September 22
2021
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Judicial review in the European Banking Union

Chiara Zilioli and Karl-Philipp Wojcik (Eds.)

review by

Diane Fromage

The project of a European Banking Union (EBU) was launched in 2012 after the efforts to enhance the resilience of the banking sector within the European Union (EU) following the Great Financial Crisis (GFC) by means of the creation of the EU-wide European System of Financial Supervision proved insufficient.

In the words of the two editors of this book, the EBU is  ‘a giant step towards European integration and a challenge for judicial review’. It is characterised by differentiation all around: ‘multi-layered horizontal differentiation’ between ‘euro-ins’, ‘euro-outs’ and ‘euro-outs’ that participate in the EBU under the regime of close cooperation; ‘multi-layered vertical differentiation’ between those banks that are directly supervised at the EU level (that is, significant institutions) and those that remain under the daily responsibility of National Competent Authorities; as well as differentiation in the applicable norms.

As is evident from this brief account of the EBU, it presents numerous original and unique features. This and the facts that it affects an economic sector where European integration had remained partial until the GFC and which has, additionally, been under stress over the past decade have led to numerous cases being brought before national and European courts (as is shown by the helpful list Federico della Negra and René Smits regularly update with the support of Pier Mario Lupino).

Against this background, this edited volume is both particularly useful and ambitious. On the one hand, it allows navigating and making sense of the abundant and complex case law to date and, more generally, it contributes to a better understanding of the complex structure and functioning of the EBU. On the other, it is ambitious because it addresses matters that have been constantly evolving since the creation of the EBU, and may be expected to continue to evolve since additional cases are currently pending and since several questions remain unsolved. An update of the presented analyses may thus be necessary in a few years’ time.

The contributions to this edited volume, whose authors are both academics and practitioners – a characteristic that makes them all the more insightful, are organised in four main parts. The first one focuses on the issues that are common to both pillars of the EBU, whilst the second and third ones address each of them specifically. The fourth and final part is devoted to the analysis of important Court decisions to date.

The content of each of the 37 chapters included in this volume cannot be discussed in-depth individually in a book review; thus, only some of the main ideas they convey will be presented here and the selection made should not be interpreted as based on any objective selection criteria.

Part One includes 13 chapters that address both issues strictly related to judicial review, as well as other issues that are more complementary to it. This is, for instance, the case of the analysis of the democratic accountability framework which Edouard Fernández-Bollo examines from the perspective of its being complementary to judicial review, or of the two chapters dedicated to the administrative review mechanisms internal to the SSM and the SRM, that is the Administrative Board of Review and the Appeal Panel, respectively. Edouard Fernández-Bollo interestingly makes the link between, on the one hand, the (exceptional) relationship of accountability between national parliaments and the ECB and, on the other, its importance not only because of the ‘potential societal importance of financial stability issues’ but also because ‘this is consistent with the important role that national law plays in supervision and with the specific challenge of ensuring good interaction between the national and the European levels that the ECB faces’. Eleni Koupepidou offers a very interesting account of the negotiations that led to the creation of the Administrative Board of Review (ABoR), as well as a positive assessment of it as her chapter ‘conclude[s] that the goals and objectives for which the ABoR was envisaged were achieved or their achievement is on track’. The author convincingly argues that the ABoR indeed fulfils these functions. However, in my view, it remains the case that some aspects including for instance transparency and, relatedly, the effective exchange of information between, on the one hand, the ABoR and, on the other, the two appeal bodies of the Single Resolution Board (SRB) and the European Supervisory Authorities, are still problematic issues that should be remedied, thus arguably calling for a more nuanced assessment. The following chapter by Marco Lamandini and David Ramos Muñoz in fact provides a very valuable and complementary contribution to Eleni’s as it critically assesses the practice of the SRB’s Appeal Panel (it is admittedly possible for them to adopt a more critical stance on this matter owing to their status as non-EU officials). Matthias Haentjens on his part sheds light on a less evident and less well-known aspect related to the creation of the EBU, namely the relationship between administrative and private law and, beyond this, under which category the EBU falls. He underlines that answering this question ‘is important, because this qualification is determinative for the way in which judicial review is organized’, considering especially that the judicial systems of several of the Member States offer different paths of review based on the nature of the case at hand (which is not the case of the EU’s judicial system). Matthias Lehmann adopts a bird’s eye view on the issues of jurisdiction, locus standi and the circulation of judgements in the EBU. For example, he provides a fine-grained and useful analysis of the question of the division of competence between national and EU courts, generally and within the EBU specifically. He also shows the gaps that exist in the current architecture for judicial review, and calls for the judicial system in place to catch up with the new level of integration between EU and national legal orders that has been reached following the creation of the EBU. In the next chapter, Felipe Brito Bastos turns to another feature of the EBU, namely its reliance on a variety of (composite) administrative procedures that involve national and EU authorities, whilst Vittorio Di Bucci examines the procedural and judicial implications of these procedures. Michael Ioannidis then considers how administrative discretion, as it exists within the EBU, is reviewed by EU courts and how the Court’s assessment could be viewed as having become stricter over time in some respects. In his conclusion, he interestingly compares the Court’s standard of review of the ECB’s discretion in the field of banking supervision and of monetary policy, and finds that ‘the Court implicitly seems to have recognized that monetary and supervisory policy may be subject to different standards of review’. In his contribution, Klaus Lackhoff looks in detail at the existing procedural requirements for conducting administrative procedures by the ECB and the SRB. Daniel Sarmiento focuses on the issues of access to documents and confidentiality in the EBU. He provides a very thorough analysis of this issue, which is particularly delicate and important in the field of banking supervision. He considers the regimes applicable both in banking supervision and in monetary policy, and shows that the balance between, on the one hand, transparency and the rights of citizens and, on the other, the confidentiality regime necessary to ensure that supervision is efficient is particularly difficult to strike. Emilie Yoo analyses the issue of interim relief in the context of proceedings pending before the Court of Justice, a topic of particular importance since ‘[w]hile interim proceedings are already part of the litigation landscape in the Banking Union, it seems likely that their importance might increase in particular in cases concerning the withdrawal of banking authorisation which entails the prohibition to exercise banking activities’. Niamh Moloney’s chapter considers the application of the EU’s Charter of Fundamental Rights to the ECB’s actions in the field of banking supervision. She posits that although ‘further litigation can be expected [, t]he deference afforded to the ECB’s interpretation of what action is needed to support financial stability in the Euro Area banking sector, however, suggests that successful challenges will be rare’. Martina Almhofer subsequently focuses on the liability of authorities in supervisory and resolution activities and notes – among other things – the interesting fact that it is the ECB’s and the SRB’s own budgets that will primarily be used where they have caused damages, as opposed to the EU’s general budget. She also considers the liability regime applicable to national supervision and resolution authorities.

Andreas Witte’s chapter is the first one of the Second Part of the book dedicated to the SSM. He considers the application of national law by the ECB and its impact on judicial review, whereas Giorgio Buono analyses banking authorisations and acquisition of qualifying holdings as unitary and composite procedures, and their judicial review. Daniel Segoin zooms in on the ECB’s investigatory powers and their judicial control, and Carmen Hernández Saseta looks at the judicial review of the instructions the ECB may give to National Competent Authorities in executing the supervisory tasks conferred upon it by the SSM Regulation. Raffaele D’Ambrosio’s contribution addresses the legal review of the administrative sanctions adopted in the framework of the SSM, whereas Alberto de Gregorio Merino defines the scope of the ECB’s regulatory powers within the SSM, and their judicial reviewability. He notably sheds light on the delimitation between the ECB’s and the EU legislature’s powers in this domain. In the last chapter of this Second Part, Agnese Pizzola looks at close cooperation, that is non-Euro area Member States’ participation in the EBU, and judicial review in that framework.

The Third Part on the SRM starts with a contribution by Jens-Hinrich Binder on judicial review in the framework of bank resolution. In his comprehensive analysis, he shows the potential for contradictory outcomes in front of national and EU courts, which the preliminary reference procedure could contribute to mitigate, and points to the fact that the EU Courts may be expected to more frequently have the final word in the future. However, he interestingly recommends that a procedure be devised to ensure that the General Court’s and the Court of Justice’s actions be coordinated considering that the former is competent to review actions for annulment brought by individuals whereas the latter decides on preliminary references lodged by national judges. This is particularly needed because ‘parallel actions can, and frequently will, result in parallel proceedings before both tribunals, both of which may then be confronted with the need to assess similar or identical matters of law at the same time’. Seraina Grünewald looks at the judicial control of resolution planning measures, which ‘impact banks as a going concern and may profoundly change the way their operations are structured and financed’. This notwithstanding, she finds that several obstacles stand in the way of banks in pursuing litigation against these measures, although she also highlights that formal and informal mechanisms allow banks and the SRB to settle disagreements at the time of adopting the planning measures, thus partially compensating for these shortcomings. Jakub Kerlin’s chapter mirrors Daniel Segoin’s chapter in the Second Part in considering the SRB’s investigatory powers and their judicial control. Likewise, Leo Flynn’s chapter complements Raffaele D’Ambrosio’s chapter in the Second Part in examining the reviewability of SRB fines and penalty payments. Myrte Meijer Timmerman Thijssen looks at the judicial review of the SRB’s decisions concerning contributions to the Single Resolution Fund and administrative fees to the SRB. Anna Gardella focuses on a point of contention in the definition of the limits between the First and the Second Pillar of the EBU, namely judicial control of Failing or Likely To Fail Assessment which may involve both the ECB and the SRB. Kathrin Blanck examines another potential source of tensions, although this time it is the one that may arise between internal market and EBU rules as she focuses on state aid and bank resolution.

The Fourth and final Part of this edited volume comprises nine chapters which each provide an in-depth analysis of the main EBU-related cases decided to date and, as such, provide easily accessible and helpful guidance in understanding their main aspects.

As has become clear from the preceding paragraphs, the 37 chapters contained in this edited volume undoubtedly make it a unique and precious reference to anyone seeking to understand better how the EBU functions and is structured. This is so not only because it is the first collection of contributions devoted to judicial review in the EBU, or because of its comprehensive character. This is also the case because of the variety of perspectives offered by the different authors in adopting distinct yet complementary perspectives on single issues and cases.

 

Diane Fromage is Marie Sklodowska-Curie Individual Fellow, Law School, Sciences Po Paris. Review prepared as part of ‘IMPACTEBU’, a project that has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement No 895841.

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