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The Banking Union and Its Implications for Private Law: A Comment

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Abstract

This comment seeks to provide a conceptual framework for analysing the Banking Union’s implications for private law. After discussing how and in what form the Banking Union can engender potentially relevant regulatory norms, it identifies the general ways whereby these can be recognised in private law and translated into private rights and/or duties. It then responds to a common argument against translation, namely, that the public nature of the regulatory regime’s goals and concerns hinders its normative expansion in the realm of private law. On a more practical level, it provides a tentative catalogue of private legal relations likely to be affected by the Banking Union.

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Notes

  1. E.g., Norton (2003) and Gorton (2003).

  2. E.g., Faerman et al. (2001).

  3. E.g., Mosley (2009), Cafaggi (2011), Backer (2011) and Pagliari (2012).

  4. Grundmann (2015).

  5. For an initial overall assessment, see Moloney (2014a).

  6. See Gortsos (2015).

  7. Regulation (EU) No 1024/2013, OJ 2013 L 287/63.

  8. Regulation (EU) No 1022/2013, OJ 2013 L 287/5.

  9. SSM Regulation, Art. 6.

  10. Directive 2014/59/EU, OJ 2014 L 173/190 (BRRD), Arts. 27–30; and SRM Regulation, Art. 13.

  11. For a concise description, see European Commission (2014).

  12. Regulation (EU) No 806/2014, OJ 2014 L 225/1.

  13. European Council Conclusions, 19 June 2009. See also European Council Conclusions, 18 October 2012.

  14. Directive 2013/36/EU, OJ 2013 L 176/338.

  15. Regulation (EU) No 575/2013, OJ 2013 L 176/1.

  16. Directive 2014/59/EU, OJ 2014 L 173/190.

  17. The term ‘single rulebook’ is used twenty times in the preambles to the various instruments setting up the Banking Union or establishing the Union’s basic prudential framework for credit institutions, but not once in their operative provisions; SSM Regulation, Rec. (7), (11)–(12), (30)–(32), (87); Regulation 1022/2013, Rec. (2), (4), (7), (11); SRM Regulation, Rec. (5), (7), (11), (35); CRD IV, Rec. (9)–(10); and CRR, Rec. 14. In most cases, the reference is simply to the ‘single rulebook for financial services in the Union’, without further explanation.

  18. Thus SRM Regulation, Rec. (11).

  19. Directive 2014/49/EU, OJ 2014 L 173/149.

  20. Directive 2002/87/EC, OJ 2003 L 35/1.

  21. Directive 2009/110/EC, OJ 2009 L 267/7.

  22. This is the meaning implied in the references to a single rulebook in SSM Regulation, Rec. (31), SRM Regulation, Rec. (35), CRD IV, Rec. (10) and CRR, Rec. (14). Similar references can be found in the earlier instrument setting up the EBA, Regulation (EU) No 1093/2010, OJ 2010 L 331/12 (Regulation establishing the EBA), Rec. (5), (22).

  23. Regulation establishing the EBA, Art. 1(2)–(3) and (5), as amended.

  24. Directive 2007/64/EC, OJ 2007 L 319/1.

  25. Directive 2008/48/EC, OJ 2008 L 133/66.

  26. Directive 2014/17/EU, OJ 2014 L 60/34.

  27. Directive 2002/65/EC, OJ 2002 L 271/16.

  28. Directive 2005/60/EC, OJ 2005 L 309/15.

  29. Directive 2014/65/EU, OJ 2014 L 173/349.

  30. Regulation establishing the EBA, as amended, Art. 8(1)(a).

  31. Ibid, Art. 8(1)(aa) and 29(2).

  32. Regulation 1022/2013, Rec. (7).

  33. SSM Regulation, Art. 4(3), second sub-para.; cf. CRD IV, Rec. (9), (10).

  34. See, e.g., Cafaggi and Muir Watt (2009) and Reich (2010).

  35. See, e.g., Directive 85/374/EEC, OJ 1985 L 210/29, on liability for defective products; Directive 2009/22/EC, OJ 2009 L 110/30, on injunctions for the protection of consumers’ interests; Directive 2011/83/EU, OJ 2011 L 304/64, on consumer rights; and (in untypical legal form) Regulation (EC) No 261/2004, OJ 2004 L 46/1, on compensation and assistance to airline passengers.

  36. Directive 2014/104/EU, OJ 2014 L 349/1. See Hüschelrath and Schweitzer (2014).

  37. As in the case of intellectual property law, Directive 2004/48/EC, OJ 2004 L 195/16.

  38. Prior to the enactment of Directive 2014/104/EU, the availability of damages for violations of EU antitrust rules had been recognised judicially, Case C-453/99 Courage Ltd v Crehan [2001] ECR I-6297, paras. 24, 26, 36.

  39. As in the case law discussed in Della Negra (2014). Cf. Cherednychenko (2014b, 2015).

  40. The regulatory rules may thus turn into ‘maximum standards of protection’ in private law; Cherednychenko (2014b), at pp 671–674.

  41. E.g., Directive 2009/65/EC, OJ 2009 L 302/32 (UCITSs IV Directive), Art. 79(2) (even though it is rather unlikely that national laws might recognise liability in the excluded circumstances).

  42. Moloney (2014b), at pp 414–415, 950–951, 968–70. For exceptions, see Directive 2003/71/EC, OJ 2003 L 345/64 (Prospectus Directive), Art. 6(2); Directive 2004/109/EC, OJ 2004 L 390/38 (Transparency Directive), Art. 7; Regulation (EC) No 1060/2009, OJ 2009 L 302/1 (Credit Rating Agencies Regulation), as amended, Art. 35a. A harmonised liability regime in favour of retail clients for breaches by investment service providers (including banks) of conduct-of-business rules was proposed at one point, but eventually failed to find its way into MiFID II. Nonetheless, MiFID II, Art. 69(2), third sub-para., provides that ‘Member States shall ensure that mechanisms are in place to ensure that compensation may be paid or other remedial action be taken in accordance with national law for any financial loss or damage suffered as a result of an infringement of [the investment services regime]’.

  43. See Veil (2010), at pp 417–421.

  44. The Consumer Credit Directive, Art. 23, provides for ‘penalties’, thus envisaging an administrative system of enforcement, possibly supported by criminal penalties, but the term cannot include civil actions. More recently, the Mortgage Credit Directive, Art. 38, requires the establishment of ‘sanctions’, but is silent about the form that these should take.

  45. Payment Services Directive.

  46. MiFID II, Art. 75(1).

  47. Payment Services Directive, Art. 83(1); Consumer Credit Directive, Art. 24(1); Mortgage Credit Directive, Art. 39(1).

  48. Unusually, however, the Credit Rating Agencies Regulation – an instrument which, though not concerning credit institutions, was undoubtedly adopted for reasons of a prudential-systemic nature – includes a special civil liability regime in favour of investors and issuers who have suffered damage as a result of a credit rating agency’s infringement of particular regulatory requirements, Credit Rating Agencies Regulation, as amended, Art. 35a.

  49. E.g., Freedland and Auby (2006).

  50. E.g., Barnett (1986).

  51. E.g., Merryman (1968) and Horwitz (1982).

  52. E.g., Kennedy (1982).

  53. See Sauter and Schepel (2009).

  54. See, e.g., Cherednychenko (2014a), at pp 490–491; and, in more nuanced terms, Marjosola (2014), at pp 566–570.

  55. Cf. Kennedy (1976).

  56. See, e.g., Becker and Stigler (1974), Landes and Posner (1974) and Shavell (1993); and, specifically in relation to the enforcement of financial (securities) regulation, Jackson and Roe (2009).

  57. Cf. Fuller 1978.

  58. Joined Cases C-6/90 and C-9/90 Francovich et al. [1991] ECR 1-5357, para. 39; Case C-91/92 Faccini Dori v Recreb Srl [1994] ECR I-3325, para. 27.

  59. SSM Regulation, Rec. 2–6.

  60. See Case C-453/99 Courage, para. 20.

  61. Case C-91/92 Faccini Dori, para. 20.

  62. Case C-604/11 Genil 48 SL, Comercial Hostelera de Grandes Vinos SL v Bankinter SA, Banco Bilbao Vizca Argentaria SA, judgment of 30 May 2013, para. 57; Case C-174/12 Hirmann v Immofinanz AG, judgment of 19 December 2013, para. 40; cf. Grundmann (2013).

  63. Tountopoulos (2014).

  64. But not the establishment of remedies unknown in national law, since this would violate the principle of procedural autonomy of the Member States; Case C-432/05 Unibet v Iustitiekanslern [2007] ECR I-2271, paras. 40–42.

  65. See, e.g., Tomasic (2011).

  66. See Binder (2015).

  67. Theoretically, however, a bank in breach of prudential requirements could be pursued by competitors, or by stakeholders such as depositors, seeking injunctive or declaratory relief or specific performance; cf. Case C-253/00, Muñoz and Superior Fruiticola v Frumar and Redbridge [2002] ECR I-7289. This type of action would avoid some of the problems in relation to actions for damages, but would not provide meaningful incentives for potential plaintiffs and would in all likelihood be totally insignificant in terms of improving compliance with the rules.

  68. See Farhang (2010) and Glover (2012).

  69. Federal Deposit Insurance Corporation (2015) and May (2015).

  70. BRRD, Art. 34(1)(3); and SRM Regulation, Art. 15(1)(e).

  71. Insolvency Act 1986, s 214.

  72. E.g., Schooner (2010) and Bruner (2013), at pp 529, 560–561; Hill and McDonnell (2013) and Armour and Gordon (2014). Existing reform proposals typically concern American law, but could be adapted to a European legal setting.

  73. C-222/02 Paul et al. v Bundesrepublik Deutschland [2004] ECR I-9425.

  74. Ibid, para. 47. See Binder (2005) and Tison (2005).

  75. On the criteria of regulatory liability under various national laws, see Tison (2005), at pp 643–655.

  76. TFEU, Arts. 268, 340; Statute of the ECB and the ESCB, Art. 35.3.

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Authors and Affiliations

  1. University of Piraeus, Piraeus, Greece

    Christos Hadjiemmanuil

  2. London School of Economics and Political Science, London, UK

    Christos Hadjiemmanuil

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  1. Christos Hadjiemmanuil
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Correspondence to Christos Hadjiemmanuil.

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The author thanks Jens-Hinrich Binder, Jenny Giotaki and Vassilios Tountopoulos for valuable observations.

C. Hadjiemmanuil: Professor of International and European Monetary and Financial Institutions (University of Piraeus), Visiting Professor of Law (London School of Economics and Political Science).

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Hadjiemmanuil, C. The Banking Union and Its Implications for Private Law: A Comment. Eur Bus Org Law Rev 16, 383–400 (2015). https://doi.org/10.1007/s40804-015-0023-x

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