3 March 2021 (*1)

(Appeal – Article 181 of the Rules of Procedure of the Court – Monetary Agreement between the European Union and the Principality of Andorra – Alleged negligence on the part of the European Commission regarding the contents of the agreement – Alleged negligence on the part of the Commission in monitoring the implementation of the agreement – Action for damages – Dismissal of the action – Causal link – None – Appeal, in part, manifestly inadmissible and, in part, manifestly unfounded)

In Case C‑403/20 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 26 August 2020,

CF, residing in Andorra la Vella (Andorra),

TB, residing in Andorra la Vella,

LO SA, established in Andorra la Vella,

UM SL, established in Andorra la Vella,

represented by J. Álvarez González and S. San Felipe Menéndez, abogados,

appellants,

the other party to the proceedings being:

European Commission,

defendant at first instance,

THE COURT (Seventh Chamber),

composed of A. Kumin, President of the Chamber, A. Arabadjiev (Rapporteur), President of the Second Chamber, and P.G. Xuereb, Judge,

Advocate General: A. Rantos

Registrar: A. Calot Escobar,

having decided, after hearing the Advocate General, to give a decision by reasoned order, in accordance with Article 181 of the Rules of Procedure of the Court of Justice,

makes the following

Legal context

Background to the dispute

Proceedings before the General Court and the order under appeal

The form of order sought by the appellants

The appeal

The second ground of appeal, concerning the General Court’s assessment of the admissibility of the appellants’ arguments in relation to the letter of 5 March 2018

Arguments of the appellants

Findings of the Court

The fourth ground of appeal, concerning the General Court’s assessment of the alleged negligence on the part of the Commission in monitoring the implementation of the EU-Andorra Monetary Agreement

Arguments of the appellants

Contrary to what the =Court held, interpreting the EU-Andorra Monetary Agreement as meaning that it does not impose any obligation on the Commission to act in the event of an infringement committed by the Principality of Andorra would render that agreement meaningless and would prevent its objectives from being fulfilled. Furthermore, as to the contents of Article 17 TEU, the Court has held that the Commission, as guardian of the Treaties and of the agreements concluded under them, must ensure the correct implementation by a third State of the obligations which it has assumed under an agreement concluded with the EU through the means provided for by the agreement at issue or by decisions taken in accordance with that agreement.

33Those obligations apply all the more to the Commission given that the citizens of Andorra have not had the possibility of relying on the direct effect of the provisions of Directive 2014/59, or the possibility to address themselves to a national court in order to request it to refer a question for a preliminary ruling to the Court, or to bring a direct action against the actions causing them harm, as the citizens of Monaco can under Article 12(4) of the EU-Monaco Monetary Agreement.

34The Commission’s inaction thus allowed the Andorran authorities to infringe the appellants’ right to property, which implies an infringement of that right by the Commission. Its failure to act also involved an infringement of the legitimate expectation of the appellants as regards the Commission’s compliance with its monitoring obligations under the EU-Andorra Monetary Agreement.

35Contrary to what the Court held, it seems clear, according to the appellants, that the damage caused by that inaction manifested itself in the difference which exists between the damage which they suffered after the resolution of BPA and that which they would have suffered if the Commission had required that Directive 2014/59 be correctly transposed into Andorran law. The conditions for the incurring of the EU’s liability were therefore met.

36While the insufficient transposition of that directive which led to that damage was carried out by the Principality of Andorra, that insufficient transposition was made possible by the Commission’s inaction, and as such the Commission must assume its responsibility.

37In that regard, in the appellants’ view, it follows from the case-law of the Court that the EU can be considered liable for the fact that its institutions agreed, even tacitly, to actions which caused damage to an applicant. However, if the Commission had fulfilled its obligations, the Principality of Andorra would have been obliged to transpose Directive 2014/59 completely and faithfully.

Findings of the Court

38It is appropriate at the outset to point out, on the one hand, that by the arguments summarised in paragraphs 29 to 34 of the present order, the appellants dispute the findings of the Court in relation to the lack of a serious infringement of EU law on the part of the Commission whereas, on the other hand, by the arguments summarised in paragraphs 35 to 37 of the present order, they dispute the Court’s assessment in relation to the lack of a causal link between the Commission’s alleged serious infringements of EU law and the harm they allegedly suffered.

39It is appropriate to examine, in the first place, the arguments in relation to that causal link.

40In that regard, it should be noted that, according to the established case-law of the Court, the European Union may incur non-contractual liability for the purposes of the second paragraph of Article 340 TFEU only if three cumulative conditions are fulfilled, namely the unlawfulness of the conduct of which the Union institutions are accused, the occurrence of actual damage and the existence of a causal link between that conduct and the harm alleged (judgment of 25 March 2010, Sviluppo Italia Basilicata v Commission, C‑414/08 P, EU:C:2010:165, paragraph 138).

41In particular, the condition under the second paragraph of Article 340 TFEU relating to a causal link concerns a sufficiently direct causal nexus between the conduct of the EU institutions and the damage, the burden of proof for which rests on the applicant, so that the conduct complained of must be the determining cause of the damage (judgment of 13 December 2018, European Union v ASPLA and Armando Álvarez, C‑174/17 P and C‑222/17 P, EU:C:2018:1015, paragraph 23).

42In this instance, it follows from paragraphs 64, 68, 72, 92, 99 and 101 of the order under appeal that the Court considered (i) that a review by the Commission of Law 8/2015 and a referral to the Joint Committee by the Commission as referred to in Article 10(2) and Article 11(3) of the EU-Andorra Monetary Agreement would not have guaranteed, by themselves, that the alleged harm would not have occurred, (ii) that, even if the EU had terminated that agreement, it is not certain that the Principality of Andorra would have modified that law, (iii) that the same is true of a potential modification to the annexes to that agreement and (iv) that an action by the Commission on the basis of Article 17 TEU, or on the basis of a potential protection of the appellants’ legitimate expectations or of the particular circumstances of the residents of Andorra, could not have achieved that objective, since the Commission would have had to act through the means provided for in that agreement.

43None of the arguments put forward by the appellants is capable of calling into question those findings of the Court. The arguments summarised in paragraphs 35 to 37 of the present order do not demonstrate an error on the Court’s part in its interpretation of the EU-Andorra Monetary Agreement, but presuppose that the Commission could impose on the Andorran authorities a transposition of Directive 2014/59 which the appellants consider to be complete and correct.

44However, as the Court rightly pointed out in paragraphs 62 to 64 of the order under appeal, it is apparent, first of all, from the terms of Article 11(3) of the EU-Andorra Monetary Agreement that it is for the Joint Committee to examine the measures taken by the Principality of Andorra and to endeavour to solve any disputes resulting from the implementation of that agreement. Next, it follows from Article 11(1) that the Commission does not by itself represent the EU within the Joint Committee, but constitutes one member of a delegation which also includes representatives from the Kingdom of Spain, the French Republic and the European Central Bank (ECB). Finally, under Article 10(2) of that agreement, it is only on the recommendation of the European Union delegation within the Joint Committee that the Commission can, on behalf of the EU, bring an action before the Court if the EU considers that the Principality of Andorra has failed to fulfil an obligation arising from that agreement.

45Consequently, the Commission does not have, under those provisions, any power capable of directly compelling the Principality of Andorra to effect a specific transposition of an EU directive.

46It follows that the Court did not err in law in its assessment that there is no causal link between the serious infringements of EU law allegedly committed by the Commission and the harm allegedly suffered by the appellants.

47In those circumstances and, in the second place, with regard to the case-law cited in paragraph 40 of the present order, the arguments summarised in paragraphs 29 to 34 of the present order must be rejected as being ineffective.

48Consequently, the fourth ground of appeal must be rejected as manifestly unfounded.

The third ground of appeal, concerning the General Court’s assessment of the alleged negligence on the part of the Commission regarding the content of the EU-Andorra Monetary Agreement

Arguments of the appellants

49By their third ground of appeal, which it is appropriate to examine in the third place, the appellants claim that one of the main obstacles they faced is that they do not have access to a direct channel through which to request a legal analysis of the compliance of Law 8/2015 with the provisions of Directive 2014/59 or an analysis of the fulfilment of the EU-Andorra Monetary Agreement, and that they can neither have such analyses reviewed by the Court, nor rely on the direct effect of a directive.

50Since, contrary to what the Court stated in paragraph 51 of the order under appeal, there is no legal remedy before the Andorran courts which allows for a correct transposition of EU law into the Andorran legal system, the only mechanism which allows for monitoring whether the Principality of Andorra is fulfilling its obligations arising from the EU-Andorra Monetary Agreement is the provision that the Commission shall investigate, react, highlight shortcomings or instruct and, where appropriate, request the intervention of the Court.

51Consequently, in the appellants’ view, the Commission’s failure to fulfil those obligations results directly in the infringement of the rights of citizens such as them, and there is no remedy before the Andorran courts that could be effective in that regard.

52By contrast, Article 12(4) of the EU-Monaco Monetary Agreement provides a means for every natural or legal person residing in the territory of the Principality of Monaco to have access to all the legal remedies available to EU citizens and also provides for the direct competence of the Court relating to all remedies with regard to the action of the EU institutions concerning that agreement.

53Such a provision which specifically guarantees the right to an effective remedy is, in the appellants’ view, a necessary provision in this kind of international agreement. Therefore, by failing to include such a clause in the EU-Andorra Monetary Agreement, the Commission did not act with the diligence required during the negotiation and signature of that agreement. Accordingly, that agreement encourages the infringement of the right to an effective remedy and entails discrimination against the citizens of Andorra as opposed to the citizens of Monaco, contrary to what the Court wrongly stated in paragraph 50 of the order under appeal.

54In particular, contrary to what the Court has stated a number of times, the action before the Court was brought not because of the conduct of the Andorran authorities, but because of the Commission’s failure to fulfil its obligations.

Findings of the Court

55Contrary to the appellants’ claims in the context of their third ground of appeal, it follows from the wording of paragraphs 267 to 274 of the application at first instance that, by their plea raised in the alternative, the appellants submitted that the Commission failed to fulfil its obligation of diligence during the negotiation and signature of the EU-Andorra Monetary Agreement in that it failed to include a provision allowing every natural or legal person residing in Andorra to have access, against the acts of the Andorran authorities, to all the remedies available to citizens of the EU and accordingly giving them access to the Court of Justice, as the General Court rightly found in paragraph 46 of the order under appeal.

56This is apparent, in particular, from paragraphs 271, 272 and 274 of the application at first instance, which were worded as follows:

271 The [appellants] suffered harm, caused directly by those infringements, in that they were unable to make a complaint about the Principality of Andorra’s flagrant infringement of EU law which it is bound to transpose and, accordingly, of the [EU-Andorra] Monetary Agreement. If the EU courts could have declared the illegality of the Andorran State’s actions, it would have opened a direct remedy in order to demonstrate before the Andorran national courts the financial liability of the Principality of Andorra, …

272 … If the Principality of Andorra’s financial liability had been incurred on the basis of the unlawful implementation of a retroactive, illegal rule of law, adopted in an ad hoc manner in order to (theoretically) transpose Directive 2014/59 …, namely Law 8/2015, with regard to a company which was at that time the subject of an insolvency procedure …, the [appellants] would be restored to the situation that they would have been in if that unlawful procedure (namely the specific circumstances of the insolvency procedure) had not been implemented.

274 Therefore, … the [appellants] ask that the General Court declare that the Commission was rendered liable due to the lack of diligence it demonstrated when the [EU/Andorra] Monetary Agreement was signed, which prevented the Andorrans affected by the infringements of [that] monetary agreement from bringing an action against that infringement before the EU Courts …’

57It follows, first, that the appellants wrongly allege that the Court misconstrued their arguments at first instance and, secondly, that their arguments in relation to their third ground of appeal must be rejected as inadmissible in so far as those arguments seek to allege that the Court did not find that the Commission was required to include in the EU-Andorra Monetary Agreement a provision with a meaning other than to provide a means for every natural or legal person residing in Andorra to have access, against acts of the Andorran authorities, to all the remedies available to citizens of the EU and accordingly giving them access to the Court.

58According to the Court’s settled case-law, since, in an appeal, the jurisdiction of the Court of Justice is confined to a review of the findings of law on the pleas and arguments debated before the General Court, a party cannot raise for the first time before the Court of Justice an argument that it did not put forward before the General Court (judgment of 26 September 2018, Philips and Philips France v Commission, C‑98/17 P, not published, EU:C:2018:774, paragraph 42 and the case-law cited).

59For the sake of completeness, it is appropriate to add that the Court noted, in paragraph 53 of the order under appeal, that even if the appellants had had the possibility of using the remedies available under EU law against acts adopted by the Andorran authorities, on the ground of an infringement by the Principality of Andorra of the EU-Andorra Monetary Agreement, that possibility would not have been able to ensure that the damage on which they are relying would probably not have occurred, which is also the case for the inclusion in that agreement of a clause such at that provided in Article 12(4) of the EU-Monaco Monetary Agreement, even if it were interpreted in the manner claimed by the appellants before the Court.

60In additional, having regard to the findings in paragraphs 43 to 45 of the present order, from which it is apparent that the EU-Andorra Monetary Agreement does not confer upon the Commission any direct power to constrain the Andorran authorities, it must be stated that the appellants are not putting forward any argument capable of calling into question the finding of the Court in paragraph 53 of the order under appeal.

61Therefore, in the light of the case-law recalled in paragraph 40 of the present order, their arguments must be dismissed, in any event, as ineffective.

62In the light of the foregoing considerations, the third ground of appeal must be rejected as manifestly inadmissible and, in any event, manifestly unfounded.

The first ground of appeal, concerning the General Court’s assessment of the admissibility of the appellant’s arguments regarding the principles of legal certainty and transparency, the essential founding principles of European integration, the credibility of the Commission and fundamental rights

Arguments of the appellants

By their first ground of appeal, which it is appropriate to examine in the fourth place, the appellants claim that, contrary to what the Court held, they developed detailed arguments which demonstrated that the Commission’s conduct, in so far as it does not ensure compliance with international agreements made with third States and does not require such compliance of those non-Member States, undermined the principles of legal certainty and transparency, the essential founding principles of European integration, the credibility of the Commission and fundamental rights. In particular, the appellants asserted that the confiscation of their property on the basis of a partial and retroactive transposition, to their detriment, of a directive compromises legal certainty and the fundamental rights of persons.

Consequently, the appellants claim that the Court’s rejection of those arguments as inadmissible is unlawful and must be replaced by a declaration of their admissibility.

Findings of the Court

The appellants claim that the Court wrongly declared inadmissible their arguments which sought a finding of infringements of the principles of legal certainty and transparency, of the essential founding principles of European integration, of the credibility of the Commission and of fundamental rights, arising from the Commission’s failure to fulfil its obligations to ensure that a third State behaves in accordance with the commitments made in the context of agreements made with the EU.

It must therefore be held that those claims relate to the same alleged conduct of the Commission referred to in the third ground of appeal. In that regard, it has been established in paragraphs 43 to 46 of the present order that the appellants have not put forward any argument capable of calling into question the Court’s finding that a causal link between that conduct and the harm allegedly suffered by the appellants is lacking.

In those circumstances, in the light of the case-law recalled in paragraph 40 of the present order, the arguments put forward in the first ground of appeal must also be rejected as being, in any event, ineffective, and therefore manifestly unfounded.

The fifth ground of appeal, concerning the General Court’s assessment of the appropriateness of closing the proceedings by means of an order

Arguments of the appellants

By their fifth ground of appeal, the appellants assert that the Court wrongly stated that their action was manifestly lacking any foundation. Accordingly, the Court should not have adopted the order under appeal, but should have taken further steps in the proceedings, held a hearing and compelled the production of evidence requested by the appellants.

Findings of the Court

In accordance with Article 126 of the Rules of Procedure of the General Court, if the Court considers that it has been sufficiently informed by the documents in the file, it may at any time decide to give judgment by way of reasoned order based on that provision.

According to settled case-law, the application of the procedure laid down in Article 126 of the Rules of Procedure does not in itself prejudice the right to proper and effective judicial process, since that provision is applicable only to cases in which the action brought before the Court is manifestly bound to fail (judgment of 5 March 2020, Credito Fondiario v SRB, C‑69/19 P, EU:C:2020:178, paragraph 56).

In the present case, contrary to what the appellants claim, no part of their arguments is, as is apparent from the assessment of the first four grounds of appeal, capable of calling into question the validity of the decision of the Court to have recourse to Article 126 of its Rules of Procedure.

It follows that the fifth ground of appeal must be rejected as being manifestly unfounded.

In the light of all the foregoing considerations the appeal must be dismissed as being, in part, manifestly inadmissible and, in part, manifestly unfounded.

Costs

Under Article 137 of the Rules of Procedure of the Court of Justice, applicable to the procedure on appeal pursuant to Article 184(1) thereof, a decision as to costs is to be given in the order which closes the proceedings.

In this instance, since the present order has been adopted before the appeal was served on the Commission and therefore before the latter could have incurred costs, the appellants must be ordered to bear their own costs.

On those grounds, the Court (Seventh Chamber) hereby orders:

The appeal is dismissed as in part manifestly inadmissible and in part manifestly unfounded;

CF, TB, LO SA and UM SL shall bear their own costs.

[Signatures]

*1 Language of the case: Spanish.