M.S.G. and Others v Banco Santander SA (C-775/22)

Contents

Judgment of the Court (First Chamber)5 September 2024^note(Reference for a preliminary ruling — Directive 2014/59/EU — Resolution of credit institutions and investment firms — General principles — Article 34(1)(a) and (b) — Bail-in — Write down of capital instruments — Conversion of subordinated obligations into shares and mandatory transfer for no consideration — Effects — Article 38(13) — Article 53(1) and (3) — Article 60(2), first subparagraph, points (b) and (c) — Articles 73 to 75 — Protection of the rights of shareholders and creditors — Purchase of capital instruments — Flawed and incorrect information provided in the prospectus — Action for damages — Action for a declaration of nullity in respect of the agreement for the purchase of capital instruments — Actions brought against the universal successor of the credit institution subject to a resolution decision)In Joined Cases C‑775/22, C‑779/22 and C‑794/22,REQUESTS for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decisions of 15 December 2022, received at the Court on 20, 22 and 23 December 2022 respectively, in the proceedingsM.S.G.,N.G.S.,A.G.S. (C‑775/22),M.C.S. (C‑779/22),FSC (C‑794/22)vBanco Santander SA,THE COURT (First Chamber),composed of A. Arabadjiev, President of the Chamber, T. von Danwitz (Rapporteur), P.G. Xuereb, A. Kumin and I. Ziemele, Judges,Advocate General: T. Ćapeta,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– A.G.S., N.G.S. and M.S.G., by J. Madrazo Leal, abogado, and V. Montes Guerra, procuradora,– FSC, by J. Concheiro Fernández, abogado,– Banco Santander SA, by R.R. García-Zarco, J.M. Rodríguez Cárcamo and A.M. Rodríguez Conde, abogados,– the Spanish Government, by L. Aguilera Ruiz, acting as Agent,– the Italian Government, by G. Palmieri, acting as Agent, and P. Gentili, avvocato dello Stato,– the European Commission, by P. Němečková, A. Nijenhuis and D. Triantafyllou, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1The requests for a preliminary ruling concern the interpretation of Article 34(1)(a), Article 53(1) and (3), and Article 60(2), points (b) and (c) of the first subparagraph of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ 2014 L 173, p. 190).

2The requests have been made in proceedings between, respectively, the investors (i) M.S.G., N.G.S. and A.G.S., (ii) M.C.S. and (iii) FSC, on the one hand, and Banco Santander SA, in its capacity as successor to Banco Popular Español SA (‘Banco Popular’), on the other, concerning actions for a declaration of nullity or for damages brought by those investors on account of flawed and incorrect information provided to them in the issuance prospectus when purchasing capital instruments that were subsequently converted into shares in Banco Popular.

Legal context

European Union law

Directive 2003/71/EC

3Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (OJ 2003 L 345, p. 64) was repealed, with effect from 21 July 2019, by Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market and repealing Directive 2003/71/EC (OJ 2017 L 168, p. 12). However, at the time of the various sets of main proceedings, the provisions of Directive 2003/71 were still in force.

4Article 6 of that directive, headed ‘Responsibility attaching to the prospectus’, provided:1. Member States shall ensure that responsibility for the information given in a prospectus attaches at least to the issuer or its administrative, management or supervisory bodies, the offeror, the person asking for the admission to trading on a regulated market or the guarantor, as the case may be. The persons responsible shall be clearly identified in the prospectus by their names and functions or, in the case of legal persons, their names and registered offices, as well as declarations by them that, to the best of their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its import.2. Member States shall ensure that their laws, regulation and administrative provisions on civil liability apply to those persons responsible for the information given in a prospectus.…’

Directive 2014/59

5Recitals 45, 49 and 120 of Directive 2014/59 state as follows:(45) In order to avoid moral hazard, any failing institution should be able to exit the market, irrespective of its size and interconnectedness, without causing systemic disruption. A failing institution should in principle be liquidated under normal insolvency proceedings. However, liquidation under normal insolvency proceedings might jeopardise financial stability, interrupt the provision of critical functions, and affect the protection of depositors. In such a case it is highly likely that there would be a public interest in placing the institution under resolution and applying resolution tools rather than resorting to normal insolvency proceedings. ……(49) The limitations on the rights of shareholders and creditors should be in accordance with Article 52 of the Charter [of Fundamental Rights of the European Union (“the Charter”)]. The resolution tools should therefore be applied only to those institutions that are failing or likely to fail, and only when it is necessary to pursue the objective of financial stability in the general interest. In particular, resolution tools should be applied where the institution cannot be wound up under normal insolvency proceedings without destabilising the financial system and the measures are necessary in order to ensure the rapid transfer and continuation of systemically important functions and where there is no reasonable prospect for any alternative private solution, including any increase of capital by the existing shareholders or by any third party sufficient to restore the full viability of the institution. ……(120) Union company law directives contain mandatory rules for the protection of shareholders and creditors of institutions which fall within the scope of those directives. In a situation where resolution authorities need to act rapidly, those rules may hinder effective action and use of resolution tools and powers by resolution authorities and appropriate derogations should be included in this Directive. In order to guarantee the maximum degree of legal certainty for stakeholders, the derogations should be clearly and narrowly defined, and they should only be used in the public interest and when resolution triggers are met. …’

6Article 1(1) of the directive provides:1.This Directive lays down rules and procedures relating to the recovery and resolution of the following entities:…(b) financial institutions that are established in the [European] Union when the financial institution is a subsidiary of a credit institution or investment firm, or of a company referred to in point (c) or (d), …;(c) financial holding companies, mixed financial holding companies and mixed-activity holding companies that are established in the Union;(d) parent financial holding companies in a Member State, Union parent financial holding companies, parent mixed financial holding companies in a Member State, Union parent mixed financial holding companies;…’

7Article 2(1) of that directive provides:‘For the purposes of this Directive the following definitions apply:…(57) “bail-in tool” means the mechanism for effecting the exercise by a resolution authority of the write-down and conversion powers in relation to liabilities of an institution under resolution in accordance with Article 43;(58) “sale of business tool” means the mechanism for effecting a transfer by a resolution authority of shares or other instruments of ownership issued by an institution under resolution, or assets, rights or liabilities, of an institution under resolution to a purchaser that is not a bridge institution, in accordance with Article 38;…(63) “transfer powers” means the powers specified in point (c) or (d) of Article 63(1) to transfer shares, other instruments of ownership, debt instruments, assets, rights or liabilities, or any combination of those items from an institution under resolution to a recipient;…(82) “termination right” means a right to terminate a contract, a right to accelerate, close out, set-off or net obligations or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract or a provision that prevents an obligation under the contract from arising that would otherwise arise;…’

8Article 34 of that directive, headed ‘General principles governing resolution’, states, in paragraph 1:‘Member States shall ensure that, when applying the resolution tools and exercising the resolution powers, resolution authorities take all appropriate measures to ensure that the resolution action is taken in accordance with the following principles:(a) the shareholders of the institution under resolution bear first losses;(b) creditors of the institution under resolution bear losses after the shareholders in accordance with the order of priority of their claims under normal insolvency proceedings, save as expressly provided otherwise in this Directive;…(f) except where otherwise provided in this Directive, creditors of the same class are treated in an equitable manner;(g) no creditor shall incur greater losses than would have been incurred if the institution or entity referred to in point (b), (c) or (d) of Article 1(1) had been wound up under normal insolvency proceedings in accordance with the safeguards in Articles 73 to 75;…’

9Article 37 of that directive, headed ‘General principles of resolution tools’, is worded as follows:‘…(3)The resolution tools referred to in paragraph 1 are the following:(a) the sale of business tool;(b) the bridge institution tool;(c) the asset separation tool;(d) the bail-in tool.4. Subject to paragraph 5, resolution authorities may apply the resolution tools individually or in any combination.…’

10Under Article 38 of that directive, headed ‘The sale of business tool’:1.Member States shall ensure that resolution authorities have the power to transfer to a purchaser that is not a bridge institution:(a) shares or other instruments of ownership issued by an institution under resolution;(b) all or any assets, rights or liabilities of an institution under resolution;Subject to paragraphs 8 and 9 of this Article and to Article 85, the transfer referred to in the first subparagraph shall take place without obtaining the consent of the shareholders of the institution under resolution or any third party other than the purchaser, and without complying with any procedural requirements under company or securities law other than those included in Article 39.2. A transfer made pursuant to paragraph 1 shall be made on commercial terms, having regard to the circumstances, and in accordance with the Union State aid framework.3. In accordance with paragraph 2 of this Article, resolution authorities shall take all reasonable steps to obtain commercial terms for the transfer that conform with the valuation conducted under Article 36, having regard to the circumstances of the case.…6. Following an application of the sale of business tool, resolution authorities may, with the consent of the purchaser, exercise the transfer powers in respect of assets, rights or liabilities transferred to the purchaser in order to transfer the assets, rights or liabilities back to the institution under resolution, or the shares or other instruments of ownership back to their original owners, and the institution under resolution or original owners shall be obliged to take back any such assets, rights or liabilities, or shares or other instruments of ownership.…9.Member States shall ensure that if the competent authority of that institution has not completed the assessment referred to in paragraph 8 from the date of transfer of shares or other instruments of ownership in the application of the sale of business tool by the resolution authority, the following provisions shall apply:(a) such a transfer of shares or other instruments of ownership to the acquirer shall have immediate legal effect;…13. Without prejudice to Chapter VII of Title IV, shareholders or creditors of the institution under resolution and other third parties whose assets, rights or liabilities are not transferred shall not have any rights over or in relation to the assets, rights or liabilities transferred.’

11Article 48 of that directive, headed ‘Sequence of write down and conversion’, provides:1.Member States shall ensure that, when applying the bail-in tool, resolution authorities exercise the write down and conversion powers, subject to any exclusions under Article 44(2) and (3), meeting the following requirements:(a) Common Equity Tier 1 items are reduced in accordance with point (a) of Article 60(1);(b) if, and only if, the total reduction pursuant to point (a) is less than the sum of the amounts referred to in points (b) and (c) of Article 47(3), authorities reduce the principal amount of Additional Tier 1 instruments to the extent required and to the extent of their capacity;(c) if, and only if, the total reduction pursuant to points (a) and (b) is less than the sum of the amounts referred to in points (b) and (c) of Article 47(3), authorities reduce the principal amount of Tier 2 instruments to the extent required and to the extent of their capacity;…’

12Article 53 of Directive 2014/59, headed ‘Effect of bail-in’, provides:1. Member States shall ensure that where a resolution authority exercises a power referred to in Article 59(2) and in points (e) to (i) of Article 63(1), the reduction of principal or outstanding amount due, conversion or cancellation takes effect and is immediately binding on the institution under resolution and affected creditors and shareholders.…3. Where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in point (e) of Article 63(1), that liability and any obligations or claims arising in relation to it that are not accrued at the time when the power is exercised shall be treated as discharged for all purposes, and shall not be provable in any subsequent proceedings in relation to the institution under resolution or any successor entity in any subsequent winding up.4.Where a resolution authority reduces in part, but not in full, the principal amount of, or outstanding amount payable in respect of, a liability by means of the power referred to in point (e) of Article 63(1):(a) the liability shall be discharged to the extent of the amount reduced;(b) the relevant instrument or agreement that created the original liability shall continue to apply in relation to the residual principal amount of, or outstanding amount payable in respect of the liability, subject to any modification of the amount of interest payable to reflect the reduction of the principal amount, and any further modification of the terms that the resolution authority might make by means of the power referred to in point (j) of Article 63(1).’

13Article 60 of that directive, headed ‘Provisions governing the write down or conversion of capital instruments’, reads as follows:1.When complying with the requirement laid down in Article 59, resolution authorities shall exercise the write down or conversion power in accordance with the priority of claims under normal insolvency proceedings, in a way that produces the following results:(a) Common Equity Tier 1 items are reduced first in proportion to the losses and to the extent of their capacity and the resolution authority takes one or both of the actions specified in Article 47(1) in respect of holders of Common Equity Tier 1 instruments;(b) the principal amount of Additional Tier 1 instruments is written down or converted into Common Equity Tier 1 instruments or both, to the extent required to achieve the resolution objectives set out in Article 31 or to the extent of the capacity of the relevant capital instruments, whichever is lower;(c) the principal amount of Tier 2 instruments is written down or converted into Common Equity Tier 1 instruments or both, to the extent required to achieve the resolution objectives set out in Article 31 or to the extent of the capacity of the relevant capital instruments, whichever is lower.2.Where the principal amount of a relevant capital instrument is written down:…(b) no liability to the holder of the relevant capital instrument shall remain under or in connection with that amount of the instrument, which has been written down, except for any liability already accrued, and any liability for damages that may arise as a result of an appeal challenging the legality of the exercise of the write-down power;(c) no compensation is paid to any holder of the relevant capital instruments other than in accordance with paragraph 3.3. In order to effect a conversion of relevant capital instruments under point (b) of paragraph 1 of this Article, resolution authorities may require institutions and entities referred to in points (b), (c) and (d) of Article 1(1) to issue Common Equity Tier 1 instruments to the holders of the relevant capital instruments. ……’

14Under Article 63(1) of that directive, headed ‘General powers’:‘Member States shall ensure that the resolution authorities have all the powers necessary to apply the resolution tools to institutions and to entities referred to in points (b), (c) and (d) of Article 1(1) that meet the applicable conditions for resolution. In particular, the resolution authorities shall have the following resolution powers, which they may exercise individually or in any combination:…(c) the power to transfer shares or other instruments of ownership issued by an institution under resolution;(d) the power to transfer to another entity, with the consent of that entity, rights, assets or liabilities of an institution under resolution;(e) the power to reduce, including to reduce to zero, the principal amount of or outstanding amount due in respect of eligible liabilities, of an institution under resolution;(f) the power to convert eligible liabilities of an institution under resolution into ordinary shares or other instruments of ownership of that institution or entity referred to in point (b), (c) or (d) of Article 1(1), a relevant parent institution or a bridge institution to which assets, rights or liabilities of the institution or the entity referred to in point (b), (c) or (d) of Article 1(1) are transferred;…’

15Under Article 64(4)(b) of that directive, the ancillary powers of the resolution authorities referred to in that provision are not to affect ‘subject to Articles 69, 70 and 71, any right of a party to a contract to exercise rights under the contract, including the right to terminate, where entitled to do so in accordance with the terms of the contract by virtue of an act or omission by the institution under resolution prior to the relevant transfer, or by the recipient after the relevant transfer’.

16Article 68 of Directive 2014/59, headed ‘Exclusion of certain contractual terms in early intervention and resolution’, provides, in paragraphs 3 and 4:3.Provided that the substantive obligations under the contract, including payment and delivery obligations, and provision of collateral, continue to be performed, a crisis prevention measure or a crisis management measure, including the occurrence of any event directly linked to the application of such a measure, shall not, per se, make it possible for anyone to:(a) exercise any termination, suspension, modification, netting or set-off rights, including in relation to a contract entered into by:(i) a subsidiary, the obligations under which are guaranteed or otherwise supported by a group entity;(ii) any group entity which includes cross-default provisions;…4. This Article shall not affect the right of a person to take an action referred to in paragraph 3 where that right arises by virtue of an event other than the crisis prevention measure, the crisis management measure or the occurrence of any event directly linked to the application of such a measure.…’

17Article 73 of that directive, headed ‘Treatment of shareholders and creditors in the case of partial transfers and application of the bail-in tool’, provides, in point (b), that ‘Member States shall ensure that … in particular for the purposes of Article 75 … where resolution authorities apply the bail-in tool, the shareholders and creditors whose claims have been written down or converted to equity do not incur greater losses than they would have incurred if the institution under resolution had been wound up under normal insolvency proceedings …’.

18Article 74 of that directive, headed ‘Valuation of difference in treatment’, states, in paragraph 1:‘For the purposes of assessing whether shareholders and creditors would have received better treatment if the institution under resolution had entered into normal insolvency proceedings, including but not limited to for the purpose of Article 73, Member States shall ensure that a valuation is carried out by an independent person as soon as possible after the resolution action or actions have been effected. …’

19According to Article 75 of the same directive, headed ‘Safeguard for shareholders and creditors’:‘Member States shall ensure that if the valuation carried out under Article 74 determines that any shareholder or creditor referred to in Article 73 … has incurred greater losses than it would have incurred in a winding up under normal insolvency proceedings, it is entitled to the payment of the difference from the resolution financing arrangements.’

20Article 101(1)(e) of Directive 2014/59 provides that financing arrangements may be used by the resolution authority only to the extent necessary to ensure the effective application of the resolution tools for the purposes of, inter alia, paying compensation to shareholders or creditors in accordance with Article 75 of that directive.

Decision of the Single Resolution Board

21By Decision SRB/EES/2017/08 of 7 June 2017, the Single Resolution Board adopted the resolution scheme in respect of Banco Popular, endorsed by the European Commission in its Decision (EU) 2017/1246 (OJ 2017 L 178, p. 15).

Spanish law

22Single Resolution Board Decision SRB/EES/2017/08 was implemented by decision of the Fondo de Reestructuración Ordenada Bancaria (Fund for Orderly Bank Restructuring, Spain; ‘the FROB’) of 7 June 2017 (BOE No 155 of 30 June 2017, p. 55470), which adopted the following measures:‘1. Reduce the current share capital of [Banco Popular] by writing down of all the shares currently in circulation …2. At the same time, carry out a capital increase excluding the pre-emption right with a view to converting all Additional Tier 1 instruments …3. Reduce the share capital to zero euro (EUR 0) by writing down the shares resulting from the conversion of Additional Tier 1 instruments in accordance with the preceding paragraph …4. At the same time, carry out a capital increase excluding the pre-emption right with a view to converting all Tier 2 instruments into new shares in Banco Popular ……6. Transfer all the shares in [Banco Popular] issued as a result of the conversion of the Tier 2 instruments referred to in the third legal basis of this Decision to [Banco Santander].’

23The third legal basis for that decision states as follows:‘As regards the scope of the write-down measure adopted by this Decision, … the depreciation shall be permanent, with no compensation being paid to the holders [of the written down shares]. There shall be no remaining obligation with regard to the holder of the written down shares, except for obligations already accrued or liability which may arise from an action brought against the lawfulness of the exercise of the power to write down.’

The disputes in the main proceedings and the questions referred for a preliminary ruling

24In 2010 and 2011, the applicants in the cases in the main proceedings purchased, respectively, various capital instruments issued by Banco Popular or by a subsidiary of Banco Popular, namely BPE Preference International Ltd.

25In 2012 and 2014, the capital instruments at issue in Cases C‑779/22 and C‑794/22 were converted into shares in Banco Popular.

26On 7 June 2017, the Single Resolution Board adopted the resolution scheme in respect of Banco Popular, which was endorsed by the Commission on the same day.

27That resolution scheme was implemented by a decision of the FROB which was also adopted on 7 June 2017. By that decision, the FROB, inter alia, reduced Banco Popular’s share capital to zero by means of the write down of all the outstanding shares. As a result of that decision, the applicants in the main proceedings in Cases C‑779/22 and C‑794/22 ceased to be the holders of the shares in Banco Popular into which their capital instruments had been converted in 2012 and 2014.

28In addition, the FROB decided to convert Tier 2 instruments and to transfer to Banco Santander the new shares issued following that conversion, without the consent of the former holders of those instruments. As a result, the applicants in the main proceedings in Case C‑775/22 ceased to be the holders of the subordinated obligations purchased in 2010 and 2011 that were converted into shares and transferred to Banco Santander, without receiving any consideration.

29The applicants in the main proceedings brought, respectively, first, an action for a declaration of nullity in respect of the purchase of the capital instruments at issue in the main proceedings, on the ground that neither Banco Popular nor BPE Preference International had duly informed them of the nature, characteristics and risks of those instruments. Second, they brought an action seeking compensation for the damage caused by the failure by those banks to meet their legal information obligations as far as concerns subscribing for those capital instruments.

30Those actions were brought, at the stage of the appeal on a point of law, before the Tribunal Supremo (Supreme Court, Spain), that is to say the referring court in the present cases; the appeals are respectively limited to either the action for a declaration of nullity, as regards Cases C‑775/22 and C‑779/22, or to the action for damages, as regards Case C‑794/22.

31After those appeals were lodged, the Court delivered the judgment of 5 May 2022, Banco Santander (Resolution of Banco Popular) (C‑410/20, EU:C:2022:351) (‘the judgment in Banco Santander (Resolution of Banco Popular)’). In that judgment, the Court held that Article 34(1)(a), Article 53(1) and (3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 preclude, following a total write down of shares ordered in the context of the resolution of a banking institution, the bringing of actions for damages on the basis of the information provided in the prospectus or of actions for a declaration of nullity in respect of the subscription agreement for shares against that institution or its successor in law.

32The referring court notes that, in Spain, there are a large number of disputes concerning Banco Popular’s various capital instruments, namely, inter alia, shares, preference shares and subordinated obligations. In most cases, the purchasers of those financial products brought actions for a declaration of nullity in respect of the agreements for the purchase of those products and for the reimbursement of the price paid for that purchase and/or actions for damages seeking compensation for the loss sustained as a result of that purchase, under Article 6 of Directive 2003/71 or the general rules governing contracts. All those actions were based on a defect in consent resulting from flawed and incorrect information provided when those financial products were marketed.

33The referring court states that, although those disputes gave rise to divergent interpretations of the provisions of Directive 2014/59 by the national courts, the parties to the disputes pending before it disagree as to whether the case-law resulting from the judgment in Banco Santander (Resolution of Banco Popular) is applicable to the situation at issue in the main proceedings.

34As regards, specifically, Cases C‑779/22 and C‑794/22, the referring court is uncertain whether the right to reimbursement on account of the nullity of the purchase of the capital instruments at issue in the main proceedings, which had been converted into shares before the resolution of Banco Popular, and the obligation to pay compensation constitute an ‘accrued’ obligation or a ‘non-accrued’ obligation within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59.

35In that regard, it notes that, in Spanish law, the term ‘accrued’ refers to the moment at which the right to demand performance of an obligation arises, whereas the term ‘due date’ refers to the end of the period set for the performance of an obligation at the end of which it becomes due. The convertible obligations at issue in the main proceedings fell due on the very day on which they were converted into shares, therefore, before the opening of the resolution procedure in respect of Banco Popular. Furthermore, the judicial decision acknowledging liability for any damage is not dispositive in nature, but rather declares that that liability exists and quantifies the damages. If the obligation to pay compensation constituted a ‘potential claim’ until it was finally declared by a court, it would itself be regarded, even before that declaration, as constituting an accrued claim.

36As regards Case C‑775/22, the referring court states that the applicants in the main proceedings, in the first place, argued before it that the case-law resulting from the judgment in Banco Santander (Resolution of Banco Popular) is not applicable to the conversion of subordinated obligations into shares or to their subsequent transfer, on the ground that Article 53(3) and Article 60(2) of Directive 2014/59 apply only in the context of a write-down measure, but not in the context of a conversion measure with subsequent transfer. In addition, the limitations on the right to effective judicial protection and the right to property of the holders of capital instruments of a company under resolution should be interpreted restrictively.

37In the second place, they relied on the rules on the right to terminate contracts under Article 64(4)(b), Article 68(3) and (4) and Article 71 of that directive. In the event of conversion, there is no rule excluding or limiting the bringing of an action for a declaration of nullity in respect of the agreement for the purchase of subordinated obligations, in so far as that action is not caused by the resolution measures, but refers to the initial subscription transaction for those obligations.

38In the third place, they claimed that depriving them of the right to bring actions for a declaration of nullity and actions for damages infringes the principle prohibiting treatment that is less favourable than under normal insolvency proceedings, as enshrined in Article 34(1)(g) and Article 73(b) of Directive 2014/59.

39In those circumstances, the Tribunal Supremo (Supreme Court) decided, in the context of Case C‑775/22, to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:‘Must the provisions of Article 34(1)(a) and (b), in relation to those of Article 53(1) and (3), Article 60(2), first subparagraph, points (b) and (c), and Article 64(4)(b), of Directive [2014/59] be interpreted as meaning that, following the conversion into shares – and the subsequent transfer of those shares, without effective consideration – of subordinated obligations (Tier 2 capital instruments) issued by a credit institution that is the subject of a resolution procedure and which were not accrued when that resolution procedure was adopted, persons who purchased those subordinated obligations before the start of such a resolution procedure are precluded from bringing, against that institution or against its successor entity, an action for a declaration of nullity in respect of the subscription contract for those subordinated obligations, seeking the reimbursement of the price paid to subscribe for the subordinated obligations, plus the interest accrued from the date of conclusion of the contract?’

40In those same circumstances, the Tribunal Supremo (Supreme Court) decided, in the context of Case C‑779/22, to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Must the provisions of Article 34(1)(a) and (b), read together with those of Article 53(1) and (3) and Article 60(2), first subparagraph, points (b) and (c), of Directive [2014/59], be interpreted as meaning that the possible claim or right that arises from a judgment against the successor entity to [Banco Popular], as a consequence of the nullity of the purchase of a capital instrument (preference shares) which was ultimately converted into ordinary shares before the measures for the resolution of Banco Popular were adopted (7 June 2017), could be considered a liability affected by the write-down provision of Article 53(3) of Directive 2014/59, in as much as it relates to ‘unaccrued’ obligations or claims, such that it would be discharged and would not be enforceable against Banco Santander, as the successor entity to Banco Popular, where the claim from which that obligation arises was brought after the procedure for the resolution of the bank had been concluded?(2) Or, conversely, must those provisions be interpreted as meaning that the abovementioned claim or right constitutes an “accrued” obligation (Article 53(3) of [Directive 2014/59]) or “liability already accrued” at the time of the resolution of the bank (Article 60(2)(b)) – and, as such, [is] excluded from the effects of the discharge or cancellation of those obligations or claims, even if the ordinary shares had been written off and cancelled – and, consequently, [that the abovementioned claim or right] is enforceable against Banco Santander, as the successor to Banco Popular, even where the claim from which that judgment ordering payment of compensation arises was brought after the procedure for the resolution of the bank had been concluded?’

41Also in those same circumstances, the Tribunal Supremo (Supreme Court) decided, in the context of Case C‑794/22, to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Must Article 34(1)(a) and (b), read together with Article 53(1) and (3) as well as Article 60(2), first subparagraph, points (b) and (c), of Directive [2014/59] be interpreted as meaning that the possible claim or right that arises from a judgment ordering payment of compensation given against the successor entity to [Banco Popular] following an action for damages arising from the marketing of a financial product (subordinated bonds necessarily convertible into shares in the same bank) not included among the additional capital instruments to which the resolution measures for Banco Popular refer, which were ultimately converted into ordinary shares in the bank before the bank resolution measures were adopted (7 June 2017), could be considered a liability affected by the write-down or cancellation provision of Article 53(3) of Directive [2014/59], as an “unaccrued” obligation or claim, such that it would be discharged and would not be enforceable against Banco Santander, as the successor entity to Banco Popular, where the claim from which that judgment ordering payment of compensation arises was brought after the procedure for the resolution of the bank had been concluded?(2) [the second question is worded in terms identical to those of the second question in Case C‑779/22].’

42By decision of the President of the Court of Justice of 7 March 2023, Cases C‑775/22, C‑779/22 and C‑794/22 were joined for the purposes of the written and oral parts of the procedure and of the judgment.

Consideration of the questions referred

The questions referred in Cases C‑779/22 and C‑794/22

43By its questions in Cases C‑779/22 and C‑794/22, which it is appropriate to examine together, the referring court asks, in essence, whether the combined provisions of Article 34(1)(a) and (b), Article 53(1) and (3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 must be interpreted as precluding, after the total write down of the shares in a credit institution under resolution, persons who have purchased capital instruments that have been converted into shares in that credit institution before the adoption of resolution measures against it, from bringing, against that institution or against its successor entity, an action for damages on the basis of flawed and incorrect information provided in the prospectus, as provided for in Article 6 of Directive 2003/71, or an action for a declaration of nullity in respect of the agreement by which they subscribed for those capital instruments under national law, which, in the light of its retroactive effect, would lead to the reimbursement of the price paid for those capital instruments that were initially purchased and were then converted into shares, plus interest from the date on which that agreement was concluded.

44As a preliminary point, it should be recalled that, in paragraph 51 of the judgment in Banco Santander (Resolution of Banco Popular), the Court has held previously that the provisions referred to in the previous paragraph of the present judgment preclude, following a total write down of shares in the capital stock of a credit institution or investment firm subject to a resolution procedure, persons having acquired shares before the opening of such a resolution procedure from bringing such actions.

45The referring court is uncertain whether the case-law resulting from that judgment may be applied to an action for a declaration of nullity or to an action for damages brought by persons who, initially, did not purchase shares in an institution or firm under resolution, but other capital instruments which were converted into such shares before such a resolution procedure was opened. In particular, it enquires whether the rights to reimbursement or compensation arising from a declaration of nullity or liability may be regarded as having been accrued, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, before the date on which the resolution decision was adopted, even though the actions giving rise to those rights were brought after the resolution measure had been taken.

46Under Article 53(3) of that directive, where a resolution authority reduces to zero the principal amount of, or outstanding amount payable in respect of, a liability, that liability and any obligations or claims arising in relation to it that are not accrued at the time of the resolution are to be treated as discharged for all purposes, and are not to be provable vis-à-vis the credit institution or the investment firm under a resolution measure or any successor entity in any subsequent winding up.

47Article 60 of that directive, which relates to the write down or conversion of capital instruments, states, in point (b) of the first subparagraph of paragraph 2, that no liability to the holder of the capital instruments written down, under the resolution decision, is to remain under or in connection with that amount of the instrument, which has been written down, except for any liability already accrued, and any liability for damages that may arise as a result of an appeal challenging the legality of the exercise of the write-down power.

48Since the referring court has stated that, under the relevant national legislation, rights to reimbursement or compensation arising from a declaration of nullity or liability constitute, in the circumstances of the main proceedings, obligations accrued before the date of adoption of the resolution decision, the Court notes that, according to settled case-law, it follows from the need for a uniform application of EU law and the principle of equality that the terms of a provision of EU law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union, having regard not only to the wording of that provision but also to the context in which it occurs and the objectives pursued by the rules of which it is part (judgments of 29 April 2021, X (European arrest warrant – Ne bis in idem), C‑665/20 PPU, EU:C:2021:339, paragraph 69, and of 30 April 2024, M.N. (EncroChat), C‑670/22, EU:C:2024:372, paragraph 109 and the case-law cited).

49As regards the concepts of ‘accrued obligations’ or ‘accrued claims’ used in the provisions referred to in paragraphs 46 and 47 of the present judgment, the Court has held previously that the rights arising from an action for damages due to the information given in the prospectus for the sale of securities, provided for in Article 6 of Directive 2003/71, and an action for a declaration of nullity in respect of a share subscription agreement cannot be regarded as falling within the category of ‘accrued’ obligations or claims, within the meaning of Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, where those actions are brought against the credit institution or investment firm issuing the prospectus or the successor entity after the adoption of the resolution decision on the basis of those provisions (see, to that effect, judgment in Banco Santander (Resolution of Banco Popular), paragraphs 41, 42 and 44).

50It is also necessary to understand those concepts in that way where the rights arise from an action for damages or for a declaration of nullity in respect of the purchase of capital instruments which have subsequently been converted into shares in the light of the context of those concepts and the objectives pursued by Directive 2014/59.

51First, the Court notes that Article 34(1)(a) and (b) of Directive 2014/59 establishes the principle whereby it is the shareholders, followed by the creditors, of a credit institution or investment firm under resolution that are required to bear the first losses incurred as a result of the application of that procedure.

52Further, where the resolution procedure involves a ‘bail-in’, within the meaning of Article 2(1)(57) of Directive 2014/59, Article 48(1) of that directive provides that, in the exercise of the write-down and conversion powers, resolution authorities are to reduce, in the first place, the different categories of capital instrument. Article 53(1) of that directive provides that the capital reduction, conversion or cancellation measures permitted by the bail-in are to take effect immediately on the affected shareholders and creditors. It thus appears that, in the context of a bail-in, the write-down and conversion of capital instruments contributes directly to the achievement of the objectives of the resolution procedure.

53An interpretation according to which persons who have purchased capital instruments prior to the resolution could, after resolution, bring actions for damages or for a declaration of nullity for the purposes of seeking damages or reimbursement in the amount of the funds paid for that purchase would entail precisely the risk that the amount of the capital instruments subject to a bail-in would be retroactively reduced, which could call into question whether the objectives pursued by the resolution action were being achieved.

54From that perspective, point (c) of the first subparagraph of Article 60(2) and Article 60(3) of Directive 2014/59 provide that no compensation is to be paid to the holders of the relevant capital instruments, other than the cases where such instruments are converted as referred to in paragraph 3 and that, in those cases, compensation is to take the form of an issuance of capital instruments to those holders. By limiting compensation to such an issuance of capital instruments, those provisions make it possible to prevent that compensation from being able retroactively to reduce the amount of capital used for the purposes of resolution.

55Second, as regards the objectives pursued by Directive 2014/59, recital 49 thereof indicates that the resolution tools should only be applied, to cover situations of extreme urgency, to those credit institutions and investment firms that are failing or likely to fail, and only when it is necessary to pursue the objective of financial stability in the general interest. A procedure of that kind should therefore be applied where the credit institution or investment firm concerned cannot be wound up under normal insolvency proceedings without destabilising the financial system. As stated in recital 45 of that directive, the resolution procedure is intended to reduce moral hazard in the financial sector by making shareholders bear first losses incurred as a result of the liquidation of a credit institution or investment firm, so as to avoid situations where such liquidations might reduce public funds and affect the protection of depositors (judgment in Banco Santander (Resolution of Banco Popular), paragraph 35).

56Directive 2014/59 therefore establishes the use, in an exceptional economic context, of a procedure that may affect in particular the rights of shareholders and creditors of a credit institution or investment firm, in order to preserve the financial stability of the Member States, by creating an insolvency regime derogating from the ordinary law governing insolvency proceedings, which may only be applied in exceptional circumstances and must be justified by an overriding public interest. The nature of this regime as a derogation implies that the application of other provisions of Union law may be disregarded where these are likely to hinder the implementation of the resolution procedure or deprive it of practical effect (judgment in Banco Santander (Resolution of Banco Popular), paragraph 37).

57On that point, recital 120 of Directive 2014/59 states that the derogations laid down by that directive from the mandatory rules for the protection of shareholders and creditors of institutions which fall within the scope of Union company law directives, which may hinder effective action and use of resolution tools and powers by resolution authorities, should not only be appropriate but should also be clearly and narrowly defined, in order to guarantee the maximum degree of legal certainty for stakeholders (judgment in Banco Santander (Resolution of Banco Popular), paragraph 38).

58Directive 2003/71, the objective of which was to protect investors at the time they decide to purchase securities from a credit institution or investment firm, is one of the ‘Union company law directives’ referred to in recital 120 of Directive 2014/59. Consequently, the latter directive makes it possible to derogate from the provisions of Directive 2003/71, in so far as the application of those provisions could hinder the implementation of a resolution procedure or deprive it of practical effect (see, to that effect, judgment in Banco Santander (Resolution of Banco Popular), paragraphs 39 and 40).

59As concerns both an action for damages and an action for a declaration of nullity, the Court has held that those actions essentially require that the credit institution or investment firm under resolution, or the successor of those entities, compensate shareholders for the losses incurred as a consequence of the exercise by a resolution authority of the write-down and conversion powers in relation to liabilities of that institution or firm, or require that it reimburse in full the sums invested during the subscription of shares that have been written down as a result of that resolution procedure. Such actions would call into question the entire valuation upon which the resolution decision is based because the breakdown of the capital forms part of the objective data for that valuation and, consequently, would be capable of causing the resolution procedure itself as well as the objectives pursued by Directive 2014/59 to be frustrated (judgment in Banco Santander (Resolution of Banco Popular), paragraph 43).

60In those circumstances, the Court has found, in paragraph 44 of the judgment in Banco Santander (Resolution of Banco Popular), that the application of Article 34(1)(a), Article 53(1) and (3), and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 excludes the possibility of an action for damages under Article 6 of Directive 2003/71 or an action for a declaration of nullity in respect of the share subscription agreement, under Spanish law, being brought against the credit institution or investment firm issuing the prospectus or the successor entity, after a resolution decision has been adopted on the basis of those provisions.

61In the present case, although the applicants in the main proceedings in Cases C‑779/22 and C‑794/22 initially purchased capital instruments other than shares in Banco Popular, it is apparent from the information provided in the request for a preliminary ruling that those instruments had already been converted into shares in Banco Popular prior to the resolution of that bank and that, in that context of the resolution of that bank, the shares resulting from that conversion were subject to a write-down and conversion measure for the purposes of the bail-in of that bank. In the light of the considerations above, the provisions of Directive 2014/59 referred to in the preceding paragraph of the present judgment therefore preclude purchasers of such capital instruments from being able to bring such an action for damages or such an action for a declaration of nullity in respect of the agreement for the purchase of those instruments after the adoption of the resolution decision.

62In the light of all of the findings above, the answer to the questions referred in Cases C‑779/22 and C‑794/22 is that the combined provisions of Article 34(1)(a) and (b), Article 53(1) and (3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59 must be interpreted as precluding, after the total write down of the shares in a credit institution under resolution, persons who have purchased capital instruments that have been converted into shares in that credit institution before the adoption of resolution measures against it, from bringing, against that institution or against its successor entity, an action for damages on the basis of flawed and incorrect information provided in the prospectus, as provided for in Article 6 of Directive 2003/71, or an action for a declaration of nullity in respect of the agreement by which they subscribed for those capital instruments under national law, which, in the light of its retroactive effect, would lead to the reimbursement of the price paid for those capital instruments that were initially purchased and were then converted into shares, plus interest from the date on which that agreement was concluded.

The single question referred in Case C‑775/22

63As a preliminary point, the Court notes that, according to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to determine the case before it. Consequently, even if, formally, the referring court has limited its question to the interpretation of a specific provision of EU law, that does not prevent this Court from providing the referring court with all the elements of interpretation of EU law that may be of assistance in adjudicating in the case before it, whether or not the referring court has referred to them in the wording of its questions. It is, in that regard, for the Court to extract from all the information provided by the national court, in particular from the grounds of the order for reference, the points of EU law which require interpretation in view of the subject matter of the dispute in the main proceedings (see, to that effect, judgments of 18 September 2019, VIPA, C‑222/18, EU:C:2019:751, paragraph 50 and the case-law cited, and of 30 June 2022, Valstybės sienos apsaugos tarnyba and Others, C‑72/22 PPU, EU:C:2022:505, paragraph 51).

64Although the question referred in Case C‑775/22 concerns, inter alia, the interpretation of Article 53(3) and points (b) and (c) of the first subparagraph of Article 60(2) of Directive 2014/59, the Court notes that those provisions govern only the effects of a write-down measure on the rights of the shareholders and creditors of a credit institution under resolution. However, the subordinated obligations at issue in that case were converted into Banco Popular shares only in the context of the resolution of that bank and the shares resulting from that conversion were immediately transferred to Banco Santander, without being subject to any write down. The effects of such a transfer of shares are governed, in particular, by the provisions of Article 38 of that directive.

65In those circumstances, the Court understands that, by its single question in Case C‑775/22, the referring court seeks, in essence, to ascertain whether the provisions of Directive 2014/59, in particular Article 34(1)(a) and (b) and Article 38 thereof, must be interpreted as precluding, after the total write down of the shares in a credit institution under resolution, persons who have purchased capital instruments which, in the context of that procedure, have been converted into shares in that credit institution, which were subsequently transferred to another credit institution, from bringing an action against the latter institution for a declaration of nullity in respect of the subscription agreement relating to those capital instruments under national law, which, taking account of its retroactive effect, would lead to the reimbursement of the price paid for those capital instruments, together with interest from the date on which that agreement was concluded.

66In that regard, the Court recalls that, under Article 37(3)(a) and (d) and (4) of Directive 2014/59, resolution authorities may combine the bail-in tool with the sale of business tool. As is apparent from Article 2(57) and (58) of that directive, although the first of those tools includes write-down and conversion powers, the second consists of the transfer, inter alia, of shares or other instruments of ownership issued by an institution under resolution to a purchaser that is not a bridge institution.

67It follows from the provisions of Article 38(1), (4) and (6) of that directive that, in the context of that second tool, since ownership of shares or other instruments of ownership is transferred to the purchaser, the original owners lose not only the ownership, but also the status of ‘shareholder’ or ‘creditor’ of the credit institution under resolution. In addition, Article 38(9)(a) of that directive specifies that such a transfer of shares or other instruments of ownership to the purchaser is to have immediate legal effect.

68It is thus apparent that the former shareholders of the credit institution under resolution whose shares have been transferred in the context of the resolution are no longer shareholders, either of that credit institution or of its successor. As confirmed by Article 38(13) of Directive 2014/59, they lose any rights over or in relation to the assets, rights or liabilities transferred.

69Like Article 53(3) and point (b) of the first subparagraph of Article 60(2) of Directive 2014/59, Article 38(13) of that same directive precludes creditors and shareholders from being able, with retroactive effect, to frustrate the resolution procedure and the objectives pursued by that procedure, by bringing, after the resolution, actions for a declaration of nullity in respect of the agreement by which they subscribed for shares or capital instruments converted into shares.

70Furthermore, such an action might enable creditors and shareholders retroactively to avoid the losses which they must bear first in accordance with the principle laid down in Article 34(1)(a) and (b) of that directive. In that regard, the fact that the capital instruments at issue in the main proceedings were converted and transferred in the context of the resolution procedure does not distinguish them from the shares subscribed for in the case which gave rise to the judgment in Banco Santander (Resolution of Banco Popular), which were written down for the purposes of achieving the objectives pursued by the same resolution procedure.

71The interpretation that the provisions of Directive 2014/59 preclude the bringing of such an action for a declaration of nullity is not called into question by the arguments of the applicants in the main proceedings, summarised in paragraphs 36 to 38 of the present judgment.

72As regards, in the first place, the right to terminate a contractual obligation on grounds other than a resolution decision, referred to in, inter alia, Article 64(4)(b) and Article 68(4) of Directive 2014/59, it follows from the legal definition set out in Article 2(1)(82) of that directive that a ‘termination right’ is capable of bringing a contract to an end or of amending it with immediate effect.

73By contrast, an action for a declaration of nullity is capable of being effective ab initio, which introduces the risk of retroactively calling into question the contractual relations between the banking institution under resolution and those shareholders and, therefore, of retroactively modifying the composition of the share capital on which the resolution action is based. In any event, both the exercise of a termination right and an action for a declaration of nullity assume that there is a contract that can be annulled or terminated. However, as has been noted in paragraphs 67 and 68 of the present judgment, a transfer of shares and other instruments of ownership has the effect of breaking the contractual links which existed, prior to that transfer, between the banking institution under resolution and the shareholders and creditors of that institution.

74As regards, in the second place, the objective referred to in Article 34(1)(g) of Directive 2014/59, the Court notes that, although that provision lays down that no creditor is to incur greater losses than would have been incurred if the institution under resolution had been wound up under normal insolvency proceedings, it follows from the wording itself of that provision that that objective must be ensured ‘in accordance with the safeguards in Articles 73 to 75 [of that directive]’.

75Under Article 73(b) of Directive 2014/59, shareholders and creditors are to be granted the right, during a resolution procedure, to a reimbursement or compensation of their claims which is no less than the estimate of what they would have recovered if the entire institution or undertaking in question had been wound up under normal insolvency proceedings. In that regard, Article 75 of that directive states that shareholders are entitled to be paid the difference between the losses incurred under the resolution and those which would have been incurred under a normal winding-up process (see, to that effect, judgment in Banco Santander (Resolution of Banco Popular), paragraphs 48 and 50).

76According to Article 74(1) of that directive, the application of the safeguard measures referred to in the preceding paragraph of the present judgment is subject to a valuation being carried out by an independent person who, as soon as possible after the resolution action has been carried out, is to make a subsequent comparison between the treatment that the shareholders and creditors actually received and the treatment they would have received under normal insolvency procedures.

77The fact that Directive 2014/59 makes provision for that specific regime for safeguarding the interests of the shareholders and creditors of a bank under resolution precludes those shareholders or creditors from being able to bring, after the resolution procedure has been carried out, actions for a declaration of nullity in order to obtain, irrespective of the outcome of the valuation provided for in Article 74, reimbursement of the sums paid to purchase the capital instruments concerned.

78In the present case, that is all the more so in view of the fact that the reimbursement at issue in the main proceedings is sought from the successor of the credit institution under resolution, whereas the payment provided for in Article 75, read in conjunction with Article 101(1)(e) of that directive, is payable not by that successor, but by the resolution financing arrangements.

79Furthermore, the applicants in the main proceedings have, in essence, relied on a limitation of their right to effective judicial protection as regards their right to bring an action for a declaration of nullity in respect of the agreement by which they subscribed for shares or capital instruments converted into shares.

80In that regard, the Court notes that, according to settled case-law, the right to judicial protection enshrined in Article 47 of the Charter is not absolute and its exercise may be subject to restrictions justified by objectives of general interest pursued by the European Union. Consequently, as is apparent from Article 52(1) of the Charter, restrictions may be imposed on that fundamental right, provided that those restrictions in fact correspond to objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and unacceptable interference that undermines the substance itself of the enshrined right (judgments of 19 December 2019, Deutsche Umwelthilfe, C‑752/18, EU:C:2019:1114, paragraph 44, and Banco Santander (Resolution of Banco Popular), paragraph 47).

81In addition, the Court has held previously that, although there is a clear public interest in ensuring, throughout the European Union, strong and consistent protection of investors, that interest cannot be held to prevail in all circumstances over the public interest in ensuring the stability of the financial system (see, to that effect, judgments of 19 July 2016, Kotnik and Others, C‑526/14, EU:C:2016:570, paragraph 91; of 8 November 2016, Dowling and Others, C‑41/15, EU:C:2016:836, paragraph 54; and Banco Santander (Resolution of Banco Popular), paragraph 36).

82As has been pointed out in paragraph 55 of the present judgment, by making shareholders the first to bear the losses suffered by a credit institution or investment firm, Directive 2014/59 is intended to ensure the stability of the financial system of the European Union. In addition, it is apparent from Article 32(1) and (5) of that directive, read in the light of recital 49 thereof, that such a procedure should apply only in those exceptional and extremely urgent economic circumstances, where the credit institution or investment firm in question cannot be wound up under normal insolvency proceedings without destabilising the EU financial system.

83Although the provisions of Directive 2014/59 prevent the applicants in the main proceedings in Case C‑775/22 from bringing, after the adoption of the resolution decision, an action for a declaration of nullity in order to obtain a reimbursement of the sums paid at the time of purchase of the capital instruments at issue in the main proceedings, they may, however, seek reimbursement or compensation under the safeguard mechanism provided for in Articles 73 to 75 of that directive and bring, for that purpose, judicial proceedings. The Court has held previously that the valuation provided for, to that effect, in Article 74 of that directive may be challenged separately from the resolution decision (judgment in Banco Santander (Resolution of Banco Popular), paragraph 49).

84Furthermore, the resolution action, as resulting from the Commission decision approving a resolution scheme, may be the subject of an action for annulment under the fourth paragraph of Article 263 TFEU (see, to that effect, judgment of 18 June 2024, Commission v SRB, C‑551/22 P, EU:C:2024:520, paragraph 96). Such an action contributes to the effective judicial protection of shareholders and creditors, also in so far as the potential annulment of the resolution action would make it possible to bring an action for a declaration of nullity in respect of the agreement by which they subscribed for shares or capital instruments converted into shares.

85In the light of the findings above, the answer to the single question referred in Case C‑775/22 is that the provisions of Directive 2014/59, in particular Article 34(1)(a) and (b) and Article 38 thereof, must be interpreted as precluding, after the total write down of the shares in a credit institution under resolution, persons who have purchased capital instruments which, in the context of that procedure, have been converted into shares in that credit institution, which were subsequently transferred to another credit institution, from bringing an action against the latter institution for a declaration of nullity in respect of the agreement by which they subscribed for those capital instruments under national law, which, taking account of its retroactive effect, would lead to the reimbursement of the price paid for those capital instruments, together with interest from the date on which that agreement was concluded.

Costs

86Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (First Chamber) hereby rules:

1.The combined provisions of Article 34(1)(a) and (b), Article 53(1) and (3), and Article 60(2), first subparagraph, points (b) and (c), of Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Councilmust be interpreted as precluding, after the total write down of the shares in a credit institution under resolution, persons who have purchased capital instruments that have been converted into shares in that credit institution before the adoption of resolution measures against it, from bringing, against that institution or against its successor entity, an action for damages on the basis of flawed and incorrect information provided in the prospectus, as provided for in Article 6 of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, or an action for a declaration of nullity in respect of the agreement by which they subscribed for those capital instruments under national law, which, in the light of its retroactive effect, would lead to the reimbursement of the price paid for those capital instruments that were initially purchased and were then converted into shares, plus interest from the date on which that agreement was concluded.

2.The provisions of Directive 2014/59, in particular Article 34(1)(a) and (b) and Article 38 thereof,must be interpreted as precluding, after the total write down of the shares in a credit institution under resolution, persons who have purchased capital instruments which, in the context of that procedure, have been converted into shares in that credit institution, which were subsequently transferred to another credit institution, from bringing an action against the latter institution for a declaration of nullity in respect of the agreement by which they subscribed for those capital instruments under national law, which, taking account of its retroactive effect, would lead to the reimbursement of the price paid for those capital instruments, together with interest from the date on which that agreement was concluded.