Judgments nº T-680/13 of Tribunal General de la Unión Europea, July 13, 2018

Resolution DateJuly 13, 2018
Issuing OrganizationTribunal General de la Unión Europea
Decision NumberT-680/13

(Non-contractual liability - Economic and monetary policy - Stability support programme for Cyprus - Decision of the Governing Council of the ECB relating to emergency liquidity assistance following a request from the Central Bank of Cyprus - Euro Group Statements of 25 March, 12 April, 13 May and 13 September 2013 concerning Cyprus - Decision 2013/236/EU - Memorandum of Understanding of 26 April 2013 on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism - Jurisdiction of the General Court - Admissibility - Formal requirements - Exhaustion of national rights of action - Sufficiently serious breach of a rule of law intended to confer rights on individuals - Right to property - Legitimate expectations - Equal treatment)

In Case T-680/13,

Dr. K. Chrysostomides & Co. LLC, established in Nicosia (Cyprus), and the other applicants whose names are included in the annex, represented by P. Tridimas, Barrister, (1) applicants,

v

Council of the European Union, represented by A. de Gregorio Merino, E. Dumitriu-Segnana, E. Chatziioakeimidou and E. Moro, acting as Agents,

European Commission, represented initially by B. Smulders, J.-P. Keppenne and M. Konstantinidis, and subsequently by J.-P. Keppenne, M. Konstantinidis and L. Flynn, acting as Agents,

European Central Bank (ECB), represented initially by N. Lenihan and F. Athanasiou, subsequently by P. Papapaschalis and P. Senkovic and finally by M. Szablewska and K. Laurinavičius, acting as Agents, and by H.-G. Kamann, avocat,

Euro Group, represented by the Council of the European Union, represented by A. de Gregorio Merino, E. Dumitriu-Segnana, E. Chatziioakeimidou and E. Moro, acting as Agents,

EuropeanUnion, represented by the European Commission, represented initially by B. Smulders, J.-P. Keppenne and M. Konstantinidis, and subsequently by J.-P. Keppenne, M. Konstantinidis and L. Flynn, acting as Agents,

defendants,

ACTION under Article 268 TFEU seeking compensation for damage allegedly suffered by the applicants as a result of the decision of the Governing Council of the ECB of 21 March 2013 relating to emergency liquidity assistance following a request from the Central Bank of Cyprus, the Euro Group Statements of 25 March, 12 April, 13 May and 13 September 2013 concerning Cyprus, Council Decision 2013/236/EU of 25 April 2013 addressed to Cyprus on specific measures to restore financial stability and sustainable growth (OJ 2013 L 141, p. 32), the Memorandum of Understanding of 26 April 2013 on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism (ESM), and other acts and conduct of the Commission, Council, the ECB and the Euro Group connected with the grant of a financial assistance facility to the Republic of Cyprus.

THE GENERAL COURT (Fourth Chamber, Extended Composition),

composed of H. Kanninen (Rapporteur), President, J. Schwarcz, C. Iliopoulos, L. Calvo-Sotelo Ibáñez-Martín and I. Reine, Judges,

Registrar: S. Spyropoulos, Administrator,

having regard to the written part of the procedure and further to the hearing on 11 September 2017,

gives the following

Judgment

  1. Background to the dispute

    A. ESM Treaty

    1 On 2 February 2012, the Treaty Establishing the European Stability Mechanism between the Kingdom of Belgium, the Federal Republic of Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Italian Republic, the Republic of Cyprus, the Grand Duchy of Luxembourg, the Republic of Malta, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the Republic of Finland (‘the ESM Treaty’) was concluded in Brussels (Belgium). That Treaty entered into force on 27 September 2012.

    2 Recital 1 of the ESM Treaty is worded as follows:

    ‘The European Council agreed on 17 December 2010 on the need for euro area Member States to establish a permanent stability mechanism. This European Stability Mechanism (“ESM”) will assume the tasks currently fulfilled by the European Financial Stability Facility (“EFSF”) and the European Financial Stabilisation Mechanism (“EFSM”) in providing, where needed, financial assistance to euro area Member States.’

    3 In accordance with Articles 1, 2 and 32(2) of the ESM Treaty, the Contracting Parties, that is to say, the Member States whose currency is the euro (‘the MSCE’), are to establish among themselves an international financial institution, the European Stability Mechanism (ESM), which is a legal person.

    4 Article 3 of the ESM Treaty describes the purpose of the ESM as follows:

    ‘The purpose of the ESM shall be to mobilise funding and provide stability support under strict conditionality, appropriate to the financial assistance instrument chosen, to the benefit of ESM Members which are experiencing, or are threatened by, severe financing problems, if indispensable to safeguard the financial stability of the euro area as a whole and of its Member States. For this purpose, the ESM shall be entitled to raise funds by issuing financial instruments or by entering into financial or other agreements or arrangements with ESM Members, financial institutions or other third parties.’

    5 Article 4(1) and (3) and the first sentence of Article 4(4) of the ESM Treaty provides:

    ‘(1) The ESM shall have a Board of Governors and a Board of Directors, as well as a Managing Director and other dedicated staff as may be considered necessary.

    (3) The adoption of a decision by mutual agreement requires the unanimity of the members participating in the vote. Abstentions do not prevent the adoption of a decision by mutual agreement.

    (4) By way of derogation from paragraph 3, an emergency voting procedure shall be used where the Commission and the ECB both conclude that a failure to urgently adopt a decision to grant or implement financial assistance, as defined in Articles 13 to 18, would threaten the economic and financial sustainability of the euro area. … .’

    6 Article 5(3) of the ESM Treaty provides that ‘[t]he Member of the … Commission in charge of economic and monetary affairs and the President of the ECB, as well as the President of the Euro Group (if he or she is not the Chairperson or a Governor) may participate in the meetings of the Board of Governors [of the ESM] as observers’.

    7 Article 6(2) of the ESM Treaty provides that ‘[t]he Member of the European Commission in charge of economic and monetary affairs and the President of the ECB may appoint one observer each [to the ESM’s Board of Directors]’.

    8 Article 12 of the ESM Treaty defines the principles governing the provision of stability support and states in paragraph 1 as follows:

    ‘If indispensable to safeguard the financial stability of the euro area as a whole and of its Member States, the ESM may provide stability support to an ESM Member subject to strict conditionality, appropriate to the financial assistance instrument chosen. Such conditionality may range from a macro-economic adjustment programme to continuous respect of pre-established eligibility conditions.’

    9 Article 13 of the ESM Treaty describes the procedure for granting stability support to ESM Members as follows:

    ‘(1) An ESM Member may address a request for stability support to the Chairperson of the Board of Governors. Such a request shall indicate the financial assistance instrument(s) to be considered. On receipt of such a request, the Chairperson of the Board of Governors shall entrust the … Commission, in liaison with the ECB, with the following tasks:

    (a) to assess the existence of a risk to the financial stability of the euro area as a whole or of its Member States, unless the ECB has already submitted an analysis under Article 18(2);

    (b) to assess whether public debt is sustainable. Wherever appropriate and possible, such an assessment is expected to be conducted together with the [International Monetary Fund (IMF)];

    (c) to assess the actual or potential financing needs of the ESM Member concerned.

    (2) On the basis of the request of the ESM Member and the assessment referred to in paragraph 1, the Board of Governors may decide to grant, in principle, stability support to the ESM Member concerned in the form of a financial assistance facility.

    (3) If a decision pursuant to paragraph 2 is adopted, the Board of Governors shall entrust the … Commission - in liaison with the ECB and, wherever possible, together with the IMF - with the task of negotiating, with the ESM Member concerned, a memorandum of understanding (an “MoU”) detailing the conditionality attached to the financial assistance facility. The content of the MoU shall reflect the severity of the weaknesses to be addressed and the financial assistance instrument chosen. In parallel, the Managing Director of the ESM shall prepare a proposal for a financial assistance facility agreement, including the financial terms and conditions and the choice of instruments, to be adopted by the Board of Governors.

    The MoU shall be fully consistent with the measures of economic policy coordination provided for in the [FEU Treaty], in particular with any act of [EU] law, including any opinion, warning, recommendation or decision addressed to the ESM Member concerned.

    (4) The … Commission shall sign the MoU on behalf of the ESM, subject to prior compliance with the conditions set out in paragraph 3 and approval by the Board of Governors.

    (5) The Board of Directors shall approve the financial assistance facility agreement detailing the financial aspects of the stability support to be granted and, where applicable, the disbursement of the first tranche of the assistance.

    (7) The … Commission - in liaison with the ECB and, wherever possible, together with the IMF - shall be entrusted with monitoring compliance with the conditionality attached to the financial assistance facility.’

    B. Financial difficulties of...

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