STA, 17 December 2020 - The European Court of Justice has ruled that Slovenia breached the inviolability of ECB archives in a 2016 police search of archives at the country's central bank that was part of an investigation into the 2013 bank bailout.
In a decision announced on Thursday, the court fully upheld the European Commission's position that Slovenia "unilaterally seized" documents that were part of the archives of the European Central Bank, thus failing to "fulfil its obligation to respect the principle of the inviolability of the archives of the EU".
Moreover, the court's Grand Chamber found that by "failing to cooperate properly with the ECB to eliminate the unlawful consequences of that infringement, Slovenia also failed to fulfil its obligation of sincere cooperation with regard to the EU".
The decision sets a legal precedent regarding EU privileges and immunity. "This case has thus given the Court the opportunity to state the conditions applicable to the protection of the archives of the Union with regard to a unilateral seizure of documents forming part of those archives made by the authorities of a member state in places other than the buildings and premises of the European Union and, in particular, the conditions under which a finding of infringement of the principle of the inviolability of the archives of the ECB may be made," the court said.
In explaining its decision, the court noted that in July 2016 the police seized paper and electronic documents at Banka Slovenije, including the then governor's e-mail communication and documents at his workspace computer and his laptop concerning the period between 2012 and 2014.
It said that although Banka Slovenije argued those measures infringed the principle of the inviolability of the ECB archives under the Protocol on the privileges and immunities of the EU and requiring an access to those archives by the national authorities be subject to the express agreement of the ECB, the Slovenian authorities continued with the search and seizure of documents without involving the ECB.
It noted that the ECB explained to the Slovenian authorities that its archives included not only the documents it had drawn up but also its communication with national central banks necessary for the performance of the tasks of the European System of Central Banks (ESCB) or of the Eurosystem.
The ECB also maintained that, subject to certain conditions, it would not refuse to waive the protection enjoyed by the documents seized by the Slovenian authorities.
The court pointed out that, since the ECB is an EU institution, the principle of the inviolability of EU archives applies to its archives as well, including those that are stored in places other than EU buildings and premises.
It finds that the national central banks and their governors have a hybrid status as, although they constitute national authorities, they are authorities acting under the ESCB, hence ECB archives also include documents in possession of national central banks.
Taking into account the large amount of documents seized and the duties of the Banka Slovenije governor, the court "considers it to be established that the documents seized by the Slovenian authorities must have included documents which were part of ECB archives" and that by seizing such documents unilaterally, the Slovenian authorities infringed the principle of the inviolability of ECB archives.
By failing to have allowed the ECB, by the end of the period fixed in the reasoned opinion, to identify which of the documents seized were linked to the performance of the tasks of the ESCB and Eurosystem and by failing to return those documents to Banka Slovenije, Slovenia also failed to fulfil its obligation of sincere cooperation with the ECB.
The court ordered Slovenia to pay for its costs as well as the costs of the European Commission, while the ECB is to pay for its own costs.
If the Court of Justice finds there has been a failure to fulfil obligations, the member state concerned must comply with the judgement without delay. Where the Commission considers that the member state has not complied with the judgement, it may bring a further action seeking financial penalties, the court noted.
The Justice Ministry said today the ruling had been expected. Given that the court clearly stated that it does not see any obstacles for the seizure of documents that are not connected to the ECB's operations, the ruling should not significantly impact the ongoing national criminal procedure, it said.
"Now it is up to the prosecution to study the ruling in detail and take appropriate action," the ministry said.
The European Commission said it had taken note of the court's decision and expected Slovenia to implement it, but did not say whether there was a deadline for the implementation of the judgement.
The ministry also said no deadline had been set but "the Justice Ministry believes the ruling should be implemented as soon as possible".
Delaying the implementation, Slovenia could risk another procedure, which could entail a fine, the ministry said. Verica Trstenjak, a former advocate general at the European Court of Justice, told the newspaper Finance that a second ruling in the case could include high fines for Slovenia, possibly reaching EUR 100 million.
The ECB took note of the ruling, saying "it confirms the ECB's initial concern that the seizure of Eurosystem documents in the offices of Banka Slovenije did not respect the principle of the inviolability of the ECB's archives".
The Commission's spokesperson Marta Wieczorek also noted that Commission President Ursula von der Leyen had confirmed the Commission's readiness to continue dialogue in her response to a letter by PM Janez Janša in June inquiring under which conditions the Commission would be willing to withdraw its action against Slovenia.
"But the Commission understands that the Slovenian authorities and the ECB have been discussing the matter without success," said Wieczorek.
Banka Slovenije said the decision upheld its view in those procedures, adding that proceedings related to the bank bailout had been weighing on its operations for years and undermined the country's international reputation.
"Banka Slovenije has been working to resolve the issue as part of national legal proceedings and talks where we have turned to regular courts as well as the Constitutional Court," the central bank said.
In the 2013-14 bank bailout roughly EUR 600 million of subordinated bank bonds and shares in several banks held by roughly 100,000 shareholders had been wiped up.
Petitioned by the small shareholders affected, the Slovenian Constitutional Court ruled in 2016 that the provision under which the bail-in was carried out did not give the subordinated creditors and shareholders effective access to recourse.
The National Assembly then passed a law in late-2019 to provide easier access to recourse for the potential plaintiffs, making Banka Slovenije financially liable for potential lawsuits.
However, based on an appeal by the central bank, the Constitutional Court suspended the implementation of the recourse providing act in March this year pending its final decision.
The central bank today noted that since the issues have still not been resolved, a group of experts became operational at its initiative in October to draw up a list of proposals for a comprehensive solution to the issues.
The Association of Small Shareholders regretted the EU Court's decision, as it made "key documents based on which the National Bureau of Investigation ascertained that Banka Slovenije untruthfully showed NLB bank assets as negative and thus unjustifiably dispossessed erased bond holders" inaccessible.
The plaintiffs can thus not access the evidence to prove the bail-in was unjustified, which the association says means the existing law to redress their rights was ineffective and the "only fair path is a settlement".