- The argument put forward by the ECB, according to which the Policy Framework does not fall within one of the categories of binding acts which the ECB may adopt, should be rejected as irrelevant. That argument is directly at odds with the settled case-law that an action for annulment is available in the case of all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effects (see, to this effect, judgments of 31 March 1971 in Commission v Council, 22/70, ECR, EU:C:1971:32, paragraph 39, and of 17 July 2008 in Athinaïki Techniki v Commission, C‑521/06 P, ECR, EU:C:2008:422, paragraphs 43 and 45). That case-law is intended specifically to prevent the form or designation given to an act by its author from resulting in its escaping assessment of its legality in an action for annulment, even though it in fact has legal effects.
- It is to be inferred from the analysis of the Policy Framework’s wording and context, of its substance and of the intention of its author that it has legal effects and accordingly constitutes an act against which an action for annulment may be brought under Article 263 TFEU.
- Notably, the statement of location policy in the Policy Framework is particularly specific, rendering it readily applicable. Thus, far from displaying the nature of a mere hypothetical statement, the Policy Framework is in fact intended to impose compliance with a location requirement for CCPs [central counterparties] whose activity exceeds the thresholds that it sets and therefore, in the absence of indications to the contrary in the text of the Policy Framework, constitutes the ECB’s definitive position.
- Whilst under Protocol No 15 to the FEU Treaty certain provisions of the FEU Treaty and the Statute [of the European System of Central Banks and of the ECB] do not apply in relation to the United Kingdom, the latter may still bring an action seeking review by the EU judicature of whether the ECB has exceeded its powers.
- Article 127(1) TFEU, Article 127(2) TFEU, fourth indent and Article 22 of the Statute have a complementary relationship. The power to adopt regulations pursuant to Article 22 of the Statute is one of the means available to the ECB for performing the task, entrusted to the Eurosystem by Article 127(2) TFEU, of promoting the smooth operation of payment systems. That task itself serves the primary objective set out in Article 127(1) TFEU to maintain price stability.
- It necessarily follows that the term ‘clearing systems’ in Article 22 of the Statute must be read in conjunction with the ‘payment systems’ to which reference is made in the same article and the smooth operation of which constitutes one of the Eurosystem’s tasks.
- A ‘payment system’ within the meaning of Article 127(2) TFEU falls within the field of the transfer of funds. Therefore, whilst such a definition may include the ‘cash’ leg of clearing operations, that is not true of the ‘securities’ leg of the clearing operations of a CCP, since while such securities may be regarded as being the subject-matter of a transaction giving rise to the transfer of funds, they do not, however, in themselves constitute payments.
- A similar conclusion is also required in respect of the term ‘clearing and payment systems’ that is used in Article 22 of the Statute.
- This term must be interpreted in the light of the task, conferred on the Eurosystem by the fourth indent of Article 127(2) TFEU, of promoting the ‘smooth operation of payment systems’. It necessarily follows that the ability which the ECB is granted by Article 22 of the Statute to adopt regulations ‘to ensure efficient and sound clearing and payment systems’ cannot be understood as according it such a power in respect of all clearing systems, including those relating to transactions in securities.
- That option granted to the ECB by Article 22 of the Statute must rather be regarded as limited to payment clearing systems alone. In this regard, it should be noted that a clearing stage may be included in payment systems, such as net settlement payment systems as opposed to a gross settlement payment system.
- Consequently, in the absence of an explicit reference to the clearing of securities in Article 22 of the Statute, it must be concluded that the choice of the term ‘clearing and payment system’ is intended to make it clear that the ECB has competence to adopt regulations to ensure efficiency and safety of payment systems, including those with a clearing stage, rather than granting it an autonomous regulatory competence in respect of all clearing systems.
- It is necessary to reject the ECB’s line of argument to the effect, in essence, that the carrying out of the task consisting in promotion of the sound operation of payment systems pursuant to the fourth indent of Article 127(2) TFEU means that it necessarily has the power to regulate the activity of securities clearing infrastructures, in the light of the effect that their default could have on payment systems.
- It is true that the Court of Justice has acknowledged that powers not expressly provided for by the provisions of the Treaties may be used if they are necessary to achieve the objectives set by the Treaties. Thus, when an article of the Treaty confers a specific task on an institution, it must be accepted, if that provision is not to be rendered wholly ineffective, that it confers on that institution necessarily and per se the powers which are indispensable in order to carry out that.
- Nevertheless, the existence of an implicit regulatory power, which constitutes a derogation from the principle of conferral laid down by Article 13(2) TEU, must be appraised strictly. It is only exceptionally that such implicit powers are recognised by case-law and, in order to be so recognised, they must be necessary to ensure the practical effect of the provisions of the Treaty or the basic regulation at issue.
- Nevertheless, the existence of those links cannot be sufficient to justify accepting that the ECB has implicit powers to regulate securities clearing systems, since the FEU Treaty envisages the possibility of such powers being conferred explicitly upon the ECB.
- Indeed, it must be pointed out that Article 129(3) TFEU provides for a simplified amendment mechanism — derogating from the mechanism in Article 48 TEU — in respect of certain provisions of the Statute, including Article 22. It enables the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, and on a recommendation from the ECB or a proposal from the Commission, to amend those provisions.
- In this respect, it is clear that the creation of a requirement to be located within the euro area that is applicable to CCPs providing clearing services for euro-denominated securities beyond certain thresholds goes beyond mere oversight of the infrastructures of securities clearing systems, and partakes regulation of their activity.
- Like the acts of any EU institution or body, the acts of the ECB with legal effects on third parties are subject to judicial review, irrespective of its form. Although foreseeable, that statement by the General Court is of particuliar importance for the ECB, given its strong emphasis on moral persuasion and acts of allegedly soft law. Following this judgment, it cannot be ruled out that more acts of the ECB will be challenged before the European Courts in the future.
- In the European Legal Order, the ECB is neither a legislator nor a regulator but an institution assigned with operational responsibilities of monetary policy and, since 4 November 2014, of prudential supervision. To fulfill these responsibilities, the ECB is equipped with limited and specific powers to adopt binding acts of general scope, such as orientations, guidelines, instructions and even regulations.
- Even though the reasoning of the General Court underlying its conclusion according to which the ECB is deprived of any power to adopt regulations in connection with the system of clearing and settlement of securities is not fully convincing, it results clearly from the judgment of the General Court that the ECB enjoys regulatory powers only for the proper fulfillment of its main tasks.
- Such an approach by the General Court is noteworthy and this case law is also of relevance for the ECB’s missions of prudential supervision. The way the ECB perceives its legislative powers and contemplates exercising them may be excessive and successfully challenged before the EU Courts.
- By denying the ECB the power to regulate the activity of the system of clearing and settlement, the General Court managed to avoid addressing the issue as to whether requiring the location of some activities to be within the Euro area, the ECB infringed the freedoms of circulation (freedom to provide services and freedom of establishment).
- In my opinion, since the ECB is in charge of policies within only a part of the EU, there is an objective risk that, in the fulfillment of its mission, it does not sufficiently take into account the legitimate interests of the EU Member States which are not part of the Eurozone and of their economic operators. Thus, it is not excluded at all that one day the ECB will be considered as having infringed freedoms of circulation, that is to say by restricting these freedoms in an unjustified or disproportionate manner.