Figures on the First 2 Years
Within the SSM, the ECB is directly competent for the ongoing supervision of significant institutionsFootnote 32 established in the Eurozone, as well as for granting and withdrawing banking licenses and assessing the acquisition of qualifying holdings for all Euro Area credit institutions, irrespective of whether or not they are significant. This means that the ECB adopts a high number of individual decisions addressed to the supervised entities which may potentially affect their legal position. So far, 20 proceedings,Footnote 33 coming from nine Member States, have been brought before the ABoR.Footnote 34 In 15 cases, the ABoR has completed its internal review and issued an opinion, one proceeding is still pending, while in the other four cases the application has been withdrawn before the ABoR delivered an opinion. In these cases, as revealed by the ECB Annual Report 2015, ‘the Board, including its Secretariat, contributed to the resolution of issues to the satisfaction of both the applicant(s) and the ECB, by playing a mediation role between the ECB and the applicant(s)’.Footnote 35 As a result of the review process, only few casesFootnote 36 have been brought before the European Court of Justice, thereby confirming that the administrative review also pursues procedural economy purposes,Footnote 37 in addition to its main function of protecting of individual rights.
Composition: Competence, Professional Expertise and Independence
In order to understand the concrete functioning of the board of review and its role within the decision-making process of the ECB, it is essential to first examine its composition and the independence requirements set up by the SSM Regulation. The ABoR is composed of five members and two alternatesFootnote 38 which are appointed by the ECB for a term of 5 years, renewable only once. In particular, following a public call for expressions of interest published in the Official Journal of the EU, the Executive Board, after hearing the Supervisory Board, submits the nominations to the Governing Council which formally appoints the members of the ABoR. The members have the duty to act independently and in the public interest, and cannot be bound by any instructions. For that purpose, they submit a public declaration of commitments and a public declaration of interests, which indicate any direct or indirect interest which might be considered prejudicial to their independence, or the absence of any such interest. Moreover, Article 24 of the SSM Regulation establishes an incompatibility regime for the ABoR members and provides that they cannot be concurrently staff of the ECB, as well as current staff of competent authorities or other national or Union institutions, bodies, offices or agencies that are involved in tasks related to the ECB within the SSM. In addition, when a member is in a conflict of interest situation, arising from a private or personal interest which may influence, or appear to influence, his/her impartiality and objectivity, this member is to be replaced by one of the alternate members.
In order to further strengthen the independence of judgement of the body, the SSM Regulation requires the members to be of high repute and to have relevant knowledge and professional experience, including supervisory experience, in the fields of banking or other financial services. The appointment of the board’s members and the alternates is to be conducted so as to ensure, to the extent possible, the respect of the principles of geographical and gender balance, as well as experience and qualification.
Scope of Review
The ABoR’s scope of review is defined by Article 24 of the SSM Regulation which provides that any natural or legal person may request a review of a decision taken by the ECB in the exercise of the powers conferred on it by the SSM Regulation, and which is either addressed to that person, or is of a direct and individual concern to that person. This provision mirrors the locus standi conditions set out in Article 263(4) TFEU for the action for annulment before the Court of Justice. Despite the structural differences between the two procedures, it is submitted that the ABoR should interpret and apply the admissibility requirements in light of the relevant case law of the ECJ.Footnote 39 Accordingly, if the applicant is not the addressee of the contested decision, the ABoR should apply the scrutiny test developed by the Court of Justice, entailing an assessment of whether the contested act itself affects the situation of the individual and does not require any implementing measure, and whether that decision affects the applicant by reason of certain peculiar attributes or by reason of factual circumstances in which they are differentiated from all other persons.Footnote 40 In addition to the standing requirements, the applicant has to demonstrate a present and vested interest in bringing proceedings before the ABoR, meaning that it must show that it would benefit from a contested act being annulled as a result of its request for review.
Differently from the Joint Board of Appeal of the ESAs and from the Appeal Panel of the SRB, national competent authorities forming part of the SSM cannot file a request for review before the ABoR.
As for the material scope of review, pursuant to Article 24(1) of the SSM Regulation, the ABoR is empowered to review ‘decisions taken by the ECB in the exercise of the powers conferred on it’ by the SSM regulation. One relevant question is whether the term ‘decision’ has to be understood in a formal way, meaning that only legal acts set out in Article 132(1), second indent, of the TFEU qualify as a decision, or in a substantial one, thus reflecting the interpretation of the ECJ according to which any measure which definitively determines the position of the authority upon the conclusion of an administrative procedure, and which is intended to have binding legal effects capable of affecting the interests of the applicant is open to challenge.Footnote 41 A broader understanding of the scope of review is favored, as it appears more in line with the material interpretation applied by the courts, as well as with the fundamental principle of rule of law according to which any act of Union law capable of having legal effect can be reviewed.Footnote 42 Accordingly, the ABoR should assess whether the contested act is capable of having legal effects vis-à-vis its addressees, irrespective of its legal form. Therefore, in principle, internal documents and acts of a preparatory nature, like for instance intermediate acts in a multi-step procedure, are not directly challengeable before the ABoR.
As for the extent of the review, Article 24 of the SSM Regulation specifies that the ABoR carries out an internal administrative review pertaining to ‘the procedural and substantive conformity with this Regulation’. One may argue that the scope of the review is not limited to the conformity of the contested act with the SSM Regulation stricto sensu, but instead has to be understood as a broader reference to all the applicable substantial and procedural law, as referred thereto.Footnote 43 This means that, by virtue of Article 4(3) of the SSM Regulation, the ABoR will be confronted with the assessment of the substantive conformity of the ECB decisions not only with the EU legislation, but also with national laws implementing EU directives. As the next section clearly demonstrates, this is a novel situation and represents one of the biggest challenges for the ECB within the new integrated system of banking supervision.
Moreover, the board verifies whether the relevant procedural rules were fully respected. Due process guarantees are set out in detail in the ECB Regulation No. 468/2014Footnote 44 (the SSM Framework Regulation). This Regulation encompasses the right of the parties to an ECB supervisory procedure to be granted the opportunity of commenting in writing on the facts, objections and legal grounds relevant to an ECB supervisory decision which would adversely affect their rights (right to be heard),Footnote 45 the right to have access to the ECB’s file, and the right to receive an accurately motivated decision, containing all the material facts and legal reasons on which the ECB supervisory decision has been based. It can be also argued that in the assessment of the procedural legality of the decision, the ABoR also checks the compliance with the general principles of EU law, as enshrined in the case law of the ECJ and recalled by the SSM Regulation.Footnote 46 Among them, of particular relevance, is the correct application of the principles of equal treatment, non-discrimination and proportionality.Footnote 47
However, the SSM Regulation makes it clear that the administrative review shall respect ‘the margin of discretion left to the ECB to decide on the opportunity to take those decisions’.Footnote 48 In other words, the internal review is limited to the legality of the contested decision and cannot question its merit. Moreover, as in court proceedings, when the decision taken by the ECB involves a broad margin of discretion or a ‘complicated economic assessment’, it is submitted that also the review of the ABoR is confined to a ‘limited standard of review’. Accordingly, the board’s review is limited as to whether the due process requirements were complied with and, in particular, whether the statement of reasons was sufficient, whether the facts were correctly reproduced and whether there was any manifest error in the assessment, and whether the decision is manifestly disproportionate or vitiated by a misuse of powers.Footnote 49
The review procedure can be divided in three phasesFootnote 50: (a) the preparatory phase, which includes the assessment of the admissibility of the request, (b) the examination phase, which may also entail an oral hearing and the collection of the relevant evidence, and (c) the deliberative phase, ending with the adoption of the opinion and its submission to the Supervisory Board.
As for the first phase, the review process is triggered by a written request submitted by a natural or legal person to the Secretary of the Administrative BoardFootnote 51 within 1 month of the date of notification of the decision or, in the absence thereof, of the day on which it came to the knowledge of the applicant. Despite a certain margin of flexibility, the ABoR assesses the admissibility of the application before examining whether the request is legally founded. If the request is held inadmissible wholly or in part, the assessment is recorded in the opinion and submitted to the Supervisory Board. If the request is admissible, the ABoR may propose to the Governing Council to suspend the effects of the contested decision, subject to the conditions mentioned above. It is worth noting that the power to suspend the decision is granted to the same body that shortly before adopted the contested decision, not exercising its power to object in accordance with Article 26(8) of the SSM Regulation.
In the second phase, the ABoR examines whether the substantial and procedural grounds raised by the applicant are well-founded. Pursuant to Article 10 of the ABoR Decision,Footnote 52 establishing the Rules of procedures of the board, the internal review is limited to the examination of the grounds set forth in the notice of review and the ABoR cannot raise ex officio new grounds for review or complement the submissions filed by the applicant. In this respect, the ABoR acts similarly to a Court within the review of legality. Quite interestingly, however, the Supervisory Board, after the review of the ABoR, may also take other elements into account when preparing its proposal for a new draft decision, thus acting in the pursuit of the general objectives entrusted to it by the SSM Regulation. This provision shows quite clearly the different nature and function of the two bodies within the decision-making process designed by the SSM Regulation.
In this phase, the ABoR collects and analyses all the relevant information for its final deliberation. In particular, in order to carry out an efficient conduct of the review, the Chair may give directions to the parties, including directions to produce documents or provide information.Footnote 53 Moreover, the ABoR may call for an oral hearingFootnote 54 where it considers it necessary for the fair evaluation of the case. It is important to highlight that the oral hearing is normally scheduled by the board as it represents a fundamental step in the review process. Indeed, the hearing is an important source of information for the board itself; it provides the applicant with the opportunity to present its view and to make oral representations before an independent panel, to hear the reasons of the ECB and to have a direct confrontation with it. The hearing is also essential for the ECB which has the possibility to provide a more extensive reasoning of the contested decision, to achieve a different evaluation of its conduct or even to reconsider its discretionary choices. The hearing is held at the ECB’s premises in Frankfurt with the applicant (or its legal representative) and the ECB staff on different sides of the table, and is not open to third parties, thus confirming the confidential nature of the ABoR proceedings.
Another tool ensuring the right of defence of the parties is the possibility to request to the ABoR the permission to adduce witness or expert evidence in the form of a written statement or to call a witness or expert who has given a written statement to give oral evidence at the hearing.Footnote 55 In these cases, the applicant is entitled to cross-examine the witnesses or experts when the latter has been called on by the ECB. However, the ABoR Decision makes it clear that such permission can only be given if the panel considers it necessary for the just determination of the review.
Finally, Article 6(3) of the ABoR Decision sets out that ‘the ECB shall provide the Administrative Board with appropriate support including legal expertise to assist in the assessment of the exercise of the powers of the ECB’. This provision must be read in conjunction with the independence status granted to the board and with Article 24(2) of the SSM Regulation which stipulates that the ABoR ‘shall have sufficient resources and expertise to assess the exercise of the powers of the ECB’. Accordingly, it is argued that the ABoR can request the ECB to provide its legal opinion, whenever the board might consider it beneficial for the accurate evaluation of the case at hand, without prejudice to the final autonomous assessment of the ABoR.
The last step of the procedure is the deliberation phase. In this phase the ABoR adopts an opinion and submits it to the Supervisory Board. The ABoR has to deliver its opinion within an appropriate time period, and no later than 2 months from the receipt of the request. The opinion is adopted by a majority of at least three members; the alternates do not take part in the deliberation. As anticipated above, the opinion is not binding on the Supervisory Board and can only propose to either abrogate the contested decision, to replace it with a new decision of identical content, or to replace it with an amended one.Footnote 56 However, one should not underestimate the influence that the opinion issued by the ABoR has on the Supervisory Board. Indeed, the latter has to ‘take into account’Footnote 57 the opinion of the ABoR, meaning that when presenting the new draft decision to the Governing Council for the adoption under the non-objection procedure, the Supervisory Board will have to explain why it decided to follow or not follow the opinion. In the latter case, the Supervisory Board is subject to an enhanced motivation obligation. Moreover, by deciding not to follow the ABoR’s opinion, if it were to suggest abrogating or amending the original decision, the Supervisory Board would accept a higher litigation risk in case an action is brought before the ECJ.
Lastly, the ABoR opinion is notified to the applicant only together with the new draft decision prepared by the Supervisory Board and adopted by the Governing Council.Footnote 58 As already mentioned, the opinions of the ABoR are not public. Indeed, in the peculiar frame of the banking supervision, the confidentiality regime is also intended to protect the interests of the applicant in not having ‘non-public’ information on its financial situation or on its relationship with the supervisory authority disclosed.
It is not possible to file a request for review against the new decision. The applicant can only appeal it before the General Court within 2 months from its notification, in accordance with Article 263 TFEU. It is important to highlight that in such cases the initial ECB decision cannot be challenged before the Court since, following the ABoR opinion, it has been either repealed or replaced by a new ECB decision. Also, the ABoR opinion as such cannot be challenged before the Court; however, the arguments put forward by the ABoR will be disclosed in Court and the ECJ may take them into account within the judicial review process.
This means that, in principle, it is always possible to choose between the administrative way and the judicial one when opposing an ECB decision. However, after the ABoR has delivered its opinion and the Governing Council has adopted a new decision, the affected party can only pursue the judicial remedy. This way is not barred by time-limit requirements as the new period starts running after the new ECB decision replacing the first one is notified to the applicant.