22 February 2022 (*)

(Action for damages – Economic and monetary policy – Stability support programme for Cyprus – Memorandum of Understanding of 26 April 2013 on Specific Economic Policy Conditionality concluded between Cyprus and the European Stability Mechanism – Jurisdiction of the General Court – Sufficiently serious breach of a rule of law intended to confer rights on individuals – Equal treatment – Principle of proportionality – Action manifestly lacking any foundation in law)

In Case T‑161/15,

Brinkmann (Steel Trading) Ltd,

established in London (United Kingdom), and the other applicants whose names are set out in the annex, (1) represented by R. Nowinski, lawyer,

applicants,

European Commission,

represented by J.-P. Keppenne, M. Konstantinidis and S. Delaude, acting as Agents,

European Central Bank (ECB),

represented by K. Laurinavičius and M. Szablewska, acting as Agents, and by H.-G. Kamann, lawyer,

defendants,

APPLICATION under Article 268 TFEU seeking compensation for the damage allegedly suffered by the applicants as a result of the decision of the Commission and the ECB to subject to certain conditions the grant of a financial assistance facility to the Republic of Cyprus,

THE GENERAL COURT (First Chamber, Extended Composition),

composed of H. Kanninen (Rapporteur), President, M. Jaeger, N. Półtorak, O. Porchia and M. Stancu, Judges,

Registrar: E. Coulon,

makes the following

Background to the dispute

On 2 February 2012, the Treaty establishing the European Stability Mechanism between the Kingdom of Belgium, the Federal Republic of Germany, the Republic of Estonia, Ireland, the Hellenic Republic, the Kingdom of Spain, the French Republic, the Italian Republic, the Republic of Cyprus, the Grand Duchy of Luxembourg, the Republic of Malta, the Kingdom of the Netherlands, the Republic of Austria, the Portuguese Republic, the Republic of Slovenia, the Slovak Republic and the Republic of Finland (‘the ESM Treaty’) was concluded in Brussels (Belgium). That treaty entered into force on 27 September 2012.

At the beginning of 2012, Cyprus Popular Bank Public Co Ltd (‘Laïki’) and Trapeza Kyprou Dimosia Etaireia Ltd (‘the BoC’) encountered significant difficulties.

The Republic of Cyprus itself faced serious financial difficulties in the course of 2012.

On 25 June 2012, the Republic of Cyprus presented a request to the President of the Eurogroup for financial assistance from the European Stability Mechanism (ESM) or from the European Financial Stability Facility (EFSF).

By a statement of 27 June 2012, the Eurogroup indicated that the financial assistance requested would be provided by either the EFSF or the ESM in the context of a macroeconomic adjustment programme to be defined in a memorandum of understanding to be negotiated between the European Commission together with the European Central Bank (ECB) and the International Monetary Fund (IMF), on the one hand, and the Cypriot authorities, on the other.

In March 2013, the Republic of Cyprus and the other Member States whose currency is the euro (‘MSCE’) reached a political agreement on a draft memorandum of understanding.

By a statement of 16 March 2013, the Eurogroup welcomed that agreement, and the commitment by the Cypriot authorities to take further measures to mobilise internal resources, in order to limit the size of the financial assistance linked to the macroeconomic adjustment programme referred to in paragraph 5 above. Those measures included, in particular, the introduction of a levy on Cypriot bank deposits, a restructuring and recapitalisation of banks, and the bail-in of junior bondholders. The Eurogroup also noted that the Cypriot financial sector would be subject to an appropriate downsizing with a view to remedying its fragility and its very large size relative to the gross domestic product (GDP) of the Republic of Cyprus. In that context, the Eurogroup indicated that it considered that the grant of financial assistance to safeguard financial stability in the Republic of Cyprus and the euro area was, in principle, warranted and called on the parties concerned to expedite the negotiations that were underway.

On 19 March 2013, the Cypriot Parliament rejected the Cypriot Government’s bill relating to the introduction of a levy on all bank deposits in Cyprus. The Cypriot Government then prepared a new bill providing for the restructuring of the BoC and Laïki (‘the banks concerned’).

On 22 March 2013, the Cypriot Parliament adopted O peri exiyiansis pistotikon kai allon idrimaton nomoss (No 17(I)/2013) (Law on the resolution of credit and other institutions, EE, Annex I(I), No 4379, 22 March 2013, p. 117; ‘the Law of 22 March 2013’). Under Article 3(1) and Article 5(1) of that law, the Kentriki Trapeza tis Kyprou (Central Bank of Cyprus; ‘the CBC’) was entrusted, jointly with the Cypriot Ministry of Finance, with the resolution of the institutions covered by that law. To that end, Article 12(1) of the Law of 22 March 2013 provides that the CBC may, by decree, restructure the debts and obligations of an institution under resolution, including by means of the reduction, modification, rescheduling or novation of the nominal capital or of the outstanding amount of any type of claim, actual or future, against the institution, or by the conversion of debt instruments or obligations into equity capital. Next, that article excludes from those measures insured deposits, for the purposes of the fifth sentence of Article 2 of the Law of 22 March 2013, that is to say deposits of EUR 100 000 or less.

By a statement of 25 March 2013, the Eurogroup indicated that it had reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme with the support of all of the MSCE and of the Commission, the ECB and the IMF.

That statement sets out, in particular, the following:

‘The Eurogroup welcomes the plans for restructuring the financial sector as specified in the annex. These measures will form the basis for restoring the viability of the financial sector. In particular, they safeguard all deposits below EUR 100.000 in accordance with EU principles.

The programme will contain a decisive approach to addressing financial sector imbalances. There will be an appropriate downsizing of the financial sector …

…

The Eurogroup urges the immediate implementation of the agreement between [the Republic of Cyprus] and [the Hellenic Republic] on the Greek branches of the Cypriot banks, which protects the stability of both the Greek and Cypriot banking systems.’

The annex to that statement is worded as follows:

‘Following the presentation by the [authorities of the Republic of Cyprus] of their policy plans, which were broadly welcomed by the Eurogroup, the following was agreed:

1.[Laïki] will be resolved immediately – with full contribution of equity shareholders, bond holders and uninsured depositors – based on a decision by [the CBC], using the newly adopted Bank Resolution Framework.

2.[Laïki] will be split into a good bank and a bad bank. The bad bank will be run down over time.

3.The good bank will be folded into [the BoC], using the Bank Resolution Framework, after having heard the Boards of Directors of [the] BoC and [Laïki]. It will take EUR 9 [billion] of ELA [(Emergency Liquidity Assistance)] with it. Only uninsured deposits in [the] BoC will remain frozen until recapitalisation has been effected, and may subsequently be subject to appropriate conditions.

4.The Governing Council of the ECB will provide liquidity to the BoC in line with applicable rules.

5.[The] BoC will be recapitalised through a deposit/equity conversion of uninsured deposits with full contribution of equity shareholders and bond holders.

6.The conversion will be such that a capital ratio of 9% is secured by the end of the programme.

7.All insured depositors in all banks will be fully protected in accordance with the relevant EU legislation.

8.The programme money (up to [EUR 10 billion]) will not be used to recapitalise [Laïki] and [the BoC].’

On 25 March 2013, the Governor of the CBC placed the banks concerned into resolution.

On 29 March 2013, two decrees were published in that connection on the basis of the Law of 22 March 2013 (‘the decrees of 29 March 2013’), namely:

(1)to peri diasosis me idia mesa tis Trapezas Kyprou Dimosias Etaireias Ltd Diatagma tou 2013, Kanonistiki Dioikitiki Praxi No 103 (Decree of 2013 on the bailing-in of the BoC, Regulatory Administrative Act No 103, EE, Annex III(I), No 4645, 29 March 2013, p. 769; ‘Decree No 103’);

(2)to peri tis Polisis Orismenon Ergasion tis Cyprus Popular Bank Public Co Ltd Diatagma tou 2013, Kanonistiki Dioikitiki Praxi No 104 (Decree of 2013 on the sale of certain operations of Laïki, Regulatory Administrative Act No 104, EE, Annex III(I), No 4645, 29 March 2013, p. 781; ‘Decree No 104’).

Articles 5 and 6 of Decree No 103 provide for a recapitalisation of the BoC, at the expense, in particular, of its own uninsured depositors and its shareholders, so that it could continue to provide banking services. Accordingly, the uninsured deposits in the BoC were converted into shares thereof (37.5% of each uninsured deposit), into securities which were convertible, by the CBC, either into shares or into deposits (22.5% of each uninsured deposit), and into securities which were convertible into deposits by the CBC (40% of each uninsured deposit). Article 6(5) of Decree No 103 states that, if the contributions of uninsured depositors exceed what is necessary in order to restore the equity capital of the BoC, the resolution authority will determine the amount corresponding to overcapitalisation and will treat it as if the conversion had never taken place. Pursuant to Article 10 thereof, Decree No 103 entered into force on 29 March 2013, at 6.00.

In so far as concerns Decree No 104, the combined provisions of Articles 2 and 5 thereof provided for the transfer, at 6.10 on 29 March 2013, of some of Laïki’s assets and liabilities, including deposits of less than EUR 100 000 and the debt connected with ELA, to the BoC. Deposits of more than EUR 100 000 remained with Laïki, pending its liquidation.

On 26 April 2013, a memorandum of understanding (‘the MoU of 26 April 2013’) was signed by the Vice-President of the Commission on behalf of the ESM, by the Cypriot Minister for Finance and by the Governor of the CBC.

Under the heading ‘Restructuring and resolution of [the banks concerned]’, paragraphs 1.23 to 1.28 of that MoU state:

1.23.‘1.23. The accounting and economic value assessment mentioned revealed that the two largest banks of Cyprus were insolvent. To address this situation the government has implemented a far-reaching resolution and restructuring plan. In order to prevent the build-up of future imbalances and to restore the viability of the sector, while preserving competition, a fourfold strategy was adopted, which does not involve the use of taxpayer money. …

1.24.First, all Greek-related assets (including shipping loans) and liabilities were carved-out, estimated in the adverse scenario at EUR 16.4 billion and EUR 15.0 billion, respectively. The Greek assets and liabilities were acquired by Piraeus Bank, the restructuring of which will be dealt with by the Greek authorities. The carve-out was based on an agreement signed on 26 March 2013. With the book value of the assets at EUR 19.2 billion, the carve-out has substantially reduced the cross exposures between Greece and Cyprus.

1.25.With respect to the UK branch of [Laïki], all the deposits were transferred to the UK subsidiary of [the BoC]. The associated assets were folded into [the BoC].

1.26.Second, [the BoC] is taking over – via a purchase and assumption procedure – almost the entire Cypriot assets of [Laïki] at fair value, as well as the latter’s insured deposits and [ELA] exposure at nominal value. The uninsured deposits of [Laïki] will remain in the legacy entity. The aim is for the value of the transferred assets to be higher than the transferred liabilities with the difference corresponding to the recapitalisation of [the BoC] by [Laïki] amounting to 9% of the risk-weighted assets transferred. [The BoC] is being recapitalised to reach a core tier one ratio of 9% under the adverse scenario of the stress test by the end of the programme, which should help to restore confidence and normalise funding conditions. The conversion of 37.5% of the uninsured deposits in [the BoC] into class A shares with full voting and dividend rights provides the largest part of the capital needs with additional equity contributions from the legacy entity of [Laïki]. Part of the remaining uninsured deposits of [the BoC] will be frozen temporarily …

1.27.Third, to ensure that the capitalisation targets are met, a more detailed and updated independent valuation of the assets of [the banks concerned] will be completed, as required by the bank resolution framework, by end June 2013. To this end, no later than mid-April 2013, the terms of reference of the independent valuation exercise will be agreed in consultation with the [Commission], the ECB, and the IMF. Following that valuation, and if required, an additional conversion of uninsured deposits into class A shares will be undertaken to ensure that the core tier one capital target of 9% under stress by end-programme can be met. Should [the BoC] be found to be overcapitalised relative to the target, a share-reversal process will be undertaken to refund depositors by the amount of over-capitalisation.

1.28.Finally given the systemic importance of [the BoC], it is important that the operations of [Laïki] are quickly integrated, operational efficiency is improved, the recovery of non-performing loans is optimised with the work-out implemented by the going concern entity and the funding conditions are progressively normalised. In order to achieve these goals and to ensure that [the BoC] can operate with maximum safeguards to preserve stability and continued viability during a transition period, the CBC, following consultation with the Ministry of Finance, will appoint a new Board of Directors and an acting Chief Executive Officer until [the BoC’s] new shareholders are organised in a general meeting. The CBC will require the Board of Directors to prepare a restructuring plan defining the bank’s business objectives and credit policies by end-September 2013. To ensure that normal business activities are not affected, institutional arrangements will be designed by end-June 2013 in accordance with Cypriot law to insulate [the BoC] from reputational and governance risks.’

On 8 May 2013, the ESM Board of Directors approved the agreement granting stability support to the Republic of Cyprus in the form of a financial assistance facility (‘FAF’).

Procedure and forms of order sought

By application lodged at the General Court Registry on 1 April 2015, Brinkmann (Steel Trading) Ltd, Megamatic Management Ltd and the other parties whose names are set out in the annex brought the present action.

In their application, the applicants claim that the Court should:

–order the defendants to pay them the sums set out in the application or such amounts as the Court finds to be due;

–order the defendants to pay the costs.

On 24 September 2015, the ECB lodged its defence.

The ECB contends that the Court should:

–dismiss the action as inadmissible;

–in the alternative, dismiss the action as unfounded;

–order the applicants to pay the costs.

By separate document, lodged at the Court Registry on 15 October 2015, the Commission raised a plea of inadmissibility under Article 130(1) of the Rules of Procedure of the General Court.

In its plea of inadmissibility, the Commission claims that the Court should:

–dismiss the action as inadmissible;

–order the applicants to pay the costs.

On 2 December 2015, the applicants submitted observations on the plea of inadmissibility raised by the Commission.

In their observations, the applicants claim that the Court should reject the plea of inadmissibility.

On 26 January 2016, the applicants lodged their reply.

By order of 17 February 2016, the General Court (First Chamber) decided to reserve the plea of inadmissibility raised by the Commission until it rules on the substance of the case, in accordance with Article 130(7) of the Rules of Procedure.

On 23 March 2016, the Commission lodged its defence.

The Commission contends that the Court should:

–dismiss the action as inadmissible and/or unfounded;

–order the applicants to pay the costs.

On 30 March 2016, the ECB lodged its rejoinder.

On 18 April 2016, pursuant to Article 69(d) of the Rules of Procedure, the President of the First Chamber of the General Court decided to stay the present proceedings pending the adoption of the decision closing the proceedings in Cases C‑8/15 P, Ledra Advertising v Commission and ECB; C‑9/15 P, Eleftheriou and Others v Commission and ECB; C‑10/15 P, Theophilou and Theophilou v Commission and ECB; C‑105/15, Mallis and Malli v Commission and ECB; C‑106/15 P, Tameio Pronoias Prosopikou Trapezis Kyprou v Commission and ECB; C‑107/15 P, Chatzithoma v Commission and ECB; C‑108/15 P, Chatziioannou v Commission and ECB; and C‑109/15 P, Nikolaou v Commission and ECB.

Following the judgments of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701), and of 20 September 2016, Mallis and Others v Commission and ECB (C‑105/15 P to C‑109/15 P, EU:C:2016:702), by which the Court of Justice disposed of the proceedings referred to in the preceding paragraph, the present proceedings were resumed.

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

On 27 October 2016, in the context of the measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, the Court invited the parties to submit observations on the consequences that should follow, for the present dispute, from the judgments of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701), and of 20 September 2016, Mallis and Others v Commission and ECB (C‑105/15 P to C‑109/15 P, EU:C:2016:702). The parties complied with that invitation within the prescribed period. In their observations, the applicants stated that they were withdrawing certain pleas in law and arguments. On 20 December 2016, the Court invited the ECB to submit its observations in that regard, which complied with that request within the prescribed period.

On 20 December 2016, the Court decided that it was not necessary to lodge a reply to the Commission’s defence.

By letter lodged at the Court Registry on 9 February 2017, the applicants requested that a hearing be held.

On 17 May 2017, on a proposal from the Fourth Chamber, the Court decided, pursuant to Article 28 of the Rules of Procedure, to refer the present case to a chamber sitting in extended composition.

By document lodged at the Court Registry on 27 July 2017, Fletcher Group Holdings Ltd applied to replace Megamatic Management as an applicant in the present case.

The Court invited the main parties to express their views on that application. By document lodged at the Court Registry on 20 November 2017, the Commission stated that it had no objections to the replacement requested, but pointed out that any replacement should be conditional on Fletcher Group Holdings accepting the dispute as it found it at the time of the replacement. By document lodged at the Court Registry on 24 November 2017, the ECB agreed to that replacement on condition that Fletcher Group Holdings accepted the dispute as it found it at the time of the replacement.

On 30 November 2017, pursuant to Article 69(d) of the Rules of Procedure, having heard the parties, the President of the Fourth Chamber of the General Court decided to stay the present proceedings pending the adoption of the decision closing the proceedings in Cases T‑680/13, Chrysostomides & Co. and Others v Council and Others, and T‑786/14, Bourdouvali and Others v Council and Others.

Following the judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486), and of 13 July 2018, Bourdouvali and Others v Council and Others (T‑786/14, not published, EU:T:2018:487), by which the Court disposed of the proceedings referred to in paragraph 42, the present proceedings were resumed.

On 3 September 2018, in the context of the measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, the Court invited the parties to submit observations on the consequences that should follow, for the present dispute, from the judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486), and of 13 July 2018, Bourdouvali and Others v Council and Others (T‑786/14, not published, EU:T:2018:487).

On 27 September 2018, the ECB and the Commission requested that the present proceedings be stayed pending a ruling by the Court of Justice on the appeals brought in Cases C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P.

On 19 November 2018, the President of the Fourth Chamber of the General Court, first, pursuant to Article 69(d) of the Rules of Procedure, having heard the applicants, decided to stay the proceedings pending the adoption of the decision closing the proceedings in Council v K. Chrysostomides & Co. and Others, C‑597/18 P, Council v Bourdouvali and Others, C‑598/18 P, K. Chrysostomides & Co. and Others v Council, C‑603/18 P and Bourdouvali and Others v Council, C‑604/18 P, and second, granted the applicants’ request to withdraw from the file their observations lodged on 5 October 2018 in the context of the measures of organisation of procedure referred to in paragraph 44 above.

Following a change in the composition of the Chambers of the Court by decision of 4 October 2019, the Judge-Rapporteur was assigned to the First Chamber. The present case was therefore assigned to the First Chamber, Extended Composition.

Following the judgment of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others (C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028), by which the Court of Justice disposed of the proceedings in the cases referred to in paragraph 46, the present proceedings were resumed.

By order of 26 February 2021, the General Court (First Chamber, Extended Composition) authorised Fletcher Group Holdings to replace Megamatic Management as applicant.

On 4 March 2021, in the context of the measures of organisation of procedure provided for in Article 89 of its Rules of Procedure, the Court invited the parties to submit their observations on the consequences that should follow, for the present dispute, from the judgment of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others (C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028), and, in so far as necessary and in so far as they have not been set aside by the Court of Justice, from the judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486), and of 13 July 2018, Bourdouvali and Others v Council and Others (T‑786/14, not published, EU:T:2018:487). The parties complied with that invitation within the prescribed period.

Under Article 126 of the Rules of Procedure, where it is clear that the General Court has no jurisdiction to hear and determine an action or where the action is manifestly inadmissible or manifestly lacking any foundation in law, the Court may, on a proposal from the Judge-Rapporteur, at any time decide to give a decision by reasoned order without taking further steps in the proceedings.

In the present case, the Court considers that it has sufficient information from the documents in the file and has decided, pursuant to that provision, to give a decision without taking further steps in the proceedings.

When the decrees of 29 March 2013 entered into force (see paragraphs 14 to 16 above), the applicants, Brinkmann (Steel Trading) and the other parties whose names are set out in the annex, were depositors with Laïki and the BoC.

The applicants claim that the ECB and the Commission, in the context of the negotiations with the Cypriot authorities, the outcome of which was announced by the Eurogroup on 15 March 2013, unlawfully made the grant of the FAF conditional on the restructuring of the banks concerned and required those conditions to be reproduced in the MoU of 26 April 2013. The applicants state that the Law of 22 March 2013 and the decrees of 29 March 2013 (‘the restructuring measures’) adopted by the Cypriot authorities were mere instruments by which those conditions were implemented.

The applicants submit that the application of the restructuring measures caused the applicants a loss as a result of the substantial reduction in the value of their deposits, quantified in the application.

The jurisdiction of the General Court and the admissibility of the action

The ECB and the Commission dispute the jurisdiction of the Court to hear and determine the present action.

First, the ECB and the Commission claim that the restructuring measures were adopted unilaterally by the Cypriot Parliament and the CBC, even before the MoU of 26 April 2013 had been signed and approved. According to them, the General Court, before which an action has been brought on the basis of Article 340 TFEU, does not have jurisdiction to make good damage attributable to a Member State.

Second, the ECB and the Commission state that they did not give binding instructions to those authorities, but merely provided them with political support and technical advice, which is not capable of giving rise to liability on the part of the European Union. The Commission adds that the Cypriot authorities always had a broad discretion in defining the measures to be taken in order to receive financial assistance from the ESM.

Third, the defendants claim that it was on behalf of the ESM that they participated in the negotiation and, in the case of the Commission, signed the MoU of 26 April 2013. The tasks carried out by those two institutions within the ESM Treaty do not entail any power to make decisions of their own and that MoU is binding only on the ESM. The Court cannot hear and determine the case as regards the damage that might arise therefrom, since it has jurisdiction only in respect of damage caused by the institutions of the European Union acting on its behalf.

Fourth, the Commission claims that an action for damages is admissible only if it relates to compensation for damage arising from the unlawfulness of a measure producing legal effects. It states that the MoU of 26 April 2013 has no legal force and the present action should therefore be dismissed as inadmissible.

The applicants respond that the Court has jurisdiction to hear and determine the present action.

The applicants maintain that it is in fact the defendants who caused the alleged damage because they did not merely provide technical support for the negotiations, but decided, in that context, to make the FAF subject to restructuring measures. In view of the circumstances, the Republic of Cyprus had no choice but to accept the restructuring of the banks concerned as a precondition for the FAF and then to conclude the MoU.

The applicants also submit that they do not claim that the incorporation into the MoU of the condition relating to the restructuring of banks is the cause of the damage suffered by them, but that, when they carry out the tasks conferred on them by the ESM Treaty, the Commission and the ECB are subject to compliance with EU law. They claim, first, that Article 136(3) TFEU makes the grant of any financial assistance from the ESM subject to strict conditionality and, in the context of the negotiations with the Republic of Cyprus concerning the terms of the grant of the FAF with which they were entrusted under Article 13(3) of the ESM Treaty, the Commission and the ECB drew up and imposed the conditions relating to the restructuring of the banks concerned, as referred to in the MoU, which thus constitutes documentary proof of their actions. Second, the applicants submit that the Commission is the authority entrusted with monitoring compliance with the conditions laid down in the MoU pursuant to Article 13(7) of the ESM Treaty.

In their observations on the consequences that should follow, for the present dispute, from the judgments of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701), and of 20 September 2016, Mallis and Others v Commission and ECB (C‑105/15 P to C‑109/15 P, EU:C:2016:702), the defendants maintain that the restructuring measures were adopted unilaterally by the Cypriot authorities. The ECB adds that it is apparent from those judgments, first, that the Eurogroup statement of 25 March 2013 is not attributable to the ECB, is purely informative and cannot be regarded as a decision of the Commission and the ECB requiring the Republic of Cyprus to implement the restructuring measures. Second, the ECB contends that the functions performed by the ECB and the Commission in the context of the ESM Treaty and the MoU of 26 April 2013 are attributable only to the ESM and that the Court of Justice, when ruling that certain conduct linked to the adoption of that MoU can give rise to liability on the part of the European Union, referred only to obligations incumbent on the Commission. The applicants, for their part, submit that it is clear from paragraphs 56 to 60 of the two judgments referred to above that the defendants’ arguments that the action is inadmissible are bound to fail.

In their observations on the consequences that should follow, for the present dispute, from the judgment of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others (C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028), and, in so far as necessary and in so far as they have not been set aside by the Court of Justice, from the judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486), and of 13 July 2018, Bourdouvali and Others v Council and Others (T‑786/14, not published, EU:T:2018:487), the applicants add that it is apparent from those judgments that the conversion of the uninsured deposits in the BoC into shares is attributable to the European Union. In addition, they state that they are seeking that the European Union be held liable for the actions of the ECB and the Commission and not of the Eurogroup.

It should be borne in mind that, under Article 268 and the second and third paragraphs of Article 340 TFEU, in the case of non-contractual liability, the General Court has jurisdiction only in disputes relating to compensation for damage caused by the institutions, bodies, offices or agencies of the European Union or by their servants in the performance of their duties (judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others

66T‑680/13, EU:T:2018:486, paragraph 81, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 77).

67It follows that the Court cannot hear a claim for compensation that is directed against the European Union and based on the unlawfulness of an act or conduct the author of which is not an institution, body, office or agency of the European Union or one of its servants in the performance of its duties. Therefore, the damage caused by the national authorities in the exercise of their own powers can only give rise to liability on the part of the latter and the national courts retain sole jurisdiction to order compensation for such damage (judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 83, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 79).

68By contrast, it is not excluded that the Court may hear an action for compensation for damage caused by an act or conduct, by which a national authority ensures the implementation of EU legislation. In such a case, it is necessary to determine, in order to establish the jurisdiction of the Court, whether the unlawful conduct alleged in support of the action is in fact the responsibility of an EU institution, body, office or agency or of one of its servants in the performance of its duties and cannot be regarded, in reality, as attributable to the national authority at issue (judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 84, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 80).

69Thus, the assessment of whether a contested act or contested conduct can be attributed to the European Union may be relevant in the context of the assessment of the Court’s jurisdiction, in so far as that Court does not have jurisdiction to hear actions for compensation for damage attributable not to the institutions, bodies, offices or agencies of the European Union or to their servants in the performance of their duties, but to a Member State or other entity external to the European Union (see, to that effect, judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 101, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 97).

70In the present case, without prejudice to determining the decisive cause of the alleged damage, it must be noted that it is in the application of the restructuring measures that the immediate origin of the financial loss that the applicants allege to have suffered as depositors in the banks concerned is liable to be found. As the applicants acknowledge, those measures stem from the decrees of 29 March 2013, adopted by a Cypriot authority, the Governor of the CBC, under a Cypriot law, the Law of 22 March 2013.

71Although the applicants submit that the damage suffered by them is, in reality, attributable to the Commission and the ECB, they have failed to identify, in their action, an act by means of which those institutions might have formally required the Republic of Cyprus to adopt the restructuring measures.

72First, even assuming that, by referring to ‘the final agreement [reached on 15 March 2013]’ or ‘the Memorandum … that was negotiated by the Troika with the Cyprus government, as announced by the Eurogroup on 15th March 2013’, the applicants are referring to the agreement described by the Eurogroup statement of 16 March 2013 placed on the file by the Commission, it must be noted that that statement refers to a political agreement providing for the grant of financial assistance of EUR 10 billion to the Republic of Cyprus and mentions the commitment of the Cypriot authorities to take certain measures allowing to limit that amount, including ‘a restructuring and recapitalisation of banks’, with a view to, inter alia, ‘safeguarding deposits’. It makes no reference to a measure of the Commission or the ECB which is binding on the Republic of Cyprus and it appears, moreover, that the terms of the FAF were not adopted at the time, since those institutions were invited, together with the IMF and the Cypriot authorities, to finalise an MoU.

73Second, the Eurogroup statement of 25 March 2013, to which the applicants expressly refer as evidence, contains a general account of some measures agreed on a political level with the Republic of Cyprus with a view to stabilising the latter’s financial situation. Contrary to what the applicants submit, in that document, the plans for restructuring the financial sector specified in the annex (see paragraph 12 above) are not presented as resulting from ‘demands’ of the Commission or the ECB that are formally binding on the national authorities.

74Third, as the Commission and the ECB correctly claim, the adoption of the restructuring measures pre-dates the signing of the MoU of 26 April 2013 and was therefore not imposed on the Republic of Cyprus as a result of that MoU being signed.

75Moreover, the applicants share the view that the MoU of 26 April 2013 is an act concluded between the ESM and the Republic of Cyprus. In that regard, it must be recalled that the fact that one or more institutions of the European Union may play a certain role within the ESM framework does not alter the nature of the acts of the ESM, which fall outside the EU legal order (judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB, C‑8/15 P to C‑10/15 P, EU:C:2016:701, paragraph 54).

76Fourth, it is to no avail that, in the context of measures of organisation of procedure, the applicants refer to paragraph 192 of the judgment of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486), in which the General Court held that the conversion of uninsured deposits in the BoC into shares, as set out in Article 2(6)(b) of Council Decision 2013/236/EU of 25 April 2013 addressed to Cyprus on specific measures to restore financial stability and sustainable growth (OJ 2013 L 141, p. 32), is, at least in part, attributable to the European Union. The Court of Justice held, in the judgment of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others (C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028, paragraphs 115 and 116), that that reasoning by the General Court was vitiated by an error of law, since the abovementioned provision merely requires, in general terms, that the Cypriot authorities maintain or continue to implement that conversion, without defining in any way the specific rules for that operation.

77It follows from the foregoing that the applicants have not demonstrated that the restructuring measures were required by an act of the Commission or the ECB acting on behalf of the European Union so as to be attributable to the latter.

78Nevertheless, it must be noted that it is apparent from the case-law that the tasks conferred on the Commission and on the ECB by the ESM Treaty do not alter the essential character of the powers conferred on those institutions by the EU Treaty and the FEU Treaty. As regards, in particular, the Commission, Article 13(3) and (4) of the ESM Treaty imposes on it the obligation to ensure compliance with EU law of the Memorandums of Understanding concluded by the ESM, so that it retains, in the context of the ESM Treaty, its role as Guardian of the Treaties, as follows from Article 17(1) TEU, according to which it ‘shall promote the general interest of the Union’ and ‘shall oversee the application of Union law’ (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 201 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 200 and the case-law cited).

79Consequently, an applicant is entitled to rely as against the Commission on unlawful conduct related to the adoption of the MoU of 26 April 2013 on behalf of the ESM in the context of an action for damages (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 202 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 201 and the case-law cited).

80Furthermore, contrary to what is contended by the ECB, it cannot be deduced from the judgment of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701), that the Commission’s unlawful conduct linked to the adoption of an MoU is the only unlawful conduct of an EU institution in the context of the ESM Treaty which is capable of incurring non-contractual liability on the part of the European Union. The Court of Justice held in that judgment that the legal nature of acts of the ESM, which commit the ESM alone and fall outside the EU legal order, could not prevent unlawful conduct linked, as the case may be, to the adoption of an MoU on behalf of the ESM from being raised against the Commission and the ECB in an action for non-contractual liability (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 203 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 202 and the case-law cited).

81In the present case, the applicants refer to the Commission’s obligation to ensure that the acts which it carries out pursuant to the ESM Treaty are in conformity with EU law or to the fact the EU institutions are still bound by EU law when they act within the framework of an international treaty.

82It is also possible to interpret their arguments as criticising the defendants for having, during the negotiations conducted in the context of the ESM Treaty with the Cypriot authorities from 27 June 2012 to 12 April 2013 ‘and specifically the period on or before [the restructuring measures]’, contributed to making the FAF conditional on the implementation of the restructuring measures for the banks concerned, as is apparent from the MoU of 26 April 2013, even though those measures appeared to be contrary to EU law.

83Since the applicants therefore allege, by such arguments, unlawful conduct on the part of the ECB and the Commission linked to the adoption of the MoU of 26 April 2013 on behalf of the ESM, the Court has, to that extent, jurisdiction to hear and determine the present action for damages.

84Furthermore, according to the applicants, the MoU of 26 April 2013 is not the cause of the alleged damage but merely evidence of the allegedly unlawful conduct of which they complain. Consequently, the Commission’s argument that an action for damages is admissible only if it relates to compensation for damage arising from the unlawfulness of an act producing legal effects, with the result that the present action is inadmissible on account of the non-binding nature of that MoU, must be rejected as ineffective.

85It follows from all of the foregoing that the Court has jurisdiction to hear and determine the action and that the action is admissible.

Substance

86It is apparent from settled case-law, applicable mutatis mutandis to the non-contractual liability of the ECB provided for in the third paragraph of Article 340 TFEU, that, in order for the European Union to incur non-contractual liability under the second paragraph of Article 340 TFEU a number of conditions must be satisfied, namely the unlawfulness of the conduct alleged against the EU institution, actual harm suffered, and the existence of a causal link between the institution’s conduct and the damage alleged. In so far as those three conditions must be cumulatively satisfied, the fact that one of them is not satisfied is sufficient for an action for damages to be dismissed (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 245 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 244 and the case-law cited).

87In the present case, it is necessary to examine at the outset whether the first of those conditions, relating to the unlawfulness of the conduct alleged of the defendants, is satisfied.

88In that regard, the Court of Justice has already pointed out on many occasions that the incurring of non-contractual liability by the European Union requires the establishment of a sufficiently serious breach of a rule of law intending to confer rights on individuals (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 247 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 246 and the case-law cited).

89In their application, the applicants claim, in essence, that, during the negotiations conducted in the context of the ESM Treaty with the Cypriot authorities, the defendants contributed to making the FAF conditional on the implementation of the restructuring measures for the banks concerned even though those measures constituted a sufficiently serious breach of three rules of EU law, namely the principle of equal treatment, the right to property and the principle of proportionality.

90In their observations on the consequences that should follow, for the present dispute, from the judgments of 20 September 2016, Ledra Advertising and Others v Commission and ECB (C‑8/15 P to C‑10/15 P, EU:C:2016:701), and of 20 September 2016, Mallis and Others v Commission and ECB (C‑105/15 P to C‑109/15 P, EU:C:2016:702), the applicants submit that they withdraw their plea alleging infringement of the right to property.

91Consequently, it is necessary to examine only the applicants’ pleas alleging infringement, first, of the principle of equal treatment and, second, of the principle of proportionality.

Plea in law alleging infringement of the principle of equal treatment

92It is apparent from settled case-law that the principle of equal treatment requires that comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified. The elements which characterise various situations, and hence their comparability, must be determined and assessed, in particular, in the light of the subject matter of the acts at issue, and of the aim they pursue, whilst account must be taken for that purpose of the principles and objectives of the field to which those acts relate (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 441 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 440 and the case-law cited).

93Since the applicants invoked an infringement of the principle of equal treatment, it is for them to identify precisely the comparable situations in which they consider to have been treated differently or the different situations in which they consider to have been treated identically (see judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 442 and the case-law cited, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 441 and the case-law cited).

94In the present case, the plea alleging infringement of the principle of equal treatment is divided into two parts, the first alleging discrimination on grounds of nationality and the second alleging discrimination vis-à-vis depositors of banks from other States which received financial assistance.

–The first part, alleging discrimination on the grounds of nationality

95In the first part, the applicants claim that the restructuring measures agreed upon when the MoU was drawn up are contrary to the prohibition of discrimination on grounds of nationality laid down in the first paragraph of Article 18 TFEU and Article 21(2) of the Charter of Fundamental Rights of the European Union. They submit in that regard that they are companies incorporated under Cypriot law, under the law of the British Virgin Islands, the law of the Bahamas, Luxembourg law, Maltese law or United Kingdom law, and that they have legal personality under EU law.

96The defendants dispute the claim made by the applicants and the ECB contends, in the rejoinder, that the applicants did not maintain it in the reply.

97It is true that, as the ECB states, the applicants claim, in the reply, that they suffered discrimination ‘not based on their own nationality, but that of the bank with whom they had accounts’.

98In addition, it should be noted, first, that, in support of their claim, the applicants merely state that they are legal persons incorporated under the law of six different Member States or third countries. Such a claim, which is not otherwise substantiated, does not provide any information that allows it to be determined that they belong to a category of identifiable persons on account of the country in which they were incorporated.

99Second, the applicants do not identify any other category of persons who were either treated differently even though they were in a comparable situation or treated in the same way even though they were in a different situation.

100It follows that the applicants have manifestly failed to establish in what respect they were subjected to any discrimination on account of the country in which they were incorporated.

101The first part must therefore be rejected as manifestly unfounded.

–The second part, alleging discrimination vis-à-vis depositors of banks from other States which received financial assistance

102In the second part, raised in the alternative, the applicants claim that they were victims of ‘discrimination by association’ on account of the fact that they held deposits in Cypriot banks and that the treatment of the Republic of Cyprus when the FAF was granted was different from that of other States which also received financial assistance.

103The applicants claim that none of the MSCE which requested financial assistance in the context of the financial crisis was subject to measures involving the contribution of depositors to the restructuring of banking institutions, so that, in comparison, the singular treatment imposed on the Republic of Cyprus appears to be punitive and unjustified. They refer, in that regard, to the case of the Hellenic Republic in 2011 and 2012, when an ‘approach by the Union’ was defined by the ECB and the Commission, and to the Portuguese Republic in 2011 and the Kingdom of Spain in 2012. The applicants also refer to Iceland, a third country which, in 2008, received financial assistance from the IMF.

104However, the applicants submit that before the negotiation of the MoU of 26 April 2013, the economic situation of the Republic of Cyprus was at no point depicted as presenting specific features in relation to the economic situation of the other MSCE. On the contrary, the banking and public finances crisis in that Member State is closely linked to the Greek bond haircut and, therefore, to the economic situation of the Hellenic Republic in 2011.

105According to the applicants, that difference in treatment is explained by economic reasons, such as the comparatively small size of the Cypriot economy, ‘monetary fatigue’ or ‘experimentation’, none of which amounts to a sufficient justification, since it would have been easy to support the Cypriot economy. For the same reasons, the restructuring measures are, moreover, disproportionate.

106In the reply, the applicants claim that banks established in the Republic of Cyprus were treated differently from banks established in other States, referring to the case of the Hellenic Republic.

107In the context of the observations on the consequences that should follow, for the present dispute, from the judgment of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others (C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028), and, in so far as necessary and in so far as they have not been set aside by the Court of Justice, from the judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others (T‑680/13, EU:T:2018:486), and of 13 July 2018, Bourdouvali and Others v Council and Others (T‑786/14, not published, EU:T:2018:487), the applicants submit that, in the abovementioned judgments, the General Court and the Court of Justice have confused the demonstration of the comparability of the situations of persons in respect of whom discrimination is alleged and the objective justification of such discrimination, by reversing the evidential burden. While the burden of proving the comparability of the situations in respect of which discrimination is alleged falls on the applicant, it is for the defendant to prove the existence of an objective justification. They submit that, in the present case, the Court should first find that the applicants suffered discrimination vis-à-vis the depositors of banks of other Member States and then require the Commission and the ECB to demonstrate that the restructuring measures were necessary and proportionate having regard to the economic circumstances.

108The defendants dispute the applicants’ arguments, the ECB claiming, in addition, that the complaint alleging a difference in treatment between the banks, as set out in the reply, is a new plea which is inadmissible pursuant to Article 84(1) of the Rules of Procedure.

109As a preliminary point, it should be noted that the applicants claim that they suffered discrimination on account of the fact that they had made deposits in banks established in the Republic of Cyprus and that that Member State, unlike other MSCE or Iceland, had its request for financial assistance made subject to measures involving a contribution by depositors to the restructuring of the banks concerned. The discrimination ‘by association’ of which they complain must therefore be understood as a difference in treatment as compared with depositors of banks established in other States, including the Hellenic Republic, which received financial assistance.

110It follows that the argument put forward in the reply that Cypriot banks were treated differently from banks of other States, in particular Greek banks, because the restructuring of those banks was carried out without making depositors contribute, does not constitute – contrary to the ECB’s claims – a new plea which is inadmissible pursuant to Article 84(1) of the Rules of Procedure, but merely amplifies the arguments set out in the application.

111That being the case, first, as regards the discrimination against the applicants as compared with depositors of Icelandic banks, it is sufficient to note that the applicants themselves submit that only the IMF participated in the negotiations relating to the financial assistance granted to Iceland in 2008. Consequently, the applicants are manifestly not justified in criticising the Commission and the ECB for having, in the context of the negotiations relating to the FAF, imposed on depositors of Cypriot banks a treatment that is different from that of depositors of Icelandic banks, since the Commission and the ECB did not take part in determining the latter treatment.

112Second, in respect of the alleged discrimination against the applicants as compared with depositors of banks of other MSCE, it must be borne in mind, as regards the existence of comparable situations, that the measures to which the grant of financial assistance by the ESM (or by other international organisations, bodies and institutions of the European Union or States) may be subject in order to resolve the financial difficulties encountered by a State facing the need to recapitalise its banking system are likely to vary significantly from case to case depending on the experience acquired and on a set of specific circumstances. Those circumstances can include in particular the economic situation of the recipient State, the size of the assistance in relation to the whole of its economy, the prospects of the banks concerned becoming economically viable again and the reasons which led to the difficulties encountered by them, including, where appropriate, the excessive size of the banking sector of the recipient State in relation to its national economy, the development of the international economic environment or an increased likelihood of future ESM interventions (or interventions of other international organisations, bodies and institutions of the European Union or States) in support of other States in difficulty which can require a preventive limitation of amounts dedicated to each intervention (judgments of 13 July 2018, K. Chrysostomides & Co. and Others v Council and Others, T‑680/13, EU:T:2018:486, paragraph 311, and of 13 July 2018, Bourdouvali and Others v Council and Others, T‑786/14, not published, EU:T:2018:487, paragraph 310).

113In the present case, the applicants refer to the financial assistance granted to the Hellenic Republic, the Kingdom of Spain and the Portuguese Republic, mentioning the amounts granted or the economic difficulties faced by those MSCE in terms, in particular, of public deficit, access by public authorities to financial markets or unemployment rates.

114In addition, the applicants put forward an argument relating to the absence of a difference between the situation of the Republic of Cyprus and that of other MSCE, claiming that at no point prior to the negotiation of the MoU of 26 April 2013 was the Cypriot economic situation officially depicted as being substantively different.

115However, the information provided elsewhere in the applicants’ own written pleadings demonstrates, in fact, that there was such a difference.

116As is apparent from paragraph 112 above, the excessive size of the banking sector makes it possible to distinguish the economic situation of a country requesting financial assistance.

117It is apparent from the application that, at the time of the negotiation of the FAF, the value of the assets of the Cypriot banking sector was eight times that of the country’s GDP. The applicants also state that that GDP was approximately EUR 18 billion even though the losses suffered by the banks concerned amounted to approximately EUR 4 billion.

118However, when the applicants set out the situation of the Hellenic Republic, the Portuguese Republic and the Kingdom of Spain as at the date when those MSCE requested financial assistance, they do not state that their banking sector was excessive in size. On the contrary, it is apparent from the application that the size of its banking sector put the Republic of Cyprus in a situation similar to a single Member State whose currency is the euro that received financial assistance, namely Ireland, whose situation is not, however, set out in more detail in the applicants’ written pleadings.

119In addition, the documents placed on the file by the applicants confirm the specific nature of the situation of the Cypriot economy in that regard. It is apparent from the Eurogroup statement of 25 March 2013 that the economic adjustment programme the main elements of which had been agreed ‘will address the exceptional challenges that [the Republic of] Cyprus is facing and restore the viability of the financial sector’ and, in particular, ‘will contain a decisive approach to addressing financial sector imbalances’ by ‘an appropriate downsizing’ of that sector. Such considerations do not appear at all in the Eurogroup statements of 2 May 2010, 16 May 2011 and 9 June 2012 relating to the financial assistance granted to the Hellenic Republic, the Portuguese Republic and the Kingdom of Spain, respectively.

120Thus, the evidence brought to the Court’s attention by the applicants themselves shows that the excessive size of the banking sector of the Republic of Cyprus having regard to its national economy, at the time when the negotiations relating to the FAF were held, makes it possible to distinguish the situation of that Member State from that of the Hellenic Republic, the Portuguese Republic and the Kingdom of Spain at the time when those MSCE made their own requests for financial assistance.

121It is to no avail that, in the reply, the applicants claim that the capital needs of Cypriot banks amounted to 44% of the GDP of the Republic of Cyprus and that the amount of financial assistance granted to the Hellenic Republic represented a far higher proportion of that country’s GDP, or that the risk of massive withdrawal of capital and ‘exit from the euro’ existed in those two MSCE. Those considerations, which are, moreover, unsubstantiated, are not capable of undermining the finding that the size of the banking sector of the Republic of Cyprus was excessive having regard to its national economy.

122Moreover, the applicants do not explain how the World Bank’s Ease of Doing Business Index to which they refer is relevant for the purpose of assessing the comparability of the situation of the banking sectors of the two different countries. Similarly, the mere fact, referred to by the applicants, that Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (OJ 2000 L 126, p. 1) refers to ‘comparable types of credit institutions’ and is applicable both to Cypriot banks and to Greek banks is not, in itself, sufficient to establish that the measures to which the grant of financial assistance to the Republic of Cyprus and the Hellenic Republic could be subject should have been similar.

123It follows that the applicants’ situation, as they describe it themselves, is manifestly not comparable to that of the depositors of the other MSCE which received financial assistance and to which the applicants refer.

124Since it was for the applicants to identify precisely the comparable situations in which they consider to have been treated differently (see paragraph 93 above), the second part must therefore be rejected as manifestly unfounded.

125It follows from all of the foregoing that the plea in law alleging infringement of the principle of equal treatment must be rejected as manifestly lacking any foundation.

Plea in law alleging infringement of the principle of proportionality

126The applicants claim that the restructuring measures placed a disproportionate burden on them and that, if they are compared with those agreed with other MSCE, ‘for example’ Ireland, the Kingdom of Spain and the Portuguese Republic, other less onerous measures could have been implemented in order to achieve the objectives pursued. They also state that the defendants ‘did not publicly debate the consequences of their new “experiment” with regard to the ESM agreements’ and that there was therefore no possibility for the applicants to put forward arguments in favour of stronger protection of their interests. Furthermore, the applicants submit that the fact that nine months passed between the request for assistance from Cyprus and the conclusion of the MoU of 26 April 2013 prevents the Commission and the ECB from pleading ‘urgency and necessity’. In the reply, they add that the levy on deposits above the EUR 100 000 threshold is arbitrary.

127The ECB disputes those arguments, while the Commission considers that there is no need to answer them.

128It should be recalled that the principle of proportionality requires that the means employed by a provision of EU law be appropriate for attaining the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary to achieve them (judgment of 16 December 2020, Council and Others v K. Chrysostomides & Co. and Others, C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028, paragraph 160).

129First, it must be noted that that principle does not provide that, in a situation such as that at issue in the present case, the Commission and the ECB would be required to ‘publicly debate’ any ‘new “experiment”’ with regard to the agreements concluded within the framework of the ESM in order for persons such as the applicants to be able to submit their comments. The applicants’ arguments in that regard must therefore be rejected as manifestly unfounded.

130Second, as the ECB submits, the negotiation of the conditions of the FAF, at the time when the restructuring measures were agreed, met a public interest objective consisting of ensuring the stability of the Cypriot financial system and the euro area as a whole.

131In order to claim that the restructuring measures went beyond what was necessary to achieve that objective, the applicants merely submit that, having regard to the conditions laid down in the context of the financial assistance granted to other MSCE such as the Kingdom of Spain or the Portuguese Republic, it was possible to make the FAF subject to conditions less prejudicial to their rights, not providing for any depositors’ contribution to the restructuring of the banks concerned.

132However, as has been pointed out in paragraphs 115 to 120 above, it is apparent from the applicants’ written pleadings and from the documents placed by them on the file that, in relation to the situation prevailing in the Kingdom of Spain or the Portuguese Republic as at the date when those MSCE requested financial assistance, the situation of the Republic of Cyprus was characterised by the excessive size of its banking sector having regard to the size of its economy.

133It follows that, in the light of the evidence brought to the Court’s attention by the applicants themselves, the comparison, for the purpose of demonstrating that the restructuring measures went beyond what was necessary, between the situation of the Republic of Cyprus and that of other MSCE which received financial assistance is manifestly unfounded. The unsubstantiated argument referring to ‘the comparably small size of the financial assistance required by Cyprus’ or the claims that the defendants cannot rely on considerations relating to the urgency and necessity of the measures decided upon are not capable of undermining that finding.

134As regards the comparison with Ireland, the applicants merely refer to the situation of that Member State in the context of their arguments concerning the principle of proportionality, without ever describing it in detail.

135Third, it is to no avail that the applicants submit that the levy on deposits above the EUR 100 000 threshold was arbitrary.

In that regard, it is sufficient to note that, as the ECB contends, that threshold was not set in an arbitrary manner since, at the material time, Article 7(1a) of Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes (OJ 1994 L 135, p. 5), as amended by Directive 2005/1/EC of the European Parliament and of the Council of 9 March 2005 amending Council Directives 73/239/EEC, 85/611/EEC, 91/675/EEC, 92/49/EEC and 93/6/EEC and Directives 94/19, 98/78/EC, 2000/12/EC, 2001/34/EC, 2002/83/EC and 2002/87/EC in order to establish a new organisational structure for financial services committees (OJ 2005 L 79, p. 9), and by Directive 2009/14/EC of the European Parliament and of the Council of 11 March 2009 (OJ 2009 L 68, p. 3), obliged the Member States to ensure that the coverage for the aggregate deposits of each depositor be set at EUR 100 000 in the event of deposits being unavailable.

137Accordingly, the plea in law alleging infringement of the principle of proportionality must be rejected as manifestly unfounded.

138It follows from all of the foregoing that the action must be dismissed in its entirety as manifestly lacking any foundation in law.

Costs

139Under 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. Since the applicants have been unsuccessful, they must be ordered to bear their own costs and to pay those incurred by the Commission and the ECB, in accordance with the forms of order sought by the latter.

On those grounds,

hereby orders:

1.The action is dismissed.

2.Brinkmann (Steel Trading) Ltd and the other applicants whose names are set out in the annex shall pay, in addition to their own costs, those incurred by the European Commission and by the European Central Bank (ECB).

Luxembourg, 22 February 2022.

Registrar

President

—

Language of the case: English.

1The list of the other applicants is annexed only to the version sent to the parties.