The Judicial Review of acts issued by NCAs within the context of the “Common Procedures” established under the SSM and the Interpretation of the Court of Justice
Eugenio Mancini (*)
The creation of the Single Supervisory Mechanism (the «SSM») has resulted in «significant» banks established in the Eurozone being supervised by the ECB, and «less significant banks» by the NCAs. In carrying out their respective supervisory functions, NCAs and the ECB have final say over measures to be adopted and decisions to be taken.
However, the ECB is also entrusted with certain supervisory functions vis-à-visall banks regardless their dimension, in relation to: (i) the authorization for taking up the business of a credit institution; (ii) the withdrawal of such authorization; and (iii) the decision regarding whether to oppose the acquisition of a qualifying holding in a credit institution. In such proceedings, also known as common procedures, the adoption of the final decision lies with the ECB, while NCAs are responsible for assisting the ECB with the preparation and implementation of any acts related to the ECB’s function.
While the functioning of administrative proceedings related to the ECB’s exclusive competence toward all banks has been widely regulated by the European legislator, the judicial remedies against illegitimacies concerning acts adopted within such proceedings have not. It has actually been for long time a debated issue whether illegitimacies relating to acts issued by NCAs in the context of such common procedures can be challenged before national courts or directly before the CJEU.
The Grand Chambre of the Court of Justice has recently addressed for the first time this issue, discussing the allocation of jurisdictional competences between domestic and European courts in the context of SSM common procedures (1).
The judgement concerned the third type of common procedure, and namely the assessment of an acquisition of a qualifying holding in a credit institution.
The Court of Justice had been posed two questions, for a preliminary ruling:
(i) whose court, national or European, has jurisdiction in actions challenging decisions to initiate procedures, measures of inquiry and non-binding proposals adopted by NCAs in the context of SSM common procedures for the assessment of acquisition of qualifying holdings in banks; and
(ii) if the jurisdiction of European courts might be asserted when such measures are challenged, not in a general action for annulment, but in an action for a declaration of invalidity on the grounds of breach or circumvention of a definitive ruling issued by a domestic Court.
In order to assess the first question, the Court of Justice applied its settled criteria on the allocation of jurisdiction between domestic and European courts in the context of composed proceedings (i.e.administrative proceedings taking place both at Union and national level).
More specifically, according to the CJEU’s case-law, such proceedings can be distinguished into:
- those where national authorities are given decision-making power and the ability to issue acts capable of affecting legal rights of third parties, and where European authorities has limited or non-existent discretion vis-à-visthe assessment made by national authorities; and
- those were national authorities issue mere internal and preparatory acts that are necessary for the proceeding but are non-binding on the European authorities in issuing their final decision.
In this respect, according to the CJEU’s case-law, in the first case any alleged illegitimacies on the part of the national authority in making its assessment shall be challenged before national courts, while in the second case they shall be challenged before the CJEU as illegitimacies relating to the final decision issued by the European competent authority (3).
Agreeing with the Opinion delivered by the Advocate General in the case at hand, who pinpointed some evidences according to which the common procedure at hand should fall into the second category of composed proceedings, the Court of Justice stated that such procedure “is among those to which the considerations set out in paragraphs 43 and 44 of the present judgement relate[i.e.a procedure where acts of national authorities constitute “a stage of a procedure in which an EU institutions exercises, alone, the final decision-making power without being bound by the preparatory acts or the proposal of national authorities”]”. Consequently, the Court concluded that European courts alone have jurisdiction to determine whether the legality of ECB’s decisions adopted in the context of common procedures at hand is affected by any defects rendering unlawful NCAs’ preparatory acts.
As for the second question referred by the Council of State, the Court of Justice stated that its previous finding holds true regardless the type of action brought before national courts.
Such Court of Justice’s judgement has addressed the debated issue of the judicial review of NCAs’ acts issued in the context of common procedures at hand, although it still remains unclear whether the CJEU’s review of such NCAs’ acts would be deemed to have the same scope as national courts’ review. Indeed, the separation between the jurisdictional system of the European Union and the ones of Member States generally prevents European courts to apply national law, except where national law is taken into account as a starting point for the useful (specific) interpretation of the applicable provisions and principles of Union law (4). In this regard, it should be generally strictly precluded to European courts to apply national law having no connection with relevant Union law (such is the case, for instance, when an NCA’s assessment is alleged to be contrary to a purely domestic-based provision, or when the NCA’s assessment is based on purely domestic law having no connection with European provisions) (5).
(*) The author is Trainee Lawyer at the Bank of Italy’s Legal Services Directorate. He is solely responsible for the opinions expressed in the article.
(1) See The judgement (C-219/17, EU:C:2018:1023).
(2) Judgment of the Court of 3 December 1992, Oleificio Borelli/Commission C-97/91, EU:C:1992:491, paragraphs 9–13; Judgment of the Court of 20 January 1993, Emerald Meats/Commission, joined cases C-106/90, C-317/90 and C-129/91, EU:C:1993:19;, paragraphs 36–41 Judgment of the Court of 6 December 1999, Carl Kühne and others, C-269/99, EU:C:2001:659, paragraphs 56–58; Judgment of the Court of 7 July 2005, Le Pen/ Parliament, C-208/03, EU:C:2005:429, paragraphs 49–51; and Judgment of the Court of 17 September 2014, Liivimaa Lihaveis, C-562/12, EU:C:2014:2229, paragraphs 67–76.
(3) Judgment of the Court of 17 October 1995, Netherlands/Commission, C-478/93, EU:C:1995:244, paragraphs 37–40; Judgment of the Court of 21 March 2000, Greenpeace France and others, C-6/99, EU:C:2000:148, paragraphs 49–57; and Judgment of the Court of 18 December 2007, Sweden/Commission, C-64/05, EU:C:2007:802, paragraphs 75–76.
(4) Ex multis, K. Lenaerts, I. Maselisand K. Gutman, EU Procedural Law, Janek Tomasz Nowak, 2014, pg. 234.
(5) Such could be the case, for instance, of the ECB’s supervisory functions granted under national law (cfr.ECB communication of 31 March 2017, Additional clarification regarding the ECB’s competence to exercise supervisory powers granted under national law).
