(Insurance – Third non-life insurance directive – Bonus-malus system)

Summary of the Judgment

Freedom of movement for persons – Freedom of establishment – Freedom to provide services – Direct insurance other than life assurance – Directive 92/49 – Freedom to set rates – Bonus-malus system not resulting in the direct setting of premium rates by the State – Permissible

(Council Directive 92/49)

A bonus-malus system applicable to motor insurance contracts which, while having effects on changes in the amount of premiums, does not, however, result in the direct setting of premium rates by the State since insurance undertakings remain free to set the amount of the basic premium cannot be equated with a system of approving premium rates that is contrary to the principle of freedom to set rates laid down by Directive 92/49 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239 and 88/357.

Full harmonisation in the field of non-life insurance rates precluding any national measure liable to have effects on rates cannot be presumed in the absence of a clearly expressed intention to this effect on the part of the Community legislature.

(see paras 24-25)

JUDGMENT OF THE COURT (Grand Chamber) 7 September 2004(1)

(Insurance – Third non-life insurance directive – Bonus-malus system)

In Case C-347/02, ACTION under Article 226 EC for failure to fulfil obligations, brought on 30 September 2002,

Commission of the European Communities, represented by C. Tufvesson and J.-F. Pasquier, acting as Agents, with an address for service in Luxembourg,

applicant,

French Republic, represented by G. de Bergues, P. Boussaroque and C. Mercier, acting as Agents,

defendant,

THE COURT (Grand Chamber),

composed of: V. Skouris, President, P. Jann, C.W.A. Timmermans (Rapporteur), C. Gulmann and J.N. Cunha Rodrigues, Presidents of Chambers, R. Schintgen, F. Macken, N. Colneric, S. von Bahr, R. Silva de Lapuerta and K. Lenaerts, Judges,

Advocate General: C. Stix-Hackl, Registrar: H. von Holstein, Deputy Registrar,

after hearing the Opinion of the Advocate General at the sitting on 30 March 2004,

gives the following

1 This request for a preliminary ruling concerns the interpretation of Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment (OJ 2012 L 26, p. 1), as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (OJ 2014 L 124, p. 1) (‘Directive 2011/92’).

2 The request has been made in proceedings between, on the one hand, Waltham Abbey Residents Association and, on the other hand, An Bord Pleanála (Planning Board, Ireland; ‘the Board’), Ireland and the Attorney General (Ireland), concerning authorisation granted by the Board for a strategic residential housing development.

Legal context

European Union law

Directive 2011/92

Recitals 7 to 9 of Directive 2011/92 state:

‘(7) Development consent for public and private projects which are likely to have significant effects on the environment should be granted only after an assessment of the likely significant environmental effects of those projects has been carried out. …

(8) Projects belonging to certain types have significant effects on the environment and those projects should, as a rule, be subject to a systematic assessment.

(9) Projects of other types may not have significant effects on the environment in every case and those projects should be assessed where the Member States consider that they are likely to have significant effects on the environment.’

Article 2(1) of that directive provides:

‘Member States shall adopt all measures necessary to ensure that, before development consent is given, projects likely to have significant effects on the environment by virtue, inter alia, of their nature, size or location are made subject to a requirement for development consent and an assessment with regard to their effects on the environment. Those projects are defined in Article 4.’

Under Article 3(1) of that directive:

‘The environmental impact assessment shall identify, describe and assess in an appropriate manner, in the light of each individual case, the direct and indirect significant effects of a project on the following factors:

…

(b) biodiversity, with particular attention to species and habitats protected under [Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ 1992 L 206, p. 7), as amended by Council Directive 2013/17/EU of 13 May 2013 (OJ 2013 L 158, p. 193) (“Directive 92/43”)] and Directive 2009/147/EC [of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (OJ 2010 L 20, p. 7)];

…’

Article 4 of Directive 2011/92 provides:

‘1. Subject to Article 2(4), projects listed in Annex I shall be made subject to an assessment in accordance with Articles 5 to 10.

(a) a case-by-case examination;

or

(b) thresholds or criteria set by the Member State.

Member States may decide to apply both procedures referred to in points (a) and (b).

Where a case-by-case examination is carried out or thresholds or criteria are set for the purpose of paragraph 2, the relevant selection criteria set out in Annex III shall be taken into account. Member States may set thresholds or criteria to determine when projects need not undergo either the determination under paragraphs 4 and 5 or an environmental impact assessment, and/or thresholds or criteria to determine when projects shall in any case be made subject to an environmental impact assessment without undergoing a determination set out under paragraphs 4 and 5.

Where Member States decide to require a determination for projects listed in Annex II, the developer shall provide information on the characteristics of the project and its likely significant effects on the environment. The detailed list of information to be provided is specified in Annex IIA. The developer shall take into account, where relevant, the available results of other relevant assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The developer may also provide a description of any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

The competent authority shall make its determination, on the basis of the information provided by the developer in accordance with paragraph 4 taking into account, where relevant, the results of preliminary verifications or assessments of the effects on the environment carried out pursuant to Union legislation other than this Directive. The determination shall made available to the public and:

(a) where it is decided that an environmental impact assessment is required, state the main reasons for requiring such assessment with reference to the relevant criteria listed in Annex III; or

(b) where it is decided that an environmental impact assessment is not required, state the main reasons for not requiring such assessment with reference to the relevant criteria listed in Annex III, and, where proposed by the developer, state any features of the project and/or measures envisaged to avoid or prevent what might otherwise have been significant adverse effects on the environment.

Member States shall ensure that the competent authority makes its determination as soon as possible and within a period of time not exceeding 90 days from the date on which the developer has submitted all the information required pursuant to paragraph 4. In exceptional cases, for instance relating to the nature, complexity, location or size of the project, the competent authority may extend that deadline to make its determination; in that event, the competent authority shall inform the developer in writing of the reasons justifying the extension and of the date when its determination is expected.’

Annex II.A of that directive contains the list of ‘information to be provided by the developer on the projects listed in Annex II’. That list reads as follows:

‘1. A description of the project, including in particular:

(a) a description of the physical characteristics of the whole project and, where relevant, of demolition works;

(b) a description of the location of the project, with particular regard to the environmental sensitivity of geographical areas likely to be affected.

(a) the expected residues and emissions and the production of waste, where relevant;

(b) the use of natural resources, in particular soil, land, water and biodiversity.

Annex III to that directive sets out the ‘criteria to determine whether the projects listed in Annex II should be subject to an environmental impact assessment’.

Directive 2014/52

Recitals 11 and 29 of Directive 2014/52 state:

‘(11) The measures taken to avoid, prevent, reduce and, if possible, offset significant adverse effects on the environment, in particular on species and habitats protected under [Directive 92/43] and Directive 2009/147 …, should contribute to avoiding any deterioration in the quality of the environment and any net loss of biodiversity, in accordance with the [European] Union’s commitments in the context of the [United Nations Convention on Biological Diversity, signed in Rio de Janeiro on 5 June 1992,] and the objectives and actions of the Union Biodiversity Strategy up to 2020 laid down in the [Communication from the Commission to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions] of 3 May 2011 entitled ‘Our life insurance, our natural capital: an EU biodiversity strategy to 2020’ [(COM(2011) 244 final)]

…

(29) When determining whether significant effects on the environment are likely to be caused by a project, the competent authorities should identify the most relevant criteria to be considered and should take into account information that could be available following other assessments required by Union legislation in order to apply the screening procedure effectively and transparently. In this regard, it is appropriate to specify the content of the screening determination, in particular where no environmental impact assessment is required. Moreover, taking into account unsolicited comments that might have been received from other sources, such as members of the public or public authorities, even though no formal consultation is required at the screening stage, constitutes good administrative practice.’

Directive 92/43

Article 6(3) of Directive 92/43 provides:

‘Any plan or project not directly connected with or necessary to the management of the site but likely to have a significant effect thereon, either individually or in combination with other plans or projects, shall be subject to appropriate assessment of its implications for the site in view of the site’s conservation objectives. In the light of the conclusions of the assessment of the implications for the site and subject to the provisions of paragraph 4, the competent national authorities shall agree to the plan or project only after having ascertained that it will not adversely affect the integrity of the site concerned and, if appropriate, after having obtained the opinion of the general public.’

Article 12(1) of that directive provides:

‘Member States shall take the requisite measures to establish a system of strict protection for the animal species listed in Annex IV(a) in their natural range, prohibiting:

(a) all forms of deliberate capture or killing of specimens of these species in the wild;

(b) deliberate disturbance of these species, particularly during the period of breeding, rearing, hibernation and migration;

(c) deliberate destruction or taking of eggs from the wild;

(d) deterioration or destruction of breeding sites or resting places.’

Point (a) of Annex IV to that directive mentions ‘all species’ of bats belonging to the suborder of ‘microchiroptera’.

Irish law

18

In particular, no principle resulting from Directive 92/49 or from the Court’s case-law precludes the inclusion in the method of calculating insurance premiums of a mandatory coefficient which has no effect on the initial level of the premiums and affects their alteration in a very small part only, since there is still overall freedom to set the final price.

19

The French Government states finally that application of a *bonus-malus* coefficient does not allow the national authorities to control either the initial level of premiums or, for the most part, their alteration over time.

The initial level of premiums results directly from the reference premium which insurance companies may set entirely freely, on the basis of the criteria that appear to them the most appropriate.

21

So far as concerns alteration of premiums over time, the French Government submits that application of the *bonus-malus* system constitutes for the national authorities not an instrument for controlling rates, but just one of the numerous factors affecting premium levels. Insurance companies remain ultimately free to alter their scales of premiums without confining themselves to reflecting the mechanical alteration of the *bonus-malus* coefficient.

22

As the Court observed in paragraph 29 of its judgment in *Commission* v *Italy*, the Community legislature meant to secure the principle of freedom to set rates in the non-life insurance sector, including the area of compulsory insurance such as insurance covering third-party liability arising from the use of motor vehicles. That principle implies, as the Court stated in the same paragraph of that judgment, the prohibition of any system of prior or systematic notification or approval of the rates which an insurance undertaking intends to use in its dealings with policyholders. The only derogation from that principle allowed by Directive 92/49 concerns prior notification and approval of ‘increases in premium rates’ in the framework of ‘general price-control systems’.

23

In *Commission* v *Italy*, the Court held that the principle of freedom to set premiums was infringed by rate-freezing rules affecting both the fixing and the altering of the rates for insurance policies covering third-party liability arising from the use of motor vehicles in relation to risks situated within Italy (*Commission* v *Italy*, paragraphs 32 and 48).

24

The French *bonus-malus* system with which the present action is concerned is, as regards its impact on insurance undertakings’ rates, different in nature from the Italian legislation which was at issue in *Commission* v *Italy*. It is true that the French system has effects on changes in the amount of premiums. However, the system does not result in the direct setting of premium rates by the State, since insurance undertakings remain free to set the amount of the basic premium. In those circumstances, the French *bonus-malus* scheme cannot be equated with a system of approving premium rates that is contrary to the principle of freedom to set rates, as defined by the Court in paragraph 29 of the judgment in *Commission* v *Italy*.

25

Full harmonisation in the field of non-life insurance rates precluding any national measure liable to have effects on rates cannot be presumed in the absence of a clearly expressed intention to this effect on the part of the Community legislature.

26

It is accordingly not possible to uphold the proposition upon which the Commission’s action is founded, which consists in contending that, despite the fact that the basic premium may be set entirely freely, the French *bonus-malus* system is contrary to the principle of freedom to set rates on the sole ground that it has effects on the alteration of that premium.

27

Nor does the Commission claim that that system is tantamount to imposing a requirement of prior or systematic notification of the scales of premiums which an insurance undertaking intends to use in its dealings with policyholders or a system of approval of such scales.

28

It follows that the Commission has not demonstrated that, by introducing and maintaining in force its *bonus-malus* system, the French Republic has acted in breach of the principle of freedom to set rates and of elimination of prior or systematic controls on scales of premiums and insurance contracts which is established by Articles 6, 29 and 39 of Directive 92/49.

29

Since the Commission confined the subject-matter of the reasoned opinion and of the present action solely to the finding of a breach of the principle, as arising from the provisions referred to in the preceding paragraph, of freedom to set rates and of elimination of prior or systematic controls on scales of premiums and insurance contracts, the present action must be dismissed.

Costs

30

Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the French Republic has applied for costs and the Commission has been unsuccessful, the latter must be ordered to pay the costs.

On those grounds, the Court (Grand Chamber) hereby:

1. Dismisses the action;

Signatures.

1 – Language of the case: French.