OPINION OF ADVOCATE GENERAL

delivered on 10 June 2004 (1)

(Reference for a preliminary ruling from the Simvoulio tis Epikratias)

(Interpretation of Articles 15 and 16 of First Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct insurance other than life assurance and interpretation of Articles 17 and 18 of First Council Directive 79/267/EEC of 5 March 1979 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance – national law giving priority, as regards the guarantee fund, to debts consisting of employees´ pay – compatibility)

I – Introduction

II – Legal framework

A – Community law

Article 11 (Subrogation to a guarantee scheme) The home Member State may provide that, where the rights of insurance creditors have been subrogated to a guarantee scheme established in that Member State, claims by that scheme shall not benefit from the provisions of Article 10(1)’

B – Greek law

11. If an insurance undertaking does not comply with the aforementioned Articles 7 and 8 concerning technical provisions, under Article 9(1) of the legislative decree the Minister for Trade may, by decision published in the Official Gazette and after having communicated his intention to the supervisory authorities of any Member States where the undertaking operates with branches or under the freedom to provide services, allocate part or all of its free assets to a guarantee fund, prohibit the free disposal of part or all of its assets, withdraw temporarily or definitively operating authorisation for some or all of the classes undertaken by it and take any other appropriate measure with the objective of safeguarding the interests of persons insured and any other person entitled to an insurance payment.

12. The provision which is at issue in the main proceedings is Article 10(1) of the legislative decree, as amended by Article 35(9) of Law 2496/1997: ‘Persons entitled to an insurance payment and successors to all or certain of their rights shall have a priority as regards the guarantee fund which takes precedence over any other general or specific priority, apart from the priority under Article 12a(8) and the priority in respect of claims arising from an employment relationship, with the exception of claims of persons exercising the right to manage and administer the insurance undertaking’. Article 12a(8) provides for priority for the remuneration and expenses of the supervisor of a liquidation or insolvency and of the liquidator.

13. Finally, it should be noted that in 1996 the power to supervise insurance companies was transferred from the Minister for Trade to the Minister for Development.

III – Facts, main proceedings and preliminary question

14. Epikouriko Kefalaio is a legal person established under Greek private law which operates under the supervision and control of the Greek Minister for Trade. Its objective is to pay insurance monies in respect of civil liability arising from motor vehicle accidents where there is no insurance cover, inter alia when the insurer has become the subject of insolvency proceedings or authorisation for the operation of an insurance undertaking has been withdrawn for infringement of the law. Once Epikouriko Kefalaio has paid the insurance monies it acquires by subrogation all the rights arising from the accident enjoyed by the person who has suffered harm as against the person liable to make the payment or his insurer.

IV – Answer to the preliminary question

19. First of all it must be established that the insurance directives do not contain any explicit rules in respect of insurance companies in a state of insolvency. Such rules were only introduced at the level of the Community with the adoption of Directive 2001/17. The second paragraph of the preamble to this directive states explicitly that ‘the insurance directives do not contain coordination rules in the event of winding‑up proceedings’ and that ‘it is in the interest of the proper functioning of the internal market and of the protection of creditors’ that such rules be established. It could, quite simply, be concluded a contrario from this that the insurance directives do not preclude the adoption and application of national provisions on this matter.

21. In order to determine whether it is possible to interpret the insurance directives in this way, regard should be had to the objectives of these directives and in particular to the scope of the harmonisation they seek to achieve. It is clear from the first paragraph of the preamble to the insurance directives that their primary objective is to complete the internal insurance market and to make it easier for insurance undertakings established in the Community to cover risks and commitments situated within the Community. Or, as stated by the Court, they are designed ‘to secure freedom to market insurance products … within the Community’. (4) In order to achieve this objective the directives aim at ‘bringing about such harmonisation as is essential, necessary and sufficient to achieve mutual recognition of authorisations and prudential control systems, thereby making it possible to grant a single authorisation valid throughout the Community and apply the principle of supervision by the home Member State’. (5) This suggests that the scope of the harmonisation to be realised by the directives is limited to what is necessary to ensure access to the insurance market throughout the Community and therefore does not cover aspects which have no bearing on market access.

22. One of the main aspects to be harmonised for this purpose was national legislation aimed at guaranteeing the financial and economic stability of insurance companies. As the Court explained in Commission v Germany, (6) in view of the sensitivity of the insurance sector from the point of view of the consumer as a policyholder and an insured person all the Member States had introduced legislation making insurance undertakings subject to mandatory rules both as regards their financial position and the conditions of insurance which they apply, and to permanent supervision to ensure that those rules are complied with. Such rules which could restrict the freedom to provide services could, however, be justified by imperative reasons relating to the public interest, provided the rules of the state of establishment were not adequate in order to achieve the necessary level of protection and the requirements of the state in which the service is provided did not exceed what was necessary in that respect. (7) In this situation the internal market in the insurance sector could only be completed if divergent national measures, which were justified under Community law and thus continued to restrict the freedom to provide services, were brought into line through harmonisation.

24. The position of the referring court and Epikouriko Kefalaio is based on the argument that, as the establishment of technical reserves is ultimately intended to protect the interests of policyholders and insured persons, where an insurance company is in a situation of insolvency their claims to payment should enjoy a privileged status in respect of the assets covering these technical reserves. Although this position appears to be quite logical and acceptable, the fact remains that it is not supported by either the terms or the purpose of the insurance directives. Whilst the national legislation which was the subject of that harmonisation was indeed aimed at the protection of consumer interests in the insurance sector and the directives, in its wake, also seek to guarantee a sufficient level of protection throughout the Community, the primary function of these directives at that stage of the harmonisation process, I repeat, was to remove obstacles to the provision of insurance services under the freedom of establishment or the freedom to provide services. The legal base of the directives, Articles 57(2) and 66 of the EEC Treaty (now Articles 47(2) and 55 EC), which empowers the Council to issue directives to make it easier to take up and pursue activities as self-employed persons (including legal persons) or in other words to facilitate market access, also points in that direction.

25. The Greek Government submits that the insurance directives are intended to protect insured persons, but only during the period in which the insurance company operates normally. I do not believe that this is correct. The obligation for an insurance company to establish adequate technical reserves and a solvency margin obviously is a precautionary measure to protect the interests of, inter alia, insured persons in such an insurance company, most particularly when this company reaches a situation where it is unable to fulfil its obligations. This function, however, has no bearing on the classification of the claims of various categories of creditors. Even though the protection of consumer interests in this field is an underlying objective of the insurance directives, this does not exclude the interests of other categories of creditors being protected when a situation of insolvency arises.

27. I would add to this that, where I observed above that rules on the insolvency of insurance undertakings do not affect market access, Directive 2001/17 does not pursue this aim as such. Rather it is presented as a measure in the interest of the ‘proper functioning’ of the internal market. (9) In other words, I do not believe that the adoption of this directive contradicts the observation I made in paragraph 23 of this Opinion.

V – Conclusion

29. I am therefore of the opinion that the answer to be given to the preliminary question referred by the Simvoulio tis Epikratias should be: Articles 15 and 16 of First Council Directive 73/239/EEC on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct insurance other than life assurance, as supplemented and amended by Second Council Directive 88/357/EEC and Third Council Directive 92/49/EEC, and Articles 17 and 18 of First Council Directive 79/267/EEC on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance, as amended and supplemented by Second Council Directive 90/619/EEC and Third Council Directive 92/96/EEC, must be interpreted as not precluding a national legislature from providing that, where an insurance company is the subject of insolvency proceedings, is put into liquidation or is otherwise in a state of insolvency, claims arising from an employment relationship with it are satisfied from the assets which are included in its technical provisions in preference to claims of persons entitled to an insurance payment and of successors to all or certain of their rights.

1 – Original language: English.

2 – Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking‑up and pursuit of the business of direct insurance other than life assurance, OJ 1973 L 228, p. 3, as amended by Second Council Directive 88/357/EEC, OJ 1988 L 172, p. 1 and Third Council Directive 92/49/EEC, OJ 1992 L 228, p. 1, and Council Directive 79/267/EEC of 5 March 1979 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance, OJ 1979 L 63, p. 1, as amended by Second Council Directive 90/619/EEC, OJ 1990 L 330, p. 50 and Third Council Directive 92/96/EEC, OJ 1992 L 360, p. 1 (hereinafter: ‘the insurance directives’).

3 – Directive 2001/17/EC of the European Parliament and of the Council of 19 March 2001 on the reorganisation and winding-up of insurance undertakings, OJ L 110, p. 28 (hereinafter: ‘Directive 2001/17’).

4 – Case C‑59/01 Commission v Italy [2003] ECR I‑1759, paragraph 26.

5 – Paragraph 5 of the preambles to Directives 92/49 and 92/96.

6 – Case 205/84 Commission v Germany [1986] ECR 3755.

7 – At paragraphs 30 to 33 of the judgment.

8 – Paragraph 2 of the preamble.

9 – Paragraph 2 of the preamble.