GC, 2nd chamber, December 19, 2019, No T-812/14

THE GENERAL COURT,

1 The applicants, BPC Lux 2 Sàrl and the other legal persons whose names are set out in the Annex, are investment funds, pension funds and a private investment company.

2 The applicants are subordinated creditors of Banco Espírito Santo, SA ('BES'), holding Lower Tier 2 Bonds ('LT2 Bonds').

3 BES and its subsidiaries constituted as of March 2014 the third-largest banking group in Portugal. The largest shareholder in BES was Espírito Santo Financial Group, whose own controlling shareholder was Espírito Santo International.

4 In May 2014, an audit by Banco de Portugal (the Bank of Portugal) of Espírito Santo International had found the latter to be in a serious financial condition, which was likely to have a negative impact on BES' solvency.

5 On 30 July 2014, BES published its results for the first half of 2014, revealing losses of EUR 3 577 billion. During July 2014, BES lost 11 to 17% of its deposits.

6 BES no longer met the minimum regulatory Common Equity Tier 1 ratio.

7 Against that background, the Portuguese authorities decided to put BES into resolution, which entailed the creation of a temporary credit institution, referred to as the 'Bridge Bank' (now called Novo Banco SA).

8 The sound business activities of BES were transferred to the Bridge Bank in accordance with the Bank of Portugal's recommendation. The Bridge Bank received a part of BES' assets and liabilities, in particular cash, retail deposits and performing loans, central bank funding, government-guaranteed bonds and treasury bills.

9 Losses relating to assets and liabilities transferred to the Bridge Bank were taken over by BES, which became known as the 'Bad Bank'. Residual assets and liabilities, other than cash, retail deposits and performing loans, central bank funding, government-guaranteed bonds and treasury bills, were also taken over by BES.

10 The Fundo de Resolução (Portuguese Resolution Fund, 'the Fund'), created in accordance with Decreto-Lei no 31-A/2012 (Decree-Law No 31-A/2012) of 10 February 2012 (Diário da República, 1st series, No 30, of 10 February 2012), financed through a parafiscal levy on Portuguese banks and controlled by the Bank of Portugal, provided the Bridge Bank with initial capital of EUR 4 899 million ('the notified measure') in return for the subscription of ordinary shares by the Fund.

11 By letter of 3 August 2014, the Portuguese authorities notified the European Commission of the resolution of BES and the immediate creation and capitalisation of the Bridge Bank through the Fund.

12 In that same letter, the Portuguese authorities acknowledged that the notified measure constituted State aid and that the Commission had to review its compatibility with the internal market.

13 Alongside that notification, the Portuguese authorities forwarded to the Commission two reports by the Bank of Portugal, namely, first, an assessment of the options envisaged for the resolution of BES, which concluded that the creation of a Bridge Bank was the only means of maintaining financial stability in the Portuguese Republic, and, second, a description of the procedure to be followed for the resolution of BES. The Portuguese authorities also gave the Commission commitments in respect of both the Bridge Bank and the Bad Bank concerning the orderly winding up of those banks.

14 Under the commitments given by the Portuguese authorities, it was stated, inter alia, that none of the assets of shareholders or holders of subordinated debt, nor any hybrid instruments, may be transferred to the Bridge Bank. It was also stated that the liquidation of BES should take place by 31 December 2016.

15 On the same day, at the end of the preliminary examination stage, pursuant to Article 108(3) TFEU, the Commission adopted Decision C(2014) 5682 final concerning State aid SA.39250 (2014/N) - Portugal - Resolution of Banco Espírito Santo, SA ('the contested decision'), by which it concluded that the notified measure, namely the capital injection of EUR 4 899 million by the Fund into the Bridge Bank, constituted State aid that was compatible with the internal market in accordance with Article 107(3)(b) TFEU, taking into account the commitments given by the Portuguese authorities.

Procedure before the General Court and the Court of Justice

16 By application lodged at the Registry of the General Court on 12 December 2014, the applicants brought the present action.

17 By separate document, lodged at the Registry of the General Court on the same day, the applicants applied for the present action to be decided under an expedited procedure pursuant to Article 76a of the Rules of Procedure of the General Court of 2 May 1991. By decision of 10 February 2015, the General Court (Fourth Chamber) refused the request for an expedited procedure.

18 By separate document lodged at the Registry of the General Court on 19 December 2014, the applicants lodged an application for interim relief seeking suspension of operation of the contested decision. That application was rejected by order of 25 February 2015, BPC Lux 2 and Others v Commission (T-812/14 R, not published, EU:T:2015:119), and the costs reserved.

19 On 9 February 2015, the Commission's defence was lodged at the Registry of the General Court.

20 By document lodged at the Registry of the General Court on 10 March 2015, the Portuguese Republic applied for leave to intervene in the present proceedings in support of the form of order sought by the Commission.

21 On 30 March 2015, the reply was lodged at the Registry of the General Court.

22 By document lodged at the Registry of the General Court on 9 April 2015, the applicants requested that, in the event of leave to intervene being granted to the Portuguese Republic, certain annexes to the application and certain paragraphs of the reply be treated as confidential vis-à-vis the Portuguese Republic.

23 By order of the President of the Fourth Chamber of 16 June 2015, the Portuguese Republic was granted leave to intervene in support of the form of order sought by the Commission.

24 On 29 June 2015, the rejoinder was lodged at the Registry of the General Court.

25 On 21 August 2015, the Portuguese Republic's statement in intervention was lodged at the Registry of the General Court.

26 On 16 November 2015, the Commission's observations on the Portuguese Republic's statement in intervention were lodged at the Registry of the General Court.

27 On 17 December 2015, the applicants' observations on the Portuguese Republic's statement in intervention were lodged at the Registry of the General Court.

28 Following a change in the composition of the Chambers of the General Court, pursuant to Article 27(5) of the Rules of Procedure of the General Court, the Judge-Rapporteur was assigned to the Second Chamber, to which the present case was accordingly allocated.

29 On 7 December 2016, the General Court put a question to the applicants as to whether they had a legal interest in bringing proceedings for annulment of the contested decision.

30 On 23 January 2017, the applicants replied to the question put by the General Court.

31 By document lodged at the Registry of the General Court on the same day, the applicants requested that certain elements of their written reply to the General Court's question be treated as confidential vis-à-vis the Portuguese Republic.

32 By order of 19 July 2017, BPC Lux 2 and Others v Commission (T-812/14, not published, 'the initial order', EU:T:2017:560), the General Court dismissed the action as inadmissible on the ground that the applicants did not have any legal interest in bringing proceedings.

33 By application lodged at the Registry of the Court of Justice on 18 September 2017, the applicants brought an appeal against the initial order.

34 By judgment of 7 November 2018, BPC Lux 2 and Others v Commission (C-544/17 P, 'the judgment on appeal', EU:C:2018:880), the Court of Justice set aside the initial order on the ground that the General Court had erred in law in holding that the applicants' action was inadmissible by reason of the absence of a legal interest in bringing proceedings. In addition, it referred the case back to the General Court and reserved the costs.

35 The case was assigned to the Second Chamber of the General Court.

36 In accordance with Article 217(1) of the Rules of Procedure, the parties lodged their written observations, within the prescribed time limits, on the action to be taken following the judgment on appeal in the present proceedings.

37 On 7 May 2019, pursuant to Article 27(2) of the Rules of Procedure, the President of the General Court reallocated the case to another Judge-Rapporteur, who was assigned to the Second Chamber.

38 On 18 October 2019, pursuant to Article 106(3) of the Rules of Procedure, the General Court (Second Chamber) decided to rule on the action without an oral part of the procedure.

Forms of order sought by the parties in the proceedings after referral back to the General Court

39 The applicants claim that the General Court should:

- annul the contested decision;

- order the Commission to pay the costs.

40 The Commission, supported by the Portuguese Republic, contends that the General Court should:

- dismiss the action;

- order the applicants to pay the costs.

Law

41 As a preliminary point, it must be borne in mind that the Court of Justice, in the judgment on appeal, upheld the appeal lodged by the applicants and set aside the initial order. The Court of Justice considered that the General Court had erred in law in holding that the applicants' action was inadmissible by reason of the absence of a legal interest in bringing proceedings.

42 The Court of Justice referred the case back to the General Court for it to rule on the plea of inadmissibility raised by the Commission alleging that the applicants did not have standing to bring proceedings for annulment of the contested decision (judgment on appeal, paragraph 62).

43 The plea of inadmissibility raised by the Commission and, if appropriate, the merits of the action must therefore be examined.

44 In its statement of defence, the Commission contends that the action is inadmissible on the ground that the applicants do not have standing to bring proceedings. In particular, the Commission maintains that the applicants are not directly or individually concerned by the contested decision.

45 First, the Commission claims that the applicants are not 'parties concerned' within the meaning of Article 108(2) TFEU or an 'interested party' within the meaning of Article 1(h) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1). Being bondholders cannot confer upon any of the applicants the status of 'party concerned' or 'interested party' within the meaning of those provisions. In addition, the applicants are not undertakings, so that they cannot claim that the contested decision has an effect on their competitive position in relation to any other entity (whether the latter is an undertaking or not).

46 Second, the applicants are not, within the meaning of the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17), individually concerned by the contested decision. In the present case, there is a total absence of information indicating how the situation of any one of the applicants is individuated by the contested decision in such a manner as to distinguish it from that of all other persons dealing with the beneficiaries of the measures at issue. Third, the Commission recalls that, in the order of 26 March 2014, Adorisio and Others v Commission (T-321/13, not published, EU:T:2014:175), the General Court has already held that the holders of subordinated bonds of a bank were not individually concerned by a decision authorising aid to that bank.

47 In their reply, the applicants maintain that they have standing to bring proceedings both as a 'party concerned' within the meaning of Article 108(2) TFEU and as a party directly and individually concerned within the meaning of the criterion defined by the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17).

48 First, the applicants claim that classification as an 'interested party' within the meaning of Article 1(h) of Regulation No 659/1999 is not limited solely to competing undertakings. According to the case-law, that classification covers any party whose interests might be affected by the granting of the aid. In that regard, the applicants claim that the direct effect of the contested decision is, first, that they have lost nearly the entire value of their bonds and, second, that they have been deprived of the opportunity to contribute to the restructuring of BES by participating in its recapitalisation or to benefit from its orderly winding up. The Commission simply assumed, without investigating further and, apparently, without requiring evidence from the Portuguese authorities, that private capital was not available for the recapitalisation of BES and that the only alternative to the notified measure was the immediate liquidation or bankruptcy of BES.

49 Second, the applicants submit that they meet, in any event, the criterion of individual concern established by the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17). They state, in that regard, that the holders of LT2 Bonds are a closed group and that those holders are in a different situation to that of the other creditors of BES in that those bonds occupy a unique position in the ranking of BES' liabilities. Moreover, demonstrating a significant effect on an undertaking's competitive position is only one example of an applicant being entitled to challenge a Commission decision on State aid.

50 In the rejoinder, the Commission states that, first, as regards the decrease in value of the LT2 Bonds, the price of BES' bonds and shares had begun to fall, from April 2014 onwards, with the announcement of the difficulties faced by BES. It was those announcements rather than the adoption of the contested decision which caused any losses sustained by the applicants. Second, as regards the loss of the opportunity to participate in the recapitalisation of BES, the applicants give no indication that they took part in the capital increase carried out by BES in June 2014. In addition, they did not provide any evidence to support the claim that they sought to participate in the recapitalisation of BES during the period after June 2014.

51 In their written reply to the General Court's questions, the applicants maintain, first of all, by analogy with the judgment of 12 November 2015, HSH Investment Holdings Coinvest-C and HSH Investment Holdings FSO v Commission (T-499/12, EU:T:2015:840), that they are both 'interested parties' and directly and individually concerned by the contested decision. Next, the decrease in value of their bonds was not caused by a fall in the market value of their bonds, but by the contested decision in that it approved the resolution of BES without taking into account the possibility of restructuring it with the help of private funds. Lastly, the applicants submit that the fact that they did not participate in the capital increase carried out by BES in June 2014 was not capable of calling into question the loss of their opportunity to participate in the recapitalisation of BES. One of the applicants purchased additional shares and LT2 Bonds in BES on 1 August 2014. In addition, the applicants contacted BES' financial adviser on 31 July 2014 to express their interest in participating in a recapitalisation of the bank.

52 It must be borne in mind, as a preliminary point, that, by the contested decision, the Commission found, without initiating the formal investigation procedure provided for in Article 108(2) TFEU, that the notified measure, taking the form of an injection of capital into the Bridge Bank, constituted State aid that was compatible with the internal market within the meaning of Article 107(3)(b) TFEU. Thus, the contested decision is addressed solely to the Portuguese Republic. The procedure for reviewing State aid is, in view of its general scheme, a procedure initiated in respect of the Member State responsible for granting the aid (see judgment of 12 November 2015, HSH Investment Holdings Coinvest-C and HSH Investment Holdings FSO v Commission, T-499/12, EU:T:2015:840, paragraph 28 and the case-law cited).

53 It must therefore be considered to what extent the applicants have standing to bring proceedings against a decision that is not addressed to them and that they seek to have annulled.

54 Under the fourth paragraph of Article 263 TFEU, any natural or legal person may, under the conditions laid down in the first and second paragraphs of that article, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.

55 In the first place, the applicants claim that they have standing to bring proceedings as an 'interested party' within the meaning of Article 108(2) TFEU and Article 1(h) of Regulation No 659/1999.

56 Within the meaning of Article 108(2) TFEU and Article 1(h) of Regulation No 659/1999, 'interested parties' are inter alia any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, that is to say, in particular competing undertakings of the beneficiary of that aid (see judgment of 24 May 2011, Commission v Kronoply and Kronotex, C-83/09 P, EU:C:2011:341, paragraphs 48 and 63 and the case-law cited).

57 It is common ground that the applicants are not competing undertakings of the beneficiary of the aid at issue.

58 However, as stated by the applicants in the reply, the definition of 'interested party' is not limited solely to competitors of the beneficiary of the aid. That definition includes any person, undertaking or association of undertakings whose interests might be affected by the granting of aid (see judgment of 24 May 2011, Commission v Kronoply and Kronotex, C-83/09 P, EU:C:2011:341, paragraphs 63 and 64 and the case-law cited).

59 The applicants may therefore be regarded as 'parties concerned' within the meaning of Article 108(2) TFEU provided that they demonstrate that their interests have been adversely affected by the contested decision (see, to that effect, judgment of 24 May 2011, Commission v Kronoply and Kronotex, C-83/09 P, EU:C:2011:341, paragraphs 66 to 71).

60 However, to recognise any person having a purely general or indirect interest with regard to the State measures to which objection is taken as having the status of a 'party concerned' would lead to an interpretation which is clearly incompatible with the provisions of Article 108(2) TFEU and, in actions for annulment against decisions taken on the basis of Article 108(3) TFEU, it would have the effect of depriving the concept of a 'person individually concerned' for the purposes of the fourth paragraph of Article 263 TFEU of all legal significance, by transforming that remedy into a sort of actio popularis (see order of 25 June 2003, Pérez Escolar v Commission, T-41/01, EU:T:2003:175, paragraph 36 and the case-law cited).

61 The applicants submit, in that regard, that they were adversely affected by the contested decision as creditors of BES. In particular, they claim that the direct effect of the contested decision is that they have lost nearly the entire value of their bonds and that they have been deprived of the opportunity to contribute to the restructuring of BES, by participating in its recapitalisation through the contribution of private capital, or to benefit from its orderly winding up.

62 As a preliminary point, it must be recalled that, by the contested decision, the Commission found that the measure notified by the Portuguese authorities, consisting in a capital injection of EUR 4 899 million by the Fund into the Bridge Bank, constituted State aid that was compatible with the internal market in accordance with Article 107(3)(b) TFEU, taking into account the commitments given by those authorities.

63 As regards, first, the decrease in value of the bonds, it must be noted, as was held by the Court of Justice, that the decline in the value of the bonds held by the applicants is attributable to the decision by the Portuguese authorities to put BES into resolution (judgment on appeal, paragraph 54).

64 The fact that the bonds held by the applicants have remained in the Bad Bank is attributable to the decision by the Portuguese authorities to put BES into resolution, which involved the creation of a Bridge Bank to which the assets of subordinated debt holders could not be transferred (see, to that effect, judgment of 19 July 2016, Kotnik and Others, C-526/14, EU:C:2016:570, paragraph 100).

65 In those circumstances, the effects, alleged by the applicants, of the contested decision on the value of their bonds, assuming that those effects have been established, are only of an indirect nature such that the applicants cannot benefit from the status of a 'party concerned' within the meaning of Article 108(2) TFEU.

66 As regards, second, the loss of the opportunity to contribute to the restructuring of BES by participating in its recapitalisation or to benefit from its orderly winding up, it must be noted that the alleged loss of opportunity, assuming that it has been established, is also attributable to the decision by the Portuguese authorities not to have recourse to private capital to restructure BES and to put the latter into resolution, which involved the creation of a Bridge Bank to which the sound assets have been transferred.

67 In the light of the foregoing, it must be held that the contested decision, in any event, affected the applicants' interests only indirectly so that they cannot benefit from the status of a party 'concerned' within the meaning of Article 108(2) TFEU.

68 In the second place, the applicants claim that they have standing to bring proceedings as a party directly and individually concerned within the meaning of the criterion defined by the judgment of 15 July 1963, Plaumann v Commission (25/62, EU:C:1963:17).

69 However, as is apparent from paragraphs 63 to 66 above, the effects, alleged by the applicants, of the contested decision on their situation are attributable to the decision of the Portuguese authorities to put BES into resolution.

70 It should, moreover, be noted that the applicants refer only to the economic effects of the contested decision on their situation without providing evidence capable of showing that their legal situation was directly affected by the decision.

71 The mere fact that a measure may exercise an influence on an applicant's substantive position cannot suffice to allow it to be regarded as directly concerned by the measure (see order of 9 November 2016, Biofa v Commission, T-746/15, EU:T:2016:658, paragraph 38 and the case-law cited).

72 In the light of the foregoing, it must be held that the contested decision did not have any direct effects on the legal situation of the applicants.

73 Given that the applicants have failed to prove that they are directly concerned by the contested decision, it must be held that they do not have standing to bring proceedings for annulment of that decision without it being necessary to rule on whether the applicants are individually concerned or on whether the contested decision constitutes a regulatory act which does not entail implementing measures, as the concept of direct concern is subject to an identical interpretation in the context of the application of the fourth paragraph of Article 263 TFEU (see, to that effect, judgments of 25 October 2011, Microban International and Microban (Europe) v Commission, T-262/10, EU:T:2011:623, paragraphs 31 and 32, and of 14 January 2016, Doux v Commission, T-434/13, not published, EU:T:2016:7, paragraph 36).

74 Consequently, the plea of inadmissibility raised by the Commission must be upheld and the action must be dismissed as inadmissible.

Costs

75 Under Article 219 of the Rules of Procedure, in judgments delivered after its judgment has been set aside and the case referred back to it, the General Court is to decide on the costs relating to the proceedings instituted before the General Court and to the proceedings on the appeal before the Court of Justice.

76 Given that, in the judgment on appeal, the Court of Justice set aside the initial order and reserved the costs, it is for the General Court to decide, in the present judgment, on all the costs relating to the proceedings brought before it, including the proceedings at first instance and for interim relief, and on the costs relating to the proceedings on the appeal in Case C-544/17 P.

77 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings.

78 However, under Article 135(1) of the Rules of Procedure, if equity so requires, the General Court may decide that an unsuccessful party is to pay only a proportion of the costs of the other party in addition to bearing his own costs, or even that he is not to be ordered to pay any costs.

79 As the applicants have been unsuccessful in the proceedings for interim relief, at first instance and after referral back to the General Court, they must be ordered to bear their own costs and to pay those incurred by the Commission for those proceedings, in accordance with the form of order sought by the Commission.

80 On the other hand, notwithstanding the fact that the Commission has been unsuccessful in the proceedings on the appeal, it appears fair, in the light of the circumstances of the case, that each party should bear the costs which it has incurred for those proceedings.

81 Lastly, under Article 138(1) of the Rules of Procedure, the Member States which have intervened in the proceedings are to bear their own costs. Accordingly, the Portuguese Republic shall bear its own costs.

On those grounds,

THE GENERAL COURT (Second Chamber)

hereby:

1. Dismisses the action as inadmissible;

2. Orders BPC Lux 2 Sàrl and the other applicants whose names are set out in the Annex to bear their own costs and to pay those incurred by the European Commission for the proceedings for interim relief, at first instance and after referral back to the General Court;

3. Orders the Commission to bear the costs incurred by it in the proceedings on the appeal;

4. Orders the Portuguese Republic to bear its own costs.