Summaries of judgments made in collaboration with the Portuguese judge and référendaire of the CJEU (Nuno Piçarra and Sophie Perez)

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Judgment of the Court (Grand Chamber) of 22 February 2022, X and Y v Openbaar Ministerie, Joined Cases C-562/21 PPU and C-563/21 PPU, EU:C:2022:100

Reference for a preliminary ruling – Urgent preliminary ruling procedure – Judicial cooperation in criminal matters – European arrest warrant – Framework Decision 2002/584/JHA – Article 1(3) – Surrender procedures between Member States – Conditions for execution – Charter of Fundamental Rights of the European Union – Second paragraph of Article 47 – Fundamental right to a fair trial before an independent and impartial tribunal previously established by law – Systemic or generalised deficiencies – Two-step examination – Criteria for application – Obligation of the executing judicial authority to determine, specifically and precisely, whether there are substantial grounds for believing that the person in respect of whom a European arrest warrant has been issued, if surrendered, runs a real risk of breach of his or her fundamental right to a fair trial before an independent and impartial tribunal previously established by law

Facts

Two European arrest warrants (‘EAWs’) were issued in April 2021 by Polish courts against two Polish nationals for the purposes, respectively, of executing a custodial sentence and of conducting a criminal prosecution. The persons concerned were in the Netherlands and did not consent to their surrender.

The Rechtbank Amsterdam (District Court, Amsterdam, Netherlands) noted that, since 2017, there have been in Poland systemic or generalised deficiencies affecting the right to a fair trial, and in particular the right to a tribunal previously established by law, resulting, inter alia, from the fact that Polish judges are appointed on application of the Krajowa Rada Sądownictwa (the Polish National Council of the Judiciary; ‘the KRS’). The referring court furthermore noted that, according to the resolution adopted in 2020 by the Sąd Najwyższy (Supreme Court, Poland), the KRS, since the entry into force of a law on judicial reform on 17 January 2018, is no longer an independent body. In so far as the judges appointed on application of the KRS may have participated in the criminal proceedings that led to the conviction of one of the persons concerned or may be called upon to hear the criminal case of the other person concerned, the referring court considered that there was a real risk that those persons, if surrendered, would suffer a breach of their fundamental right to a tribunal previously established by law.

In those circumstances, that court questioned the ECJ on the scope of its case law according to which the existence of a real risk that the person in respect of whom a EAW has been issued would, if surrendered, suffer a breach of that fundamental right is capable of permitting the executing judicial authority to refrain, exceptionally, from giving effect to that EAW on the basis of Article 1(3) of Framework Decision 2002/584 [judgment of 25 July 2018, Minister for Justice and Equality (Deficiencies in the system of justice), C‑216/18 PPU, EU:C:2018:586].

Findings of the ECJ

The ECJ explained that the right to be judged by a tribunal “established by law” encompasses, by its very nature, the judicial appointment procedure. Thus, as a first step in the examination seeking to assess whether there is a real risk of breach of the fundamental right to a fair trial, connected in particular with a failure to comply with the requirement for a tribunal previously established by law, the executing judicial authority must carry out an overall assessment, on the basis of any factor that is objective, reliable, specific and properly updated concerning the operation of the judicial system in the issuing Member State and, in particular the general context of judicial appointment in that Member State. The information contained in a reasoned proposal addressed by the European Commission to the Council on the basis of Article 7(1) TEU, the abovementioned resolution of the Sąd Najwyższy (Supreme Court) and the relevant case-law of the Court and of the ECtHR are such factors. By contrast, the fact that a body, such as the KRS, which is involved in the judicial appointment procedure, is made up, for the most part, of members representing or chosen by the legislature or the executive, is not sufficient to justify a refusal to surrender

As a second step in that examination, it is for the person in respect of whom an EAW has been issued to adduce specific evidence to suggest that systemic or generalised deficiencies in the judicial system had a tangible influence on the handling of his or her criminal case or are liable, in the event of surrender, to have such an influence. Such evidence can be supplemented, as appropriate, by information provided by the issuing judicial authority.

In that respect, as regards a EAW issued for the purposes of executing a custodial sentence or detention order, the executing judicial authority must take account of the information relating to the composition of the panel of judges who heard the criminal case or any other circumstance relevant to the assessment of the independence and impartiality of that panel, as well as the possibility, for the person concerned, to request the recusal of the members of the panel of judges for breach of his or her fundamental right to a fair trial, the fact that that person may exercise that option as well as the outcome of the request for recusal. By contrast, it is not sufficient, in order to refuse surrender, that one or more judges who participated in those proceedings were appointed on application of a body such as the KRS.

Where an EAW has been issued for the purposes of conducting a criminal prosecution, the executing judicial authority must take account of the information relating to the personal situation of the person concerned, the nature of the offence for which that person is prosecuted, the factual context surrounding that EAW or any other circumstance relevant to the assessment of the independence and impartiality of the panel of judges likely to be called upon to hear the proceedings in respect of that person. Such information may also relate to statements made by public authorities which could have an influence on the specific case. By contrast, the fact that the identity of the judges who will be called upon eventually to hear the case of the person concerned is not known at the time of the decision on surrender or, when their identity is known, that those judges were appointed on application of a body such as the KRS is not sufficient to refuse that surrender.

Judgment of the Court (First Chamber) of 5^th May 2022, BPC Lux 2 Sàrl and Others v Banco de Portugal and Others, Case C-83/20, EU:C:2022:346

Reference for a preliminary ruling — Directive 2014/59/UE — Recovery and resolution of credit institutions and investment firms — Articles 36, 73 and 74 — Protection of shareholders and creditors — Partial implementation — Transposition in stages — Charter of Fundamental Rights of the European Union — Article 17(1) — Right to property

Facts

On account of its financial situation and the serious and grave risk that it would be in default of its obligations, Banco Espírito Santo SA (‘BES’) was the subject of a resolution decision taken by Banco de Portugal (Bank of Portugal) on 3 August 2014 (‘the resolution action’). That action, which was taken under national legislation on the resolution of credit institutions, resulted in the creation of a bridge bank, Novo Banco SA, to which certain assets, liabilities, off-balance sheet items and assets managed by BES were transferred. The applicants in the main proceedings were holders of subordinated bonds issued by BES or held, directly and indirectly, shares in the share capital of BES. They challenged the resolution action before the national administrative courts and, in that context, claimed, inter alia, that that action had been taken in breach of EU law.

The Supremo Tribunal Administrativo (Supreme Administrative Court, Portugal) had doubts as to the compatibility of the national legislation, under which the BES resolution action had been taken, with EU law, in particular with Directive 2014/59 and Article 17 CFREU, on account of the failure to transpose a series of requirements set out in that directive. In addition, that court was uncertain whether the Portuguese legislature was liable seriously to have compromised the result prescribed by Directive 2014/59 by adopting the Decree-Law 114-A/2014, of 1 August 2014, which transposed that directive only in part prior to the expiry of the period for transposition of that directive, set at 31 December 2014.

Findings of the ECJ

The ECJ first pointed out that, on the date on which the resolution action at issue was taken, namely 3 August 2014, the period for transposition of Directive 2014/59 had not expired. As the provisions of that directive are not applicable to the dispute in the main proceedings, the applicants in the main proceedings could not rely on them before the referring court.

As regards the applicability of Article 17 CFREU, the ECJ pointed out, first, that the Decree-Law 31-A/2012, of 10 February 2012, was intended to implement one of the commitments entered into by the Portuguese Republic in the context of a Memorandum of Understanding on economic policy conditionality concluded with the joint mission of the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB), and, secondly, that the Decree-Law 114-A/2014, of 1 August 2014, constitutes a measure for the transposition in part of Directive 2014/59. The ECJ concluded that EU law was being implemented, within the meaning of Article 51(1) CFREU, with the result that the provisions of the Charter were applicable to the dispute in the main proceedings.

In that regard, the ECJ emphasized that the protection conferred by Article 17(1) CFREU concerns rights with an asset value creating an established legal position under the legal system concerned, enabling the holder to exercise those rights autonomously and for his or her own benefit. The ECJ considered that that is true of those shares or bonds tradeable on capital markets, as those at issue in the main proceedings.

Nevertheless, the ECJ held that a resolution action taken under national legislation such as that at issue in the main proceedings did not constitute a deprivation of property within the meaning of Article 17(1) CFREU, as that resolution action did not provide for a formal deprivation or expropriation of the shares or bonds concerned, nor did it forcibly, wholly and definitively deprive their holders of the rights deriving from those shares or bonds. The ECJ further held that, in the light of the discretion enjoyed by the Member States when adopting decisions on economic matters, the third sentence of Article 17(1) CFREU does not preclude national legislation, such as that at issue in the main proceedings, which does not contain any express provision ensuring that shareholders do not bear greater losses than they would have incurred if the institution had gone into liquidation at the date on which the resolution action was taken.

Lastly, the ECJ clarified that the transposition by a Member State, in national legislation relating to the resolution of credit institutions, of certain provisions of Directive 2014/59 before the expiry of the period prescribed for its transposition, is not, in principle, liable seriously to compromise the result prescribed by that directive, within the meaning of the judgment of 18 December 1997, Inter-Environnement Wallonie (C‑129/96, EU:C:1997:628).