ORDER OF THE GENERAL COURT (Tenth Chamber)
12 March 2021 (*)(1)
(Economic and monetary policy – Prudential supervision of credit institutions – Insolvency proceedings – Refusal by the ECB to accede to a request from the board of directors of a credit institution that the insolvency administrator of that institution be instructed to grant the lawyer authorised by that board access to the premises, information, staff and resources of that institution – Competence of the author of the act – Action manifestly lacking any foundation in law)
In Case T‑50/20,
PNB Banka AS, established in Riga (Latvia), represented by O. Behrends, lawyer,
applicant,
v
European Central Bank (ECB), represented by C. Hernández Saseta, F. Bonnard and V. Hümpfner, acting as Agents,
defendant,
APPLICATION under Article 263 TFEU for the annulment of the ECB’s decision of 19 November 2019 refusing to instruct the applicant’s insolvency administrator to grant the lawyer authorised by the applicant’s board of directors access to its premises, to the information that it holds and to its staff and resources,
THE GENERAL COURT (Tenth Chamber),
composed of A. Kornezov, President, K. Kowalik-Bańczyk and G. Hesse (Rapporteur), Judges,
Registrar: E. Coulon,
makes the following
Order
Background to the dispute
1 The applicant, PNB Banka AS, a credit institution incorporated under Latvian law, was classified as a ‘significant entity’ by decision of 1 March 2019 and was on that basis placed under the direct supervision of the European Central Bank (ECB) within the framework of the single supervisory mechanism introduced by Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the ECB concerning policies relating to the prudential supervision of credit institutions (OJ 2013 L 287, p. 63).
2 On 15 August 2019, the ECB concluded that the applicant was to be deemed to be failing or likely to fail within the meaning of Article 18(1)(a) 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 (OJ 2014 L 225, p. 1). On the same day, the Single Resolution Board (SRB) decided not to adopt a resolution scheme within the meaning of Article 18(1) of that regulation in relation to the applicant.
3 On 22 August 2019 the Finanšu un kapitāla tirgus komisija (Financial and Capital Markets Commission, Latvia; ‘the FCMC’) applied to have the applicant declared insolvent. By decision of the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Riga City Court (Vidzeme District), Latvia) of 12 September 2019, the applicant was declared insolvent. An insolvency administrator was appointed at the same time. That court then transferred to the insolvency administrator all of the applicant’s powers and all of those of its board of directors. That court, in addition, rejected a request from the applicant’s board of directors to retain its rights to represent the applicant in the action, in particular, against the ECB’s assessment that the applicant was failing or likely to fail and against the SRB’s decision not to adopt a resolution scheme in relation to it.
4 On 12 September 2019 the FCMC requested that the ECB withdraw the applicant’s authorisation as a credit institution. On 28 October 2019 the ECB sent the draft decision relating to the withdrawal of the authorisation to the applicant’s insolvency administrator. Following the delivery of the judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923), the ECB called on the lawyer authorised by the applicant’s board of directors to adopt a position on the draft decision.
5 It is apparent from correspondence between the lawyer authorised by the applicant’s board of directors and the insolvency administrator that the latter would not authorise the payment of lawyers’ fees out of the applicant’s resources which he is responsible for administering and that he would refuse to allow access to the applicant’s premises, its information and staff.
6 By letter of 18 November 2019 the lawyer authorised by the applicant’s board of directors requested the ECB, first, to extend the deadline given to him to submit his observations in relation to the draft decision on withdrawal of the applicant’s authorisation and, secondly, to instruct the insolvency administrator to grant him access to the applicant’s premises, information, members of staff and resources (‘the requested instruction’).
7 By letter of 19 November 2019, sent to the applicant by email, the ECB stated in particular that it was unable to comply with the request of the lawyer authorised by the applicant’s board of directors that the ECB instruct the insolvency administrator to grant that lawyer access to the applicant’s premises, information, staff and resources as the purpose of the request fell outside its scope of competence (‘the ECB’s refusal to give the requested instruction to the insolvency administrator’). By contrast, the extension of the deadline requested by the lawyer authorised by the applicant’s board of directors was granted and the ECB allowed him to have access to the supervisory file.
8 By decision of 17 February 2020 the ECB withdrew the applicant’s authorisation, after receiving observations from both the insolvency administrator and the lawyer authorised by the applicant’s board of directors.
9 By the present action, the applicant, represented by its board of directors, seeks the annulment of the ECB’s refusal, contained in the letter of 19 November 2019, to give the requested instruction to the insolvency administrator.
Procedure and forms of order sought
10 On 29 January 2020 the applicant brought an action for annulment against the ECB’s refusal to give the requested instruction to the insolvency administrator.
11 By separate document lodged at the Court Registry on 16 April 2020, the ECB lodged a plea of inadmissibility against the action under Article 130(1) of the Rules of Procedure of the General Court.
12 By separate document lodged at the Court Registry on 3 August 2020, the applicant submitted its observations on the plea of inadmissibility.
13 By separate document lodged at the Court Registry on 18 May 2020, the Republic of Latvia applied for leave to intervene in support of the form of order sought by the ECB.
14 In the application, the applicant claims that the Court should:
– annul the ECB’s refusal to give the requested instruction to the insolvency administrator;
– order the ECB to pay the costs.
15 In the plea of inadmissibility, the ECB contends that the Court should:
– declare the action inadmissible;
– order the applicant to pay the costs.
16 In its observations on the plea of inadmissibility, the applicant claims that the Court should:
– reject the plea of inadmissibility;
– order the ECB to pay the costs.
Law
17 Under Article 126 of the Rules of Procedure, where the action is manifestly inadmissible or manifestly lacking any foundation in law, the Court may decide to give a decision by reasoned order without taking further steps in the proceedings.
18 In the present case, the Court considers that it has sufficient information available to it from the material in the file and has decided, pursuant to that article, to give a decision without taking further steps in the proceedings.
Admissibility
19 The ECB argues that its refusal to give the requested instruction to the insolvency administrator is not a challengeable act since it does not produce any binding legal effects capable of affecting the applicant’s legal position.
20 The purpose of the applicant’s request is, the ECB submits, outside the scope of its competence in the matter of prudential supervision, as Regulation No 1024/2013 does not confer any competence on it in relation to the liquidation or insolvency of a credit institution and, by the same token, those areas have to remain within the competence of the national authorities.
21 Therefore, according to the ECB, the email of 19 November 2019 expressing its refusal to give the requested instruction to the insolvency administrator was purely an explanation of its competence that was provided to the applicant for information purposes.
22 The applicant disputes those arguments.
23 In that regard, it should be borne in mind that the Court may assess, according to the circumstances of each case, whether the proper administration of justice justifies the dismissal of an action on the merits without first ruling on the plea of inadmissibility raised by the defendant (see, to that effect, judgment of 26 February 2002, Council v Boehringer, C‑23/00 P, EU:C:2002:118, paragraph 52).
24 In the present case, it is necessary to examine at the outset the pleas in law raised by the applicant on their substance, without first ruling on the plea of inadmissibility of the action raised by the ECB based on its lack of competence to give the requested instruction to the insolvency administrator, regard being had, first, to the link that exists between the admissibility and substance of the action and, secondly, to the fact that the action is, for the reasons set out below, manifestly lacking any foundation in law (see, by analogy, judgment of 23 March 2004, France v Commission, C‑233/02, EU:C:2004:173, paragraph 26).
The claim for annulment
25 The applicant contests the ECB’s refusal to give the requested instruction to the insolvency administrator. Access to the applicant’s premises, information, staff and resources is, it contends, vital in order to allow its board of directors to perform its role of representing the applicant in accordance with the judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923). The applicant argues that the board of directors cannot represent it in an effective manner if the lawyer authorised by that board of directors is refused access to the information and files that the applicant holds, and to its resources, particularly its financial resources, which would make it possible to finance external legal representation.
26 The applicant puts forward five pleas in law in support of its action. The first plea alleges that the ECB erred in declaring that it did not have competence to give the requested instruction to the insolvency administrator. The second plea alleges an infringement of the applicant’s right to an effective remedy. By its third plea the applicant argues that its right to be heard was breached. The fourth plea alleges an infringement of the applicant’s right to an appropriately reasoned decision. By its fifth plea the applicant argues that the ECB infringed the principle nemo auditur propriam turpitudinem allegans.
The first plea in law, alleging that the ECB erred in declaring that it did not have competence to give the requested instruction to the insolvency administrator
27 In its first plea in law, the applicant argues that the ECB, in its capacity as the applicant’s direct supervisory authority following the applicant’s classification as a ‘significant credit institution’, is competent to give the requested instruction to the insolvency administrator, inter alia on the basis of Latvian law, in particular Article 1321(3) of the Kredītiestāžu likums (Law on Credit Institutions) of 5 October 1995 (Latvijas Vēstnesis, 1995, No 163), which provides as follows:
‘In accordance with the competence laid down in this Law, the [FCMC] is entitled to supervise the activities of the insolvency administrator and his or her compliance with the restrictions laid down in this Law. To that end, the authorised representative of the [FCMC] has the right to acquaint himself or herself with all of the documents of a credit institution related to that credit institution, and to receive, from the insolvency administrator, explanations and any other necessary information relating to the insolvency proceedings in respect of the credit institution.’
28 It is therefore, the applicant submits, for the ECB to supervise the activities of the insolvency administrator in order to ensure compliance with appropriate internal governance within the applicant. One of the supervisory authority’s key tasks is to ensure that the board of directors can actually discharge its responsibilities. The applicant stresses that it is impossible for its management to carry out its responsibilities so long as it does not have access to the premises and resources of that credit institution.
29 The applicant also relies on Article 4(1)(e) of Regulation No 1024/2013 and on Articles 67 and 74 of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ 2013 L 176, p. 338), which are provisions on the requirements for the internal governance arrangements of a credit institution. The applicant states that it is apparent from, inter alia, Article 67(1) and (2) of Directive 2013/36 that, where a credit institution fails to have in place governance arrangements required by the competent authorities in accordance with the national provisions transposing Article 74 of that directive, the supervisory authority may issue an order requiring the natural or legal person responsible to cease the conduct in question and to desist from a repetition of that conduct.
30 The applicant submits that it follows from those provisions that the ECB, having substituted itself for the FCMC, has the power to give the requested instruction to the insolvency administrator in order to ensure that the applicant is effectively represented for regulatory purposes. In the present case, it argues, the ECB itself is preventing the applicant’s compliance with the supervisory rules which it is supposed to oversee.
31 Furthermore, according to the applicant, the ECB recognised that the applicant’s board of directors had retained its status as the applicant’s representative. Consequently, the ECB gave the lawyer authorised by its board of directors the possibility to submit observations on the draft decision to withdraw the applicant’s authorisation.
32 The ECB rejects those arguments in its plea of inadmissibility.
33 First of all, it must be noted that, by decision of 17 February 2020, the ECB withdrew the applicant’s banking authorisation. As of that date the applicant has no longer, in principal, been a credit institution within the meaning of Regulation No 1024/2013, subject to prudential supervision by the ECB. The question therefore arises as to whether the applicant, in its current situation, may still legitimately plead and rely on the ECB’s obligations in respect of its competence in matters of prudential supervision. However, it is not in dispute that, at the time of the ECB’s refusal to give the requested instruction to the insolvency administrator, on 19 November 2019, the applicant was a credit institution. It is appropriate therefore to examine whether the applicant is justified in taking the view that the ECB had competence at that time to accede to its request.
34 It must be stated at the outset that the applicant bases this plea, in essence, on Article 4(1)(e) of Regulation No 1024/2013, on Articles 67 and 74 of Directive 2013/36 and on Article 1321(3) of the Law on Credit Institutions. According to the applicant, those provisions give the ECB the power to issue the requested instruction.
35 In that regard, it should be noted that, in accordance with Article 4(3) of Regulation No 1024/2013, the ECB is to apply, in the context of its prudential supervisory tasks, such as the one laid down in Article 4(1)(e) of that regulation, all relevant EU law and, where that law is composed of directives, the national legislation transposing those directives.
– Regulation No 1024/2013
36 According to the first paragraph of Article 1, Regulation No 1024/2013 ‘confers on the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions, with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system within the Union and each Member State, with full regard and duty of care for the unity and integrity of the internal market based on equal treatment of credit institutions with a view to preventing regulatory arbitrage’.
37 The fifth paragraph of Article 1 of that regulation states that the latter ‘is without prejudice to the responsibilities and related powers of the competent authorities of the participating Member States to carry out supervisory tasks not conferred on the ECB by [that] Regulation’.
38 Article 4(1)(e) of that regulation provides that ‘the ECB shall, in accordance with paragraph 3 of [that] Article, be exclusively competent to carry out, for prudential supervisory purposes, the following tasks in relation to all credit institutions established in the participating Member States: … to ensure compliance with the acts referred to in the first subparagraph of Article 4(3), which impose requirements on credit institutions to have in place robust governance arrangements, including the fit and proper requirements for the persons responsible for the management of credit institutions, risk management processes, internal control mechanisms, remuneration policies and practices and effective internal capital adequacy assessment processes, including Internal Ratings Based models’.
39 First, the wording of that provision thus defines the scope of the prudential supervision performed by the ECB, which does not include the power for that institution to give instructions which have no connection with that supervision, such as that requested by the applicant, to an insolvency administrator, who has been appointed in accordance with national law in insolvency proceedings brought in relation to an institution such as the applicant, to give the lawyer of the board of directors of such an institution access to the premises, information, staff and resources of that institution.
40 The mere fact that the ECB is the only institution responsible for the tasks listed in Article 4(1) of Regulation No 1024/2013 in relation to ‘all credit institutions’ does not in any way mean, contrary to what is argued by the applicant, that it has, in relation to credit institutions which are termed ‘significant’ and are therefore under its direct supervision, such as the applicant, more extensive competence than that provided for in Article 4(1)(e) of Regulation No 1024/2013.
41 Admittedly, it should be noted that Article 4 of Regulation No 1024/2013, headed ‘Tasks conferred on the ECB’, provides in paragraph 1 that, within the framework of Article 6 of that regulation, the ECB is ‘exclusively competent’ to carry out, for prudential supervisory purposes, the tasks listed in Article 4(1) in relation to ‘all’ credit institutions. Thus, it follows from the wording of Article 4(1) of Regulation No 1024/2013 that the ECB is exclusively competent to carry out the tasks stated in that provision in relation to all of those institutions, thus both ‘significant institutions’ and ‘less significant’ institutions (see, to that effect, judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraphs 37 and 38).
42 However, in the context of Article 4(1) of Regulation No 1024/2013, read in conjunction with Article 6(4) to (6) thereof, the difference between the two categories of credit institution is not relevant as far as concerns the extent of the ECB’s powers of prudential supervision, but is relevant solely for the purposes of sharing the tasks between the ECB and the national supervisory authorities, inasmuch as those authorities assist the ECB in carrying out the tasks conferred on it by that regulation, by a decentralised implementation of some of those tasks in relation to less significant credit institutions, within the meaning of the first subparagraph of Article 6(4) of that regulation (see, to that effect, judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 41).
43 It is true that, under Article 6(1) of Regulation No 1024/2013, the ECB is to carry out its tasks within a single supervisory mechanism composed of itself and national competent authorities, and is to be responsible for the effective and consistent functioning of the single supervisory mechanism (judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 39).
44 It is in that context that, in accordance with Article 6(6) of Regulation No 1024/2013, national competent authorities are to carry out and be responsible for the tasks referred to in Article 4(1)(b), (d) to (g) and (i) of that regulation and are authorised to adopt all relevant supervisory decisions in relation to the credit institutions referred to in the first subparagraph of Article 6(4), that is to say, those which, in accordance with the criteria set out in that latter provision, are ‘less significant’ (judgment of 8 May 2019, Landeskreditbank Baden-Württemberg v ECB, C‑450/17 P, EU:C:2019:372, paragraph 40). However, that consideration cannot hold good for ‘significant’ credit institutions, such as the applicant, in relation to which the ECB itself exercises directly all the relevant supervisory tasks on the basis of Article 6(5)(b) of Regulation No 1024/2013.
45 That said, the relevant provisions of Regulation No 1024/2013 do not show that the supervisory tasks entrusted to the ECB in relation to ‘significant’ credit institutions include the power to give instructions to an insolvency administrator which are unconnected to those tasks, such as that requested by the applicant, as has been noted in paragraph 39 above. It is also evident that the wording of those provisions does not give any indication that such a power exists. The applicant’s argument in that respect must therefore be rejected.
46 Secondly, as regards the purpose of Regulation No 1024/2013 and of Article 4(1)(e) thereof, it should be observed, first, that Article 127(6) TFEU, which is the legal basis on which Regulation No 1024/2013 was adopted, provides that the Council of the European Union may confer on the ECB specific tasks concerning policies relating to the prudential supervision of credit institutions and other financial institutions, with the exception of insurance undertakings (judgment of 2 October 2019, Crédit mutuel Arkéa v ECB, C‑152/18 P and C‑153/18 P, EU:C:2019:810, paragraph 52).
47 It should be noted, next, that Article 127 TFEU appears in Chapter 2, entitled ‘Monetary policy’, of Title VIII of Part Three of the FEU Treaty and that it establishes the objectives and fundamental tasks of the European System of Central Banks (ESCB) and of the ECB (judgment of 2 October 2019, Crédit mutuel Arkéa v ECB, C‑152/18 P and C‑153/18 P, EU:C:2019:810, paragraph 54).
48 The tasks relating to prudential banking supervision that are referred to in Article 127(6) TFEU are performed with the objective of ensuring the safety and soundness of credit institutions, in particular the major credit institutions and banking groups, so as to help safeguard the stability of the EU financial system as a whole (judgment of 2 October 2019, Crédit mutuel Arkéa v ECB, C‑152/18 P and C‑153/18 P, EU:C:2019:810, paragraph 55).
49 What is more, the pursuit of those objectives is explicitly mentioned in recitals 16, 26, 30 and 65 of Regulation No 1024/2013 and in the first paragraph of Article 1 of that regulation (judgment of 2 October 2019, Crédit mutuel Arkéa v ECB, C‑152/18 P and C‑153/18 P, EU:C:2019:810, paragraph 56).
50 Accordingly, the purpose of the prudential supervision carried out by the ECB, as envisaged by Regulation No 1024/2013, and in particular by Article 4(1) thereof, is to limit specific risks connected to economic and financial stability within the euro area by avoiding, in particular, the failure of a credit institution. The ECB’s competence to carry out the supervisory tasks entrusted to it is vital for detecting risks to the viability of banks and requiring them to take the necessary measures.
51 In the present case, the applicant is subject to insolvency proceedings managed by an insolvency administrator, in accordance with Latvian law, and the requested instruction, the sole purpose of which is to provide the lawyer of the applicant’s board of directors with access to its premises, information, staff and resources, is not such as to be capable of contributing to the management of the risks which Regulation No 1024/2013 seeks to limit. Neither the viability of the credit institution at issue nor economic or financial stability is affected by the requested instruction.
52 Consequently, it is evident that neither the wording of the relevant provisions of Regulation No 1024/2014, their purpose, as reflected in particular in the legal basis of that regulation in the FEU Treaty, nor their context supports the conclusion that examination of the request by the applicant’s board of directors for the ECB to give the requested instruction to the insolvency administrator came within the scope of the ECB’s competence.
– Directive 2013/36
53 In accordance with Article 74(1) of Directive 2013/36, ‘institutions shall have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks they are or might be exposed to, adequate internal control mechanisms, including sound administration and accounting procedures, and remuneration policies and practices that are consistent with and promote sound and effective risk management’.
54 According to Article 67(1)(d) of Directive 2013/36, that article is to apply, inter alia, where ‘an institution fails to have in place governance arrangements required by the competent authorities in accordance with the national provisions transposing Article 74 [of that directive]’. Under Article 67(2)(b) of that directive, ‘Member States shall ensure that in the cases referred to in paragraph 1, the administrative penalties and other administrative measures that can be applied include at least the following: … an order requiring the natural or legal person responsible to cease the conduct and to desist from a repetition of that conduct’.
55 As regards the corporate governance of credit institutions, the objectives of Directive 2013/36 are clear from the preamble, in particular recitals 53 and 54 (judgment of 24 April 2018, Caisse régionale de crédit agricole mutuel Alpes Provence and Others v ECB, T‑133/16 to T‑136/16, EU:T:2018:219, paragraph 73).
56 Recital 53 of Directive 2013/36 states that ‘weaknesses in corporate governance in a number of institutions have contributed to excessive and imprudent risk-taking in the banking sector which has led to the failure of individual institutions and systemic problems in Member States and globally …’ (judgment of 24 April 2018, Caisse régionale de crédit agricole mutuel Alpes Provence and Others v ECB, T‑133/16 to T‑136/16, EU:T:2018:219, paragraph 74).
57 In that regard, the legislature stated, in the same recital, that ‘in some cases, the absence of effective checks and balances within institutions resulted in a lack of effective oversight of management decision-making, which exacerbated short-term and excessively risky management strategies’ (see, to that effect, judgment of 24 April 2018, Caisse régionale de crédit agricole mutuel Alpes Provence and Others v ECB, T‑133/16 to T‑136/16, EU:T:2018:219, paragraph 74).
58 It should be observed that the objectives of Article 74(1) of Directive 2013/36 are similar to those of Regulation No 1024/2013. Accordingly, even though the ECB is the authority with competence to secure compliance with that provision in relation to the applicant, that provision likewise does not confer competence on the ECB to adopt enjoining measures, such as the requested instruction, with the result that the purpose of the applicant’s request for the ECB to enjoin the insolvency administrator to act according to the requested instruction is manifestly outside the ECB’s sphere of competence. In reality, the sole aim of the request by the applicant’s board of directors is to allow that board to be able to have the applicant’s funds at its disposal in order to pay their lawyer and to have access to documents and information designed to enable it to exercise its right to be heard and its right to an effective legal remedy. That request therefore has no connection with the subject matter of Article 74 of Directive 2013/36, which concerns the governance of the credit institution concerned and the establishment of sound and effective risk management within that institution.
59 Article 67(1)(d) and (2)(b) of Directive 2013/36 cannot call the foregoing into question. It is apparent, in particular, from those provisions that, in a situation where an institution fails to have in place governance arrangements required by the competent authorities in accordance with the national provisions transposing Article 74 of that directive, the supervisory authority may, inter alia, issue an order requiring the natural or legal person responsible to cease the conduct in question and to desist from a repetition of that conduct.
60 In those circumstances, the requested instruction cannot be regarded as coming within the scope of the prudential supervision laid down by those provisions and seeking in particular to limit excessive risk-taking by the credit institution in question.
– The Latvian Law on Credit Institutions
61 According to the applicant, the ECB, which is responsible for directly supervising it after it was classed as a significant entity, has in the present case the same powers as those conferred on the FCMC by Article 1321(3) of the Law on Credit Institutions, which provides as follows:
‘In accordance with the competence laid down in this Law, the [FCMC] is entitled to supervise the activities of the insolvency administrator and his or her compliance with the restrictions laid down in this Law. To that end, the authorised representative of the [FCMC] has the right to acquaint himself or herself with all the documents of a credit institution related to that credit institution, and to receive, from the insolvency administrator, explanations and any other necessary information relating to the credit institution’s insolvency proceedings.’
62 As noted, in essence, in paragraph 35 above, the first subparagraph of Article 4(3) of Regulation No 1024/2013 provides as follows:
‘For the purpose of carrying out the tasks conferred on it by this Regulation, and with the objective of ensuring high standards of supervision, the ECB shall apply all relevant Union law, and where this Union law is composed of Directives, the national legislation transposing those Directives. Where the relevant Union law is composed of Regulations and where currently those Regulations explicitly grant options for Member States, the ECB shall apply also the national legislation exercising those options.’
63 It should be noted that the Law on Credit Institutions is among the items of Latvian legislation which are intended to transpose Directive 2013/16.
64 However, it does not follow from Article 1321(3) of the Law on Credit Institutions, read in the light of the relevant provisions of Regulation No 1024/2013 and of Directive 2013/36, that it is for the ECB to give the requested instruction to the insolvency administrator. Insolvency proceedings fall within the competence of the national authorities in cases where, in particular, there are no provisions conferring such a competence on the ECB.
65 Furthermore, the applicant’s assertion that its board of directors is prevented from discharging its duties by reason of the insolvency administrator’s refusal to restore access to its premises and resources is not capable of calling the foregoing into question, regard being had, first, to the ECB’s lack of competence in that regard and, secondly, to the nature and purpose of the insolvency proceedings underway against the applicant. In accordance with Article 2(1)(47) of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190), the term ‘normal insolvency proceedings’ means ‘collective insolvency proceedings which entail the partial or total divestment of a debtor and the appointment of a liquidator or an administrator normally applicable to institutions under national law and either specific to those institutions or generally applicable to any natural or legal person’.
66 Accordingly, it is evident that neither Regulation No 1024/2013, Directive 2013/36, nor national law confers competence on the ECB to give the requested instruction to the insolvency administrator.
– Judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P)
67 As for the applicant’s argument that the ECB failed to comply with the obligations flowing from the judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923), it should be noted that that judgment concerns the judicial protection of the legal person Trasta Komercbanka, a credit institution, in specific circumstances, namely the revocation by the appointed liquidator of the power of attorney of the lawyer authorised by the board of directors of that institution to bring an action before the Courts of the European Union against the decision to withdraw the authorisation which had affected that bank. In essence, it follows from that judgment that, in the light of the right to effective judicial protection enshrined in Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’), the Courts of the European Union could not, in those circumstances, take into account the revocation of the power of attorney of the lawyer in question and that, consequently, it was necessary to adjudicate on the action.
68 In that regard, the Court of Justice noted in paragraph 55 of the judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923), that the principle of effective judicial protection of individuals’ rights under EU law, also referred to in the second subparagraph of Article 19(1) TEU, is a general principle of EU law stemming from the constitutional traditions common to the Member States. That principle has been enshrined in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950. It is at present reaffirmed by Article 47 of the Charter.
69 Furthermore, the Court of Justice considered that the effective judicial protection of a legal person such as Trasta Komercbanka, whose authorisation had been withdrawn by a decision of an EU institution such as the ECB, adopted on the basis of an act of the European Union such as Regulation No 1024/2013, was ensured by the right of that person, pursuant to the fourth paragraph of Article 263 TFEU, to bring an action for annulment of that decision before the Courts of the European Union (see, to that effect, judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others, C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923, paragraph 56).
70 In the present case, it must be held that the ECB complied with the requirements stemming from the judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923). First, after that judgment had been delivered, the ECB acknowledged that the applicant’s board of directors was still representing it for the purposes of bringing an action against the decision to withdraw the authorisation. Consequently, instead of obtaining the observations of the insolvency administrator alone, the ECB, in compliance with that judgment of the Court of Justice, also asked the lawyer authorised by the applicant’s board of directors to submit his observations in relation to the draft decision to withdraw the applicant’s authorisation. Secondly, in the letter which also included the ECB’s refusal to give the requested instruction to the insolvency administrator, the ECB granted the extension of the deadline for submitting observations requested by the lawyer authorised by the applicant’s board of directors. Thirdly, the ECB stated in that letter that the lawyer authorised by the applicant’s board of directors would be given access to the supervisory file. Consequently, the applicant’s argument that the ECB, by refusing to give the requested instruction to the insolvency administrator, failed to have regard for the consequences of the judgment of 5 November 2019, ECB and Another v Trasta Komercbanka and Others (C‑663/17 P, C‑665/17 P and C‑669/17 P, EU:C:2019:923), is manifestly unfounded.
71 Nevertheless, it is in any event settled case-law that it is for the national authorities of a Member State, as appropriate, to take the general or particular measures necessary to ensure that EU law is complied with in their territory. While they retain the choice of the measures to be taken, those authorities must in particular ensure that the rights which individuals derive from EU law are given full effect, including the right to effective judicial protection enshrined in Article 47 of the Charter (see, to that effect, judgment of 21 June 2007, Jonkman and Others, C‑231/06 to C‑233/06, EU:C:2007:373, paragraph 38 and the case-law cited).
72 In that regard, it is important to note that the ECB’s lack of competence to give the requested instruction to the insolvency administrator does not ipso facto deprive interested parties, such as the applicant, of effective judicial protection. Decisions taken by the national authorities in the context of insolvency proceedings, such as those underway in relation to the applicant, in response to any request for access to documents, premises, staff or the resources of the credit institution at issue are, as a rule, subject to review by the national courts, which, if necessary, may refer questions to the Court of Justice for a preliminary ruling under Article 267 TFEU in cases where they encounter difficulties in interpreting or applying EU law.
73 It follows that the ECB manifestly lacked competence to accede to the request of the applicant’s board of directors that it give the requested instruction.
The other pleas in law and complaints raised by the applicant
74 As regards the second plea in law, the applicant asserts that its right to an effective remedy has been infringed because the lawyer authorised by its board of directors did not have access to the information held by the applicant, nor to its financial resources. For that reason, the applicant’s board of directors has not been recognised as the legal representative, as a matter of fact or in law, by the ECB.
75 The first paragraph of Article 47 of the Charter states that everyone whose rights and freedoms guaranteed by the law of the European Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in that article.
76 It is clear from the analysis of the first plea in law that the ECB manifestly lacked competence to accede to the request of the applicant’s board of directors that it give the requested instruction. The applicant is therefore not justified in criticising the ECB on the ground that it infringed the applicant’s right to an effective remedy. Reference is made, in addition, to paragraphs 71 and 72 above.
77 Accordingly, the plea alleging an infringement of Article 47 of the Charter is manifestly unfounded.
78 By its third plea in law, the applicant claims that its right to be heard has been infringed, given that it was not placed in a position to make its case properly before the ECB adopted the refusal to give the requested instruction to the insolvency administrator.
79 The right to be heard is protected not only by Articles 47 and 48 of the Charter, which ensure respect for both the rights of the defence and the right to fair legal process in all judicial proceedings, but also by Article 41 thereof, which guarantees the right to good administration.
80 Article 41(2) of the Charter provides accordingly that the right to good administration includes, inter alia, the right of every person to be heard before any individual measure which would adversely affect him or her is taken (judgment of 5 October 2016, ECDC v CJ, T‑395/15 P, not published, EU:T:2016:598, paragraph 54 and the case-law cited).
81 It follows from the foregoing that the ECB manifestly lacked competence to accede to the applicant’s request. In addition, it should be observed that the refusal by the ECB to give the requested instruction to the insolvency administrator was adopted in response to a request by the applicant in which the latter was able to set out the facts and arguments underlying that request.
82 Consequently, the third plea must be rejected as being manifestly unfounded.
83 So far as concerns the alleged infringement of the duty to state reasons, put forward in the fourth plea in law, it should be observed that it is settled case-law that the statement of reasons required by Article 296 TFEU must be appropriate to the measure at issue and 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 persons concerned to ascertain the reasons for it and to enable the competent court to exercise its power of review. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest that the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. 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 for a measure meets the requirements of Article 296 TFEU 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 issue (see judgment of 8 September 2011, Commission v Netherlands, C‑279/08 P, EU:C:2011:551, paragraph 125 and the case-law cited).
84 In particular, the reasons given for a decision adversely affecting a person are sufficient if that decision was adopted in circumstances known to the party concerned which enable him or her to understand the scope of the measure concerning him or her (see judgment of 17 September 2020, Rosneft and Others v Council (C‑732/18 P, not published, EU:C:2020:727, paragraph 78 and the case-law cited).
85 In the present case, it is apparent from the ECB’s refusal to give the requested instruction to the insolvency administrator, the content of which is given in paragraph 7 above, that the ECB set out the essential facts and points of law. That letter allowed, first, the applicant to know the reasons for the adopted measure in order to defend its rights and, secondly, the Courts of the European Union to exercise their power to review its legality. The applicant was able to challenge the merits of the assessment contained in the letter of 19 November 2019 by arguing in a reasoned manner that the ECB’s refusal to accede to the request of the applicant’s board of directors was not well founded. In addition, as is clear from the foregoing analysis, the Court has been able to rule on that question and to exercise its power of review. Consequently, the applicant errs in alleging that the statement of reasons for that letter is inadequate.
86 In the context of the fifth plea in law, the applicant submits that the ECB infringed the principle nemo auditur propriam turpitudinem allegans, according to which no person may take advantage of his or her own misconduct. In particular, the applicant observes that on 15 August 2019 the ECB considered that it was failing or likely to fail. The ECB’s assessment, it argues, led to an erroneous view of the applicant’s solvency, to the initiation of insolvency proceedings against it and to the appointment of the insolvency administrator.
87 However, in order for it to be possible to rely on the principle nemo auditur propriam turpitudinem allegans, wrongful conduct attributable to the ECB must also be established. Nevertheless, it is clear from the analysis of the first plea in law that the ECB was entitled to take the view that it could not accede to the request of the board of directors that it give the requested instruction, on the ground that the purpose of the request was outside its sphere of competence. No wrongful conduct can therefore be imputed to the ECB in the present case.
88 With regard to the assessment of whether the applicant was failing or likely to fail and the question as to whether the ECB was responsible for the initiation of the insolvency proceedings by the Rīgas pilsētas Vidzemes priekšpilsētas tiesa (Riga City Court (Vidzeme District), those are not the subject of the present action and therefore cannot be used as a basis for establishing alleged wrongful conduct.
89 Having regard to all of the foregoing, the plea alleging an infringement of the principle nemo auditur propriam turpitudinem allegans must therefore be rejected as being manifestly unfounded.
90 Consequently, the action must be dismissed as being manifestly unfounded in law.
The application to intervene
91 In accordance with Article 144(3) of the Rules of Procedure, where the defendant lodges a plea of inadmissibility or of lack of competence, as provided for in Article 130(1), a decision on the application to intervene is not to be given until after the plea has been rejected or the decision on the plea reserved.
92 In the present case, as the action is being dismissed in its entirety as being manifestly unfounded in law, there is no need to rule on the application to intervene submitted by the Republic of Latvia (see order of 21 January 2016, Proforec v Commission, T‑120/15, not published, EU:T:2016:50, paragraph 37 and the case-law cited).
Costs
93 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the applicant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the ECB, with the exception of those relating to the application to intervene.
94 Pursuant to Article 144(10) of the Rules of Procedure, the applicant, the ECB and the Republic of Latvia are each to bear their own costs relating to the application to intervene.
On those grounds,
THE GENERAL COURT (Tenth Chamber)
hereby orders:
1. The action is dismissed.
2. There is no need to rule on the application to intervene submitted by the Republic of Latvia.
3. PNB Banka AS shall bear its own costs and shall pay those incurred by the European Central Bank (ECB), with the exception of those relating to the application to intervene.
4. PNB Banka, the ECB and the Republic of Latvia shall each bear their own costs relating to the application to intervene.
Luxembourg, 12 March 2021.