ECJ upholds General Court judgments dismissing the actions for damages in connection to Cyprus bank restructuring

The European Court of Justice decided today to uphold the judgments of the General Court of the EU in so far as it dismissed the actions for damages brought by a number of individuals and companies on account of acts and conduct adopted by the EU institutions in connection with financial assistance granted to Cyprus that was conditional upon the restructuring of its banking sector.

On the other hand, ECJ found that the General Court erred in law in holding that the Euro Group constitutes an EU body established by the Treaties whose acts or conduct might give rise to non-contractual liability of the European Union.

More specifically, according to the ECJ, the Euro Group cannot be equated with a configuration of the Council and is characterised by its informality and does not have any competence of its own or the power to punish a failure to comply with the political agreements concluded within it.

The ECJ concludes from this that the General Court was wrong in holding that the Euro Group is an ‘EU’ body established by the Treaties, whose conduct would be capable of giving rise to non-contractual liability of the European Union.

It adds that, since the political agreements concluded within the Euro Group are given concrete expression and are implemented by means, in particular, of acts and action of the EU institutions, inter alia of the Council and the ECB, individuals are not denied their right, enshrined in Article 47 of the Charter of Fundamental Rights of the European Union, to effective judicial protection, given that, as indeed happened in this instance, they may bring an action to establish non-contractual liability of the European Union against those institutions in respect of the acts or conduct that the latter adopt following such political agreements.

ECJ  points out, in particular, that it is for the Commission, as guardian of the Treaties, to ensure that such political agreements are in conformity with EU law, and that any inaction on the part of the Commission in that regard is liable to result in non-contractual liability of the European Union being invoked.

ECJ also  holds that the General Court erred in law in finding that Cyprus had no margin of discretion, under that provision, for the purpose of defining the specific rules for that conversion. So far as concerns, in the third place, the appeals brought by the individuals and companies concerned in Cases C-603/18 P and C-604/18 P, those individuals and companies contended that a sufficiently serious breach of their right to property, of the principle of the protection of legitimate expectations, and of the principle of equal treatment was attributable to the acts and conduct of the EU institutions, with the result that the first condition for the incurrence of noncontractual liability by the European Union was met.

In that regard, the Court points out, first of all, that the right to property 3 is not an absolute right and may be subject to limitations. 4 It takes the view, in particular, that, as already held by it in its judgment in Ledra Advertising and Others v Commission and ECB, 5 the measures referred to in the memorandum of understanding of 26 April 2013 cannot be regarded as constituting a disproportionate and intolerable interference impairing the right to property of the individuals and companies concerned.

Next, the Court holds that the fact that, during the early phases of the international financial crisis, the grant of financial assistance to other MSCE was not subject to the adoption of specific measures cannot be regarded as an assurance capable of having engendered a legitimate expectation on the part of the shareholders, bondholders and depositors of Laïki and BoC that that would also be the case in the context of the grant of the financial assistance to Cyprus.

Finally, after noting that the general principle of equal treatment requires comparable situations not to be treated differently and different situations not to be treated in the same way, unless such treatment is objectively justified, the Court hold that there is no infringement of this principle.

ECJ finds that the companies and individuals concerned were not in a situation comparable to that of the Central Bank of Cyprus, whose action is guided exclusively by public interest objectives, to that of depositors in the Greek branches of Laïki and BoC, to that of depositors in those two banks whose deposits did not exceed €100,000, to that of the depositors and shareholders of banks of other MSCE which benefited from financial assistance before Cyprus or to that of members of the Cypriot cooperative banking sector.

In conclusion, the Court dismisses in their entirety the appeals brought by the companies and individuals concerned (Cases C-603/18 P and C-604/18 P), sets aside the judgments under appeal inasmuch as the General Court dismissed the pleas of inadmissibility raised by the Council in so far as those pleas relate to the actions directed against the Euro Group and against Article 2(6)(b) of Decision 2013/236 and, giving final judgment on those pleas, 6 upholds them.