of that court’s own motion and since the Court of Justice does not have access to recordings of the hearing before the General Court, (19) it seems to me that, notwithstanding the parties’ statements before the Court of Justice, it cannot be found that the General Court upheld either the rule that the parties should be heard, or SRB’s rights of defence, or the right to a fair hearing. (20)
65. It is, therefore, necessary to examine whether the General Court’s error had any consequences, by determining whether, even in the absence of the breach of procedure in question, the proceedings could not have had a different outcome, so that the failure to observe the rule that the parties should be heard could not have influenced the content of the judgment under appeal and would not have adversely affected the interests of the SRB. (21)
66. The question whether or not the annex to the decision at issue was authenticated depends on an analysis of the documents produced and involves a genuine assessment by the General Court which could be contested by the parties.
67. It is therefore not inconceivable that the General Court’s assessment might have been different had the SRB been in a position to submit its observations on the authentication of that annex and that, accordingly, compliance with the rule that the parties should be heard could have influenced the content of the judgment under appeal.
68. The judgment under appeal should be set aside under that head of claim.
(b) Distortion concerning the routing slip produced during the written procedure before the General Court
69. The jurisdiction of the Court of Justice to review findings of fact by the General Court extends, inter alia, to the substantive inaccuracy of its findings where apparent from the documents in the case file, to distortion of the clear sense of the evidence, to the legal classification of that evidence and to the question whether the rules relating to the burden of proof and the taking of evidence have been observed. (22)
70. It is also apparent from settled case-law that one instance of such a distortion is where the General Court has manifestly exceeded the limits of a reasonable assessment of the evidence, (23) though the distortion must be obvious from the documents on the Court’s file, without there being any need to carry out a new assessment of the facts and the evidence. (24) It is not sufficient to show that a document could be interpreted differently from how it was construed by the General Court. (25)
71. In the present case, from examination of the documents produced during the written procedure before the General Court, it is common ground that the annex to the decision at issue that mentions the sums owed by each institution was not signed, either physically or electronically, and that it contains no reference other than the date, 10 April 2017. Moreover, the routing slip does not specify which documents are attached to it, which therefore cannot be identified.
72. The General Court therefore did not distort the clear sense of the evidence when it stated that the annex to the decision at issue was not inextricably linked to that decision, after finding that it was impossible to link that annex with any certainty to that signed decision or to the signed routing slip (unlike the signed decision whose reference number is reproduced on the routing slip) and that it was again impossible to assert that the annex was in fact an attachment to the decision at issue, or which version had been put to the members of the SRB and validated when they voted electronically.
73. Consequently, the ground of appeal alleging distortion of the clear sense of evidence can be rejected.
(c) Infringement of Article 85(3) of the Rules of Procedure of the General Court
74. The SRB submits that under Article 85(3) of its Rules of Procedure the General Court should have accepted its offer of evidence, because until the hearing the SRB was unaware that the matter of authentication of the annex to the decision at issue was in contention.
75. The General Court’s settled case-law based on that article refers to two situations in which an offer of evidence can be accepted: where the party making the offer could not have the evidence in question at its disposal before close of the written procedure; or where the belated production of evidence by the opposing party justifies the file being supplemented in order to ensure observance of the rule that the parties should be heard. (26)
76. However, at the hearing before the General Court the SRB put forward merely an argument rather than a new offer of evidence. Article 85(3) of the Rules of Procedure of the General Court therefore did not apply. The ground of appeal alleging an infringement of Article 85(3) of the Rules of Procedure of the General Court can be rejected.
B. Second ground of appeal in Case C‑584/20 P: the General Court erred in law by declaring the plea of illegality against Delegated Regulation 2015/63 to be admissible without stating reasons for that finding
1. Arguments of the parties
77. The Commission claims that the General Court erred in law by declaring the plea of illegality against Delegated Regulation 2015/63 to be admissible. The Commission takes the view that, since any errors of law in that delegated regulation were attributable to higher-ranking measures, that is to say, Regulation No 806/2014 and Directive 2014/59, LBBW should also have challenged the legality of those texts, which Delegated Regulation 2015/63 merely ‘supplemented’, within the meaning of Article 290(1) TFEU.
78. The Commission also argues that the judgment under appeal is vitiated by a failure to state reasons, because it uses the terms ‘in part’ and ‘in particular’, thereby creating a lack of clarity as to the amendments which allegedly need to be made to Delegated Regulation 2015/63.
79. In any event, the Commission is requesting a substantive examination of the plea of illegality.
80. The SRB supports the Commission’s line of argument.
81. LBBW asserts that the General Court correctly held the plea of illegality against Articles 4 to 7 and 9 of Delegated Regulation 2015/63 and against Annex I to that delegated regulation to be admissible, because those provisions are not based on mandatory provisions of Directive 2014/59 and of Regulation No 806/2014.
82. According to LBBW, neither Article 103(2) and (7) of Directive 2014/59, on the principles that should guide calculation of the contributions, nor Articles 69(1) and 70(2) of Regulation No 806/2014, on the target level and annual ceiling, require the contribution to be risk profile adjusted by reference to the risk profiles of all the other institutions that owe contributions. On the contrary, in LBBW’s view those articles allow the Commission a discretion that enabled it, when it adopted Delegated Regulation 2015/63, to use an adjustment method that takes into account only the data relating to the institution in question, as exists in relation to micro-prudential supervision and with respect to calculating the contributions to fund deposit guarantee schemes.
83. According to LBBW, the principles of equal treatment and proportionality likewise do not dictate a comparative approach, since those principles are upheld to no lesser extent in the case of a calculation method based solely on the data of the institution in question. That method, moreover, enables LBBW’s right to effective judicial protection to be protected.
84. In LBBW’s view the judgment under appeal contains a sufficient statement of reasons to enable the Court of Justice to exercise its power of review since, first, use of the terms ‘in particular’ and ‘in part’ shows that the General Court’s examination was confined to the legality of Delegated Regulation 2015/63 and, second, assessment of the consequences of the illegality falls within the powers of the Commission.
85. In the alternative, LBBW asserts that the decision at issue is vitiated by serious failures to state reasons that are attributable exclusively to an act of maladministration by the SRB, irrespective of whether or not Delegated Regulation 2015/63 is unlawful, since the SRB has not justified how it used the discretion available to it.
2. Assessment
86. In contrast to the Commission’s view, the issues concerning whether Delegated Regulation 2015/63 complied with higher-ranking provisions, which were not disputed in the context of the application at first instance, go not to the admissibility of the plea of illegality but to its substance. The General Court, which addressed the matter as part of its examination of the substance of that plea, cannot therefore be criticised and the ground of appeal can be rejected.
87. Furthermore, the General Court in any event correctly held that the Commission’s choice of the adjustment method in Delegated Regulation 2015/63 was not imposed by the provisions of Directive 2014/59 or Regulation No 806/2014. The only criteria apparent from those texts which limit the Commission’s discretion in relation to the risk adjustment are in fact the following:
– an annual target level of at least 1% of covered deposits; (27)
– a total amount of annual contributions capped at 12.5% of that annual target amount, (28) and
– ‘a risk-adjusted contribution, that shall be based on the criteria [(29)] laid down in Article 103(7) of Directive [2014/59], taking into account the principle of proportionality, without creating distortions between banking sector structures of the Member States’. (30)
88. Those criteria do not, as such, preclude the use of a different adjustment method such as, for example, the method based on the risk data of the institution concerned alone, provided that the individual contributions are subsequently adjusted proportionately to reach the requisite share of the annual target level. Moreover, the number of risk indicators is irrelevant from that perspective since they are weighed against each other.
89. The ground of appeal alleging that paragraphs 129 and 147 of the judgment under appeal on the plea of illegality contain an insufficient statement of reasons can also be rejected, since the General Court provided ample reasons as to why the calculation method used by the SRB under Delegated Regulation 2015/63 became opaque as a result of the use of inaccessible data relating to third-party institutions, though that method was not dictated either by Directive 2014/59 or by Regulation No 806/2014. Moreover, the General Court explained in paragraph 140 of the judgment under appeal that the fact that the plea of illegality was limited to Delegated Regulation 2015/63 did not prevent that Court from finding the methodology for calculating the ex ante contributions to be unlawful ‘at least as regards the part of that methodology relating to the risk adjustment set out in that delegated regulation’. The General Court therefore confined its examination to the legality of Delegated Regulation 2015/63.
90. The second ground of appeal in Case C‑584/20 P can therefore be rejected as being unfounded.
C. Third ground of appeal in Case C‑584/20 P: the General Court misinterpreted Articles 69(1) and 70(2) of Regulation No 806/2014 in respect of the target level and the basic annual contribution
1. Arguments of the parties
91. The Commission criticises the General Court for finding that the aggregate amount of ex ante contributions for a given year could fall short of the maximum (annual) proportion of 12.5% of the target level to be reached in 2023.
92. The Commission argues that both the total target level (at least 1% of covered deposits (31)) and the annual target levels (a maximum of 12.5% of the total target level since the target level must be reached in eight years (32)) must be understood as being a benchmark which must inevitably be calculated in advance and that the SRB, as a mere agency, has no power to change those levels. The amount established annually in that way must therefore be distributed proportionately between all the institutions concerned and therefore, according to the Commission, the calculation method prescribed is justified in terms of its underlying principles.
93. LBBW is of the view that under Article 70(2) of Regulation No 806/2014 the aggregate annual ex ante contributions may be below 12.5% of the overall total level. It considers that the SRB is expressly given discretion under Article 69(2) of that regulation, which provides that ‘contributions to the [SRF] … shall be spread out in time as evenly as possible until the target level is reached, but with due account of the phase of the business cycle and the impact that pro‑cyclical contributions may have on the financial position of contributing institutions.’
94. LBBW adds that Article 3(1) and (4) of Delegated Regulation 2017/747 lay down, first, the criteria for assessing the phase of the business cycle and the impact of pro-cyclical contributions on the financial position of those institutions and, second, the circumstances in which the SRB can set a level of annual contributions lower than the average of the annual contributions. According to LBBW, those two factors confirm that the SRB has discretion and that the proportion of 12.5% of the target level may be revised downwards in certain circumstances.
2. Assessment
95. It is apparent from the clear wording of Article 70(2) of Regulation No 806/2014 that the total annual amount of ex ante contributions must not exceed 12.5% of the target level. If that factor alone is taken into consideration, the General Court’s finding in paragraph 139 of the judgment under appeal, to the effect that Article 70(2) does not prohibit an aggregation of ex ante contributions that might potentially amount to less than 12.5% of the target level for the year in question, cannot be challenged.
96. The argument that Article 69(1) of that regulation – establishing an overall target level representing ‘at least 1% of the amount of covered deposits of all credit institutions authorised in all of the participating Member States’ – makes it clear that the 12.5% annual proportion of that target level is both ‘floor’ and ‘ceiling’ can be rejected.
97. That argument would in fact only be coherent if the overall target level was fixed once and for all at the start of the eight-year period and divided into eight equal parts of 12.5%.
98. However, that is not so, because it can be seen from Article 4(2) of Delegated Regulation 2015/63 that ‘the resolution authority shall determine the annual contribution referred to in paragraph 1 on the basis of the annual target level of the resolution financing arrangement … and on the basis of the average amount of covered deposits in the previous year, calculated quarterly, of all the institutions authorised in its territory.’ Accordingly, the annual target level depends on the average amount of covered deposits in the previous year, which may vary. (33)
99. Further, as LBBW has demonstrated, although the SRB does not in fact have power to set a new target level below 1% or a total amount of annual contributions above 12.5%, it does however have the necessary powers to take into account, first, the phase of the business cycle and the impact that pro-cyclical contributions may have on the financial position of contributing institutions, in order to distribute the annual contributions as evenly as possible, (34) and, second, conservative projections ensuring that the target level can be met by the end of the initial period, in order to set a level of annual contributions lower than the average of the annual contributions. (35)
100. Accordingly, there is nothing to prevent the SRB from setting the total amount of the annual contributions at below 12.5% of the target level. The third ground of appeal in Case C‑584/20 P should therefore be rejected as being unfounded.
D. Fourth ground of appeal in Case C‑584/20 P: the General Court misinterpreted Articles 4 to 7 and Article 9 of Delegated Regulation 2015/63 and Annex I thereto by characterising the risk adjustment of contributions as ‘interdependent’
1. Arguments of the parties
101. The Commission criticises the General Court for, in paragraph 100 of the judgment under appeal, characterising the calculation as ‘inherently opaque’ ‘to the extent that [it] is based interdependently on [confidential] data’. According to the Commission, the General Court confused the calculation of basic contributions, which are ‘interdependent’, each one on the others, because they are determined proportionately, with their adjustment to the level of risk, which is based on a different method of comparing institutions. That comparison, in its view, flows from the legislation on risk adjustment (including Annex I, Step 2, point (3) of Delegated Regulation 2015/63).
102. The Commission also alleges a failure to state reasons in the judgment under appeal in so far as the General Court found certain articles of Delegated Regulation 2015/63 to be unlawful but did not specify in what way each was unlawful.
103. LBBW argues, first, that the Commission is drawing an artificial distinction between comparison and interdependence when it criticises the judgment under appeal, because the risk adjustment involves a comparison or an interdependence of data. Second, it is of the view that Articles 69(1) and 70(2) of Regulation No 806/2014 do not dictate the use of an opaque mechanism. On an unchanged legislative basis, the Commission could have used an assessment of an institution’s risk profile relying solely on data relating to that institution, as exists where contributions are raised in the field of deposit guarantees.
104. Last, LBBW is of the view that the judgment under appeal contains an adequate statement of reasons on that matter.
2. Assessment
105. The fact that the method used by the Commission to assess institutions’ risk profile is described either as based ‘interdependently’ on the data of other institutions or as based on a ‘comparison’ between the institutions’ data reveals a difference of approach in the procedures for assessing risk profiles.
106. The term ‘comparison’ could refer to a situation in which the risk profiles are calculated using only the data of the institution concerned, and are then compared with each other, while the term ‘interdependently’ would refer to a situation in which the risk profiles are calculated using the data of the institution concerned and of third-party institutions and then compared with each other.
107. As soon as the General Court found that the calculation method involves confidential data relating to third-party institutions, which is not disputed, it seems to me that it was in a position, without erring in law, to find that the calculation method was ‘interdependent’.
108. Moreover, how the calculation method is described does not affect the General Court’s finding that the method in question, which is based on confidential third-party data, is opaque.
109. Further, the Commission has not provided any evidence that the choice made in Delegated Regulation 2015/63 was dictated by Directive 2014/59 or by Regulation No 806/2014, since it merely invokes Annex I to that delegated regulation, which the General Court ruled unlawful.
110. Last, the ground of appeal alleging that the judgment under appeal failed to state reasons can be found to be inadmissible because the Commission has not stated reasons for that claim.
111. The fourth ground of appeal in Case C‑584/20 P can therefore be rejected as being inadmissible in part and unfounded in part.
E. Fifth ground of appeal in Case C‑584/20 P and second ground of appeal in Case C‑621/20 P: the General Court incorrectly extended the obligation to state reasons under Article 296 TFEU and infringed Article 47 of the Charter
1. Arguments of the parties
112. The Commission and the SRB claim that the General Court provided inadequate reasons in the judgment under appeal when it upheld, in their view en bloc, the plea of illegality in respect of a number of provisions of Delegated Regulation 2015/63, without specifying in what way each provision contributed to the illegality resulting from the opaque calculation method. Moreover, they assert, the statement of reasons is contradictory because the General Court acknowledges that data was confidential and that it was possible to challenge some aspects of the calculation method while finding that method to be opaque.
113. The appellants are of the view that the General Court misinterpreted the scope of Article 296 TFEU in respect of statements of reasons.
114. First, they consider that a statement of reasons is sufficient if the decision shows the reasoning and methodology followed to reach that decision, in which the criteria used and the reasons for their application are decisive. (36) They add that this does not mean that the addressee of the decision must be able to verify the accuracy of the calculations. The appellants conclude that Delegated Regulation 2015/63 meets those requirements because it allows for the making of decisions for which sufficient reasons are stated.
115. The SRB adds that the obligation to state reasons established in Article 296 TFEU, which corresponds to the right set out in Article 41(2)(c) of the Charter and protects the right to an effective judicial remedy under Article 47 of the Charter, can be limited, in the same way as any fundamental freedom derived from the FEU Treaty. In its view, the obligation to preserve professional secrecy, including business secrecy, under Article 339 TFEU, gives rise to one of those limits. The SRB believes that the chosen calculation method not only leads to decisions for which sufficient reasons are stated but is furthermore capable of adequately protecting professional secrecy. The SRB adds that the Court of Justice has already held that the reasons for refusing access to the minutes of proceedings of the Governing Council of the ECB were not required to ‘[provide] a statement of reasons that would have made it possible to understand and verify’ how access to that information would have undermined the public interest. (37)
116. Second, according to the appellants, the statement of reasons of the decision at issue is all the more adequate since the confidential data is not in actual fact decisive for calculating the individual contribution because that data is processed en masse. Any error in that data would therefore have no impact on the individual contributions and accordingly would not harm fair competition between institutions.
117. The SRB states that, if that data should be disclosed, in order to accommodate both the requirement to state reasons and the requirement to preserve business secrecy that data could be disclosed to the General Court and the Court of Justice, as occurs in relation to restrictive measures. (38)
118. The Commission is of the view that only information that is decisive for the individual decision may be disclosed to the General Court, which does not include such confidential data processed en masse.
119. Third, according to the appellants, that solution, which strikes a balance between the requirement to state reasons and the preservation of business secrecy, is implemented in several areas of EU law where there is discretion in a decision‑making process that involves confidential data (public procurement, competition law, the civil service and anti-dumping measures, for example) and can be applied in relation to ex ante contributions since it allows sufficient judicial review, the General Court not being required to recalculate those contributions.
120. Fourth, in the SRB’s view the calculation method defined by Delegated Regulation 2015/63 is not opaque.
121. The SRB states that because Article 296 TFEU lays down a procedural requirement relating to the statement of reasons for a decision rather than to the substance of its operative part, it does not appear to be the appropriate legal basis for assessing the validity of that delegated regulation.
122. The SRB adds that the EU legislature exercised its discretion when it opted for a ‘fixed target + distribution on a relative basis’ methodology whereby it is possible, on the one hand, to determine the overall amount of the contribution as accurately as possible in advance and, on the other, to spread that amount fairly between contributors having regard to their size and risk factors. The SRB asserts that the ‘absolutely individual’ calculation methodology used in taxation matters does not satisfy the requirement of having a predictable fixed target.
123. The SRB explains that the chosen method comprises seven stages, of which only three use identical confidential third-party data for each contribution calculation. Those three stages are:
– fixing the annual target level (stage 2);
– creating risk baskets containing institutions with similar risk profiles (discretisation) (stage 4); and
– calculating the common denominator, which is obtained by adding together all the adjusted annual contributions and used to calculate the share of the annual target level payable by each institution (stage 6).
124. The SRB adds that the harmonised annex provided to each contributor indicates transparently how it has been assigned to a risk basket, thereby enabling it to know its position compared with other contributors, even though the third-party data used to create and calibrate those baskets remains confidential. Additional aggregate data is also published on the website of the SRB, which further increased the amount of information supplied in the years following the 2017 financial year.
125. LBBW submits that the General Court did provide sufficient reasons for its decision, and did not contradict itself, in relation to the fact that certain provisions of Delegated Regulation 2015/63 are unlawful, since that Court explained in what respects it is the basic structure of the risk adjustment which is defective and that this defect accordingly affects all the provisions applicable to calculation of that part of the contribution, even though some aspects of the method can be challenged separately.
126. LBBW considers that the General Court correctly assessed the extent of the SRB’s obligation to state reasons in order to safeguard its right to effective judicial protection and rebuts all the appellants’ arguments.
127. First, LBBW asserts that the preservation of professional secrecy cannot be interpreted so extensively as to amount to depriving the obligation to provide a statement of reasons of its essential content, (39) as has occurred in the present case, because a large number of institutions concerned, a large quantity of data and a large number of individual circumstances were used for the calculation.
128. LBBW states that there is no obligation to reconcile the need to state reasons with the need for confidentiality (40) and that, furthermore, by choosing a different calculation method the Commission could have avoided any conflict between those two principles, protected by primary law, and limited the likelihood of unverifiable errors that exists at present.
129. Second, LBBW claims that the Commission’s ground of appeal alleging that the data relating to 3 500 institutions had no impact is inadmissible because of its novelty at the appeal stage. LBBW adds that this ground is unfounded because the assessment of its risk profile depends on confidential data from all those institutions.
130. Third, LBBW asserts that the case-law applicable to competition fines is irrelevant because those fines are required to have a deterrent effect, meaning that the Commission must have discretion in order to influence the behaviour of undertakings. It adds that the cited case-law in the fields of public procurement, competition, civil service competitions and anti-dumping, relating as it does to competition between legal or natural persons, likewise does not apply to its own situation, where it is required to pay a heavy financial contribution. According to LBBW, the greater the discretion, the more detailed the statement of reasons must be, and that this is true for the calculation of the ex ante contributions. Last, the case-law on access to certain ECB documents cited by the SRB is explained by the special instruments governing that institution.
131. Fourth, the appellants’ questioning of the General Court’s factual findings on the insufficient statement of reasons in the decision is inadmissible.
132. Moreover, the insufficiency of a statement of reasons cannot be remedied during the proceedings, as the SRB has proposed, and the judgment of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission, (41) on restrictive measures, does not apply by analogy. The General Court has in fact correctly held that this case-law, established in the field of combating terrorism, cannot be transposed to Banking Union cases. In addition, even had it been in possession of all the confidential data, the General Court would not have been able to verify the calculation because it does not have the appropriate software.
133. LBBW states that, even though, according to the SRB, there have been changes to the statement of reasons in decisions setting ex ante contributions since 2017, those changes, first, merely reinforce the evidence that the decision at issue contains an insufficient statement of reasons and, second, still do not able contributors to verify the accuracy of the calculations relating to them.
134. Fifth, LBBW asserts that when the SRB states that only the ‘fixed target + distribution on a relative basis’ method meets the requirements of Directive 2014/59 and Regulation No 806/2014, the SRB fails to satisfy the requirements of Article 169(2) of the Rules of Procedure of the Court of Justice, because it does not specify the points criticised in the judgment under appeal.
135. LBBW adds that the requirements for a final target level and a maximum annual amount do not dictate use of the method chosen by the Commission, since the European Banking Authority (EBA) has issued guidelines setting out several possible calculation methods for bank contributions to fund the deposit guarantee scheme. In Germany, for example, in accordance with those guidelines, the choice has been made to use a risk adjustment that takes into consideration only the risk profile of each contributor. Nor is the Commission’s method dictated by either Directive 2014/59 or Regulation No 806/2014, any more than it is by the principles of equal treatment and proportionality.
2. Assessment
136. The criticisms relating to the statement of reasons in the judgment under appeal can to my mind easily be refuted. First, the statement of reasons was sufficient in respect of the decision at issue since the appellants have been able to challenge the General Court’s reasoning. Second, the statement of reasons in the judgment under appeal is not contradictory because the fact that some stages of the calculation may be open to challenge does not prevent a finding that the calculation methodology is general and open to criticism as a whole.
137. As regards the extent of the SRB’s obligation to state reasons for the decision at issue, the SRB and the Commission dispute the view of the General Court and LBBW that the addressee of a decision relating to an ex ante contribution must be able to verify the calculation determining the amount of its contribution.
138. It should be recalled that it is apparent from the case-law of the Court of Justice that, although the statement of reasons required under Article 296 TFEU must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the person concerned to ascertain the reasons for the measures and to enable the court having jurisdiction to exercise its power of review, that statement of reasons must, however, be appropriate to the act at issue and the context in which it was adopted. In that regard, it is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons is sufficient must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question and, in particular, in the light of the interest which the addressees of the measure may have in obtaining explanations. Consequently, the reasons given for a measure adversely affecting a person are sufficient if that measure was adopted in a context which was known to that person and which enables him to understand the scope of the measure concerning him. (42)
139. The Court of Justice has specified that, in relation to individual decisions, in addition to permitting review by the courts, the purpose of that obligation is to provide the person concerned with sufficient information to know whether the decision may be vitiated by an error enabling its validity to be challenged. (43)
140. The parties have not disputed the finding that the General Court makes in paragraphs 97, 103 and 109 of the judgment under appeal to the effect that the statement of reasons of the decision at issue does not enable LBBW to verify the accuracy of its contribution. Accordingly, in terms of the requirements to state reasons referred to above, the statement of reasons in the SRB’s decision is inadequate because three stages of the calculation involve third-party confidential data which is not disclosed to the addressee of that decision.
141. However, the Commission and the SRB assert, first, that the obligation to state reasons must be weighed against the business secrecy protected in Article 339 TFEU and, second, that the SRB subsequently improved transparency by disclosing aggregate data in the harmonised annexes notified to contributors and published on its website.
142. As regards the need to accommodate both the obligation to state reasons and business secrecy, the General Court stated, in paragraph 108 of the judgment under appeal, that the obligation to preserve business secrets cannot be given so wide an interpretation that the obligation to provide a statement of reasons is thereby deprived of its essential content. (44) Accordingly, the appellants are criticising only the part of the judgment under appeal by which the General Court found a failure to state reasons.
143. To my mind, calculation of the ex ante contribution differs from a straightforward parafiscal levy (45) in so far as, in addition to the fact that the contributing institutions contribute directly to the SRF, their risk profile is calculated on a comparative basis in order to influence their behaviour, with a view to reducing moral hazard. The influencing of behaviour by choosing that calculation method is therefore not based on the concept of the contribution as a penalty, but instead on the wish to promote certain less risky forms of behaviour by institutions. Furthermore, the outcome of taxation depends on applying a rate to a basis of assessment and is not fixed in advance whereas, in the present case, a percentage of an annual target level must be met and the analogy is therefore invalid. The parallel that the General Court draws with tax rules is accordingly in my view irrelevant.
144. The fields of EU law cited by the appellants and the General Court show that the EU courts have allowed limitations on the obligation to state reasons, based on business secrecy (competition law, (46) State aid (47) and public procurement (48)), on the complexity of the matter (anti-dumping measures (49)), on the burden incumbent on the decision-making authority (civil service competitions (50)), on the need to influence the behaviour of undertakings by the deterrent effect of competition fines (51) and on compelling reasons relating to the security of the European Union or its Member States (combating terrorism (52)).
145. The circumstances of the present case are very particular, on account of the use of aggregate confidential data from a large number of third parties (between approximately 1 600 (53) and 3 500 (54) institutions concerned depending on the stage of the calculation) and a complex calculation methodology chosen in order to achieve a contribution from all the institutions that are financially stable, consisting of ex ante contributions to prevent the pro-cyclical effects of ex post contributions in the event of a crisis and taking into consideration the degree of liquidity and market risk run by those institutions.
146. To my mind, the method per se is fully explained in the legislation in force and by the SRB in the decision at issue and in reality the difficulty lies in the use en masse of confidential data which makes it difficult or even impossible for each institution concerned to review how its contribution was calculated.
147. The attempt to weigh the obligation to state reasons for decisions against the obligation to protect business secrecy in a situation in which the method used is complex, as a result of the use en masse of confidential data, gives rise to questions as to the extent of that protection in relation to the setting of ex ante contributions. It is unclear whether that protection should be the same both where the disclosure of information relates to specific data about a competitor or a small number of competitors and where it relates to a body of data concerning all the competitors in the sector, which are so numerous that they cannot be identified in any way.
148. If one allows that the protection of business secrecy must be different, two scenarios can be distinguished in which that data is used in the context of the calculation method chosen by the Commission to set the ex ante contributions to the SRF.
149. In stages 2 and 6 of the calculation, the confidential data used is the sum of the items of data in question for each of the institutions concerned. Accordingly, in stage 2, the target level of the annual contribution is calculated from the amount of the covered deposits of all the institutions authorised in all the participating Member States (that amount has been disclosed to contributors since at least 2017). Stage 6 comprises calculation of the common denominator, which corresponds to the sum of the risk-adjusted annual contributions and is used to calculate the share of the annual target level payable by each institution. That amount was disclosed for the 2020 exercise.
150. For those two stages, therefore, the SRB has increasingly chosen to disclose the aggregate confidential data. Furthermore, after 2017, it has also disclosed the amount of the aggregate liabilities (excluding own funds) of all of the institutions authorised in the territories of all of the participating Member States, which is needed to calculate the basic annual contribution, (55) whereas the other aggregate confidential data used in that calculation, that is to say, the amount of the covered deposits, was already disclosed (see the preceding point of this Opinion).
151. In contrast, for stage 4 of the calculation, corresponding to the discretisation procedure, that is to say, the creation of baskets containing institutions with a similar risk profile for a particular indicator and classified from the lowest to the highest on the basis of the data relating to the institutions for each indicator, the disclosure of data does not seem relevant.
152. First, the aggregate data for an indicator would not provide each contributor with sufficient information because, with this method, the contributor’s classification is linked to the positions of the other institutions in respect of that indicator. Second, providing information about the positions of other institutions could amount to disclosing confidential identifying data and could directly harm business secrecy. In reality, according to LBBW’s reasoning, it is not possible completely to verify the accuracy of the calculation even where that data is disclosed, unless it is possible to verify name-linked data and the way in which it is reproduced in the system. (56) Doing so would, however, directly harm business secrecy.
153. As regards disclosing that data only to the General Court and the Court of Justice, as proposed by the SRB, there seem to be two obstacles to that option. First, there is a large volume of litigation relating to ex ante contributions, both before the national courts (657 sets of administrative and judicial proceedings pending as at 31 May 2020, that is to say, 32 more than in June 2019) (57) and before the EU Courts (42 cases pending, including 19 cases concerning ex ante contributions for 2020 and one appeal, as at 1 September 2020). (58) Second, the courts cannot process or even verify the institutions’ raw data because they do not have the necessary tools and on account of the workload that would be created if it were necessary to verify the accuracy of all the data.
154. Under those circumstances, when that stage of the calculation was carried out for the 2017 exercise, LBBW was only able to know how many baskets were created for each risk indicator and the basket to which it had been assigned, and could not even verify whether it was assigned to the basket corresponding to its own figures. Subsequently, the SRB has provided information about the range of risk profiles corresponding to each basket which enables the institution to verify at least whether it is assigned to the correct basket.
155. In the light of the foregoing, my view is that, when the General Court found that the contributors should have been able to verify the accuracy of their contribution calculation, it erred in law in respect of the extent of the SRB’s obligation to state reasons and the judgment should be set aside on that point.
156. I am of the view, therefore, that a balance can be struck between the obligation to state reasons and business secrecy, with no change in the legislation, provided that the SRB discloses the following data, in the decision at issue itself, since a subsequent document cannot remedy a failure to state reasons: (59)
– the amount of covered deposits of all the institutions authorised in the territories of all of the participating Member States;
– the amount of the aggregate liabilities (excluding own funds) of all the institutions authorised in the territories of all of the participating Member States;
– the total amount of the risk-adjusted annual contributions; and
– the bands corresponding to each risk indicator basket.
157. I am also of the view that, when the Commission chose that calculation method (‘fixed target + distribution on a relative basis’) in Delegated Regulation 2015/63, it used its discretion under Directive 2014/59 and Regulation No 806/2014. The Commission cannot be criticised in that respect simply because there is another calculation method.
158. LBBW criticises the opacity caused by the complexity of the calculation method and the fact that it is based interdependently on confidential data, mindful of the likelihood of undetectable errors due to the large quantity of data processed. It takes the view that, in contrast, one of the methods recommended in the EBA guidelines on methods for calculating contributions to deposit guarantee schemes (60) issued under Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes, (61) would offer greater transparency – since it would not depend on third-party confidential data – and, as a result, a better statement of reasons.
159. Annex 1, paragraph 3, to those guidelines, on the ‘bucket’ method, which corresponds to baskets, states:
‘The buckets’ boundaries should be determined either on a relative or absolute basis, where:
– when using the relative basis, the [individual risk scores] of member institutions depends on their relative risk position vis-à-vis other institutions; in this case, institutions are distributed evenly between risk buckets, meaning that institutions with similar risk profiles may end up in different buckets;
– when using the absolute basis, the buckets’ boundaries are determined to reflect the riskiness of a specific indicator; in this case, all institutions may end up in the same bucket if they all have a similar level of riskiness.’
160. Nevertheless, even using that method and applying bucket boundaries created on an absolute basis, the final contribution will be calculated on the basis of aggregate third-party confidential data when the contributions are adjusted proportionately (optionally upwards or compulsorily downwards) in order to reach a maximum of 12.5% of the annual target level, (62) which would likewise make it impossible to verify the contribution calculation, as the General Court required.
161. The fact that there is another calculation method that likewise relies ultimately on third-party confidential data is therefore insufficient to call into question the Commission’s freedom to choose a different calculation method, provided that the method chosen satisfies certain transparency requirements referred to above. (63)
162. Since the SRB has satisfied those requirements voluntarily with no change in the legislation, it appears unnecessary to alter the legal framework laid down by Delegated Regulation 2015/63.
163. In consequence, when the General Court held that certain provisions of that delegated regulation detailing the calculation method were unlawful, it erred in law and the judgment under appeal should also be set aside on that point.
VII. The action at first instance
164. If the Court of Justice follows the reasoning I propose and sets aside the judgment under appeal, it is appropriate to consider whether the Court can itself dispose of the case. Under the first paragraph of Article 61 of the Statute of the Court of Justice of the European Union, where it sets aside the decision of the General Court, the Court of Justice may either itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.
165. In the present case, it appears that the state of the proceedings does permit the Court of Justice to give final judgment in respect not only of the authentication of the annex to the decision at issue, but also of the statement of reasons in that decision and the plea of illegality.
166. In relation to authentication of that annex, the only matter at issue before the Court of Justice is the assessment of the evidence produced on that point. Furthermore, the fact that this Court is disposing of the dispute concerning failure to uphold the rule that the parties should be heard cannot have the effect of calling into question the findings of fact by the General Court, unless there has been distortion, which has not been proven in this case. The Court of Justice can examine only new factors, if they are admissible, brought to the attention of the General Court and the Court of Justice subsequently to the plea raised of the former court’s own motion.
167. Does the fact that the General Court infringed that principle mean that the Court of Justice, disposing of the case itself, must take into account, first, the argument, submitted at the hearing before the General Court and reiterated in the appeal, that the decision at issue and the annex thereto were included in ARES and, second, the documents submitted on appeal (new versions of the three documents produced in the written procedure before the General Court and a new document)?
168. Article 85 of the Rules of Procedure of the General Court, as interpreted by the case-law, (64) is applicable to the production of new documents in support of an appeal alleging a breach of the principle that the parties should be heard, as in the present case.
169. Before the Court of Justice, new versions of the decision at issue and the annex thereto and of the routing slip and a new document comprising a screenshot from ARES were produced and can be examined when the Court of Justice disposes of the case.
170. It can be seen from the ARES screenshot that, on 11 April 2017, a file in PDF format bearing the number of the decision at issue and a file in Excel format entitled ‘Annex I ….’ were entered in the system and subsequently, on 12 May 2017, there is a reference to a signature of the president of the SRB, giving rise to a registration and an ARES number on 13 June 2017. That ARES number and the date 13 June 2017 appear on the new versions of the decision at issue produced before the Court of Justice.
171. Although those items of evidence are capable of establishing, for the first time, a link between the file containing the annex to the decision at issue and the file containing that decision, it should nevertheless be noted that, first, the signature of the SRB president is not mentioned until 12 May 2017 and apparently corresponds to the file being closed in ARES, whereas the routing slip was signed by hand on 11 April 2017 and, second, registration and allocation of an ARES number only took place on 13 June 2017, that is to say, after the national resolution authorities and contributing institutions were notified. Accordingly, evidence of an inextricable link between that annex and that decision has been provided by reference only to a date two months after the decision at issue was adopted.
172. That time lag is in my view all the more problematic because the file containing the annex to the decision at issue exists in a format that can be easily and undetectably altered, unlike a text where an anomaly is discoverable when it is read. Furthermore, that file does not bear a date and time stamp, while it is apparent from the replies to the measures of inquiry ordered by the General Court that there were two versions of the document that were sent to the executive session of the SRB. Accordingly, both the format chosen for the file and the late registration pose difficulties in terms of legal certainty and of authenticating the content of that annex.
173. I believe that, in the light of the decision-making arrangements (remote e‑voting) and the fact that the annex to the decision at issue was not notified to the contributing institutions, a higher level of legal certainty should be required and the sequence of events in the present case is insufficient to authenticate that annex.
174. I am therefore of the view that the decision at issue should be annulled under that head of claim in so far as it concerns LBBW.
175. In relation to the statement of reasons in the decision at issue, since the detailed transparency requirements set out in point 156 of this Opinion in respect of the aggregate data and bands of values for the risk baskets have not been met, the obligation to state reasons has not in my view been discharged.
176. That infringement of Article 296 TFEU and Article 41(2)(c) of the Charter must entail that the decision at issue should be annulled in so far as it concerns LBBW.
177. As regards the plea of illegality relating to certain provisions of Delegated Regulation 2015/63, it is clear from what is stated in points 137 to 163 of this Opinion that that plea can be rejected.
178. Since I am of the opinion that the decision at issue should be annulled it is not necessary to examine the other pleas raised before the General Court.
VIII. Continued legal effects of the decision at issue
179. Should the Court annul the decision at issue in so far as it concerns LBBW, it should be recalled that, under the second paragraph of Article 264 TFEU, the Court may, if it considers this necessary, state which of the effects of the act which it has declared void are to be considered as definitive.
180. In the present case, although the appeal proceedings have shown that the decision at issue was made in breach of essential procedural requirements, they have not, in contrast, revealed any error affecting its conformity with Delegated Regulation 2015/63.
181. Accordingly, to order annulment of the decision at issue without ordering that its effects should continue until it is replaced by a new decision is likely not only to adversely affect the implementation it represents but also to detract from legal certainty.
182. Under those circumstances, I propose that the Court should find that the effects of the decision at issue should continue until the entry into force of a new decision made to replace it or the expiry of six months from the date of the forthcoming judgment at the latest.
IX. Costs
183. Under Article 138(1) of the Rules of Procedure of the Court of Justice, applicable to appeal proceedings by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
184. Since LBBW has applied for costs and the SRB has been unsuccessful, the SRB must be ordered to bear its own costs incurred in the proceedings before the General Court and those before the Court of Justice and to pay the costs incurred by LBBW.
185. Under Article 140(1) of the Rules of Procedure of the Court of Justice, applicable to appeal proceedings by virtue of Article 184(1) thereof, Member States and institutions which have intervened in the proceedings are to bear their own costs.
186. The Fédération bancaire française, the Kingdom of Spain and the Commission, as interveners in the proceedings, are therefore to bear their own costs incurred in the proceedings before the Court of Justice in the two appeals and, in respect of the Commission, also those relating to the proceedings before the General Court.
X. Conclusion
187. In the light of the foregoing, I propose that the Court of Justice should:
(1) Set aside the judgment of the General Court of the European Union of 23 September 2020, Landesbank Baden-Württemberg v SRB (T‑411/17, EU:T:2020:435).
(2) Annul the decision of the Executive Session of the Single Resolution Board (SRB) of 11 April 2017 on the calculation of the 2017 ex ante contributions to the Single Resolution Fund (SRB/ES/SRF/2017/05), in so far as it concerns Landesbank Baden-Württemberg.
(3) Order that the effects of decision SRB/ES/SRF/2017/05 continue, in so far as that decision concerns Landesbank Baden-Württemberg, until the entry into force of a new decision made to replace it or the expiry of six months from the date of delivery of the forthcoming judgment at the latest.
(4) Order the SRB to pay, in addition to its own costs before the General Court and the Court of Justice, those incurred by Landesbank Baden-Württemberg before the General Court and the Court of Justice.
(5) Order the Fédération bancaire française, the Kingdom of Spain and the European Commission, as interveners in the proceedings, to pay their own costs incurred before the Court of Justice and, in respect of the Commission, also before the General Court.