On 21 December 2016, the Court of Justice of the European Union (“ECJ”) delivered a judgment on the guarantee scheme granted by Belgium to three financial cooperatives of the ARCO group (Case C-76/15, Paul Vervloet and Others v Ministerraad).
The judgment of the ECJ stems from a request for a preliminary ruling from the Belgian Constitutional Court, which had to decide on several questions with regard to the constitutionality of the ARCO guarantee. In November 2011, the Belgian authorities decided to grant to the 800,000 ARCO shareholders the same protection as that provided for savings deposits and life insurance, i.e., a protection of funds limited to EUR 100,000 per investor. In the event of default on the part of the ARCO cooperatives, the Belgian state would repay up to EUR 100,000 of the funds invested by natural persons in shares issued by the financial cooperatives. ARCO, one of the main shareholders of the Belgian-French Dexia Bank, was thus protected against the threat of the flight of private investors from the three financial cooperatives.
By decision of 3 July 2014, the European Commission classified the ARCO guarantee as unlawful state aid (since it had not been notified in a timely manner) and incompatible with the internal market. Belgium and the three financial cooperatives brought actions before the General Court for annulment of the Commission’s decision (Cases T-664/14 Belgium v Commission and T-711/14 Arcofin and Others v Commission). Those proceedings were stayed pending the ECJ’s response to the questions referred by the Belgian Constitutional Court in the present proceedings.
The ECJ was asked to rule on the compatibility of the ARCO guarantee with EU law, in particular with Directive 94/19/EC of 30 May 1994 on deposit-guarantee schemes (“Directive 94/19/EC”) and on the validity of the Commission’s decision of 3 July 2014.
The ECJ first held that the shares of companies such as recognised cooperatives operating in the financial sector do not fall within the scope of the term “deposit”, as defined in Article 1(1) of Directive 94/19/EC, since such shares are essentially participations in ARCO’s capital, while deposits form part of the borrowed capital of a credit institution. The ECJ insisted on the fact that recognised cooperatives operating in the financial sector cannot be considered to be a “credit institution” within the meaning of Article 1(1) Directive 94/19. On that basis, the ECJ held that Directive 94/19 does not impose on Member States an obligation to adopt a guarantee scheme with regard to shares in recognised cooperatives operating in the financial sector, such as ARCO. According to the ECJ, the Directive does not prevent Member States from extending the deposit-guarantee scheme to shares in recognised cooperatives operating in the financial sector. However, such an extension must not undermine the practical effectiveness of the scheme that Directive 94/10/EC requires Member States to establish. This assessment must be made by the national courts, which must take into account, inter alia, the number of beneficiaries of the additional guarantee and the beneficiaries’ contributions towards the financing of the guarantee. In addition, the ECJ stressed that national courts must assess whether the extension is compatible with the Treaty, in particular the provisions relating to state aid.
As regards the state aid rules, the ECJ confirmed the validity of the Commission’s decision of 3 July 2014. The ECJ considered that the Commission did not erroneously classify the ARCO guarantee as state aid, that the Commission’s decision was sufficiently reasoned and that the Commission was entitled to conclude in its decision that the guarantee scheme was unlawfully put into effect by Belgium.
