1.Introduction

In the aftermath of the economic crisis of 2008, the European Union needed to face all the challenges that the economic crisis represented for the economies of the Member States, including those outside the eurozone. As Advocate General Hogan pointed out in his opinion, the collapse of the investment bank Lehman Brothers in September 2008 marked the beginning of a major fiscal and banking crisis.Case C-450/17 P Landeskreditbank Baden-Württemberg v ECB, EU:C:2018:982, Opinion of AG Hogan, para 1. The duration and the severity of the crisis required bank recapitalisations and nationalisations in several Member States, which threatened the fiscal stability of several countries, and at some point the very survival of the euro currency as such. This led to significant legal changes in the economic, financial, and banking sectors. In 2014, the Banking Union was implemented as a result of these reforms, though it still remains an unfinished job. The Banking Union was conceived as a three-pillar structure, but only two have been created thus far: the Single Supervision Mechanism (hereafter SSM) and the Single Resolution Mechanism (hereafter SRM). Currently, the European Deposit Insurance Scheme is still pending, and remains the last step towards integrating all national deposit guarantee schemes into a single insurance framework.

This article aims to focus its research on the SSM, a hybrid dual administrationS Adalid, ‘Les Transformations de La Gouvernance de La BCE’ in F Martucci, L’Union bancaire (Bruylant 2016) 161–188. formed by both national and European authorities in which there are many composite procedures between the national competent authorities (hereafter NCAs) and the EU authorities (namely the ECB) that must also apply national law. Depending on the task, there is a cooperative role in some cases, while in other cases national authorities execute the decisions adopted at the EU level. The first part of this article will analyse the new notion of national law enshrined in the SSM Regulation. Until now, national law has been applied solely by national administrative authorities and interpreted solely by national courts. However, the boundaries are becoming more blurred, and the radical distinction seems to be disappearing.

The second part of this article will address the composite procedures in the SSM and the judicial protection standard developed over time by the Court of Justice of the European Union (hereafter CJEU)In accordance with Article 19 of the Consolidated Version of the Treaty on European Union [2016] OJ C202/15 [TEU], the term CJEU refers to the Court of Justice of the European Union, which includes both the General Court and the Court of Justice. In the text, the General Court and the Court of Justice are separately referred to. on this matter. Lastly, this article will explore possible solutions to fill the judicial protection gaps that may be caused by composite procedures in the SSM and – in particular – whether the rationale of the CJEU’s Rimšēvičs judgment should also be taken into account, especially considering the specific features of the SSM. If so, this might constitute a true changing point for EU law, whose Court of Justice is slowly shifting from a sui generis international tribunal governed mainly by international law logic to a new type of judicial organisation, one similar to a last instance court. In other words, the Rimšēvičs judgment might be a ‘new Van Gend en Loos’ given its potential to integrate the current national administrations and the European administration into one single entity.

2.The Single Supervision Mechanism

The SSM centralises the supervision of significant credit institutions at the European Central Bank (hereafter ECB); it thus intends to exclude a home bias in supervision and enhance financial stability.K Lackhoff, Single Supervisory Mechanism: European Banking Supervision by the SSM: A Practicioner’s Guide (CH Beck 2017). Furthermore, the SSM attempts to create ‘an efficient and effective framework for the exercise of specific supervisory tasks over credit institutions by a Union institution’ and to ensure ‘the consistent application of the single rulebook to credit institutions’.Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions [2013] OJ L287/63 [SSM Regulation], Recital 87.

The SSM as such does not have a legal personality of its own. The SSM Regulation defines it as ‘the system of financial supervision composed by the ECB and national competent authorities of participating Member States’.ibid, art 2(9). The primary legal source of the SSM is Council Regulation (EU) 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (SSM Regulation).ibid. Pursuant Article 6 SSM Regulation, the ECB adopted, on 16 April 2014, Regulation (EU) 468/2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (hereafter SSM Framework Regulation), which deals with practical issues regarding the cooperation with the national designated authorities.Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (ECB/2014/17) [2014] OJ L141/1.

In the SSM, the ECB directly oversees the significant entities, and indirectly oversees the less significant banks through the NCAs, which are defined as national competent authorities ‘designated by a participating Member State’.SSM Regulation, art 2(2). In some countries, the NCAs are the national central bank. However, to separate monetary policy from banking supervisory tasks, some countries (for instance, Austria, Estonia, Finland, France, Germany, Latvia, Luxembourg, and Malta) have decided to assign micro-prudential banking supervision to independent national administrative authorities other than the national central bank. Although the NCAs assist the ECB in carrying out the tasks conferred on it by a decentralised implementation,Case C-540/17 P Landeskreditbank Baden-Württemberg v ECB, EU:C:2019:372, para 41. the Member States and their NCAs remain competent with regard to anti-money laundering and consumer protection, and capital markets and insurance regulations, as well as for civil and company law issues. This solution is consistent with the principle of ‘centralised control and decentralised operational framework’ that is also applicable in the field of monetary policy.A Baglioni, ‘The Single Supervisory Mechanism’ in A Baglioni, The European Banking Union (Palgrave Macmillan UK 2016) 31 and 60.

There are two exceptions to this general rule, as the SSM Regulation exclusively grants two tasks to the ECB, regardless of whether the credit institution is significant or not: the authorisation and withdrawal of banking authorisation, and the assessment of notifications of acquisitions and disposals of qualifying holdings.SSM Regulation, arts 14 and 15. In addition to this, the ECB has also been granted a wide range of powers regarding less significant supervised entities, given that it can issue regulations, guidelines, or general instructions addressed to national competent authorities to ensure consistency of supervisory outcomes within the SSM.ibid, art 16. Finally, the ECB may, at any time – and after taking into account six factors described in Articles 67 to 69 SSM Framework Regulation – decide to directly exercise supervision over a less significant supervised entity or group. This decision may be taken on its own initiative after consulting with national authorities, or upon request by a national competent authority.

The ECB is also responsible for the effective and consistent functioning of the SSM,SSM Regulation, art 6(1). and it may give instructions to the NCAs;ibid, art 6(5). this implies a hierarchy between the EU institutions and their national counterpartsA Karagianni and M Scholten, ‘Accountability Gaps in the Single Supervisory Mechanism (SSM) Framework’ (2018) 34 Utrecht Journal of International and European Law 187.. Additionally, the ECB may require NCAs to report regularly on the measures they have taken regarding the performance of the tasks carried out to exercise oversight over the functioning of the SSM system.

For all these reasons it is often difficult, in practice, to distinguish delineate the competences transferred to the ECB from those remaining within the NCAs. It is therefore no surprise that this issue has already given rise to one preliminary reference to the CJEU.Case C-52/17 VTB Bank (Austria), EU:C:2018:648.

3.The concept of national law applicable

A central question in EU law is the role of national law. Although EU courts in principle do not apply national law, its interpretation remains necessary in areas where EU law needs to be complemented by national provisions.M Prek and S Lefèvre, ‘The EU Courts as “National” Courts: National Law in the EU Judicial Process’ (2017) 54 Common Market Law Review 369, 378. This happens in two situations: the first occurs when an EU norm makes an explicit reference to national provisions. For example, in the field of public procurement, EU institutions and organs usually include a contract clause requiring compliance with the national legislation of the State in which the activities of tenders must be carried out. The second situation occurs in other areas of EU law where EU institutions or organs are vested with the task of accounting for national law provisions. For instance, Article 8(6) Regulation (EU) 2017/1001Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark [2017] OJ L154/1. states that one ground for opposing the registration of an EU trademark is if an application for a designation of origin or a geographical indication has already been submitted in accordance with Union legislation or national law. These examples show that, under EU law, there is a certain renvoi to national provisions.

3.1.​Meaning of the concept national law applicable in the SSM

The SSM Regulation has different provisions prescribing the application of national law by the ECB. Article 4(3) SSM Regulation enables the European Central Bank to apply all relevant Union law and, where this Union law is composed of directives, the national law transposing those directives; when the relevant Union law is composed of regulations that explicitly grant optionsThe predecessor of the European Banking Agency, the Committee of European Banking Supervisors, defined “options” in its Guidelines on Supervisory Disclosure of January 2010 as ‘a situation in which competent authorities or Member States are given a choice on how to comply with a given provision, selecting from a range of alternatives set forth in Community legislation’: Committee of European Banking Supervisors, ‘CEBS Guidelines on Supervisory Disclosure – Revised’ (European Banking Authority, January 2010) <www.eba.europa.eu/sites/default/documents/files/documents/10180/105237/d70c1f4c-9e0e-48c5-b59b-9d4784e03f10/CEBSGuidelinesonSupervisoryDisclosurerevisedJan.pdf?retry=1> accessed 13 July 2021. for the Member States, the ECB shall also apply the national legislation exercising those options.An example of an option can be found in Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on Access to the Activity of Credit Institutions and the Prudential Supervision of Credit Institutions and Investment Firms, Amending Directive 2002/87/EC and Repealing Directives 2006/48/EC and 2006/49/EC [2013] OJ L176/338 [CRD], arts 128ff on capital buffers, which Member States are free to implement in different ways. Nevertheless, Article 5(2) SSM Regulation has limited the options of the Member States, because the ECB could apply higher requirements for capital buffers than those applied by the national competent authorities when deemed necessary. For this reason, it is possible to affirm that not only is EU law applicable in the SSM, but also national law is applicable (to a certain extent). As some authors have indicated, even though the ECB is an EU institution, it exercises public authority of the Member States pursuant to Article 4(3) of the SSM Regulation.F Coman-Kund and F Amtenbrink, ‘On the Scope and Limits of the Application of National Law by the European Central Bank within the Single Supervisory Mechanism’ (2018) 33 Banking & Finance Law Review 133, 157. This underlines the special administrative nature of the SSM which – like the European System of Central Banks (ESCB) – is formed by the EU administration and the national administrations.

However, other provisions in the SSM Regulation imply an indirect application of national law by the ECB. For instance, Article 6(5) SSM Regulation grants the ECB the power to instruct the NCAs through regulations, guidelines, or general instructions on how to perform their supervisory tasks and on how to adopt their supervisory decisions. In other words, the ECB has also been granted the power to instruct national regulators on how to apply their respective national laws.L Boucon and D Jaros, ‘The Application of National Law by the European Central Bank within the EU Banking Union’s Single Supervisory Mechanism: A New Mode of European Integration?’ (2018) 10 European Journal of Legal Studies 155, 166. Furthermore, there are even provisions that extend the competence of the ECB. In this sense, Article 9(1) SSM Regulation allows the ECB to instruct national regulators to use their powers under and in accordance with the conditions set out in national law when the ECB does not have the powers to act. The ECB, in other words, may require national regulators to fill in when the ECB itself is not entitled to intervene.

The application of national law by an EU institution in banking supervision constitutes a novelty in EU law. It also raises many questions on how it should be interpreted. Firstly, in many cases, the transposition of directives is deeply embedded in pre-existing national provisions that reflect previous national legislative singularities. Secondly, national provisions are applied in a specific way due to domestic case-law or administrative practices. Thirdly, in the absence of a harmonised European administrative procedural law, the ECB is bound by national procedural provisions. The SSM Regulation and the SSM Framework Regulation do indeed contain a minimum of general procedural provisions. Even Directive 2013/36/EU of on Access to the Activity of Credit Institutions and the Prudential Supervision of Credit Institutions and Investment Firms (hereafter CRD)See Article 22 CRD on the assessment of qualifying holdings in a credit institution, which stipulates, in paragraph 2, that competent authorities shall have a maximum period of 60 working days from the day they are notified of an intended acquisition. In these cases, this deadline must be applied by the ECB. contains some procedural provisions, although it contains more examples of open procedural provisions in the CRD, such as the assessment of the suitability of members of the management body of a financial entity. Despite this, EU administrative law remains silent on whether national administrative provisions concerning deadlinesAs indicated by L Wissink, ‘Challenges to an Efficient European Centralised Banking Supervision (SSM): Single Rulebook, Joint Supervisory Teams and Split Supervisory Tasks’ (2017) 18 European Business Organization Law Review 431, 443: ‘The timelines for deciding whether to grant an authorization are, for example, in the Netherlands still shorter than in many other Member States. Dutch law states that the competent authority has to prepare a draft decision for the ECB within 13 weeks of receiving the notification, and the final decision has to be adopted within 6 months at the very maximum, whereas the maximum period under the CRD IV is much longer (i.e. a year)’. must be applied in addition to those general provisions, and on what happens when national provisions are more specific while not contradictory to those general provisions set out in the regulations.

In light of the above, and due to the disparities of scenarios that can be applied, it is not clear what is meant precisely by the concept ‘national law’ in the SSM Regulation. This could be detrimental to the principle of legal certainty and the principle of legitimate expectations, since banks could face ECB interpretations of national rules which may be different from previous national interpretations. According to some authors in an annulment procedure against a decision of the ECB,M Prek and S Lefèvre, ‘The EU Courts as “National” Courts: National Law in the EU Judicial Process’ (2017) 54 Common Market Law Review 369, 381. the General Court might be called upon to verify not only whether such a decision complies with EU law, but also whether it is in conformity with the relevant national legislation representing the exercise of such option and discretion.

On top of that, the creation of the SSM has given an additional reason to further develop the Single Rulebook. The Single Rulebook refers to the group of norms that regulate how the supervision of banks is carried out in the European Union, either by the national competent authorities or by the European Central Bank. The main objective is to create directly applicable rules for all institutions across Europe. The structure of the banking union relies on the Single Rulebook to apply a common standard while supervising credit institutions in the eurozone.

The Single Rulebook mainly consists of directives which – unlike regulations – are not directly applicable and need to be transposed into national law to be applicable. As a result, the Single Rulebook also includes national laws which implement and give effect to the relevant Union directives.A Lefterov, ‘The Single Rulebook: Legal Issues and Relevance in the SSM Context’ (2015) ECB Legal Working Paper Series No 15/2015 54, 9 <www.ecb.europa.eu/pub/pdf/scplps/ecblwp15.en.pdf > accessed 13 July 2021. This situation has been criticisedR Smits, ‘SSM and the SRB Accountability at European Level: Room for Improvements?’ (Economic Governance Support Unit (EGOV) Directorate-General for Internal Policies of the European Parliament 2020) 19 <www.europarl.europa.eu/RegData/etudes/STUD/2020/645726/IPOL_STU(2020)645726_EN.pdf> accessed 13 July 2021. as leading, inevitably, to the undermining of the effectiveness of supervision and equal treatment of credit institutions. The use of directives is also problematic for linguistic reasons, because the ECB must take into account national provisions, which are not usually translated. As a result, some have said that the Single Rulebook is not really a ‘single’ rulebook at all,M Lehmann, ‘Single Supervisory Mechanism Without Regulatory Harmonisation? Introducing a European Banking Act and a “CRR Light” for Smaller Institutions’ (2017) EBI Working Paper Series No 3/2017, 17 <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2912166#> accessed 13 July 2021. but is rather a patchwork of European and national rulesIn 2016, the ECB published a Guide and a Regulation harmonizing the exercise of over 130 options and discretions within the SSM: See ECB, ‘ECB Guide on options and discretions available in Union law. Consolidated version’ (Banking Supervision, November 2016) <www.bankingsupervision.europa.eu/ecb/pub/pdf/ond_guide_consolidated.en.pdf> accessed 13 July 2021 and Regulation (EU) 2016/446 of the European Central Bank of 14 March 2016 on the exercise of options and discretions available in Union law (ECB/2016/4) [2016] OJ L78/60. full of gaping holes which are filled out differently by the Member States, consequently leading to distortions of competitions, complex and inefficient supervision, and hidden systemic risks. Thus, some authors propose adopting a European Banking Act,M Lehmann, ‘Single Supervisory Mechanism Without Regulatory Harmonisation? Introducing a European Banking Act and a “CRR Light” for Smaller Institutions’ (2017) EBI Working Paper Series No 3/2017. which would combine the different directives and regulations in force into one set of rules.

However, it is important to recall that such a horizontal regulation cannot be achieved due to the lack of a legal basis. According to Article 4(2) TFEU,Consolidated Version of the Treaty on the Functioning of the European Union [2016] OJ C202/49 [TFEU]. banking supervision is an area of shared competence, and the Member States enjoy a certain margin of appreciation that does not allow a wider use of regulation as the legal act for the adoption of prudential standards. However, this situation could promote the idea that some banks have incentives to establish their seat in a Member State where the legal standards are lower.

3.2.​Legal Theories regarding the application of national law applicable in the SSM

Some authors have tried to conceptualise the reference made in Article 4(3) SSM Regulation to apply national law.A Witte, ‘The Application of National Banking Supervision Law by the ECB: Three Parallel Modes of Executing EU Law?’ (2014) 21 Maastricht Journal of European and Comparative Law 89, 106 and 108. The first theory regards the application of national law provisions by the ECB as a transformation. According to this theory, once national laws are applied they become part of the EU legal order and become subject to the judicial review of the CJEU. This theory was supported by Advocate General Mengozzi when he declared that national law in such a configuration ‘becomes part of the legal context which the Courts of the European Union must take into account in their assessment’.Case C-401/09 P Evropaïki Dynamiki v ECB, EU:C:2011:31, Opinion of AG Mengozzi, para 72. However, the CJEU has consistently refrained, under settled case-law, to rule on issues concerning national law. In a preliminary reference procedure under Article 267 TFEU, the Court of Justice has no power to rule on facts pertaining to national law,Case C-159/10 Fuchs and Köhler, EU:C:2011:508, para 30 and Case C-507/15 Agro Foreign Trade & Agency, EU:C:2017:129, para 23. nor can it verify whether they are correct. Likewise, the Court cannot identify the provisions of national law relevant to the dispute – such as national procedural law –Case C-50/00 P Unión de Pequeños Agricultores v Council, EU:C:2002:462, para 43. to give a ruling on their interpretation or to decide whether the referring Court’s interpretation is correct. Those questions fall under the exclusive competence of the national courts. The national judge is the only one responsible for assessing the scope of application of national law and how it must be applied.Case C-453/04 innoventif, EU:C:2006:361, para 29. Moreover, the Court of Justice cannot ‘verify the accuracy of the interpretation of national law made by the national court’, but it ‘must base its reasoning on the interpretation of national law as described to it by that court’.Case C-69/14 Târsia, EU:C:2015:662, para 13.

A second theory considers that Article 4(3) SSM Regulation only commands the ECB to apply relevant national legislation applicable, but this does not change the nature of the norms involved. This theory is supported by Recital 34 SSM Regulation, which says that

[f]or the carrying out of its tasks and the exercise of its supervisory powers, the ECB should apply the material rules relating to the prudential supervision of credit institutions. Those rules are composed of the relevant Union law, in particular directly applicable Regulations or Directives, such as those on capital requirements for credit institutions and on financial conglomerates’.SSM Regulation, Recital 34.

The Recital, however, does not include national law. In this sense, some authors have indicated that the application by the ECB of national law requires that it shall be directly or indirectly linked with the supervisory tasks at the national level that can be subsumed to the SSM framework.A Biondi and A Spano, ‘The ECB and the Application of National Law in the SSM: New Yet Old…’ (2020) 31 European Business Law Review 1023, 1034. In practice, this theory might not be as consistent as it seems. Indeed, if a Member State has not correctly implemented a directive into its legal system, would the ECB be obliged to apply it? Instead, as some have suggested,K Banks, ‘Incorrect Implementation of EU Directives: What Effects for the ECB and the CJEU, and What Mechanisms for Rectification?’ (ECB Legal Conference 2019. Building Bridges: Central Banking Law in an Interconnected World, December 2019) 124. Article 4(3) SSM Regulation implies that the ECB shall apply national law only to the extent that it is compatible with Union. Where it is not so compatible, it must apply those provisions of EU law which are capable of being directly applied or of producing direct effect. The first theory might consequently be more realistic in practice.

3.3.Interpretation of the Court of Justice regarding national law in the SSM

There have been few cases where the ECB has had to directly apply national substantive law directly and which have later led to judicial proceedings before the CJEU.E Gagliardi and L Wissink, ‘Ensuring Effective Judicial Protection in Case of ECB Decisions Based on National Law’ (2020) 13 Review of European Administrative Law 41, 44. The first one was the Crédit Mutuel Arkéa v ECB judgment.Case T-52/16 Crédit mutuel Arkéa v ECB, EU:T:2017:902. This case concerned an annulment action against a decision of the ECB regarding the Crédit Mutuel group. The main point of discussion was the ECB’s approach towards the consolidated prudential supervision of the Crédit Mutuel group and the imposition of additional capital requirements. The Court accepted the previous interpretation by the General Court, and ruled:

it is settled case-law that the scope of national laws, regulations or administrative provisions must be assessed in the light of the interpretation given them by national courts (…). However, in the absence of decisions by the competent national courts, it is for the Court to rule on the scope of those provisions.ibid, para 131.

One year later, a judgmentCase T-133/16 Caisse régionale de crédit agricole mutuel Alpes Provence v ECB, EU:T:2018:219. came out concerning the annulment of the ECB decision opposing the fact that proposed candidates could simultaneously carry out the functions of chairmen of the board of directors and of ‘effective directors’ for a group of banks belonging to the French regional agricultural credit union. The applicants contested the ECB’s interpretation of the concept ‘effective director’, as it was included in Article 13 CRD and transposed into national law, particularly in Articles L. 511 to 13 French Monetary and Financial Code (hereafter CMF).Case T-133/16 Caisse régionale de crédit agricole mutuel Alpes Provence v ECB, EU:T:2018:219, para 49. The General Court found that, according to Article 4(3) SSM Regulation, the ECB must apply both relevant Union provisions and national laws that transpose these provisions. Hence, it concluded that an assessment of the legality of the contested decisions would be required to determine if the ECB committed the error of law alleged by the applicants. The General Court ruled that the interpretation of the CMF by the French Conseil d’État was compatible with its own interpretation of the CRD, and rejected all arguments based on alleged violations of national law by the ECB without any further scrutiny of the relevant national law.

Notwithstanding the above, a procedural limitation seems to arise in these types of cases. Under Article 58 of the Statute of the Court of Justice of the European Union,Consolidated Version of the Treaty on the Functioning of the European Union. Protocol (No 3) on the Statute of the Court of Justice of the European Union [2016] OJ C202/210. an appeal to the Court of Justice must be based on: (i) lack of competence of the General Court; (ii) a breach of procedure before it which adversely affects the interests of the appellant; or, lastly, (iii) the infringement of Union law by the General Court.E Gagliardi and L Wissink, ‘Ensuring Effective Judicial Protection in Case of ECB Decisions Based on National Law’ (2020) 13 Review of European Administrative Law 41, 49. At first glance, this would exclude any infringement of national law by the General Court. However, it would also depend on the CJEU’s interpretation on whether this may also include national law. It could further be argued whether the Statute of the Court of Justice should be reformed to keep EU procedural rules updated to the latest developments of EU law.

4.The control of composite procedures in the SSM

4.1.​Delimitation of the concept composite procedures

A distinct feature of European law has been that the authorities of Member States apply and execute EU law.A Witte, ‘The Application of National Banking Supervision Law by the ECB: Three Parallel Modes of Executing EU Law?’ (2014) 21 Maastricht Journal of European and Comparative Law 89, 90. This sui generis functioning prescribed in Article 296(1) TFEU distinguishes the European integration project from any national decentralised administrative system, where federal law is applied and executed in most cases by federal authorities. Nevertheless, the EU administrative system is increasingly characterised by a close integration between national and EU authorities, while administrative procedures in the sphere of EU law are increasingly integrated.HCH Hofmann, ‘Composite Decision Making Procedures in EU Administrative Law’ in HCH Hofmann and A Türk (eds), Legal Challenges in EU Administrative Law (Edward Elgar Publishing 2009) 136. The SSM is a unique example of the high degree of cooperation between the ECB and the NCAs. Pursuant to Articles 73 to 88, Part V, the SSM Framework Regulation creates a number of what is usually referred to as ‘common procedures’ or ‘composite procedures’ which require the exercise of decisional powers between the NCAs and the ECB to adopt a final legal act.See F Brito Bastos, ‘Judicial Review of Composite Administrative Procedures in the Single Supervisory Mechanism: Berlusconi’ (2019) 56 Common Market Law Review 1355, 1367: according to the Brito Bastos, the Court has acknowledged the term “composite administrative procedure” for the first time in the Berlusconi ruling.

Despite the lack of an official definition,According to art I-4 (3), Book I, of the ReNEUAL Draft Model Rules on EU Administrative Procedures <www.reneual.eu/index.php/projects-and-publications/reneual-1-0> accessed 14 July 2021: ‘“composite procedure” means an administrative procedure where EU authorities and the authorities of a Member State or of different Member States have distinct functions which are interdependent. A composite procedure may also mean the combination of two administrative procedures that are directly linked’. it could be said that, in the composite procedures, the decisional power is exercised jointly rather than being strictly divided between national and EU authorities in a succession of national and EU procedural phases.F Brito Bastos, ‘An Administrative Crack in the EU’s Rule of Law: Composite Decision-Making and Nonjusticiable National Law’ (2020) 16 European Constitutional Law Review 63, 64. These multiple-step procedures with inputs from different administrative actors cooperate either vertically between EU institutions and bodies and the Member States administrations, horizontally between various Member States, or in triangular procedures with different Member State and EU institutions and bodies.HCH Hofmann, ‘Composite Decision Making Procedures in EU Administrative Law’ in HCH Hofmann and A Türk (eds), Legal Challenges in EU Administrative Law (Edward Elgar Publishing 2009) 136. Nevertheless, there are three types of procedures that have predominantly been used across many EU policies:B Budinska, ‘Judicial Review of Revocation Decisions in the Context of European Banking Supervision’ (2019) 12 Review of European Administrative Law 175, 186. (i) the national administration conducts the whole procedure and drafts a preparatory measure for the EU administration, which does not enjoy any discretion; (ii) the national administration drafts a preparatory measure and submits it to the EU authority, which can deviate from the proposal; and (iii) the EU administration decides the matter on its own, with some marginal assistance by the national authorities.

4.2.​Composite procedures in the SSM and the relevant case law of the CJEU

As Advocate General Campos Sánchez Bordona recalled in his opinion, these types of procedures ‘are not new in EU law’ and there are examples in other areas where national and EU administrative bodies act together, ‘such as structural funds, agriculture, and the appointment of member of the European parliament’.Case C-219/17 Berlusconi and Fininvest, EU:C:2018:502, Opinion of AG Campos Sánchez-Bordona, paras 3, 57–58. However, in the banking union, its presence and use are more extended. An example of a composite procedure in the SSM can be the authorisation of the acquisition of qualifying holdings under Article 15 SSM Regulation, further detailed in Articles 85 to 87 SSM Framework Regulation. According to this procedure, the ECB enjoys the exclusive competence to approve the acquisition. However, the NCAs are responsible for providing the ECB with all the information it needs (such as the technical expertise and good reputation of the acquiror, who, as the owner of a relevant number of shares, would have a significant influence on the functioning of the bank) and to prepare a proposal. If these conditions are not met, the ECB will grant the applicant the right to be heard, regulated in Article 31 SSM Framework Regulation. Lastly, the ECB takes a final decision.

In the Berlusconi case,Case C-219/17 Berlusconi and Fininvest, EU:C:2018:1023. In this case, the Bank of Italy – the Italian supervisory banking authority – adopted a preparatory act which put forth to the European Central Bank that former Italian Prime Minister Silvio Berlusconi, due to a conviction for tax fraud, no longer fulfilled the good reputation requirements to hold a qualifying holding. The European Central Bank concurred, and adopted a final decision opposing Mr. Berlusconi’s qualifying holding. the CJEU dealt with a decision adopted by the ECB pursuant to a composite procedure that governs authorisation for the acquisition of qualifying holdings. The question raised in this preliminary reference by the Italian Consiglio di Stato concerned which Court – national or EU – is competent to review the decisions taken in the composite procedure of Article 15 SSM Regulation. The Berlusconi case is a good example of how difficult it is to determine which Court is competent to rule on a particular controversy, regardless of the fact that the ECB has the last say in the particular case of acquisition of qualifying holdings.

The standard of judicial protection in composite procedures was, however, predefined by two precedents decided before the Berlusconi judgment. The first precedent is the Borelli case-law,Case C-97/91 Oleificio Borelli v Commission, EU:C:1992:491. In this case, the Italian company Oleificio Borelli applied for financial aid from the European Agricultural Guidance and Guarantee Fund to build an oil mill. The application was evaluated by the Italian authority – the region of Liguria – which rejected the request for aid; the European Commission later accepted the decision previously adopted by the national authority. The applicant started an action for annulment procedure and argued there had been mistake in the assessment carried out by the national authority, and that this had resulted in an unlawful decision from the European Commission. relevant when the EU authority has no discretion at all. The second precedent is the one set by the Swedenv. CommissionCase C-64/05 P Sweden v Commission, EU:C:2007:802. jurisprudence, relevant when the EU is not bound by the national preparatory acts and enjoys a certain margin of discretionary powers.

In the seminal Borelli judgment,See, for a more complete review of the case, F Brito Bastos, ‘The Borelli Doctrine Revisited: Three Issues of Coherence in a Landmark Ruling for EU Administrative Justice’ (2015) 8 Review of European Administrative Law 269. the Court declared it did not have jurisdiction to rule on the lawfulness of a measure adopted by the national authority,Case C-97/91 Oleificio Borelli v Commission, EU:C:1992:491, paras 9–10. arguing based on the division of powers between national authorities and the EU institutions. According to the Borelli case law:

it is for the national courts, where appropriate and after obtaining a preliminary ruling from the Court, to rule on the lawfulness of the national measure at issue on the same terms on which they review any definitive measure adopted by the same national authority which is capable of adversely affecting third parties and, consequently, to regard an action brought for that purpose as admissible even if the domestic rules of procedure do not provide for this in such a case.ibid, para 13.

This conclusion has, until recently, been reiterated by the CJEU.Case C-562/12 Liivimaa Lihaveis, EU:C:2014:2229. In this case, Estonian procedural law prevented applicants from challenging before court the rejection of an application for funding under the European Regional Development Fund evaluated by a monitoring committee – a body established by agreement between the Republic of Estonia and the Republic of Latvia on the basis of Article 63(1) of Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 [2006] OJ L210/25. Otherwise, there could be a breach of Article 47 of the European Charter of Fundamental Rights,Consolidated Version of the Charter of Fundamental Rights of the European Union [2016] OJ C202/389. given that citizens would be unable to access the Court to challenge any legal acts that directly affect them.

4.3.​The judicial protection standard of the CJEU in composite procedures

Any act of the EU can be subject to review by the CJEU – either directly via the annulment procedureArticle 263(2) TFEU provides for a non-exhaustive list of pleas in law or grounds of review that may be invoked by the applicant, including (i) lack of competence; (ii) infringement of an essential procedural requirement; (iii) infringement of the Treaties or of any rule of law relating to their application; or (iv) misuse of powers. or indirectly via the preliminary ruling procedure.The preliminary ruling procedure under Article 267 TFEU gives a vaguer ground of review, limited either to the interpretation of the Treaties or the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union. The only key prerequisite is that such a question is raised in a case pending before a court or tribunal of a Member State. In principle, an act is open to review via an annulment procedure only if it is a measure definitively laying down the position of an EU institution on the conclusion of that provision. In contrast, intermediate or provisional measures intended to pave the way for the final decision are not subject to challenge, Case C-60/81 IBM v Commission, EU:C:1981:264, para 10. unless they can affect the applicant’s legal sphere independently of the final decision.Joined Cases T-125/03 and T-253/03 Akzo Nobel Chemicals and Akcros Chemicals v Commission, EU:T:2007:287.

In this context, it is important to mention the opinion of Advocate General Sánchez-Bordona in the Berlusconi case, when he recalled the key elements regarding composite procedures from the settled case-law of the CJEU.Case C-219/17 Berlusconi and Fininvest, EU:C:2018:502, paras 65–71. Firstly, the ECJ has no jurisdiction to rule on the lawfulness of national preparatory acts that form part of an EU decision-making procedure. However, to ensure that there are ‘no gaps in judicial review in such cases’, the CJEU requires national courts to review the legality of any measure adopted by the national authority. Nevertheless, the Court has held that the division of jurisdiction according to the principle of loyal cooperation established in Article 4(3) TEU requires that national courts should defer to the CJEU to review the entirety of the composite procedure and refrain from reviewing national preparatory acts that have led to an EU decision. Suppose national courts could challenge the preparatory acts. In that case, the Court’s exclusive jurisdiction to rule on the legality of that final decision could potentially be compromised when there is a risk of a divergent assessment.

Secondly, the jurisprudence of the CJEU has always rejected the idea that the irregularity of any national preparatory act affects the validity or contaminates the final decision at the EU level.F Brito Bastos, ‘Derivate Illegality in European Composite Administrative Procedures’ (2018) 55 Common Market Law Review 101, 104. On the one hand, derivative illegality would open the door to judging the final EU decision against norms of national law breached during previous national procedural phases in composite procedures. This would make the validity of the final EU measure rely on national law, which contravenes the notion of validity of EU legal acts independent of national law.Case 6/64 Costa v ENEL, EU:C:1964:66 and Case 106/77 Amministrazione delle finanze dello Stato v Simmenthal, EU:C:1978:49. On the other hand, the derivative illegality of final EU decisions threatens the uniformity of EU law.

In the Berlusconi case, the Court explains that, for an administrative procedure of this nature to be effective, ‘there must be necessarily a single judicial review’ done by EU courts after the EU authority has taken the decision that brings the procedure to an end.Case C-219/17 Berlusconi and Fininvest, EU:C:2018:1023, paras 49–50. The Court further affirmed that, in procedures of this sort, the legislator does not intend to ‘establish a division between two powers – one national and the other of the [EU] with separate powers, but (…) [rather] an exclusive decision-making power’.ibid, para 44. Thus, the Court declared its competence ‘by virtue of their exclusive jurisdiction to review the legality of EU acts on the basis of Article 263 TFEU’.ibid.

According to the Borelli case-law, EU courts are only competent to review decisions adopted by EU organs and institutions when the national preparatory measures do not bind them. Therefore, national preparatory measures are only reviewable before the national courts, even though it might not be possible in accordance with the applicable national procedural rule. While this requirement imposed by the European courts seems to fill the possible gaps of judicial protection, it does leave some questions open:M Eliantonio, ‘Judicial Review in an Integrated Administration: The Case of “Composite Procedures”’ (2015) 7 Review of European Administrative Law 65, 97. first of all, there is no guarantee that national courts would disapply national procedural rules that they would admit claims against national preparatory measures. Lawyers may not know to rely on this case-law before the national courts, and national judges might be reluctant to apply the European standard fixed by the CJEU. In general, national judges are not willing to set their own procedural rules aside, which may endanger legal certainty and could resort to differential treatment if national courts come to different conclusions in cases concerning the same or similar preparatory measures taken in the context of composite procedures. Moreover, based on the Foto-Frost ruling,Case C-314/85 Foto-Frost v Hauptzollamt Lübeck-Ost, EU:C:1987:452, para 15. national courts do not have the power under any circumstance to invalidate EU measures or measures issued in a different Member State. However, the Foto-Frost ruling was issued when it was inconceivable that an EU institution would base its acts on anything other than directly applicable EU law, and when it was still possible to distinguish national law and European Union law.

For all these reasons, any hypothetical applicant who wishes to challenge the decision adopted in a composite procedure would need to bring a subsequent claim before the competent national court and before the General Court of the EU via the annulment procedure. The second option would be to challenge the legality of the national act before the competent national court, and request the national judge to refer a preliminary question on the validity of the EU act. Although the Court has recently recalled the obligation for courts of last instance to submit a preliminary question regarding the interpretation of EU law,Case C-416/17 Commission v France (Précompte mobilier), EU:C:2018:811. the possibility to submit a preliminary question remains up to the national judge, who is not bound by the request of an interested party. Furthermore, according to the Deggendorf case-law,Case C-188/92 TWD v Bundesrepublik Deutschland, EU:C:1994:90, para 17. this route will not be open to those who could clearly have challenged the respective EU act via an action for annulment but has not done so in due time.

This current solution is an excessive burden on any citizen when exercising their right to an effective remedy, and involves extra time and money. The CJEU has recognised in the past the ‘right to obtain an effective remedy in a competent court’;Case C-222/84 Johnston v Chief Constable of the Royal Ulster Constabulary, EU:C:1986:206, para 19. still, to challenge a composite procedure can turn out to be a legal labyrinth, which may lead to a gap in the judicial system of the EU.

4.4.​Possible solutions to the gaps in the judicial protection of the composite procedures in the SSM

It was always a common understanding that, under EU law, there is a coherent and complete system of legal remedies that guarantee the right of judicial protection and the rule of law vis-à-vis the Union institutions.K Lenaerts, ‘The Rule of Law and the Coherence of the Judicial System of the European Union’ (2007) 44 Common Market Law Review 1625, 1626. The Court of Justice first underlined these complete systems of legal remedies in the1986 Les Verts judgment.Case C-294/83 Les Verts v Parliament, EU:C:1986:166. In this landmark decision, the CJEU defined the Union as a community of law and introduced the fundamental concept that the EU is based on the rule of law. Therefore, ‘neither its Member States nor its institutions can avoid a review of the question whether the measures adopted by them are in conformity with the basic constitutional charter, the Treaty’.ibid, para 23. However, the SSM constitutes a legal novelty for which the CJEU is still applying an old set of legal remedies – or at least relying on an old fashioned separation of jurisdiction no longer applicable. The case-law of the CJEU has predominantly aimed at ensuring Member State compliance with the right to an effective remedy. Still, when it comes to reviewing EU provisions against this right, the general consideration is a lot less pressing, and the CJEU has decided to be less stringent in its application.HCH Hofmann, ‘A Commentary on the Right to an Effective Remedy in the Case Law of the CJEU’ (2019) University of Luxembourg Law Working Paper No. 2019/016, 2 <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3503540> accessed 14 July 2021.

There have been some proposals to fix the gaps in the judicial protection of composite procedures.Some of these proposals clearly opt for ‘falls within the exclusive jurisdiction of the courts of the Member State’, as in Joined Cases C-297/88 and C-197/89 Massam Dzodzi v Belgian State, EU:C:1990:360, paras 41–42. A possibility could be to expand the current scope of reviewable acts under Article 263 TFEU to preparatory measures, which in the current application of the IBM case-law would not be considered a reviewable act.Case C-60/81 IBM v Commission, EU:C:1981:264. In his opinion on the Berlusconi case,Case C-219/17 Berlusconi and Fininvest, EU:C:2018:502, Opinion of AG Campos Sánchez-Bordona, paras 113–114. Advocate General Sanchez Bordona proposed that it should be for the General Court in an action for annulment to examine the lawfulness of the preparatory act on which it is based. In his opinion, Advocate General Sánchez-Bordona indicated that the IBM case-law could offer a useful analogy for the judicial protection in composite procedures.

In the past, some authors have been in favour of reinforcing the CJEU’s competence to examine all the questions relevant to the case.See G Gaja, ‘Case C-6/99, Association Greenpeace France and Others v. Ministère de l’Agriculture et de La Pêche and Others’ (2000) 37 Common Market Law Review 1427, 1431. Gaja states that ‘the Court should be in principle entitled to examine all the questions that are relevant for ascertaining the validity of the Community act – whether these questions relate to facts, EC law or national law’. This opinion was also shared by Advocate General Sánchez Bordona in the Berlusconi case, when he considered that the ECB’s new mandate to authorise acquisitions of an increase in qualifying holdings implies an extension of the jurisdiction of the Court of Justice to apply and interpret national law that transposes directives.Case C-219/17 Berlusconi and Fininvest, EU:C:2018:502, Opinion of AG Campos Sánchez-Bordona, para 114. The CJEU should rethink its previous case-law, especially considering the singularity of the judicial scrutiny that is currently being done on banking supervision cases, which covers the interpretation of not only EU law, but also of applicable national law. Even though the CJEU has once again expanded its powers by arrogating itself the power to interpret national law in the absence of a decision by the competent national Court, the existence of composite procedures in the SSM adopted after some intermediate acts represents a legal challenge to the current EU law to guarantee the right to access to courts. In the past, the Court has considered that if the intermediate act was deemed to have independent legal effects, it could be separately reviewable.Case C-53/85 AKZO Chemie v Commission, EU:C:1986:256; Case C-400/99 Italy v Commission, EU:C:2005:275; Case C-39/93 P SFEI e.a v Commission, EU:C:1994:253. This possibility should be considered by the CJEU in the future with regard to the SSM in order to ensure an effective remedy under EU law.

Other proposalsM Eliantonio, ‘Judicial Review in an Integrated Administration: The Case of “Composite Procedures”’ (2015) 7 Review of European Administrative Law 65, 98. had previously suggested the possibility of bringing only one claim – against the final measure before the Court of the legal system which took the final measure – and introduce the possibility of a ‘cross’ (to another Member State) or ‘reverse’ (by the CJEU to the national level) preliminary ruling system, whereby the competent Court could ask a question of validity to a competent court of the legal system where the preliminary measures were issued. However, this solution seems less likely to be accepted by the CJEU. In the past, the CJEU has been reluctant to lose its exclusive control of the EU legal order.Opinion 1/09 of the Court (Full Court) of 8 March 2011, EU:C:2011:123, paras 66–67 and Opinion 2/13 of the Court (Full Court) of 18 December 2014, EU:C:2014:2454, para 175.

4.5.​A possible extension of the Rimšēvičs judgment to the SSM

Another option to ensure an effective remedy in the context of the SSM could be to extend the Rimšēvičs judgment. The facts of the case concerned the launching of a criminal procedure against Ilmārs Rimšēvičs, governor of the Bank of Latvia, who was arrested and forbidden to participate in the meetings of the Latvian central bank by the Latvian Anticorruption Office. He also needed to request an authorisation to leave the country while the investigation was being carried out. This prohibition to travel affected the performance of his duties as a member of the ECB’s Governing Council, such as, for instance, the attendance to the monthly meeting that takes place at the ECB headquarters in Frankfurt am Main. For this reason, both Mr. Rimšēvičs and the European Central Bank contested the national measure at the Court of Justice on the basis of Article 14(2) of the Statute of the ESCB and of the ECB (hereafter ESCB-ECB Statute):Consolidated Version of the Treaty on the Functioning of the European Union. Protocol (No 4) on the Statute of the European System of Central banks and of the European Central Bank [2016] OJ C202/230, art 14(2). Article 14(2) stipulates that if a decision to relieve a governor from office is adopted, then it is possible for the Governor concerned or the Governing Council to refer the decision to the Court of Justice ‘on grounds of infringement of the Treaties or of any rule of law relating to their application’.ibid.

The European Central Bank requested the Court to declare that Latvia had infringed its obligations by adopting that national measure. However, Advocate General Kokott warned that if the Court were merely to find that the national measure at stake was incompatible with the ESCB-ECB Statute, it would be for the Republic of Latvia to take the necessary measures to ensure that the judgment of the Court was implemented within its internal legal order.Case C-202/18 Rimšēvičs v Latvia, EU:C:2018:1030, Opinion of AG Kokott, para 38. She also expressed that the annulment of the national measure would be ‘an extremely serious interference in the sphere of competence and the procedural autonomy of the Member States’, and that ‘[i]n the light of the constitutional importance of the principles of subsidiarity and of the conferral of powers enshrined in Articles 4 and 5 TEU, the possibility of such interference would have to be expressly provided for in the Treaties’.ibid, para 60.

The CJEU rejected this last point of Advocate General Kokott’s opinion, and concluded that the ‘architecture of the remedies’ provided by the Treaties distinguished ‘two spheres of legality review for EU and national legal acts, which are ‘interconnected but nevertheless quite separate’.Case C-202/18 Rimšēvičs v Latvia, EU:C:2019:139, paras 52–62. Furthermore, the CJEU concluded that Article 14(2) ESCB-ECB Statute ‘derogates from the general distribution of powers between the national court and the [EU] courts’.ibid, para 69. Lastly, the Court underlined that

[t]he ESCB represents a novel legal construct in EU law which brings together national institutions, namely the national central banks, and an EU institution, namely the ECB, and causes them to cooperate closely with each other, and within which a different structure and a less marked distinction between the EU legal order and national legal orders prevails.ibid.

The CJEU found that the independence of the national central bank governor and – to a greater extent – of the ECB’s Governing Council would be severely undermined if governors could be relieved from office without grounds, and even a temporary prohibition to perform his duties was likely to constitute a form of pressure.Case C-202/18 Rimšēvičs v Latvia, EU:C:2019:139, paras 52–53. Consequently, the CJEU decided to directly annul the act of the Anti-Corruption Office, Latvia, an act of national law, that threatens the independence of the Governing Council of the European Central Bank.

This changing trend suggests that the exclusive competence of the Court of Justice to interpret EU law under Article 19 TEU has begun slowly to move towards complete judicial scrutiny. The Rimšēvičs v Republic of Latvia judgment has been classified by some authors as a highly unusual case,A Hinarejos, ‘The Court of Justice Annuls a National Measure Directly to Protect ECB Independence: Rimšēvičs’ (2019) 56 Common Market Law Review 1649, 1649. by other commentators as the exception that confirms the rule,R Smits, ‘A National Measure Annulled by the European Court of Justice, or: High-Level Judicial Protection for Independent Central Bankers: ECJ 26 February 2019, Cases C-202/18, Ilmārs Rimšēvičs v Republic of Latvia, and C-238/18 European Central Bank v Republic of Latvia, ECLI:EU:C:2019:139’ (2020) 16 European Constitutional Law Review 120, 142. and by other authors as ‘a genuine constitutional moment’, a ‘revolution with the potential of changing EU law forever’.D Sarmiento, ‘Crossing the Baltic Rubicon’ (Verfassungsblog, 4 March 2019) <https://verfassungsblog.de/crossing-the-baltic-rubicon/> accessed 14 July 2021.

Until now, the CJEU has only examined the validity of national law indirectly through the preliminary ruling procedure.A Hinarejos, ‘The Court of Justice Annuls a National Measure Directly to Protect ECB Independence: Rimšēvičs’ (2019) 56 Common Market Law Review 1649, 1656. Nevertheless, this landmark decision shows how the Court of Justice of the EU is evolving from being an international court to being a Supreme Court that has the last word and may disapply and annul national measures if it is necessary to comply with general principles of EU law. Hypothetically, it is not impossible to think of extending the approach used by the Court in the Rimšēvičs case to other situations of comparable dual nature, such as the SSM where there is a less marked distinction between EU and national law prevails and therefore to annul directly national acts. Some authors have supported this view with some reservations.P Dermine and M Eliantonio, ‘Case Note: CJEU (Grand Chamber), Judgment of 19 December 2018, C-219/17, Silvio Berlusconi and Finanziaria d’investimento Fininvest SpA (Fininvest) v Banca d’Italia and Istituto per La Vigilanza Sulle Assicurazioni (IVASS)’ (2019) 12 Review of European Administrative Law 237, 248–249. Although the case dealt with the specific matter of the principle of central bank independence and pursuant a specific legal remedy, the author of this paper finds that the Court should extend the Rimšēvičs case to the SSM, especially considering the number of composite procedures available and since the SSM Regulation explicitly foresees an application of national law by the ECB. These two specific features of the SSM show that there is no clear distinction between national law and EU law; thus, it is not always possible to distinguish which administration adopted the contested act in a composite procedure. The Court should be consistent to the essence of EU law – given that the EU is ‘a union based on the rule of law in which individual parties [must] have the right to challenge before the courts the legality of any decision or other national measure relating to the application to them of an EU act’ –Case C-64/16 Associação Sindical dos Juízes Portugueses, EU:C:2018:117, para 31; Case C-583/11 P Inuit Tapiriit Kanatami and Others v Parliament and Council, EU:C:2013:625, paras 91 and 94. and fill the gap in the judicial protection of the composite protection. Despite the close cooperation between national and European administrations in the ESCB or in the SSM, the current system of judicial protection remains artificially separated. The famous expression dialogue des juges, coined presumably by Bruno Genevois,Ministre de l’intérieur c Cohn-Bendit [1978] Conseil d’État 11604. could become an old memory of what EU procedural law used to be. If national law could also be interpreted to a certain extent by the CJEU, then national courts would eventually disappear from the equation. This approach might be necessary to protect the integrity of the EU project as a whole, as was the case for the Van Gend en Loos judgment when it laid down the foundations of the EU legal system.Case 26/62 Van Gend en Loos, EU:C:1963:1. Here, the Court concluded that ‘the Community constitutes a new legal order of international law for the benefit of which the states have limited their sovereign rights’.ibid, 12. In this sense, in the opinion of this paper’s author, the Rimšēvičs judgment is a new Van Gend en Loos, considering that its reasoning has the potential to further expand the legal integration process across the EU.

The CJEU should extend its power to review the lawfulness of an act of national law because, according to Article 19 TEU, the CJEU ‘shall ensure that in the interpretation and application of the Treaties the law is observed’.TEU, art 19. The mandate of the CJEU is not limited exclusively to EU law, but rather to guaranteeing coherence between the EU legal order and the national law of the Member States. In the past, the European Court of Justice has significantly expanded its jurisdictional boundaries. In rulings such as Les Verts and Sogelma,See Case C-294/83 Les Verts v Parliament, EU:C:1986:166 and Case T-411/06 Sogelma v EAR, EU:T:2008:419. the Court claimed the power to review the acts of the European Parliament and of EU Agencies, even though the wording of the Treaties did not envisage such a review. For quite some time, the decisions adopted by organs or agencies were attributed to the Commission, and therefore susceptible indirectly to judicial review.Case C-32/58 Snupat v High Authority, EU:C:1959:18. However, before the entry into force of the Lisbon Treaty, the Court decided that any act of any EU body ‘intended to produce legal effects vis-à-vis third parties must be open to judicial review’.Case T-411/06 Sogelma v EAR, EU:T:2008:419, para 37. If the European Court of Justice can autonomously broaden the scope of EU acts subject to judicial review, why should it not then be able to expand the type of acts that can be reviewed?

5.Conclusion

The SSM has created a new type of administration, formed by national competent authorities and the ECB – an EU institution responsible for supervising banks in the European Union. However, the competence to assess the legality of the legal acts adopted under the SSM is still divided between the national courts and the CJEU. This separation, although justified, represents a challenge in the long term to guaranteeing access to courts and legal certainty.

The SSM constitutes a new legal challenge because of the close relations between national law and EU law applicable, and the fact that many legal acts of the SSM are adopted at EU level pursuant to preparatory acts carried out at the national level. Furthermore, the Single Rulebook that governs banking supervision is slowly broadening the traditional boundaries of EU law and national law; at the same time, it is carrying out positive harmonisation instead of the traditional negative harmonisation based on the principle of mutual recognition. The system of legal remedies foreseen in the Treaties in reality leaves gaps in the judicial system, because it was meant for another development stage of EU law when it was still possible to distinguish between national law and European Union law. Therefore, different courts were in charge of deciding in their sphere of competence.

Cases related to banking supervision, however, required a new formulation of EU procedural law. The next logical step would be the possibility for the CJEU to directly annul any national act that does not comply with the jurisprudence or with the standards fixed by EU law. The CJEU has already done this in a case related to the monetary policy, and extending this interpretation to the SSM is possible. The Court must continue to explore this possibility in order to complete the interpretation that national courts carry out in areas where there is a close connection with EU law and where it is difficult to distinguish if the national law is a mere transposition of concepts.