Court of Justice 20-01-2000 ECLI:EU:C:2000:27

Arguments of the parties

According to the Commission, the Community legislature intended to exclude from the scope of the Directive insurance services managed or controlled by bodies forming part of a system of social security and which are operated according to the solidarity principle on which these schemes are generally based. It follows, according to the applicant, that insurance businesses with links to national social security schemes do fall within the scope of the Directive where they are provided by private undertakings operating with a view to profit. The Directive concerns the undertakings as such, guaranteeing them the freedom to establish themselves and to provide their services throughout the Community, by virtue of the harmonisation of the systems for the authorisation and supervision of undertakings. The mere fact that an undertaking is providing a service which can be linked to the social security system does not, therefore, entail the automatic inapplicability of the Directive.

This interpretation is confirmed, according to the Commission, by Articles 1(3) and 2(4) of the 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 insurance:^(*) Article 1(3) states that ‘operations relating to the length of human life which are prescribed by or provided for in social insurance legislation, when they are effected or managed at their own risk by assurance undertakings in accordance with the laws of a Member State’ are included within the scope of the Directive; under Article 2(4), insurance forming part of a statutory system of social security, with the exception of insurance provided by private undertakings operating at their own risk, is excluded from the scope of the Directive. According to the Commission, it is in the light of that interpretation that one should also read Article 55 of the Third Directive, which concerns specifically compulsory insurance against accidents at work offered by private undertakings ‘at their own risk’; for those operations which fall within the scope of the Directive, the State in which an insurance company from another Member State is established and offering its services (hereinafter: ‘the State where the insurance is offered’ or ‘country of the risk’) may require the company to observe national rules on insurance contracts, with the exception of those relating to financial supervision which are the exclusive responsibility of the home Member State.^(*)

The Belgian Government maintains, on the contrary, that the Third Directive should be interpreted as not covering all basic social security insurance — namely that insurance which constitutes the essential feature of the national social security system. In the area of compulsory insurance against accidents at work, the Third Directive, and Article 55 in particular, apply only to insurance not directly included in the general system of social security. The groups of insurance mentioned in the Royal Decree of 1994, the legality of which the Commission is contesting, are those provided for by Article 21(4) of the Law of 29 June 1981 laying down the general principles in the field of social security^(*) These groups of insurance were considered by the Belgian Conseil d'État^(*) to be an integral part of the statutory system of social security. The Belgian Government also states that to follow the interpretation of the Directive proposed by the Commission would lead to a manifest anomaly in the Belgian legal system, since in that system compulsory insurance against accidents at work provided by the national funds, which are public bodies, coexist with identical insurance offered by private undertakings.

Assessment of the Advocate General

Although the arguments put forward by the two parties reach opposing conclusions, each of the two arguments can be upheld in part. There is no doubt that, as stated by the Belgian Government, we are dealing here with compulsory insurance which is an integral part of the national social security system. However, one can also agree with the Commission's argument that it cannot be asserted, even if in the country concerned the undertakings established there may provide insurance services whose origins and raison d'être lie in the social security system, that the same right is not also to be accorded to foreign undertakings on the basis of the provisions of the Third Directive.

But what kind of services did the Community legislature intend to bring within the term ‘social security scheme’ mentioned in Article 2( 1 ) of the First Directive? I hardly need add that the field of application of social security systems begins where that of the Community provisions on the removal of national frontiers and the liberalisation of the respective markets ends.^(*) It is clear that the measures under the Treaty designed to realise the single market and freedom of competition^(*) do not in any way envisage as a further aim regulating national systems of social security, which remain, in accordance with social policy measures adopted at Community level, within the exclusive competence of the Member States.

The Court has already had reason to rule on the scope of the abovementioned provisions of the Third Directive in its judgment in Garcia in 1996,^(*) a judgment invoked several times by both parties in their pleadings, albeit in different perspectives. In the case in question the Court was asked to interpret Article 2(2) in so far as, by referring to Article 2(1) of the First Directive, it establishes that that directive does not concern insurance included in national social security schemes. The question for a preliminary ruling had been put by a French court in the context of a dispute in which a number of self-employed workers were contesting the right of social security offices — responsible for managing compulsory insurance schemes covering retirement, sickness, maternity, invalidity and death — to demand payment of the relevant contributions. The workers claimed that the exclusive right granted to these social security funds for managing this insurance was incompatible with the Third Non-life Insurance Directive. The Court, relying on the case-law cited above on the intangibility of national systems of social security, affirmed that the French scheme came under the concept referred to in Article 2(1) of the First Directive. It went on to say that liberalising the national market would have meant removing the obligation to be affiliated to that scheme, which would have had the effect of threatening its survival.

According to the Belgian Government, that judgment^(*) defines the scope of the Directive, not in relation to the nature of the undertakings, but in relation to the nature of the insurance, so that the concept of ‘social security scheme’ does not include all basic social insurance. This interpretation it maintains, is confirmed in the Court's judgment in Assurances du Crédit v Council and Commission^(*) on the subject of the definition of the scope of Council Directive 87/343/EEC of 22 June 1987 amending, as regards credit insurance and suretyship insurance, First 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.^(*) In that judgment the Court considered all insurance that is social in origin and in nature as not covered by Directive 87/343, ‘irrespective of the legal status of the undertaking effecting such operations’.

In my opinion, the Garcia judgment, which includes in the concept of a social security scheme mentioned in Article 2(1 )(d) of the First Directive the insurance provided by the French social security offices, deals with insurance displaying the typical characteristics of a social benefit, in the sense that it is provided by a public body and governed exclusively by rules of public law. That situation is different from the one we are considering here because the insurance services are provided by private undertakings within a market system and, consequently, the considerations expounded by the Court on the French system cannot be applied here. In view of the obvious difference between the two cases in question, I cannot accept the Belgian Government's argument that the conclusions reached by the Court in that judgment should also be transposed to this case.

Similarly, the reference made by the Belgian Government to the judgment in Assurances du Crédit v Council and Commission is not relevant because in that judgment the Court confines itself to declaring lawful the exclusion which appears expressis verbis in Article 2(2)(d) of the First Directive as amended by Directive 87/343 concerning public export credit insurance. The Court's analysis, based essentially on the subject-matter and the objectives of the measure whose validity was in dispute, focuses on an appraisal of the possibility of reconciling the subject-matter and the objectives with the exclusion of public export credit insurance, independent of the modalities by which these operations were effected at national level.^(*)

In the case in point here, unlike the national situation analysed by the Court in Garcia, we are concerned with an ambiguous situation displaying only in part the intrinsic characteristics of a social security system; namely compulsory insurance provided not only by the mutual funds forming part of the social security system but also by private undertakings operating with a view to profit, without the inherent links with the policy of the States on social security for workers.^(*) I have already mentioned that the Belgian Government has pointed out that, according to the Belgian Conseil d'État, this compulsory insurance constitutes a service of a socialsecurity nature. However, in my opinion, the definition under national law cannot have any influence on the definition of the concept of social security set out in Article 2(l)(d) of the Directive.^(*) A reading of the Directive and the identification of its objectives point, in fact, to the opposite conclusion.

As the Commission has stated, a first argument, of a purely literal nature, precludes the insurance at issue from being regarded as excluded from the scope of the Directive. Article 55 of the Directive expressly refers to ‘any insurance undertaking offering, at its own risk, compulsory insurance against accidents at work’, and provides that Member States may require compliance with ‘specific provisions of their national law ... , except for the provisions concerning financial supervision, which shall be the exclusive responsibility of the home Member State’. I would add that Article 54 concerns a different category of insurance which, while it is in principle covered by social security schemes, is regulated by the Directive. This insurance is ‘alternative to health cover provided by the statutory social security system’, for which reason the Member State ‘may require that those contracts comply with the specific legal provisions adopted by that Member State to protect the general good in that class of insurance, and that the general and special conditions of that insurance be communicated to the competent authorities of that Member State before use’.

Apart from this argument of a literal nature, which very clearly limits the scope of the concept in Article 2(1) of the First Directive, other reasons of a substantive nature linked to the specific characteristics of the Belgian social security system lead to the same conclusion.

From this angle, it must first be considered whether the Belgian compulsory insurance scheme against accidents at work has any impact on the structure and the activities of the undertaking providing the insurance and whether, if this is not the case, the Directive, whose aim is to remove barriers to freedom of establishment and freedom to provide services for insurance undertakings must, for this reason, not be considered to apply. It is clear that, even though the rules governing social security would not affect in any way the manner in which the undertakings carry out their economic activity, the Community provisions of which these undertakings are the subject cannot affect the national provisions, public in origin and nature, which govern social security systems, and consequently, cannot undermine the function or the essential objective of these systems.

Following this line of reasoning, I shall go on to examine the overall framework of the provisions on compulsory insurance against accidents at work as laid down in Belgian law.

As I have already pointed out in the introduction to my Opinion, Article 2(2) of the Law of 1975 on the control of insurance undertakings, as amended by the Royal Decree of 12 August 1994, implementing Directive 92/49, in defining the scope ratione materiale of the Law excludes ‘mutual funds, private undertakings with fixed premiums^(*) and public institutions in relation to the operations referred to: (a) by the Law of 10 April 1971 on accidents at work [and by the Law of 3 July 1967 on compensation for damage resulting from accidents at work, accidents on the way to or from work and occupational diseases in the public sector]’.

The delegation of insurance against accidents at work to private undertakings, which dates back to 1903, was reaffirmed in 1971 and most recently by the Royal Decree of 31 March 1987.^(*) The Law of 10 April 1971 (hereinafter ‘the Law of 1971’) which, together with the Royal Decree of 21 December 1971 (hereinafter ‘the Royal Decree of 1971’), governs this insurance requires employers to insure their employees with a mutual fund or an authorised insurance undertaking (Article 49).

The Law of 29 June 1981 laying down the general principles governing the social security of employees provides in Articles 3 and 21(4) that social security includes allowances payable by reason to accidents at work and occupational diseases.

The amount of compensation to be paid to employees is established by statute (sec Articles 10-21 and 28-33 of the Law of 1971) on the basis of the employee's remuneration, while the amount of insurance premiums is freely decided upon by individual insurance companies.^(*) The rates must be communicated to the Ministry for Social Security by 31 December each year and may not increased by more than 10% (Article 12 of Royal Decree of 1971).

When applying for authorisation, the authorised undertakings must provide proof of financial stability by producing accounts for the Ministry of Social Security and the Fund for accidents at work (Article 4, in particular (5), of the Royal Decree of 1971).^(*) Secondly, for operations relating to the insurance at issue, they must keep separate accounts in accordance with the provisions of specific legislation (Article 8 of the Royal Decree). Thirdly, they must lodge a security with a public body, the Caisse des Depots et Consignations (Article 4(7) and Article 16 of the Royal Decree of 1971) and they are required to hold reserves in the circumstances and in accordance with the rules established by the King (Article 52 of the Law of 1971 and Articles 21 and 22 of the Royal Decree of 1971). Finally, the Fund for accidents at work (see below) carries out the technical, medical and financial monitoring of the observance by the authorised insurers of the Law of 1971 (Article 58(9) of the Law of 1971).

Furthermore, under the Royal Decree No 66 of 10 November 1967, a Fund for Accidents at Work was set up (Fonds des accidents du travail; hereinafter: ‘the FAT’) which is governed by Chapter III of Section 2 of the Law of 1971. The role of the Fund is to pay the compensation where the employer has not insured the employee or where the insurance company fails to pay out (Article 58(3) of the Law of 1971).

It is apparent from these aspects of the legislation, firstly, that the insurance companies set the level of contributions autonomously and freely manage the funds they accumulate from the payment of those contributions. It follows that, in carrying out their economic activity of receiving and investing contributions for compulsory insurance against accidents at work, they do not act in conformity with criteria based on social solidarity but operate according to the traditional logic of schemes based on capitalisation. Secondly, as the Commission points out, the relationship between the employer (and therefore also the employee/insured party) and the insurance company is governed by private law, which, among other things, means that the insurance company is not required to pay compensation where the employer has failed to pay some or all of the contributions. From these points of fact and of law it can be clearly seen that what is concerned here is private insurance business carried on in accordance with the classic rules of free competition, notwithstanding the fact that the services provided by the undertaking have their origins in social security rules. That aspect is not decisive given that the service is provided by undertakings according to operations and calculations which are not defined precisely and in detail by the Belgian rules on social security.

Admittedly, certain characteristics of the system do appear to bring the insurance in question within the traditional pattern of social benefits. These are the employer's obligation to insure, the determination by statute or another act of general application of the rate of compensation, on the basis of the income of the insured parties and, finally, intervention by the FAT where the employer has failed to fulfil the obligations placed on him or where the insurance undertaking is in financial difficulties. However, I do doubt whether the presence of such factors is an obstacle to applying Community legislation such as the Third Directive, which, let me point out once again, has as its aim the liberalisation of the activities of Community undertakings. Similarly, in interpreting the Community measure from the point of view of its effects in the national legal system, I doubt whether opening up the Belgian market can in any way harm the proper functioning of the national insurance system. Since, as we have seen, the application of the public-law provisions of the insurance system do not in any way affect the freedom of the undertaking to provide this service and to determine how it is to be provided, it cannot be jeopardised by the fact that the undertaking providing the service is foreign. I would point out in this respect that, specifically because of Article 55 of the Third Directive, the Belgian State may require foreign undertakings to comply with the rules of national law concerning compulsory-insurance contracts and that by virtue of Article 45(2) of the Directive it may also require them to join and participate, ‘on the same terms as undertakings authorised there, |in| any scheme designed to guarantee the payment of insurance claims to insured persons and injured third parties’.

It remains for me to consider how the rules of national law on financial management, which concern authorised undertakings, and the possibility for foreign companies to provide the same insurance without being subject to any form of prior or subsequent control of their financial situation by the Belgian authorities can be reconciled.^(*) As the Directive has coordinated the controls carried out by the various national authorities, the supervision of the undertakings, which is entrusted to the home State, should be considered sufficient to protect the rights of the insured parties. The fact that the controls carried out by the Belgian authorities arc more rigorous than the basic controls provided for by the Directive cannot lead to the conclusion — arrived at, it would seem, by the Belgian Government — that the controls provided for in other national legal systems are insufficient to ensure the provision of the insurance services at issue on the part of foreign companies. To admit the contrary would amount to diminishing the scope of the entire system instituted by the Third Directive, a system which is, precisely, based on collaboration and mutual trust between national authorities. Nor should it be forgotten that, in the event of infringement of provisions of national law on the part of a foreign undertaking, the authorities of the State where the insurance is offered may contact the authorities of the home State and, in an emergency, adopt ‘appropriate measures to prevent or penalise further infringements’ (Article 40 of the Directive). In my opinion, therefore, the factual and legal conditions which must exist for the obligation on the part of the authorities of the Member State where the insurance is offered to accept the results of the prior and subsequent controls carried out by the authorities of the home State are not satisfied in the present case.

Even intervention by the FAT, where the insurance undertaking is in crisis, does not make it possible to bring insurance against accidents at work within the concept ‘insurance forming part of a statutory system of social security’ as stated in Article 2(1) of the First Directive. That intervention is intended to substitute, and not to complement, that of the insurance undertakings. It is, in reality, a mechanism designed to provide safeguards for workers, not for insurance undertakings. The undertakings remain subject to the rules of private law which require them to carry out their contractual commitments and, in particular, to pay out compensation. In the event of default, these undertakings are subject to the standard insolvency proceedings which enable the State and, as a result, the FAT, as the case may be, to have recourse to their assets in order to recover compensation paid to workers.

In view of all the above considerations, I consider that the Third Directive is applicable to compulsory insurance against accidents at work of the kind governed, under the Belgian legal system, in particular by the Law of 1971 and the Royal Decree of 1971, and that, therefore, the Kingdom of Belgium has not properly implemented the Directive.