Victory at the Court of Justice of the EU setting a significant precedent for financial institutions

Our Dispute Resolution team won at the Court of Justice of the European Union, setting a significant precedent for payment and electronic money institutions operating in the EU.

We represented a payment institution in a dispute against the Bank of Lithuania regarding the Bank of Lithuania’s decision to revoke a payment institution’s licence because the payment institution had issued electronic money without a dedicated licence.

The key argument that led to the imposition of the most severe sanction was the supervisor’s assumption that accepting funds without a payment order and holding funds in payment accounts for more than 48 hours constituted the issuance of electronic money.

By representing the interests of the client, we have demonstrated that the position of the Bank of Lithuania is not only contrary to the basic logic of e-money issuance but also to the provisions of Article 2(2) of Directive 2009/110/EC, according to which to establish e-money issuance it is necessary to prove that the institution has issued a separate monetary asset from the funds transferred by the clients, which would be accepted by the customers, including the institution’s purpose of issuing e-money. In cases where the payment institution only accepts funds without a payment order and such funds are held in payment accounts for more than 48 hours, they are funds related to future payment transactions but not e-money.

The Supreme Administrative Court of Lithuania, which is hearing the case, has decided to stay the case and to refer the matter to the CJEU for a preliminary ruling as to whether the holding of funds in a payment institution’s account for more than 48 hours without a payment order constitutes e-money issuance.

The case has received positions from the European Commission, Germany, Poland and the Czech Republic, which fully support our client’s arguments. Only the Republic of Lithuania defended the arguments of the Bank of Lithuania. On 5 October 2023, Advocate General Campos Sánchez-Bordona delivered his opinion fully supporting our client’s arguments.

On 22 February 2024, the CJEU issued a preliminary ruling in case C-661/22, in which it fully accepted our argued position that accepting funds without a payment order and their retention in payment accounts for more than 48 hours does not constitute e-money issuance. The CJEU also clarified that what is important for the issuance of e-money is not only the purpose but also the creation of a separate asset, the customer’s acceptance of that separate asset and the keeping of that separate asset separate from the funds transferred by the customer.

The CJEU has thus rejected the Bank of Lithuania’s erroneous position on the interpretation of the conditions for e-money issuance, which had been in force for several years, and has established a significant precedent for the activities of payment and e-money institutions.

Message was sent successfully

Send a message

    Submit