Kotnik and Others (Judgment) [2016] EUECJ C-526/14 (19 July 2016)

Kotnik and Others (Judgment) [2016] EUECJ C-526/14 (19 July 2016)

The Banking Communication is not binding on Member States but sets out criteria the Commission applies in assessing State aid compatibility under Article 107(3)(b) TFEU. The requirement for burden-sharing by shareholders and subordinated creditors as a prerequisite for State aid is not precluded by Articles 107-109 TFEU, does not violate the principle of legitimate expectations or the right to property, and is not incompatible with Directive 2012/30/EU. Burden-sharing measures, when adopted by administrative or judicial authorities, may constitute 'reorganisation measures' under Directive 2001/24/EC.

Citation
[2016] EUECJ C-526/14
Parties
Referring Court: Ustavno sodišče (Constitutional Court, Slovenia); Applicants in Main Proceedings: Private individuals, Državni svet Republike Slovenije (Council of State, Slovenia), Varuh človekovih pravic Republike Slovenije (Slovenian Ombudsman); Respondent in Main Proceedings: Banka Slovenije (Bank of Slovenia); Intervening Party: European Commission; Intervening Party: Slovenian Government
Jurisdiction
European Union
Judgment Date
19 July 2016
Procedural Posture
Preliminary Ruling (article 267 Tfeu) / Final Judgment of the Court of Justice of the European Union
Outcome
Questions answered; points 40-46 of the Banking Communication are valid and compatible with EU law as interpreted.
Legal Topics
State Aid to Banks, Burden Sharing, Banking Communication, Protection of Legitimate Expectations, Right to Property, Directive 2012/30/eu, Directive 2001/24/ec, Reorganisation Measures, Compatibility of National Law With EU Law
EU Law Banking and Finance Law State Aid Law Company Law State Aid to Banks Burden Sharing Banking Communication Protection of Legitimate Expectations +5 more

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Parties

Ustavno sodišče (Constitutional Court, Slovenia)

Referring Court

Private individuals, Državni svet Republike Slovenije (Council of State, Slovenia), Varuh človekovih pravic Republike Slovenije (Slovenian Ombudsman)

Applicants in Main Proceedings

Banka Slovenije (Bank of Slovenia)

Respondent in Main Proceedings

European Commission

Intervening Party

Slovenian Government

Intervening Party

Procedural Posture

Preliminary Ruling (article 267 Tfeu) / Final Judgment of the Court of Justice of the European Union

Legal Issues

  1. 1 Whether points 40-46 of the Banking Communication are binding on Member States
  2. 2 Whether the burden-sharing condition for State aid is compatible with Articles 107-109 TFEU
  3. 3 Whether the burden-sharing condition violates the principle of legitimate expectations or the right to property

Ratio Decidendi

The Banking Communication is not binding on Member States but sets out criteria the Commission applies in assessing State aid compatibility under Article 107(3)(b) TFEU. The requirement for burden-sharing by shareholders and subordinated creditors as a prerequisite for State aid is not precluded by Articles 107-109 TFEU, does not violate the principle of legitimate expectations or the right to property, and is not incompatible with Directive 2012/30/EU. Burden-sharing measures, when adopted by administrative or judicial authorities, may constitute 'reorganisation measures' under Directive 2001/24/EC.

Court Disposition

Questions answered; points 40-46 of the Banking Communication are valid and compatible with EU law as interpreted.

Orders

  • The Banking Communication is not binding on Member States.
  • Articles 107-109 TFEU do not preclude the burden-sharing condition in points 40-46 of the Banking Communication.