On State guarantees and Rules of Competition and State aid in EU/EEA law

This argument was explored by Mr. Liepitz in a mail sent to me. It concerns the territorial limits, the State liability and the rules of competition and state aid in EU law (which are similar in EEA law). As you all can see, we should also consider very well and more in-depth the issue of non-discrimination. I recommend the articles of Stefán Már Stefánnsson and Petur Blöndal in Morgunblaðið in this regard.

 

Just to put this into context. Law is a social science discipline so legal pleadings are all acceptable as long as the legal methodology of fundamenting arguments on law, jurisprudence and doctrine are respected.

 

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" It is clear that when the national State extends the garantees to depositors beyond the scheme, this constitutes a form of "State subsidy" and a discrimination problem may occur. If we consider (a bit far fetch, but why not) that it is a social policy, no problem, a State has the right to discriminate in favour of its citizens, or perhaps its residents.  If we consider it is a subsidy to the enterprises and / or national economy, we enter right into the huge ECJ jurisprudence on art 86 and 87 of the Treaty establishing European Communiies, now 106 and 107 in the Lisbon  Treaty 'Functionnig of UE"

(pfiew..)

 

There it is [The new Treaty on the Functioning of the European Union]:

 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:115:0047:0199:EN:PDF

 

Clearly  the bank system offers a SIEG regulated by Article 106. The aim of government in 2008 was to avoid desapearance of money in Island, a la Argentina, that is a national systemic crisis.

 

But 106 it is a terrible contested terrain, though Lisbon insists on national duties (cf 106- 2, art 14 and related declaration)

 

107 is more clear . You may say (and that would be my own  line) Island has a TERRITORIAL right to discriminate, that is in favour of LOCAL depositors and establishments, not national depositors (for example : it cannot discriminate against a British citizen having his money in a Rekjavik branch) nor national producers (it should garantee deposits of an Islander depositor in a Rekjavik branch of a British bank)

 

Without that territorial limits, a distortion would occur since a big State (or a big scheme) as more power to garantee than a small state

 

Anyway, as you have pointed out in your report, if GB and NL desagree with Island on implementation of art 106 and 107, they go to ECJ

!!! But before that , only   the Commission has a say (art 108a)"

 

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Athugasemdir

[gerdur (IP-tala skráð) 13.1.2010 kl. 18:04]

"[...]. In particular, deposit-guarantee schemes may, on social considerations, cover certain kinds of deposits in full. "
( 31994L0019 Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes)

=Treating differently here does not mean discriminating (or; it´s justified discrimination). Local deposits are accounts of a certain kind, the decision of protecting them in full was based on social considerations.

Different cases treated differently.

Probably the criteria Brits and Dutch used to ´discriminate´ in their cases.

"[...] whereas this must not, however, jeopardize the stability of the banking system of the Member State concerned; "
= The emphasis on the greater importance of keeping a bank system stable.

According to C-222/02 Paul Peter the Icelandic government would never have to pay more than the minimum guarantee (ca 20.000 euro).
In this case the ruling says ca that since the Directive does not mention ´individual rights´, it can not be interpreted to mean to protect individual rights (just public).
There is no mention in the directive that the rules cover system crash (like Mr. Lipietz points out)= its rules will not apply in a case.
And even if it did:
If a state can be held liable for max. 20.000 euros under normal circumstances (when it is ruled to have had full responsibility for supervision) - it must be held responsible for less under crash circumstances. Rules not being clear about us having full responsibility makes an even stronger case.

[gerdur (IP-tala skráð) 13.1.2010 kl. 18:11]

Correction: "Rules not being clear about us having full supervision responsibility ..."

[Maria Elvira Méndez Pinedo, 14.1.2010 kl. 12:26]

Thank you Gerdur for all your comments. I totally agree with your conclusions on State liability. These are things that an important number of specialists in EU law have pointed out.

If we can argue the issue of non-discrimination, then the State liability rules play in our favour. I am working on  that.