Ledra Advertising Ltd and Others v European Commission and European Central Bank (ECB).

• Jurisdiction: European Union
• Celex Number: 62015CJ0008
• ECLI: ECLI:EU:C:2016:701
• Court: Court of Justice (European Union)
• Docket Number: C-10/15,C-8/15
• Date: 20 September 2016
• Procedure Type: Recurso de anulación

JUDGMENT OF THE COURT (Grand Chamber)

20 September 2016 (*1 )

‛Appeals — Stability support programme for the Republic of Cyprus — Memorandum of Understanding of 26 April 2013 on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism (ESM) — Duties of the European Commission and the European Central Bank — Non-contractual liability of the European Union — Second paragraph of Article 340 TFEU — Conditions — Obligation to ensure that the Memorandum of Understanding is consistent with EU law’

In Joined Cases C‑8/15 P to C‑10/15 P,

THREE APPEALS under Article 56 of the Statute of the Court of Justice of the European, lodged on 9 January 2015,

Ledra Advertising Ltd, established in Nicosia (Cyprus) (C‑8/15 P),

Andreas Eleftheriou, residing in Limassol (Cyprus) (C‑9/15 P),

Eleni Eleftheriou, residing in Limassol (C‑9/15 P),

Lilia Papachristofi, residing in Limassol (C‑9/15 P),

Christos Theophilou, residing in Nicosia (C‑10/15 P),

Eleni Theophilou, residing in Nicosia (C‑10/15 P),

represented by A. Paschalides, dikigoros, A. Paschalidou, Barrister, and A. Riza QC, instructed by C. Paschalides, Solicitor,

appellants,

the other parties to the proceedings being:

European Commission, represented by J.-P. Keppenne and M. Konstantinidis, acting as Agents, with an address for service in Luxembourg,

and

European Central Bank (ECB), represented by K. Laurinavičius and O. Heinz, acting as Agents, and H.-G. Kamann, Rechtsanwalt,

defendants at first instance,

THE COURT (Grand Chamber),

composed of K. Lenaerts, President, A. Tizzano, Vice-President, R. Silva de Lapuerta, T. von Danwitz, J.L. da Cruz Vilaça, A. Arabadjiev (Rapporteur) and D. Šváby, Presidents of Chambers, A. Rosas, E. Juhász, M. Berger, A. Prechal, E. Jarašiūnas, C.G. Fernlund, M. Vilaras and E. Regan, Judges,

Advocate General: N. Wahl,

Registrar: I. Illéssy, Administrator,

having regard to the written procedure and further to the hearing on 2 February 2016,

after hearing the Opinion of the Advocate General at the sitting on 21 April 2016,

gives the following

Judgment

1 By their appeals, Ledra Advertising Ltd, in Case C‑8/15 P, Andreas Eleftheriou, Eleni Eleftheriou and Lilia Papachristofi, in Case C‑9/15 P, and Christos Theophilou and Eleni Theophilou, in Case C‑10/15 P, ask the Court to set aside, respectively, the orders of the General Court of the European Union of 10 November 2014, Ledra Advertising v Commission and ECB (T‑289/13, EU:T:2014:981), of 10 November 2014, Eleftheriou and Papachristofi v Commission and ECB (T‑291/13, not published, EU:T:2014:978), and of 10 November 2014, Theophilou v Commission and ECB (T‑293/13, not published, EU:T:2014:979) (collectively, ‘the orders under appeal’), by which the General Court declared in part inadmissible and in part unfounded their actions seeking, first, annulment of paragraphs 1.23 to 1.27 of the Memorandum of Understanding on Specific Economic Policy Conditionality concluded between the Republic of Cyprus and the European Stability Mechanism (ESM) on 26 April 2013 (‘the Memorandum of Understanding of 26 April 2013’) and, secondly, compensation for the damage pleaded by the appellants resulting from the inclusion of those paragraphs in the Memorandum of Understanding and an infringement of the European Commission’s supervisory obligation.

Legal context

ESM Treaty

2 On 2 February 2012, the Treaty establishing the European Stability Mechanism was concluded in Brussels (Belgium) 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, 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’). The ESM Treaty entered into force on 27 September 2012.

3 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.’

4 Under 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, established among themselves an international financial institution, the European Stability Mechanism (ESM), which has legal personality.

5 Article 4(1), (3) and (4), first subparagraph, of the ESM Treaty states: ‘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 [European Central Bank (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 ‘the Member of the European Commission in charge of economic and monetary affairs and the President of the [European Central Bank], as well as the President of the Eurogroup (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 states that ‘the 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 The procedure for granting stability support to an ESM Member is described in Article 13 of the ESM Treaty 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 European 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 European 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 European 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 European 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.’

The Memorandum of Understanding of 26 April 2013

10 Under the heading ‘Restructuring and resolution of Cyprus Popular Bank and Bank of Cyprus’, paragraphs 1.23 to 1.27 of the Memorandum of Understanding of...