The European Court has dismissed an appeal filed by Pilatus Bank against a ruling to delegate all decisions on behalf of the shuttered bank to a Malta Financial Services Authority appointee.
In its ruling, the EU court confirmed its previous decision, handed down in July 2019, which had already ruled against the defunct bank, dismissing its case as inadmissible.
The issue relates to an email the European Central Bank sent on 10 September 2018, when it ordered all communication between Pilatus Bank and the ECB to be made through a third party.
Pilatus Bank argued that the order by the ECB to channel all communication through Veteran US financial regulator Lawrence Connell, who had been appointed by the MFSA to run the bank, lacked any legal basis in national or European law.
The appointment followed a directive freezing all the assets of the bank, hours after its chairman was arrested in the US. Ali Sadr Hashemi Nejad was arrested on charges that he had violated US sanctions. His chairmanship of the bank was suspended.
The EU Court heard how Pilatus Bank was the subject of administrative proceedings concerning the withdrawal of its licence as a credit institution, initiated by the Malta Financial Services Authority.
The email in question was sent by the ECB after the MFSA had submitted a proposal to withdraw the bank’s licence.
The bank’s licence was eventually withdrawn in November 2018. An appeal against this decision is still pending.
In reaching the dismissal, the General Court pointed out that the only grounds for annulment are measures the legal effects of which are binding on an applicant by bringing about a distinct change in its legal position.
The General Court concluded that the email did not produce binding legal effects capable of affecting the appellant’s interests by bringing about a distinct change in its legal position and so was not open to challenge by an action for annulment.
In its appeal, Pilatus claimed that the court had “distorted Maltese law” and had infringed its right to an effective remedy, among other arguments. The ECB countered that the appeal contained inadmissible and unfounded arguments.
The court noted that although there were a total of nine arguments in the appeal application, the information which was meant to support them was too brief to enable it to assess whether they were well-founded or to be examined in detail.
It ruled that although the first court had drawn a wrong conclusion about the email and its legal effects, this error did not merit the setting aside of the order.
It, therefore, dismissed the appeal in its entirety “as being manifestly unfounded”. It also ordered Pilatus Bank to pay the costs.