Not all investors are equal ... or not equal to the EU financial institutions anyway (re 2012 Greek debt crisis) (T-79/13)

In its Judgment of 7 October 2015 in Accorinti and Others v ECB, T-79/13, EU:T:2015:756 (not available in English, but a press release is), the General Court of the Court of Justice of the European Union (GC) dismissed a claim for compensation against the European Central Bank (ECB) as a result of the 53.5% haircut that private investors in Greek sovereign debt suffered in 2012. 

Indeed, the GC ruled that the loss suffered in 2012 by the private holders of Greek debt instruments in connection with the restructuring of the public debt of the Greek State is not attributable to the ECB, but to the economic risks ordinarily inherent in financial sector activities. The claimants had submitted three main grounds for illegality of the ECB's participation in the restructuring of Greek debt: 
  1. breach of the legitimate expectations allegedly created by the general declarations of the subsequent ECB Presidents Mr Trichet and Mr Draghi and, in particular, the open and repeated opposition of the ECB to a restructuring of the Greek public debt and a Greek selective default, which eventually happened; 
  2. breach of the principle of equal treatment as a result of the selective nature of the haircut, which affected private investors but not the ECB that also held Greek public debt at the time; and 
  3. improper exercise of competences linked to the objective of safeguarding price stability and the objective relating to the sound management of monetary policy as per Article 127 TFEU. 

In claimants' view, such illegalities (or any of them) would suffice to engage the non-contractual liability of the ECB under Article 340 TFEU. The GC dismissed the action in full. The arguments of the GC are interesting, particularly because they create a clear-cut restriction on this sort of arguments to seek liability derived from macroeconomic policy intervention. Specifically, as the press release indicates, 

'the GC holds that the private investors cannot rely on the principle of the protection of legitimate expectations or on the principle of legal certainty in a field such as that of monetary policy, the objective of which involves constant adjustment to reflect changes in economic circumstances. The private investors were deemed to have knowledge of the highly unstable economic circumstances which determined the fluctuation in the value of the Greek securities. They could therefore not exclude the risk of a restructuring of the Greek public debt, given the differences of view prevailing in that regard within the Eurosystem and in the other institutions involved (Commission, IMF and ECB). The Court then states, that the press releases and the public statements of some ECB staff members were of a general nature and came from an institution which did not have the power to decide on a possible restructuring of the public debt of a Member State. In addition, those press releases and statements did not include specific and unconditional assurances from authorised and reliable sources, capable, for that reason, of giving rise to legitimate expectations' (emphasis added) 
Moreover, there is an obiter dictum that I find particularly interesting in paragraph 82, where the GC stresses that the investors acted in a way that displays a clear risk-taking strategy (if not pure speculation), which reduces their ability to rely on arguments ultimately based on good faith, such as legitimate expectations.

Regarding the second line of argument, in a quite measured and detailed analysis of the applicability of the principle of equality to the private investors and the ECB (which, in my view, could have been dispensed with in much less space than paras 85-103 in view of its prima facie ludicrousness), and as the press release also summarises, the GC 
'considers that the general principle of equal treatment cannot apply, since the private savers or creditors and the ECB (as well as NCBs [national central banks] of the Eurosystem) were not in a comparable situation: confronted with the Greek financial crisis and the exceptional circumstances attached to it, the ECB was exclusively guided by public interest objectives, such as, in particular, the objective of safeguarding price stability and the objective relating to the sound management of monetary policy. By contrast, the private investors or savers acted in pursuit of a purely private interest, namely obtaining a maximum return on their investments' (emphasis added). 
There is another obiter dictum (?) bit of the Judgment that I find particularly interesting in paragraphs 99-103, where the GC discusses a sub-argument linked to equality of treatment, whereby the claimants had submitted that a general pari passu clause [ie an obligation to receive the same treatment as other creditor holding the same type of securities] would have prevented the ECB from avoiding the effects of the haircut suffered by private investors. In that regard, the GC rejects the existence of a general pari passu clause under EU law (para 99) and, even in stronger terms, determines that
if a rule that would impose the pari passu implied an obligation to treat all creditors equally without having regard to the various situations in which they find themselves and, in particular, on the one hand, private investors and, on the other hand, the central banks of the Eurosystem acting in the exercise of the duties conferred upon them by Article 127 TFEU and Article 18 of the [ECB] Statute, the recognition of such a rule in the legal order of the Union might be contrary to the principle of equal treatment (para 100, own translation from Spanish and emphasis added).
Finally, the GC also rejects the arguments based on the improper exercise of monetary policy competences, largely because they were founded on the same reasons that it had already rejected under the previous heads of claims.

Overall, the Accorinti and Others v ECB Judgment is interesting because it recasts the relevant case law of the CJEU in terms of EU Institutions' liability and applies it in a way that consolidates the hands-off approach that the CJEU seems to have definitely adopted to issues of macroeconomic policy and monetary stability of the Euro (along the lines of Pringle, C-370/12, EU:C:2012:756). 

It also sends out a very clear message that the Court remains committed to avoid creating a legal framework where EU Institutions are the object of spurious litigation. This is very clear from para 69 of the Judgment, where the GC stressed that
regarding the regulatory activities of the institutions, in which the adoption by the ECB of acts of general application ... can be included, the Court held that the restrictive construction of the responsibility of the Union in the exercise of its regulatory activity is explained, firstly, by the fact that the exercise of the legislative function, even when there is a mechanism of judicial review of the legality of the acts, should not be hindered by the prospect of actions for damages every time the general interest of the Union requires the adoption of policy measures that may adversely affect the interests of individuals and, [secondly], by the fact that, in a legislative context characterized by the existence of broad discretion that is essential for the implementation of a policy of the Union, the latter shall not incur liability unless the institution concerned has exceeded, manifestly and seriously, the [limits for the] exercise of its powers (see, to that effect, the judgment of 9 September 2008, FIAMM and other / Council and Commission, C-120/06 P and C-121/06 P, Rec, EU: C: 2008: 476, paragraph 174) (para 69, own translation from Spanish and emphasis added).
In my view, the Judgment and the line of case law it consolidates has the advantage of establishing a clear red line that should exclude future litigation. It should thus be welcome.

A new European Dynamics challenge rejected: let's focus on admissibility of claims (T-553/11)

In its Judgment of 23 May 2014 in case T-553/11 European Dynamics Luxembourg v ECB, the General Court (GC) has ruled on yet another challenge filed by European Dynamics (ED) against procurement decisions of the EU Institutions and, in this case, the European Central Bank (for previous episodes in the appeals saga, see here).

In this case, the
legal framework applicable to the procurement is basically contained in Decision ECB/2007/5 of the ECB of 3 July 2007 laying down the rules on procurement. However, the issues discussed are fundamentally common to those under the EU procurement Directives, which makes the case generally relevant.
Generally, the challenges brought by ED concern the duty to state reasons and potential abuses of power by the contracting authorities and, with some small differences based on the specific content of the procurement decision appealed, they tend to be subjected to exactly the same legal tests (which tend to result in the dismissal of their appeals). In my view, this case is not materially different from the previous ones as those issues are concerned.
However, there is an element in this saga of cases that is often overlooked because it is purely procedural, which relates to the admissibility of the challenges themselves (as, oftentimes, ED is rather 'non-selective' or not sufficiently precise in the identification of the procurement decision subjected to appeal). In that regard, the Judgment in T-553/11 is interesting (?) in that it assesses two points: a) the admissibility of (independent) challenges against confirmatory decisions in internal appeal procedures, and b) the admissibility of claims requesting the annulment of all decisions related to the 'core' procurement decision subject to challenge.
(Independent) appeals against internal review confirmatory decisions In the first part of the Judgment, the GC engages in a rather lengthy discussion on the admissibility of a challenge against both the initial decision not to invite ED (as leading undertaking in a grouping) to submit an offer in a negotiated procedure and the subsequent decision of the procurement review body (PRB) to dismiss the internal appeal and confirm the initial decision. The GC clearly indicates that those are two separate decisions and that both are open to challenge. However, it immediately stresses that:
there is no need to specifically examine the legality of the decision of [the PRB], but [...] it is appropriate to conduct a review of the legality of the rejection of the consortium’s application taking into account all the reasons relied on during the procedure, bearing in mind that in public procurement, the obligation to state reasons pertaining to a decision may be fulfilled in several stages (see, to that effect and by analogy, Case T‑50/05 Evropaïki Dynamiki v Commission [2010] ECR II‑1071, paragraph 133 and the case-law cited, and judgment of 22 May 2012 in Case T‑6/10 Sviluppo Globale v Commission, not published in the ECR, paragraph 29), and must be assessed in the light of information available to the applicant at the time of bringing the action (Case T‑183/00 Strabag Benelux v Council [2003] ECR II‑135, paragraph 58, and Case T‑4/01 Renco v Council [2003] ECR II‑171, paragraph 96) (T-553/11 at para 49, emphasis added).
Both parts of the reasoning on admissibility seem functionally contradictory, given that the individualisation or distinction between the decisions should make them amenable to different grounds for a challenge. However, the 'holistic' approach adopted by the GC comes to institute de facto a full review of the (content) of all decisions involved in a procurement process prior to the application for judicial review
Hence, the valuable message derived from this lengthy discussion is, in my view, that regardless of the number of formal decisions adopted in a procurement procedure and the possibility to challenge them separately, the reviewing court must take the content of all of them (ie the full procurement file, at least as regards that candidate or tenderer) into account when a challenge is actioned against a decision adopted at any stage of the process. However, this may not be particularly new and should not have been controversial, as it seems to derive rather plainly from the power to conduct full reviews of the findings in fact and in law in which a procurement decision is based.
Appeals against 'all decisions related' to the main challenged decisionIn my opinion, this discussion is very formalistic and, to a certain extent, unnecessary. It revolves around whether the claimant submits a valid challenge if it requests the annulment of 'all decisions related' to the main procurement decision object of the appeal. The argument against the admissibility of such (secondary) claim is that it is inespecific and, consequently, does not meet the requirements of precision that are common to most judicial review systems. In the reasoning of the GC
54 Heads of claim [...] that seek the annulment of acts related to challenged acts which are not identified must be declared inadmissible as a result of the lack of precision of their subject-matter (see, to that effect, order in Case T‑166/98 Cantina sociale di Dolianova and Others v Commission [2004] ECR II‑3991, paragraph 79).
55 That finding is not undermined by the fact that it has been held, first, that the identification of the contested act could be implicitly inferred from the indications contained in the application and from the argument therein as a whole and, secondly, that an action formally brought against an act that is part of a series of acts forming a whole could be regarded as directed also, so far as necessary, against the others (order in Case T‑320/09 Planet v Commission [2011] ECR II‑1673, paragraph 23). Indeed, such a deduction is impossible specifically when the arguments contained in the application manifestly lack clarity and precision (order in Case T‑64/96 Jorio v Council [1997] ECR II‑127, paragraph 35), as is the case in the present case (T-553/11 at paras 54-55, emphasis added).
Hence, in the case at hand, the GC dismisses the claim for annulment of  'all related decisions of the ECB'. However, materially, this may not have any effect on the final outcome of the process if the appeal is upheld. In this regard, it must be taken into consideration that, (possibly) differently from other areas of (contract) law, the remedies against the illegal conclusion of a public contract may or may not involve the annulment of the contract depending on the grounds on which the illegality is founded, and irrespective of the specific claims brought forward by the applicant.
In the specific case of the review of EU institutional procurement, this discussion may have some purpose, as Article 263 TFEU  does not expressly regulate the remedies available. However, more generally, outside the scope of the review of the procurement decisions of the EU Institutions, the Remedies Directive allows Member States to restrict the ineffectiveness (ie voidability?) of public contracts to certain very grave cases (see art 2d) so, other than in those cases (where ineffectiveness must be declared, even if it was not expressly required by the appellant, as a matter of direct effect and supremacy of the Remedies Directive itself), the ineffectiveness of those decisions may be barred by domestic rules, regardless of the content of the action exercised by the appellant.
In my view, given the possibility for Member States to balance public and private interests in their domestic rules concerned with the effectiveness of illegally awarded public contracts, in public procurement litigation, the annulment of 'all related decisions' or their preservation (with a consequent indemnification of damages and, if applicable, the imposition of fines) is a matter of determination of the adequate remedy by the review court and, consequently, the discussion on the admissibility of this head of claim remains fundamentally superfluous.

GC on non-disclosure of ECB documents: Carte blanche to public market manipulation? (T-590/10)

Today's Judgment of the General Court of the EU in case T-590/10 Gabi Thesing and Bloomberg Finance LP v ECB has provided clarification on the reasons that the ECB (and, by analogy, other EU Institutions) can provide to reject a request of access to its documents. The GC has backed the ECB in its non-disclosure decision on the basis of the protection of public interest and has adopted a broad view of such an exception. 

In general terms, the position of the ECB and the GC seem appropriate to grant  sufficient administrative discretion to the EU Institutions in their assessment of the public interest at stake. However, the specifics of the GC Judgment are a bit troubling, if one takes the position of the GC to its logical extreme. In my view, the following bears emphasizing:
43 [...] the ECB must be recognised as enjoying a wide discretion for the purpose of determining whether the disclosure of documents relating to the fields covered by that exception could undermine the public interest. The European Union judicature’s review of the legality of such a decision must therefore be limited to verifying whether the procedural rules and the duty to state reasons have been complied with, whether the facts have been accurately stated, and whether there has been a manifest error of assessment or a misuse of powers (see, by analogy, Case C‑266/05 P Sison v Council [2007] ECR I‑1233, paragraph 34). [...]
45 [...] with respect to the applicants’ arguments that the ECB incorrectly failed to take account of the public interest considerations in favour of disclosure and that there is a compelling public interest for disclosure of the documents at issue which would in fact further the public interest, the Court notes that the exceptions to the right of access to documents provided for in Article 4(1)(a) of Decision 2004/258 are framed in mandatory terms. It follows that the ECB is obliged to refuse access to documents falling under any one of those exceptions once the relevant circumstances are shown to exist, and no weighing up of an ‘overriding public interest’ is provided for in that provision, in contrast with the exceptions referred to in Article 4(2) and (3) of that decision (see, by analogy, Joined Cases T‑3/00 and T‑337/04 Pitsiorlas v Council and ECB [2007] ECR II‑4779, paragraph 227 and the case-law cited). [...]
51 As regards the issue whether disclosure of the first document would specifically and effectively undermine the protected interest in question, it is common ground [...] that, at the time of the adoption of the contested decision, the European financial markets were in a very vulnerable environment. The stability of those markets was fragile, in particular, because of the economic and financial situation of the Hellenic Republic. It is also common ground that that situation and the related sales of Greek financial assets were causing strong depreciations in the value of those assets, which also triggered losses for Greek and other European holders. The applicants did not dispute that that development had the potential of leading to negative spillover effects on the solvency and funding conditions of other issuers and countries in the euro area. In such an environment, it is clear that market participants use the information disclosed by central banks and that their analyses and decisions are considered a particularly important and reliable source to assess current and prospective financial market developments. Moreover, the ECB was entitled to find that public confidence is an essential element affecting the proper functioning of the financial markets. The ECB was not indeed contradicted in this respect by the applicants. [...]
56 [...] the fact that, on 21 October 2010, the data contained in the first document were outdated and that they gave only a snapshot of the factual situation at the time that the document was drafted does not permit the conclusion that, in the event of disclosure of that document, financial market participants would also have regarded as outdated and therefore of no value ECB staff assumptions and views regarding the impact of off-market swaps on government deficit and on government debt which are contained in that document.
57 Although it is true that those participants are professionals who can be expected to use information taken from documents in the context of their work, the fact remains that they consider assumptions and views originating from the ECB to be particularly important and reliable for assessing the financial market. It cannot reasonably be precluded that, even if those assumptions and views were made on the basis of data available well before 21 October 2010, they would have been regarded as still valid on that date. Moreover, it can be assumed that, by relying on those assumptions and views that were based on a certain known factual situation, those professionals might have inferred, on the basis of additional data, assumptions and views allegedly held by the ECB regarding the government deficit and government debt at the time that the ECB definitively refused access to that document. In this respect, any clarification by the ECB on the disclosed version of that document, indicating that the information contained therein was no longer up to date, would not have been able to prevent disclosure of that document from misleading the public and financial market participants in particular on the situation regarding the government deficit and government debt as assessed by the ECB.
58 In the light of the very vulnerable environment in which the financial markets found themselves at the time of adoption of the contested decision, the assessment that such an error would undermine the economic policy of the Union and the Hellenic Republic cannot be rejected as manifestly incorrect. Indeed, such an error might have had negative consequences on access, in particular for that Member State, to the financial markets and might therefore have affected the effective conduct of economic policy in the Hellenic Republic and the Union. (T-590/10, paras 43 to 58, emphasis added).
In my view, to put it clearly, the reasoning of the GC diminishes the analytical capacity of the financial sector and disregards the ability of professional financial advisors and analysts to separate the chaff from the grain and boldly assumes that panic and shortsightedness would have dominated the analysis of the documents which disclosure was requested (a rather strong assumption, at any rate). Moreover, in its analysis of the cumulative impact that disclosure may have had, the GC basically opposes all basic tenets that financial markets can only work effectively on the basis of full disclosure of any potentially relevant information [an assumption that, on the other hand, is strongly defended under EU rules on market abuse]. 

All in all, in an (acknowledged) extreme reading of the GC's Thesing Judgment, the ECB (and other EU Institutions) may have been given carte blanche to manipulate financial markets (by withholding information) if they deem such manipulation in the public interest. That can surely not be acceptable under EU Law. Therefore, a correction of the Thesing broad reasoning seems desirable, in order to keep any degree of effectiveness in the provisions of article 15 TFEU -- and so that everything is not effectively lost in the field of EU governance.