On Banks, Courts and International Law
| Published date | 01 September 2014 |
| Author | Federico Fabbrini |
| Date | 01 September 2014 |
| DOI | 10.1177/1023263X1402100304 |
| Subject Matter | Article |
444 21 MJ 3 (2014)
ON BANKS, COURTS AND
INTERNATIONAL LAW
e Intergovernmental Agreement on
theSingleResolution Fund in Context
F F *
ABSTRACT
In May 2014, 26 Member States of the EU concluded an intergovernmental agreement
on the transfer and mutualization of contr ibution to the Single Resolution Fund (SRF).
is inter national treaty constitutes a core component of the second pillar of the European
Banking Union – the Single Resolution Mechanism, to wind down failing banks in the
Euro-zone – and complements an EU regulation a dopted by the European Parliament and
the Council creating the SRF. is article critically analyse s the choice to use international
law to adopt the rules on transfer and mutualization of contributions to the SRF. As the
article maintains, resort to an inte rgovernmental agreement in this case was not necess ary
from a legal point of view. In fact, the justi cation for the use of international law in
this case rested on a awed legal argument, namely that EU regulation s cannot impose
nancial obligations on the states. Moreover, as the article ex plains, resort to international
law is unsound from a policy point of view. e use of an international treaty to regulate
the transfer and mutualization of contributions to the SRF opens the door for national
courts’ review of the agreement – a prospect which contrasts with the constitutional logic
of leaving decisions about economic questions in the political process. In light of these
weaknesses, the article explains that the intergover nmental agreement was tolerated by
the European Parliament to secure completion of the Banking Union before the 2014 EU
elections, but conclude s suggesting that a pressing constit utional challenge for the European
Parliament is to devise legal and politic al mechanisms to prohibit the Member States from
* Assistant Profe ssor of European & Compa rative Constit utional Law, Tilburg L aw School, the
Netherlands . I am gratefu l to Giuseppe Mart inico and to t he anonymous revie wers of the MJ for
their helpful c omments. I am glad to acknowled ge that an earlier version of thi s article appeared as a
Research Paper of t he Centro Studi sul Feder alismo.
On Banks, C ourts and Internat ional Law
21 MJ 3 (2014) 445
acting outside the EU legal order whene ver the Treaties provide for the powers and mean s
to act within the Union.
Keywords: Bank ing Union; economic governance; Euro-cr isis; international law;
judicial re view
§1. IN T RODUC T ION
On 21May 2014, the representatives of 26 Member States of the European Union (EU),1
congressed on the side of the Economic and Fina ncial A airs (ECOFIN) Council,
signed the Agreement on the tr ansfer and mutualiz ation of contributions to the Single
Resolution Fund.2 is agreement constitute s a core component of the European
Banking Union: t he Single Resolution Mechanism (SRM).3 e SRM complements
the Single Superv isory Mechani sm (SSM),4 and the Single Deposit Guara ntee Scheme
(SDGS ),5 and – as re peatedly emphasized by the Eu ropean Council6 – is expected to
increase the stabi lity of the EU bank ing sector by establish ing a common procedure
to wind down failing banks.
7 Following a compromise reached in March 2014 a er
prolonged negotiations with t he European Parl iament,8 the SRM i s based on two
interwoven legal measures. On t he one hand, the Council and the Europea n Parliament
have approved an EU regulation establ ishing uniform rules a nd a uniform procedure for
the resolution of credit instit utions and certai n investment rms in the framework of a
single resolution mechani sm and a single bank resolution fund.9 On t he other hand, the
Member States have concluded a separate intergovernmental agreement on the t ransfer
1 All EU Member State s, except the United Ki ngdom and Sweden.
2 Council of the EU, Pre ss release, 21May 2014, Doc. 10088/14.
3 Council of the EU, Pre ss release, 18December 2013, Doc. 17983/13.
4 Council Regulation (EU) No 1024/2013 of 15October 2013 conferring speci c tasks on the Eu ropean
Cent ral B ank c oncer nin g poli cies r elat ing to the pr uden tial super vis ion of c redi t inst itut ions , [2013] OJ
L 287/63.
5 Directive No 2014/49/EU of the European Parliament and of the Council of 16April 2014 on Deposit
Guarantee Sche mes, [2014] OJ L 173/149.
6 See for example Europ ean Council, Conclu sions, 20December 2013, EUCO 217/13, para. 29.
7 See also Europe an Commission, Com munication ‘A Roadmap Towards Banki ng Union’, 12September
2012 COM(2012) 510 nal.
8 European Parli ament, Proposal for a Reg ulation of the Eu ropean Parliament a nd the Council
establishi ng uniform ru les and a uniform proc edure for the resolution of cre dit institutions a nd certain
investment rms in the frame work of a Single Resolution Mechanism a nd a Single Bank Resolution
fund and amend ing Regulat ion (EU) No 1093/2010 of the European Parli ament and the Counc il,
Approval of the na l compromise text, 20Ma rch 2014, Interinstitutiona l le 2013/0253 (COD).
9 Regulation (EU) No. 8 06/2014 of the European Parl iament and of the Cou ncil of 15 July 2014
establishi ng uniform ru les and a uniform proc edure for the resolution of cre dit institutions a nd certain
investment rms in the frame work of a Single Resolution Mechanism a nd a Single Bank Resolution
Fund and amendi ng Regulation (EU) No 1093/2010 of the European Parl iament and of the Council,
[2014] OJ L 225/1.
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