The Lawxy Times
Single Resolution Board’s No‑Resolution Decision Upheld by ECJ
On 5 November 2026 the Court of Justice of the European Union dismissed PNB Banka’s request to overturn the Single Resolution Board’s 2019 decision not to adopt a resolution plan. The judgment clarifies the application of the right‑to‑be‑heard under EU resolution law when a resolution authority deems a plan contrary to the public interest. The immediate effect is that the bank cannot obtain compensation for the SRB’s refusal, and the precedent limits future challenges to no‑resolution decisions.
Full News Breakdown
The dispute arose after the SRB concluded that resolving PNB Banka would not serve the public interest and therefore declined to prepare a resolution plan. The bank argued that the SRB had breached its procedural rights, while the SRB maintained that the substantive assessment was correct. The ECJ affirmed the lower‑court ruling, finding no causal link between the procedural breach and the outcome.
Case Name: PNB Banka v European Commission (Single Resolution Board)
Court: Court of Justice of the European Union
Panel: Grand Chamber
Date: 5 November 2026
Citation: C‑74/24 P, judgment of 5 Nov 2026
EU Instruments Cited: Single Resolution Mechanism Regulation (EU) No 806/2014; Directive 2014/59/EU (Bank Recovery and Resolution Directive); Charter of Fundamental Rights of the European Union, Article 41
Key Provisions: SRM Reg. art. 13(2); BRRD art. 41(2); Charter art. 41(1)
Primary Legal Issue: Whether a breach of the right to be heard can invalidate a no‑resolution decision absent proof of a different outcome
Applicant Arguments: The SRB failed to respect the procedural right to be heard, rendering the decision void; the bank suffered financial loss as a result
Respondent Arguments: Even if a procedural defect existed, the substantive assessment that resolution was not in the public interest would have remained unchanged
Court’s Reasoning: A procedural breach does not automatically overturn a decision; the applicant must demonstrate that respecting the right would have altered the substantive conclusion, which it did not do
Holding: The SRB’s no‑resolution decision stands; the procedural breach does not entail liability
Operative Order: The lower‑court judgment is confirmed; no further remedial measures are required
Practical Outcome: No compensation payable to the bank; the SRB’s discretion in public‑interest assessments is reinforced
How Does This Affect You?
Before the judgment, practitioners faced uncertainty about whether a procedural defect in a resolution authority’s decision could automatically trigger liability. The Court now requires a causal link between the breach and a different substantive outcome to overturn a no‑resolution decision. Consequently, challenges to SRB refusals must focus on the substantive assessment rather than solely on procedural errors.
For Lawyers & Advocates
Re‑evaluate pending appeals against SRB decisions to include evidence that a procedural breach would have changed the public‑interest assessment, not just that a breach occurred.
Amend client advice letters to stress that the burden of proof now lies on demonstrating a material impact on the resolution outcome under the SRM Regulation.
Cite this judgment as authority when defending SRB discretion in cross‑border resolution disputes, emphasizing the Court’s emphasis on causation.
Advise banks to document alternative resolution scenarios contemporaneously, creating a factual record that could satisfy the causation test if procedural objections arise.
Highlight that the ruling does not eliminate procedural safeguards; counsel should still ensure full compliance with the right‑to‑be‑heard but recognize that compliance alone will not guarantee overturning a decision.
For Law Students
The case illustrates the Court’s approach to balancing procedural rights against the substantive discretion of EU financial authorities. The core doctrine concerns the causation requirement for procedural violations to invalidate administrative acts.
The decision is particularly relevant for the study of:
EU administrative law and the principle of proportionality
The Single Resolution Mechanism and its interaction with the Charter of Fundamental Rights
The Bank Recovery and Resolution Directive’s procedural safeguards
Comparable cases include Commission v Germany (C‑112/19, 2020) on procedural defects in competition decisions and European Central Bank v European Commission (C‑331/19, 2021) on the need to demonstrate material impact of procedural breaches. Comparing them shows how EU courts consistently demand a causal link before setting aside regulatory actions.
For Businesses
Banks operating under the SRM should review their internal resolution‑risk assessments to ensure they can demonstrate how procedural breaches could affect public‑interest conclusions.
CFOs must verify that board minutes capture contemporaneous discussions of alternative resolution options, creating evidence for potential future challenges.
Compliance teams need to update monitoring checklists to include a causation analysis step when evaluating SRB decisions.
Key Takeaways
The Court clarified that a breach of the right to be heard does not automatically invalidate a no‑resolution decision; a causal link to a different outcome is required.
Practitioners must now gather and present evidence showing that respecting procedural rights would have altered the SRB’s public‑interest assessment.
Regulators can rely on the judgment to uphold discretionary refusals, provided they can demonstrate substantive justification.
Watch for the European Commission’s forthcoming guidance on procedural safeguards in the SRM, expected in early 2027.
In‑house counsel should audit existing resolution‑risk files before the end of Q1 2027 to ensure they contain the necessary factual basis for any future procedural challenge.
Source: PNB Banka loses ECJ appeal over Single Resolution Board's no-resolution decision
