On 21 December 2016, the Court of Justice of the European Union (CJEU) issued a ruling in relation to the guarantee scheme granted by the Belgian Government to three financial cooperatives (Case C-76/15, Paul Vervloet and Others v Ministerraad).
Background to the case
The judgment of the CJEU follows a request for a preliminary ruling from the Belgian Constitutional Court, which had to rule on several questions with regard to the constitutionality of the guarantee as renewed in November 2011. Through the guarantee, the Belgian Government had granted the three companies the same protection as legally provided for savings, deposits and life insurance: up to €100,000 per individual.
In 2014, the European Commission considered that the guarantee constituted unlawful state aid, incompatible with the internal market. The company receiving the guarantee and the Belgian Government sought annulment of that decision before the General Court. Those proceedings were stayed when the Belgian Constitutional Court made a reference to the CJEU on this issue.
The Belgian Constitutional Court sought the CJEU’s view on the compatibility of the guarantee with EU law and Directive 94/19/EC of 30 May 1994 on deposit-guarantee schemes (“Directive 94/19/EC”), as well as on the validity of the Commission’s decision of 3 July 2014.
The CJEU ruling
Directive 94/19/EC does not oblige Member States to adopt a guarantee scheme for shares in recognised cooperatives active in the financial sector (like the companies in this case). Nevertheless, Member States are not prevented from extending the application of the Directive.
The CJEU underlined, however, that an extension may not undermine the practical effectiveness of the scheme required by Directive 94/10/EC, which is to be assessed by national courts. In their assessment, the national courts must take into account the number of beneficiaries of the additional guarantee and the beneficiaries’ contributions towards the financing of the guarantee. Furthermore, the national courts must assess whether EU state aid rules are complied with.
The CJEU confirmed the validity of the Commission’s decision of 3 July 2014 by stating that the Commission did not wrongfully classify the guarantee as state aid. The CJEU furthermore stated that the Commission’s decision was sufficiently reasoned and therefore the Commission was entitled to conclude that the guarantee scheme was unlawfully put into effect by Belgium.
Given the sensitive nature of this issue for Belgian politicians, it is expected that the legislator will attempt to provide a similar protection scheme for the savers affected by this case. It remains to be seen, though, whether such a scheme will pass the test of EU law.