Judgment of the Court First Chamber of 5 May 2022, BPC Lux 2 and Others, C-83/20

• Date: 05 May 2022
• Year: 2022

3

I. FUNDAMENTAL RIGHTS: PRINCIPALS AND FUNDAMENTAL RIGHTS

ENSHRINED IN THE CHARTER

Judgment of the Court (First Chamber) of 5 May 2022, BPC Lux 2 and Other s, C-83/20

Reference for a preliminary ruling – Directive 2014/59/EU – Banking union – Recovery and resolution of

credit institutions and investment firms – Articles 36, 73 and 74 – Protection of shareholders and

creditors – Partial implementation before expiry of the period for transposition – Transposition in stages –

Charter of Fundamental Rights of the European Union – Article 17(1) – Right to property

Banco Espírito Santo SA (‘BES’) was one of the main credit institutions in the Portuguese banking

system. On account of its financial situation and th e serious and grave risk that it would be in default

of its obligations, that credit institution was the subject of a resolution decision taken by Banco de

Portugal (Bank of Portugal) on 3 August 2014 (‘the resolution action’). That action, which was taken

under national legislation on the resolution of credit institutions,

1

as amended by a Decree-Law of

1 August 2014,

2

resulted in the creation of a bridge bank, Novo Banco SA, to which certain assets,

liabilities, off-balance sheet items and assets managed by BES were transferred.

The applicants in the main proceedings (‘BPC Lux 2 and others’) are holders of subordinated bonds

issued by BES. Massa Insolvente held, directly and indirectly, shares in the share capital of BES. Before

the national administrative courts, BPC Lux 2 and others and Massa Insolvente challenged the

resolution action and, in that context, claimed, inter alia, that that action had been taken in breach of

EU law.

The Portuguese Supreme Administrative Court, before which two appeals had been brought by BPC

Lux 2 and others and Massa Insolvente, had doubts as to the compatibility of the national legislation,

under which the BES resolution action had been taken, with EU law, in particular with Directive

2014/59

3

and Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’),

4

on account of the failure to transpose a whole series of requirements set out in that directive.

In addition, that court was uncertain whether the Portuguese legislature was liable seriously to have

compromised the result prescribed by Directive 2014/59

5

by adopting the Decree-Law of 1 August

2014, which transposed that directive only in part prior to the expiry of the period for transposition of

that directive set at 31 December 2014.

By its judgment, the Court of Justice finds that the national legislation under which the BES resolution

action was taken is compatible with Article 17(1) of the Charter. It also rules that the transposition by

a Member State, only in part, of certain provisions of a directive before the expiry of the period

1

Regime Geral das Instituições de Cré dito e Sociedades Financeiras (General Provision s governing Credit Institutions and Finan ce

Companies), as stem from Decree-Law No 31-A/2012 of 10 February 2012.

2

Decree-Law No 114-A/2014 of 1 August 2014.

3

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) No1093/2010 and (EU) No 648/2012,

of the European Parliament and of the Council (OJ 2014 L 173, p. 190).

4

Article 17 of the Charter guarantees protection of the right to property.

5

In accordance with the principle establish ed in the line of authority emanating from the judgment of 18 December 1997, Inter-Environnement

Wallonie (C-129/96, EU:C:1997:628), concerning the obligations of Member States during the period for transposition of a directive.