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EU General Court clarifies its position on shareholders’ right to bring legal proceedings and annuls ECB decision

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Regulatory monitoring

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In Corneli (Case T-502/19), the EU General Court (the Court) decided in favour of a minority shareholder of Banca Carige SpA seeking to overturn the ECB’s decision to place the bank under temporary administration. 

In its decision, the Court clarifies some of the conditions under which a shareholder of a bank has standing to challenge an ECB decision concerning that bank.

The Court’s annulment of the ECB decision was based on the finding that the ECB had erroneously applied provisions of Italian law purporting to transpose EU law requirements. The Court held that the ECB needed to apply national law and could not reason by reference to the text of the Directive if the national law provisions  relied on clearly contradicted them, thereby limiting the parameters of ‘conforming interpretation’. 


Background to the Corneli decision

Banca Carige SpA (the Bank) is an Italian bank which has been directly supervised by the ECB since 2014. After losses of more than EUR1.6 billion and several unsuccessful attempts to strengthen its capital base to comply with the applicable capital requirements, the ECB decided to place the Bank under temporary administration, whereby the Bank’s directors and supervisory committee members were replaced.

The ECB based its decision on a provision in the Italian Consolidated Law on Banking (the Italian National Law), which transposes Directive 2014/59/EU (Bank Recovery and Resolution Directive – BRRD), on the grounds of a “significant deterioration in the bank’s situation”.

Ms Corneli, a minority shareholder holding 0.000361% of shares in the Bank, sought the annulment of this decision. She argued that the ECB erroneously applied the Italian National Law, since the relevant provision on which the ECB specifically relied did not include a “significant deterioration” of a bank’s situation as a ground for placing the institution under temporary administration. 

The Court’s decision

The case raises important procedural and substantive questions of EU law:

  1. whether a shareholder had standing to bring an action for annulment; 
  2. whether a shareholder had a legal interest in bringing proceedings; and
  3. whether the ECB erred in law in determining the legal basis used to adopt the decision.

Procedural points 

A shareholder’s standing to bring an action for annulment – “direct concern”

The Court held that Ms Corneli’s legal situation was directly concerned by the decision (ie, without the intervention of an intermediate measure), since it altered Ms Corneli’s rights to participate, as a shareholder, in the management of the Bank, including the right to elect the management and supervisory bodies of the Bank and to convene shareholder meetings. 

The Court rejected the ECB’s argument that the Court of Justice (CoJ) decision in Trasta Comerzbanka negated standing in this case.  

In Trasta, the CoJ overturned the Court and held that a decision of the ECB to withdraw a bank’s license affected its shareholders merely “economically” but not “legally”, as the withdrawal decision did not prevent shareholders from continuing to exercise their rights at the general meeting. That situation differed from the present case where the effect of the ECB decision was precisely that those shareholder rights were curtailed. 

A shareholder’s standing to bring an action for annulment – “individual concern”

The Court also held that the Shareholder was “individually” concerned by the ECB decision. The Bank’s shareholders belonged to a clearly identifiable group and were affected, as a result of the adoption of the decision, in respect of an attribute which characterised them individually, namely (i) that of holding shares in the Bank and (ii) that of being prevented from exercising certain rights attached to those shares.

Legal interest in bringing proceedings

The Court held that, in contrast to the ECB’s claim, Ms Corneli had a legal interest in bringing proceedings. This was because the legal effects resulting from the decision were capable of affecting her own (distinct) interests and legal position, and not just those of the Bank. 

Erroneous application of national law by the ECB

The ECB based their decision on the following two arguments:

  • In application of the so-called principle of conforming interpretation, the Italian National Law should be read in the light of the BRRD, which it was designed to transpose, and which de facto provides for placement under temporary administration. Consequently, the Bank’s placement under temporary administration should be permitted under the Italian National Law even if, as the ECB itself admits, the situation in question, namely the Bank’s significant deterioration, is not expressly referred to in the provision of Italian National Law which the ECB applied in this case; and 
  • The ECB was required to apply, in addition to national law, all the standards laid down in EU law. On that basis, the ECB was required to directly apply the BRRD which provides for the Bank’s placement under temporary administration in the event of a significant deterioration, regardless of the existence of the Italian National Law.

The Court rejected both arguments:

  • Conforming interpretation ground: Under settled EU case-law, national law must indeed, as far as possible, be interpreted in conformity with the EU law it seeks to transpose, as this is imperative to ensure the EU law’s full effectiveness. However, the principle of conforming interpretation also has certain limits. In particular, it cannot serve as the basis for an interpretation of national law contra legem (ie an interpretation which runs counter to the wording used in the national measure transposing a directive).
  • Compliance with EU law ground: The ECB is expressly obliged to comply with EU law under the Single Supervisory Mechanism (SSM). The SSM Regulation requires the ECB to “apply all relevant Union law, and where this Union law is composed of Directives, the national legislation transposing those Directives”. Thus, the ECB must apply the text of the national law and not rely on an interpretation of the Member State’s legislation that is more in conformity with the directive it seeks to transpose but is contra legem. A directive is only binding as to the result to be achieved, and leaves to the national authorities the form and methods of implementation. It was also settled-case law that a directive generally cannot of itself impose obligations on an individual and cannot therefore be relied on as such against an individual.

Key takeaways

Procedural points

  • The Corneli decision is important as it sheds new light on the judgment of the CoJ in Trasta. In what seems to be an interpretation of the Trasta judgment that limits its scope, the General Court accepts the standing of a bank’s shareholder (even one with less than one-thousandth of the capital) to challenge the ECB on a supervisory decision that directly and individually affects her shareholder rights. Where the effect of a supervisory decision was merely economic as in the case of licence withdrawal (Trasta), shareholders cannot themselves challenge the decision, but where a decision curtails their inherent shareholder rights (as in the case of a temporary administrator being appointed), they can. 

  • The Court held that a bank’s shareholders have a legal interest in bringing proceedings as long as they can prove that not only the bank’s but their own interests and rights are affected by the ECB’s decision.

Substantive points 

  • The Court in Corneli follows established case law on the limits of conforming interpretation and confirms the application of the general principles in the context of the SSM. While the European Court’s case law generally requires authorities to disapply national law when directly applicable provisions of directives would otherwise go unheeded, here, the Court prevents the ECB from applying national law contra legem (ie to apply a directive’s intention against the precise wording of the national implementing law).

  • While the Court’s ruling on EU directives follows established principles, this judgment seems to tear significant holes in the power of the ECB to supervise banks and take effective measures in all participating Member States. On the Court’s rather formalistic reasoning, whether or not the ECB will have all the tools available that EU legislation foresees depends on how faithfully a Member State has implemented relevant directives. Where this has not been done (as in the Italian transposing measures at issue in the case), the ECB’s hands appear to be tied. 

  • Another reading of the judgment could be that it is yet another instance of the ECB getting the red card for not providing adequate reasoning for their decision. The ECB based their decision explicitly on Article 70 of the Italian National Law, which does not refer to ‘a significant deterioration in the situation of [the bank]’ as a ground for placing a bank in temporary administration. Instead that condition was referred to in a preceding provision concerning a less intrusive measure of “removal” of a managing or supervisory body. It is certainly conceivable that had the ECB supported its decision by reasoning based on both provisions, it could have overcome the difficulty that the Italian National law had not faithfully implemented the BRRD. 

Further context

This judgment is one of several concerning the ECB’s decision to place the Bank under special administration. The ECB also lost cases on its refusal to grant access to information lodged by the Bank's main shareholder and a similar case on access to documents by Ms Corneli.


The two-month appeal period for the Corneli judgment has elapsed. While it is not in the public domain it appears likely that the ECB has appealed the judgment given that the Court’s judgment raises fundamental procedural and substantive questions. It remains to be seen if the CoJ shares the view of the Court. The courts have differed in the past on the issue of standing (in Trasta) and the CoJ’s case law on conforming interpretation suggests a more liberal approach requiring national authorities to disapply national law that cannot be read in conformity with the underlying directive.  

Further reading

Read the full Corneli decision here.

Further cases in the Carige saga regarding the ECB's refusal to grant access to documents can be found here