II – The dispute in the main proceedings and the question referred for a preliminary ruling
21.
Onix is an insurance company, governed by Romanian law and with its head office in Bucharest (Romania), which, since 24 October 2012, has been carrying on business in Italy under the freedom to provide services, in particular in the field of suretyship insurance, where it provides payment guarantee policies to public bodies in connection with tendering procedures.
22.
According to the information which the Romanian Autoritatea de supraveghere financiara (Financial Supervisory Authority)(12) supplied to the IVASS, during Onix’s two months of trading in 2012, that undertaking collected premiums to the value of EUR 795 363, some 75% of them in Italy and the rest in Romania.
23.
Following a request for information from the IVASS, which had itself received requests for information from public authorities holding payment guarantee policies, the ASF reported that Onix’s reference shareholder was an Italian citizen, Simone Lentini, who held 0.01% of Onix’s capital as a personal shareholder and the remaining 99.99% of that capital as sole shareholder of the company Egady Company. The ASF further stated that Mr Lentini was also chairman and managing director of Onix.
24.
The IVASS took the view that the information received showed that Mr Lentini’s reputation was in question, in particular because, on 29 July 2013, the Tribunale di Marsala (District Court, Marsala, Italy) had convicted him of attempted aggravated fraud against the Italian State.
25.
By letter of 4 October 2013, the IVASS sent the ASF the information and documents in its possession, asked it to take all appropriate measures to protect the insured persons and advised it that, if the ASF failed to take action, it would itself take all expedient and necessary measures to protect the interests of Italian insured persons.
26.
By letter of 8 November 2013, the ASF offered to cooperate, announcing that it had set up an internal working party responsible for assessing the measures to be adopted and inviting the IVASS to cooperate with it.
27.
By letter of 19 November 2013, the IVASS confirmed that it was prepared to cooperate, but pointed up the urgency of the matter and stated that, if the ASF had not revoked Onix’s authorisation within 30 days, it would be obliged to prohibit the company from concluding new insurance contracts in Italy.
28.
On 9 December 2013, the two supervisory authorities held a meeting during which the ASF appears to have said that it was unable to revoke Onix’s authorisation, not least because the criteria laid down by the guidelines of 18 July 2008 had not been transposed into domestic law.
29.
By decision of 20 December 2013, adopted on the basis of Article 40(6) of Directive 92/49 and Article 193(4) of the CAP, the IVASS prohibited Onix from concluding new insurance contracts in Italian territory.
30.
Onix brought an action against that decision before the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio, Italy), which, by judgment of 14 January 2015, dismissed that action on the ground that the lack of good reputation constituted an emergency which justified the adoption of measures to protect the interests of the persons insured.
31.
Onix lodged an appeal against that judgment before the Consiglio di Stato (Council of State, Italy), claiming in particular that the supervisory authority of the host Member State does not have the power to prohibit an insurance operator authorised in the home Member State from concluding new contracts in its territory on the ground that the reputation condition is not met.
32.
The referring court is considering dismissing the appeal on the ground that Article 40(6) of Directive 92/49 permits the supervisory authorities of the host Member State, on account of the reference shareholder’s proven criminal record, to take the precautionary step of prohibiting the insurance undertaking from continuing to trade in its territory with a view to protecting the interests of the persons insured.
33.
Since, however, it has doubts about the compatibility of such an adjudication with EU law, in particular the principle of single authorisation and supervision by the home Member State of compliance with the reputation condition, the Consiglio di Stato (Council of State) decided to stay the proceedings and refer the following question to the Court for a preliminary ruling: ‘Does [EU] law, in particular Article 40(6) of Directive 92/49, Commission Interpretative Communication 2000/C 43/03, paragraph 5, and the … principle of home country control, preclude an interpretative approach (such as that applied to Article 193(4) of the [CAP] approved by Legislative Decree No 209 of 7 September 2005, endorsed by this Court) in accordance with which the supervisory authority of a State hosting an insurance operator under the freedom to provide services may, in cases of urgency and for the protection of the interests of insured persons and of persons entitled to insurance benefits, issue injunctions specifically prohibiting the conclusion of new contracts within the territory of the host State, on the grounds of the identified failure, whether pre-existing or supervening, assessed discretionarily, to satisfy a subjective precondition laid down for the purpose of the issue of authorisation to engage in insurance business, in particular the requirement of good repute?’
III – My assessment
34.
In order to answer the question referred by the national court, it is necessary to start from the premiss, recalled by the Commission in its written observations, that Directive 92/49 has established the principles of single authorisation and conferment on the Member State in which the insurance undertaking has its head office of exclusive competence to carry out the financial supervision of that undertaking. As recital 1 of that directive says, its purpose is to complete the internal market in direct insurance other than life assurance from the point of view both of the right of establishment and of the freedom to provide services, to make it easier for insurance undertakings with head offices in the European Union to cover risks situated therein.
35.
Moreover, it is clear from recital 5 of Directive 92/49 that the approach adopted by the EU legislature for the purposes of achieving those objectives is to bring about ‘such harmonisation as is essential, necessary and sufficient to achieve the 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’.
36.
So it is that the home Member State is exclusively competent under Articles 6 and 13 of Directive 73/239, as amended, to verify that the conditions necessary for issuing prior official authorisation are satisfied and to carry out the financial supervision [of insurance undertakings]. As Article 7(1) of that directive explicitly states, the grant of such authorisation by the home Member State gives access to the insurance business throughout the European Union.
37.
To the extent that the conditions of authorisation are harmonised, the freedom to provide services cannot be limited by the imposition by other Member States of additional conditions applicable to the pursuit of insurance activities in their territory, either under the freedom of establishment or under the freedom to provide services. The view must likewise be taken that the freedom to provide services could not be fully exercised either if the other Member States were able to deny the benefit of the provisions of EU law to an insurance undertaking which has obtained prior official authorisation on the basis of a different assessment of that undertaking’s status in relation to the conditions laid down by the EU legislature.
38.
It is therefore indisputable that the principle of single authorisation precludes any re-examination by the host Member State of the harmonised conditions applicable to the grant of such authorisation, which can be withdrawn only by the home Member State if the insurance undertaking ceases to satisfy those conditions.
39.
The conditions of authorisation are set out in Article 8 of Directive 73/239, which provides in particular that, in order to obtain authorisation, an undertaking which is being set up must adopt one of the legal forms stipulated in that directive,(13) limit its objects to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business,(14) and submit a scheme of operations indicating in particular the nature of the risks covered and details relating to premiums and claims.
40.
With regard more specifically to the present case, it should be noted that Article 8(1)(e) of Directive 73/239 provides that insurance undertakings must be effectively run by persons ‘of good repute with appropriate professional qualifications or experience’, while Articles 8 and 15b of Directive 92/49 lay down conditions governing the ‘quality’ of shareholders or members, which must be such as to ensure sound and prudent management, the second of those two articles stating that, in the event of acquisition by a new acquirer, the latter is to satisfy a ‘reputation’ criterion.
41.
Those two directives therefore make the grant and maintenance of authorisation expressly subject to conditions of ‘good repute’ in the case of directors or managers and ‘reputation’ in the case of shareholders.
42.
Two consequences follow from this.
43.
First, while there is no need to comment on the precise scope of the guidelines of 18 July 2008, it should be noted that the adoption of those interpretative guidelines obviously does not mean that, prior to that interpretation, the provisions laying down the conditions in respect of reputation were not in any way binding on the Member States. The Romanian supervisory authorities were therefore wrong to believe that they could use the non-transposition of those guidelines as a pretext for refusing to withdraw the authorisation granted to Onix on the ground that its reference shareholder has a criminal record.
44.
Secondly, while it is true that the relatively vague terms of ‘reputation’ and ‘good repute’ give the competent authorities of the home Member State a measure of discretion, they nonetheless cannot be interpreted as entitling the supervisory authorities of the host Member State to undertake an assessment of those criteria that is in competition with that undertaken by the supervisory authorities of the home Member State. Any margin of discretion that does exist lies exclusively with the home Member State and does not amount to the conferment of a competing competence on the host Member State. In other words, the fact that the directive does not provide a precise definition of the ‘standard’ concepts of reputation or good repute cannot justify any encroachment by the supervisory authorities of the host Member State upon the spheres of competence reserved for the authorities of the home Member State.
45.
I am therefore of the view that the reputation condition is caught by the rule, recalled by the Commission in its interpretative communication, to the effect that compliance with the harmonised conditions of authorisation falls only to the home Member State, on whose responsibility the single authorisation is granted.
46.
I therefore fully concur with the inference which the Commission draws from that rule, which is to say that the host Member State is not entitled to make up for the inaction of the home Member State by adopting a measure based exclusively on non-compliance with one of the conditions governing the authorisation of insurance companies.
47.
I therefore propose that the Court make it a general rule that Article 8(1) and Article 13(1) of Directive 73/239 must be interpreted as meaning that they preclude the supervisory authority of the host Member State from adopting, as against an insurance undertaking operating in its territory under the freedom to provide services, measures such as a prohibition on the conclusion of new contracts solely on the ground of non-compliance with conditions of authorisation such as that relating to the reputation of shareholders.
48.
To draw from the wording of that rule the hasty inference that, in the circumstances of the case in the main proceedings, the Italian State would have no means available to it, other than by bringing an action for failure to fulfil obligations, of ensuring the protection of insured persons and policyholders, is, in my opinion, a step too far.
49.
After all, the analysis to the effect that the principle of single authorisation and the rule as to supervision by the home Member State mean that the host Member State has no means of taking action against an authorised insurance undertaking that fails to comply with the rules of law applicable in its territory is based on a short-sighted view of Directive 92/49, which contains a number of provisions enabling the authorities of the host Member State to take steps to bring an end to the irregularities they have found.
50.
First of all, Article 28 of that directive confers on the host Member State the power to prevent the conclusion of a contract which ‘[conflicts] with legal provisions protecting the general good’. The general good is therefore an initial safety net on the basis of which a measure restricting an authorised undertaking’s freedom to provide services may be adopted. The approach thus taken by the EU legislature therefore draws directly on the Court’s case-law as established in its judgment of 20 February 1979, Rewe-Zentral,(15) known as ‘Cassis de Dijon’, in which it recognised that restrictions on the freedom of movement may be justified by overriding reasons in the general interest.
51.
Secondly, Article 40 of Directive 92/49 includes a safeguard clause allowing the host Member State to adopt measures to ensure that undertakings with a branch or carrying on business under the freedom to provide services within its territory comply with the rules applicable there.
52.
That article provides for two different procedures, depending on whether or not the matter is urgent.
53.
The standard procedure, provided in Article 40(3) to (5) of Directive 92/49, allows the host Member State to prevent or penalise irregularities committed by an authorised undertaking in its territory. The supervisory authority of that Member State must first require the undertaking concerned to remedy the irregular situation; then, if the undertaking in question fails to take the necessary action, it is to inform the competent authorities of the home Member State accordingly, so that they can, ‘at the earliest opportunity, take all appropriate measures to ensure that the undertaking concerned remedies that irregular situation’.(16) Only if the undertaking persists in infringing the legal provisions in force, despite the measures taken or because those measures prove ‘inadequate’(17) or ‘are lacking’,(18) may the host Member State itself take ‘appropriate measures to prevent or penalise further infringements’,(19) including, ‘in so far as is strictly necessary’,(20) preventing that undertaking from continuing to conclude new insurance contracts.
54.
The emergency procedure provided for in Article 40(6) of Directive 92/49 allows the Member States concerned to take appropriate measures in an emergency to prevent irregularities within their territories, including prohibiting [insurance undertakings] from continuing to conclude new insurance contracts.
55.
In the present case, it is common ground that the measure prohibiting the conclusion of new contracts in Italy was adopted on the basis of Article 193 of the Private Insurance Code, which combined the standard and emergency procedures into a single procedure. It is also clear from the order for reference, however, that that measure was motivated by the existence of an emergency in the form of the need to protect insured persons. That is why the referring court focused its question on the interpretation of Article 40(6) of Directive 92/49.
56.
The parties which have submitted observations to the Court have adopted conflicting readings of that provision.
57.
Whereas Onix submits that that provision confines the host Member State’s power of intervention to situations involving the infringement of general-interest provisions contained in the ‘operational rules’ applicable in that Member State with respect to the conclusion and execution of insurance contracts, the Italian Government considers that that power may be based on the mere fact that one of the shareholders no longer satisfies the reputation condition, where it is established that the general interest of insured persons cannot be adequately protected in the home Member State. That government goes on to say, with regard more specifically to the emergency procedure provided for in Article 40(6) of Directive 92/49, that the concept of ‘prevention of irregularities’ is very broad and includes all circumstances capable of posing a real threat to the interests of insured persons or to the regularity and efficiency of the insurance market as a whole. For its part, the Commission argues that, in order to trigger the emergency procedure, the host Member State authority must not only demonstrate that one of the conditions of authorisation is not or is no longer satisfied, but must also prove the existence of a particular need for action to be taken to prevent the commission of infringements. It recognises, however, that it is for that authority to determine whether, in circumstances such as those in the case in the main proceedings, there was a risk that infringements would be committed in national territory and whether the prohibition on the conclusion of new contracts was strictly necessary in order to prevent them, the specific situation of the persons responsible for running the business and their non-compliance with the requirement of good repute being factors capable of being taken into consideration to that end.
58.
To my mind, if the effectiveness of the provisions of EU law governing the distribution of powers between the home Member State and the host Member State is to be preserved, then, as the Commission rightly states, the authorities of the host Member State must not be permitted to avail themselves of the safeguard procedure on the sole ground that the insurance undertaking operating under the freedom of establishment or the freedom to provide services does not satisfy or no longer satisfies the conditions of authorisation. After all, acceptance of the proposition that non-compliance with the conditions of authorisation is sufficient in itself to justify the exercise of competence by the host Member State would have the effect of transforming the exception provided for in Article 40 of Directive 92/49 into a principle and distorting into a competing competence one that is merely supplementary and intended to be exercised in the absence of any action by the authorities of the [home] Member State.
59.
I do not for that matter think that the principles of single authorisation and supervision by the home Member State dictate the view that the supervisory authorities of the host Member State can act on the basis of Article 40 of Directive 92/49 only in the event of irregularities relating to the provisions that remain within the competence of the Member States.
60.
There are, after all, a number of objections to that interpretation.
61.
First, that interpretation seems to me to be based on an excessively restrictive reading of Article 40 of Directive 92/49, which, although providing for an exception to the rule of supervision by the home Member State that must be interpreted strictly, is nonetheless couched in general terms and draws no distinction on the basis of the origin of the irregularities which are to be prevented.
62.
Secondly, the analysis to the effect that Article 40 of Directive 92/49 seems to have been specifically intended to act not only as a procedural provision but also as an exception to the principle of supervision by the home Member State, thus rendering the host Member State competent under certain conditions, is corroborated by the drafting history of Directive 92/49. Thus, according to the explanatory memorandum to the Proposal for a Third Council Directive 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 (COM(90) 348 final),(21) while the legal regime introduced in order to allow measures and sanctions to be adopted against insurance undertakings that fail to comply with the rules applicable to them when carrying on business by way of the freedom to provide services is ‘based on the principles of devolution of the general power to adopt measures and sanctions [to] the home Member State and on collaboration between the different Member States concerned’,(22) the host Member State ‘retains, however,(23) the possibility of adopting directly(24) measures against an undertaking operating in its territory in order to prevent or punish irregularities committed by that undertaking in its territory with regard to the provisions that are applicable to it’.(25) It states that ‘the same applies where the measures taken by the home Member State are insufficient or non-existent’.(26) The safeguard mechanism is therefore indeed envisaged as a derogation from the principle of ‘devolution of general power’ to the home Member State, thus allowing the host Member State to adopt measures to prevent or punish irregularities in its territory. The contribution made by that mechanism is not merely procedural, therefore. Far from simply coordinating the action taken by the Member States in accordance with their respective spheres of competence, it gives the host Member State a measure of competence to prevent and punish irregularities committed in its territory by an undertaking carrying on its business under the freedom to provide services.
63.
However, the principle of home country supervision is not absolute and, ‘since it is not a principle laid down by the Treaty’,(27) the EU legislature ‘could depart from it’.(28) That principle, moreover, as established by Directive 92/49, is limited in scope, since it ‘extends only to the financial supervision of insurance undertakings’(29) and ‘does [not] preclude the possibility of controls’(30) by the authorities of the host Member State.
64.
Thirdly, I think it important to make the point that, so far as concerns the irregularities of which insurance undertakings may be accused, there is no absolute separation between the provisions that fall to the home Member State and those that fall to the host Member State, since facts constituting an infringement of the harmonised provisions may also constitute an irregularity under non-harmonised national legislation, or at least create a risk of irregularity.
65.
In this regard, there is a significant difference in wording between Article 40(3) of Directive 92/49 and Article 40(6) of that directive. While the first of those two provisions makes the triggering of the standard procedure subject to the finding that an undertaking with a branch or carrying on business under the freedom to provide services in the territory of a Member State ‘is not complying with the legal provisions applicable to it in that State’, the second contains no such provision with respect to the implementation of the emergency procedure. The triggering of the standard procedure is therefore subject to the finding of an ‘irregular situation’ involving non-compliance with the legal provisions of the host Member State. That procedure is therefore intended to bring to an end and penalise an irregularity which has already been committed by the undertaking concerned.
66.
The precautionary dimension of the emergency procedure provided for in Article 40(6) of Directive 92/49, on the other hand, allows it to be implemented more flexibly. That procedure is not subject to the same conditions as the standard procedure, since, to trigger it, the host Member State need only demonstrate the need ‘to prevent irregularities’ that might be committed in its territory. The need to protect national insured persons against the risks of irregularities is therefore such as to justify intervention by the host Member State, provided, of course, that those risks are duly established.
67.
I infer from the foregoing considerations that the EU legislature did not intend the safeguard clause provided for in Directive 92/49 to be an exclusively procedural provision serving only to organise cooperation between the home Member State and the host Member State in matters relating to the supervision of insurance undertakings carrying on business under the freedom of establishment or the freedom to provide services, without altering the rules on the division of powers. Designed as an exception to the principle of home Member State supervision, that clause also serves to confer powers of intervention on the host Member State, albeit within a framework of strict conditions, both substantive and procedural, for their exercise.
68.
In short, while I fully agree with the Commission’s analysis to the effect that the host Member State authority is not in principle entitled to compensate for the inaction of the home Member State authority by adopting a measure based on non-compliance with one of the essential conditions for the authorisation of insurance companies, I nonetheless take the view that, in a situation such as that in the case in the main proceedings, Article 40(6) may serve as a basis for a measure prohibiting the conclusion of new contracts where that measure is in truth based not on non-compliance with one of the essential conditions of authorisation but on the existence of a risk of irregularities adversely affecting insured persons and suretyship policyholders.
69.
That is precisely the case in the dispute in the main proceedings, which concerns a situation involving particular circumstances that demonstrate the patent existence of the risks of irregularities referred to by the Italian supervisory authorities and the urgent need to take action against Onix in order to protect the Italian insurance market.
70.
It is important to make the point here that it is clear from the order for reference that the IVASS took the decision to prohibit the conclusion of new insurance contracts in Italy on the basis of the following findings:
-
First, on 29 July 2013, Mr Lentini, who controls the capital of Onix as a personal shareholder and as sole shareholder of Egady Company, was convicted of attempting to commit aggravated fraud against the Italian State in order to obtain payments of public funds;
-
Next, Mr Lentini was the sole director of the company G.C.C. Garanzie Crediti e Cauzioni SpA, which, pursuant to a decision of the Banca d’Italia (Bank of Italy) of 28 August 2007 and a decision of the Minister for the Economy of 10 June 2008, was removed from the lists of financial intermediaries on account of management irregularities and non-compliance with the minimum equity requirements, an administrative penalty in the amount of EUR 80 000 having been imposed on Mr Lentini for the same reasons;
-
Finally, the company Garanzie Crediti e Cauzione Srl, formerly Garanzie Crediti e Cauzione SpA, was twice the subject of sequestration orders made by the Agenzia delle Entrate (Tax Administration) on account of sureties given but not honoured.
71.
In my view, it was on the basis of those three components of the background to the matter that the IVASS found there to be a particularly serious risk that the irregularities for which penalties had already been imposed on Mr Lentini personally or on the companies controlled by him would be repeated, this time via Onix, the intermediate legal person. Those past irregularities create in and of themselves a risk that Onix will not be able to honour its surety commitments and will, as a consequence, cause serious harm both to the undertakings that financed the underwriting of insurance contracts with that company and to the public entities to which those commitments were given. In the particular circumstances of the case at issue in the main proceedings, it seems to me that the existence of a risk of irregularities such as to justify recourse to the procedure under Article 40(6) has therefore been clearly demonstrated, irrespective of the finding as to non-compliance with the reputation condition necessary for obtaining authorisation.
72.
I further consider that the IVASS has made apparent the existence of an emergency arising from the lack of cooperation and diligence on the part of the Romanian supervisory authorities, the fact that Onix carried on most of its business in Italian territory (given that, despite not having been admitted to trade in Italy until 24 October 2012, that company collected 75% of its insurance premiums there during its two months of trading in 2012) and the urgent requests for information made by public authorities expressing their concerns as beneficiaries of the guarantees underwritten with Onix.
73.
To that extent, I fully concur with the President of the European Insurance and Occupational Pensions Authority (EIOPA),(31) who, ruling on the merits of the complaint which Onix had brought against the IVASS on 5 February 2014, decided(32) not to initiate an investigation on the ground, in particular, that the power of the host Member State authority to take appropriate measures in an emergency, as provided for in Article 40(6) Directive 92/49, may be exercised where the concerns of that authority cannot be addressed in any other way, in particular by cooperation between the supervisory authorities.
74.
In short, I take the view that the conditions for implementing the emergency procedure provided for in Article 40(6) of Directive 92/49 are satisfied in the present case in so far as the IVASS not only found that Onix did not meet the reputation condition but also demonstrated the existence of an emergency calling for the adoption of measures to prevent irregularities.
75.
The analysis to the effect that the host Member State’s intervention is legitimate and justified in circumstances such as those in the case in the main proceedings seems to me to be corroborated by the substantial body of case-law relating to penalties for abuse of rights.
76.
Reliance on an abuse of rights in support of the legitimacy of certain restrictions on the freedom to provide services has become familiar in the Court’s case-law since the judgment of 3 December 1974, van Binsbergen.(33) In that judgment, the Court held that ‘a Member State cannot be denied the right to take measures to prevent the exercise by a person providing services whose activity is entirely or principally directed towards its territory of the freedom [to provide services] for the purpose of avoiding the professional rules of conduct which would be applicable to him if he were established within that State …’.(34)
77.
The Court later held that ‘a Member State is entitled to take measures designed to prevent certain of its nationals from attempting, under cover of the rights created by the Treaty, improperly to circumvent their national legislation’(35) and that ‘[Union law] cannot be relied on for the purposes of abuse or fraud’.(36) It held that, in such circumstances, the national courts may take account, on the basis of objective evidence, of abuse or fraudulent conduct on the part of the persons concerned in order, where appropriate, to deny them the benefit of the provisions of Union law on which they seek to rely, provided that they assess such conduct in the light of the objectives pursued by those provisions.(37)
78.
While that case-law does not authorise a Member State generally to exclude the provision of certain services by operators established in other Member States, since that would entail abolition of the freedom to provide services,(38) it does allow it to adopt specific prohibitive measures on a ‘case-by-case’(39) basis.
79.
The Court requires the classification of a situation as an abuse of rights to be based on objective evidence. The evidence generally taken into account includes the direction of the business, the situation in which that business is entirely or principally directed towards the territory of the host Member State falling within the scope of the right of establishment, not the freedom to provide services.
80.
The circumstances of the case in the main proceedings exhibit objective evidence that Italian law has been circumvented. It is, after all, common ground that, as soon as Onix was authorised to trade under the freedom to provide services, it directed 75% of its business towards Italian territory, even though it was managed and controlled by a person prohibited from accessing the Italian insurance market.(40) It follows from that evidence that Mr Lentini established himself in Romania in order to carry on once again in Italian territory, through an intermediate legal person, the same business as that which he is prohibited from pursuing.
81.
While the classification of abuse is usually adopted in situations where an operator locates his establishment in a Member State with favourable legislation in order to evade the stricter legislation of another Member State, the dispute in the main proceedings involves a more obvious and serious case of fraud, in which a person seeks to use the freedom to provide services in order to evade a trading ban.
82.
Although I agree with the notion, eloquently articulated by the Commission at the hearing, that the risks of circumvention must not lead us to ‘throw out the baby with the bath water’ by shelving the principle of home Member State supervision, I am also convinced, to continue that metaphor, that we must not ‘wash the baby in dirty water’. Acceptance of the proposition that the principles of single authorisation and supervision by the home Member State may take us into the choppy, not to say hostile, waters of fraudulent evasion of the law would lead not to their preservation but to their loss.
83.
To my mind, the issue in this case is the credibility of the Union legal order. A refusal to penalise conduct involving the fraudulent evasion of the law, whereby the freedom to provide services is used as a means of circumventing a decision to prohibit access to a national market which is adopted in the light not least of previous criminal convictions, serves up a powerful argument to all those who express serious reservations about the home country principle, despite the fact that this is the keystone to the construction of the internal market. That principle deserves better than a dogmatic approach which, by interpreting that principle in a dangerously absolutist fashion, makes it excessively rigid and ultimately serves only to weaken and threaten the entire structure which it is there to support.
84.
Finally, to recognise that the safeguard clause which the Union legislature wished to include is applicable in the circumstances of the case in the main proceedings is to all intents and purposes to ‘give effect to the salutary flexibility and social compression without which the law would become odious, since it could then serve indiscriminately to administer justice or injustice depending on the whim of the scruples or appetite of the person concerned’.(41) What is more, to refuse to allow the freedom to provide services to be subjugated to the appetite of fraudsters seeking to evade a trading ban in one Member State by taking refuge in another Member State is not to call into question the internal market acquis.
85.
It is for these reasons that I propose that the Court’s answer should be that Article 8(1) and Article 13(1) of Directive 73/239 are to be interpreted as precluding the supervisory authority of the host Member State from adopting, as against an insurance undertaking operating in its territory under the freedom to provide services, measures such as a prohibition on the conclusion of new contracts on the sole ground of non-compliance with the conditions of authorisation, such as that relating to the reputation of shareholders.
86.
However, in circumstances such as those in the case in the main proceedings, in which the insurance undertaking authorised by the home Member State not only has as its reference shareholder a natural person who, on account not least of a criminal conviction against him for attempted fraud, is prohibited from accessing the insurance market in the host Member State, but also directs most of its business towards the territory of that Member State, those provisions do not preclude the supervisory authorities of that Member State from adopting, on the basis of Article 40(6) of Directive 92/49 and in the light of the emergency arising from the fact that the home Member State supervisory authorities failed to take any action despite having been given formal notice to withdraw authorisation, measures restricting the freedom of the undertaking concerned to provide services in its territory, such as a prohibition on continuing to conclude new contracts, with a view to averting the risk that the intermediate legal person will circumvent the prohibition on market access and the associated risk that the irregularities for which the reference shareholder has been penalised will be repeated.
87.
Even though the referring court does not ask the Court about the detailed procedural rules under which the supervisory authority of the host Member State may adopt measures on the basis of Article 40(6) of Directive 92/49, I am minded to make the point, in the light of its finding that Onix was not given a prior hearing in connection with the measure prohibiting it from concluding new contracts, that, in my view, the right to be heard in any proceedings must apply even in the event of recourse to the emergency procedure provided for in that provision. After all, the right to be heard must be observed in cases where the administrative authority plans to adopt a measure which will adversely affect an individual,(42) even if the applicable legislation does not expressly provide for such a procedural requirement.(43)