No compensation for Arco shareholders, says European Court

A federal plan to compensate 800,000 members of the Arco co-operative for at least some of the money they lost in the collapse of Dexia bank has been ruled illegal by the European Court of Justice in Luxembourg.

The decision was preceded by negative advice from the court’s advocate-general and the EU Commission. The ruling returns Arco members to a state of uncertainty regarding their investments.

Following the collapse of Dexia bank in 2011, the governments of Belgium and France decided to split the bank into two. The Belgian government then nationalised its part of Dexia bank, redubbing it Belfius.

Shareholders lost fortunes, but not all were affected in the same way. Those who bought their shares by the usual methods lost everything. Some, however, were investors via Arco, the investment section of the Union of Christian Workers ACW. They were covered by a measure taken by the government earlier that extended the state guarantee for savings to investments made in Arco.

Lawyers representing ordinary shareholders described that protection as unfair and brought their case to the Council of State. The Council of State passed the question up to the Constitutional Court, which in turn passed it to the European Court.

This week’s ruling – that the guarantee to Arco investors is an illegal type of state aid – is binding on all levels.

The federal government is already preparing an alternative plan to help Arco investors, with economy minister Kris Peeters announcing the creation of a task force to produce a proposal acceptable to both Arco and the EU by next spring. That timing would allow measures to be introduced by the end of 2017 or early 2018.