CELEX: 61999CJ0109
Directives 73/239/EEC and 92/49/EEC
Objects of insurance undertakings limited to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business

Grounds
1 By judgment of 23 March 1999, received at the Court on 29 March 1999, the Tribunal Administratif (Administrative Court), Pau, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) two questions on the interpretation of Article 8(1)(b) 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 (OJ 1973 L 228, p. 3), as amended by Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive) (OJ 1992 L 228, p. 1).
2 Those questions were raised in proceedings between the Association Basco-Béarnaise des Opticiens Indépendants (hereinafter the ABBOI) and the Préfet des Pyrénées-Atlantiques, the latter being supported by Adour Mutualité (hereinafter Adour) and Mutualité Française - Union des Pyrénées-Atlantiques (hereinafter the UPA), concerning the legality, in the light of Article 8(1)(b) of Directive 73/239, of the Préfet's decision approving the constitutional rules for a sight and hearing centre run by the UPA.
Community law
3 The taking-up and pursuit of the business of direct insurance, other than life assurance, are primarily governed at Community level by Directive 73/239.
4 The purpose of Directive 73/239, which was adopted on the basis of Article 57(2) of the EC Treaty (now, after amendment, Article 47(2) EC), was to facilitate exercise of the right of establishment by undertakings engaged in the business of direct insurance other than life assurance.
5 Directive 92/49, which was also adopted on the basis of Article 57(2) of the EC Treaty, but additionally on the basis of Article 66 thereof (now Article 55 EC), seeks 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. The fifth recital in the preamble thereto explains that, in order to attain those objectives, Directive 92/49 aims 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.
6 Article 1 of Directive 73/239 provides:
This Directive concerns the taking-up and pursuit of the self-employed activity of direct insurance carried on by insurance undertakings which are established in a Member State or which wish to become established there in the classes of insurance defined in the Annex to this Directive.
7 Article 2 of Directive 73/239 provides:
This Directive does not apply to:
1. The following kinds of insurance:
...
(d) Insurance forming part of a statutory system of social security;
...
8 Article 8(1)(a) and (b) of Directive 73/239 provides:
The home Member State shall require every insurance undertaking for which authorisation is sought to:
(a) adopt one of the following forms:
...
- in the case of the French Republic: société anonyme; société d'assurance mutuelle; institution de prévoyance régie par le code de la sécurité sociale; institution de prévoyance régie par le code rural; and mutuelles régies par le code de la mutualité;
...
(b) limit its objects to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business;
...
9 Article 13 of Directive 73/239 provides:
1. The financial supervision of an insurance undertaking, including that of the business it carries on either through branches or under the freedom to provide services, shall be the sole responsibility of the home Member State.
2. That financial supervision shall include verification, with respect to the insurance undertaking's entire business, of its state of solvency, of the establishment of technical provisions and of the assets covering them in accordance with the rules laid down or practices followed in the home Member State under provisions adopted at Community level.
...
10 Article 15 of Directive 73/239 provides:
1. The home Member State shall require every insurance undertaking to establish adequate technical provisions in respect of its entire business.
The amount of such technical provisions shall be determined in accordance with the rules laid down in Directive 91/674/EEC.
2. The home Member State shall require every insurance undertaking to cover the technical provisions in respect of its entire business by matching assets in accordance with Article 6 of Directive 88/357/EEC. In respect of risks situated within the European Community, those assets must be localised within the Community. Member States shall not require insurance undertakings to localise their assets in any particular Member State. The home Member State may, however, permit relaxations in the rules on the localisation of assets.
11 Article 18(1) of Directive 73/239 provides:
Member States shall not prescribe any rules as to the choice of the assets that need not be used as cover for the technical provisions referred to in Article 15.
12 Article 57 of Directive 92/49 provides that the Member States are to adopt the laws, regulations and administrative provisions necessary for compliance with that Directive not later than 31 December 1993 and to bring them into force no later than 1 July 1994.
13 In Case C-239/98 Commission v France [1999] ECR I-8935, the Court held that, by failing to adopt the laws, regulations and administrative provisions necessary to comply fully with Directive 92/49 and, in particular, by not transposing that directive into national law in respect of mutual benefit societies governed by the Code de la Mutualité (the Code governing mutual benefit societies), the French Republic had failed to fulfil its obligations under that directive (paragraph 24).
National legislation
14 Article L. 111-1 of the Code de la Mutualité provides:
Mutual benefit societies ("mutuelles") are non-profit-making associations sustained essentially by means of contributions from their members and dedicated, through actions of solidarity and mutual assistance, to the welfare of those members and their families, with a view to ensuring, in particular:
1. the prevention of social risks to the person and reparation of their consequences;
2. the fostering of motherhood and the protection of children, family life, the elderly, and the disabled or handicapped;
3. The cultural, moral, intellectual and physical development of their members and the improvement of their living conditions.
15 Article L. 411-1 of the Code provides:
In order to attain the objectives set out in Article L. 111-1, mutual benefit societies may set up health, socio-medical, social or cultural establishments or facilities. Subject to agreement, these may be open to members of other mutual benefit societies governed by this Code.
The provisions of this Code shall be without prejudice to statutes or regulations governing the setting-up and operation of such categories of establishment or facility.
16 Article L. 411-2 provides:
The establishments and facilities referred to in Article L. 411-1 shall not possess legal personality distinct from that of the founding mutual benefit society. Transactions entered into by any of those establishments or facilities must be the subject of a separate budget and recorded in separate accounts.
17 Article L. 411-6 provides:
The creation and extension of the establishments or facilities referred to in Article L. 411-1 are subject, without prejudice to any authorisation requirements laid down by special legislation or regulations applying to such establishments or facilities, to approval by the administrative authorities of rules, annexed to their constitutions, making detailed provision for their administration and financial management.
A decree of the Conseil d'État may establish model rules to govern establishments or facilities set up by mutual benefit societies and may specify rules which are to be of compulsory application.
...
18 Article L. 123-1 provides:
Mutual benefit societies may combine to form associations which will have as their particular purpose the creation of establishments or facilities of the kind referred to in Article L. 411-1 of this Code or of re-insurance facilities to be shared by all mutual benefit societies belonging to a particular association. For the same purposes, such associations may group together to form federations.
National or inter-regional mutual benefit societies may belong to associations through their branches located within the territorial ambit of those associations.
Associations and federations may not interfere in the internal affairs of their member societies.
19 Article L. 123-2 provides:
The general assemblies of associations and federations shall be composed of delegates from member societies, elected in accordance with their respective constitutions.
Decisions taken in accordance with due procedure by the general assembly shall be binding on member societies.
20 Article L. 123-3 provides:
Subject to the above provisions, associations and federations of mutual benefit societies shall be governed by the same provisions as mutual benefit societies.
21 Article L. 125-1, second paragraph, provides:
The general assembly shall take decisions concerning constitutional amendments, division or dissolution, mergers with other societies, or loans, the nature and amount of which are fixed by decree. Every member of a mutual benefit society is entitled to vote ...
22 Articles R. 122-1 and R. 122-2 of the Code provide that the constitutions adopted by the constitutional assembly, as well as any constitutional amendments, must be lodged, against acknowledgment of receipt, with the Préfecture of the département in which the mutual benefit society has its headquarters and that the decision approving, or refusing approval, is to be taken by the Préfet of the appropriate département.
23 Model constitutions of mutual benefit societies, associations and federations are annexed to Decree No 86-1359 of 30 December 1986 (JORF of 31 December 1986, p. 16013), which specifies the constitutional provisions which are to be binding, such as Clauses 24, 26 and 36.
24 Clause 24 of the model constitution provides:
The general assembly shall be composed of delegates from societies. Each delegate shall have only one vote.
25 Clause 26 of the model constitution, concerning the composition of the general assembly, provides that each mutual benefit society is to choose from various options proposed; it provides as follows:
The number of delegates elected by each society shall:
- be proportional to the numerical strength of each society, on the basis of ... delegate(s) for every ... members;
- be proportional to the number of contributions paid to the association (or federation), on the basis of ... delegate(s) for every ... contributions;
- reflect the numerical strength of each society and the contributions paid to the association (or federation), in accordance with the following rules ...
26 Point 5 of the fourth paragraph of Clause 36 of the model constitution provides that the general assembly must decide on questions concerning membership of, or withdrawal from, a particular association.
27 Model rules for eye centres run by mutual benefit societies are set out in Annex 2 to Decree No 64-827 of 23 July 1964 (JORF of 8 August 1964, p. 7329), which specifies the provisions of those rules which are to be binding, such as Clauses 1, 11 and 36.
28 Under Clause 1 of the model rules, eye centres have no legal personality distinct from that of the society.
29 Clause 11 provides:
Income shall consist of:
...
3. - funds allocated by the association to the operation of the eye centre where its income is insufficient;
4. - advances approved by the association for expenses incurred in setting up the eye centre;
...
30 The first paragraph of Clause 36 of the model rules additionally provides:
The closure of an eye centre or the withdrawal of financial facilities for the supply of optical instruments is a matter to be decided exclusively by the general assembly, acting in accordance with the procedure for introducing amendments to the constitution.
The main proceedings and the questions referred for a preliminary ruling
31 By an initial application lodged on 16 January 1998 at the Tribunal Administratif de Pau, the ABBOI (which has its headquarters at Pau) sought annulment of the decision of 20 May 1996 by the Préfet des Pyrénées-Atlantiques, approving the constitutional rules for a sight and hearing centre run by the UPA.
32 It appears from the file forwarded by the national court that the UPA is an association of mutual benefit societies which is engaged exclusively in the organisation of socio-medical facilities - two dental centres and five sight and hearing-aid centres - and which is wholly uninvolved in the insurance business.
33 By a second application, lodged on 10 April 1998 at the Tribunal Administratif de Pau, the ABBOI also sought annulment of the decision of 10 May 1995 by the Préfet des Pyrénées-Atlantiques, approving the constitutional rules for an eye centre run by Adour.
34 It appears from the observations submitted by the ABBOI that Adour is a mutual benefit society which provides its members with both complementary sickness insurance and the facilities of an eye centre.
35 The Tribunal Administratif de Pau granted the UPA and Adour leave to intervene in support of the form of order sought by the Préfet des Pyrénées-Atlantiques, who contended that the two applications should be dismissed, and ordered that the cases be joined for the purposes of the final judgment.
36 On the ground that the ABBOI possessed no legal interest in the annulment of the prefectoral decision of 20 May 1996 in so far as that decision concerned a hearing centre, the Tribunal Administratif de Pau dismissed as inadmissible the application for annulment lodged on 16 January 1998.
37 The national court observed that, according to the ABBOI, the prefectoral decision of 20 May 1996 is unlawful on the ground that its legal basis - Article R. 122-1 et seq. of the Code de la Mutualité - is incompatible with Article 8(1)(b) of Directive 73/239, which provides that insurance undertakings must limit their objects to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business.
38 It considered the provisions of Article 8(1)(b) of Directive 73/239 to be clear and unconditional, but found nothing in the evidence before it to indicate whether an association of mutual benefit societies such as the UPA, which was not engaged in insurance business, fell within the scope of that provision or to indicate what activities are covered by the term commercial business and therefore prohibited.
39 The national court was uncertain whether Article 8(1)(b) of Directive 73/239 must be interpreted as precluding administrative authorities from approving, pursuant to Articles R. 122-1 and R. 122-2 of the Code de la Mutualité, the constitution of a body covered by that Code and engaged in commercial business.
40 The Tribunal Administratif de Pau therefore decided to stay proceedings and to refer the following two questions to the Court for a preliminary ruling:
(1) Must Article 8(1)(b) of Council Directive 73/239/EEC be interpreted as precluding the provisions of Articles L. 123-1 and L. 123-2 of the French Code de la Mutualité, which allow mutual benefit societies whose sole business is that of insurance to create between them mutual benefit bodies which have legal personality and legal autonomy and engage in commercial business in the optical sector?
(2) If the provisions of the directive are incompatible with French law, is the prohibition of commercial business imposed on the mutual benefit body set up by mutual benefit societies whose sole business is that of insurance general and absolute, or is it open to the competent authorities of the Member State to define the conditions under which and the spheres in which a commercial business may be pursued?
Admissibility
41 The French and Netherlands Governments maintain that the reference for a preliminary ruling is inadmissible on the ground that the order for reference does not sufficiently explain the factual and legal context in which the questions have arisen. According to the Netherlands Government, it fails to indicate either the nature of the business engaged in by the mutual benefit societies or their aims. It also fails to specify whether the societies concerned are associations or whether the bodies at issue were set up by several societies; nor does it describe the activities engaged in by the bodies at issue. Clarification on these points is necessary in order to determine whether Article 8(1)(b) of Directive 73/239 is applicable, principally because that directive does not cover mutual benefit societies which manage sickness insurance which forms part of a statutory system of social security. In these circumstances, it is impossible for the Court to give a useful interpretation of Community law, or for the Member States and other interested parties to submit written observations suggesting how the questions referred might be answered.
42 According to settled case-law, the need to provide an interpretation of Community law which will be of use to the national court makes it necessary for the national court to define the factual and legal context of the questions it is asking or, at the very least, to explain the factual circumstances on which those questions are based. Those requirements are of particular importance in certain areas, such as that of competition, where the factual and legal situations are often complex (see, in particular, Joined Cases C-320/90, C-321/90 and C-322/90 Telemarsicabruzzo and Others [1993] ECR I-393, paragraphs 6 and 7; Case C-284/95 Safety Hi-Tech [1998] ECR I-4301, paragraphs 69 and 70; Case C-341/95 Bettati [1998] ECR I-4355, paragraphs 67 and 68; Case C-67/96 Albany [1999] ECR I-5751, paragraph 39; and Joined Cases C-115/97, C-116/97 and C-117/97 Brentjens' [1999] ECR I-6025, paragraph 38).
43 The information provided in orders for reference must not only be such as to enable the Court to reply usefully but must also give the Governments of the Member States and other interested parties the opportunity to submit observations pursuant to Article 20 of the EC Statute of the Court of Justice. It is the Court's duty to ensure that the opportunity to submit observations is safeguarded, bearing in mind that, by virtue of the abovementioned provision, only the orders for reference are notified to interested parties (see, in particular, Joined Cases C-128/97 and C-137/97 Testa and Modesti [1998] ECR I-2181, paragraph 6; Case C-325/98 Anssens [1999] ECR I-2969, paragraph 8; Albany, paragraph 40; and Brentjens', paragraph 39).
44 It is clear from the observations submitted pursuant to Article 20 of the EC Statute of the Court of Justice by the French Government and other interested parties, as well as from the observations submitted by the Netherlands Government itself in the event that the Court might hold that the questions referred for a preliminary ruling are admissible, that the information provided in the order for reference has enabled those bodies to make meaningful submissions on the questions.
45 Furthermore, while the Netherlands Government may have taken the view that the information provided by the national court was not sufficient to enable it to take a position on certain aspects of the questions referred, it must be emphasised that further information was made available in the documents forwarded by the national court, as well as in the written observations and the answers given to the question put by the Court. All that information, which appears in the Report for the Hearing, was brought to the attention of the Governments of the Member States and the other interested parties for the purposes of the hearing, at which they had an opportunity to enlarge upon their observations (see Albany, paragraph 43, and Brentjens', paragraph 42).
46 The Court therefore considers itself sufficiently enlightened by the information provided by the national court - amplified as necessary, as described in paragraph 45 above - as to the factual and legislative context of the dispute, to enable it to interpret the Community legislation at issue having regard to the situation forming the subject-matter of the main proceedings.
47 It follows that the reference for a preliminary ruling is admissible.
Substance
Question 1
48 By its first question, the national court is essentially asking whether Article 8(1)(b) of Directive 73/239 precludes mutual benefit societies whose sole business is that of insurance from creating between them a body which has legal personality and legal autonomy, such as an association of mutual benefit societies, and which engages in commercial business.
49 It should first be noted that the Netherlands Government, Adour and the UPA dispute the applicability of Directive 73/239 to the case before the national court.
50 The Netherlands Government contends that Directive 73/239 does not cover mutual benefit societies with responsibility for the management of sickness insurance forming part of a statutory system of social security (Case C-238/94 García and Others [1996] ECR I-1673, paragraph 10). Article 8(1)(b) cannot therefore be interpreted as precluding national legislation which permits mutual benefit societies, while managing a social security scheme, to create between them legal persons which engage in commercial business.
51 On that point, it need merely be observed that there is nothing in the file forwarded by the national court, or in the written observations, or in the replies to the question put by the Court, to indicate that the mutual benefit societies in question are responsible for managing sickness insurance which forms part of a statutory social security system. It is therefore necessary to answer the first question on the basis of its wording, according to which the societies concerned are engaged in insurance business covered by Directive 73/239.
52 Adour and the UPA maintain that an association of mutual benefit societies which does not engage in any insurance business does not fall within the scope of Directive 73/239. The provisions of that directive - in particular, Article 8(1)(b), under which insurance undertakings must limit their objects to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business - do not therefore apply to such an association.
53 On that point, it should be borne in mind that Directive 73/239 applies to each of the mutual benefit societies which make up an association, which means that it is necessary to determine whether or not the participation of societies engaged solely in the business of insurance in an association which carries on commercial business is contrary to the prohibition laid down in Article 8(1)(b) of Directive 73/239.
54 The ABBOI argues that Article 8(1)(b) precludes mutual benefit societies engaged in insurance business from creating an association with legal personality and legal autonomy which engages in commercial business, since the financial problems generated by such business could jeopardise the solvency of the association's members. Decisions adopted in accordance with the prescribed procedure by the general assembly of an association are binding on its members, which could therefore be required to underwrite losses arising from involvement in commercial business which might exceed the value of the initial capital subscribed to them and their free assets.
55 It should be recalled, first, that Article 15 of Directive 73/239 provides that the home Member State is to require every insurance undertaking to establish adequate technical provisions in respect of its entire business by matching assets and, in respect of risks situated within the European Community, by assets localised within the Community. Additionally, Article 18(1) of the Directive provides that Member States must not prescribe any rules as to the choice of the assets that need not be used as cover for the technical provisions referred to in Article 15.
56 It is clear from Articles 15 and 18(1) of Directive 73/239, read together, that the participation of a mutual benefit society engaged in insurance business in a body with legal personality and legal autonomy which is involved in business other than insurance business cannot in any circumstances entail a financial commitment in excess of that society's free assets.
57 Secondly, the Court has held (see Case C-241/97 Försäkringsaktiebolaget Skandia [1999] ECR I-1879, paragraph 46) that the wording of Article 8(1)(b) of Directive 73/239 in no way prohibits insurance undertakings from holding, as their free assets, shares in a company carrying on business other than insurance business.
58 As the Court also held in Försäkringsaktiebolaget Skandia (paragraph 47), the primary purpose of the prohibition laid down in Article 8(1)(b) of Directive 73/239, preventing insurance undertakings from carrying on commercial business other than insurance business, is to protect the interests of insured persons against the risks which engagement in such business could entail for the solvency of those undertakings. It follows that the aforesaid provision does not prevent insurance undertakings from holding shares in public limited companies which carry on commercial business other than insurance business and to the assets of which the financial risks are confined.
59 The Court stated in paragraph 51 of Försäkringsaktiebolaget Skandia that there is a risk that certain investments might compromise the solvency of insurance undertakings, but that, in order to guard against such a risk, it is for the national supervisory authorities of the home Member State to maintain, in accordance with Article 13 et seq. of Directive 73/239, financial supervision of insurance undertakings.
60 It follows from the foregoing that Article 8(1)(b) of Directive 73/239 does not preclude mutual benefit societies engaged in insurance business from participating, within the limits of their respective free assets, in a body with legal personality and legal autonomy which is involved in commercial business - such as an association of mutual benefit societies - provided that the financial risks inherent in such business attach only to the assets possessed by that body.
61 On that point it is important to note that, contrary to the argument put forward by the French Government, the fact that the association at issue in the main proceedings is engaged in non-profit-making business is not sufficient to divest that business of its commercial character for the purposes of Article 8(1)(b) of Directive 73/239.
62 Given the purpose of Article 8(1)(b) - which, as recalled in paragraph 58 above, is to protect the interests of insured persons against the risks which the exercise of commercial business other than insurance business could entail for the solvency of insurance undertakings - it is clear that any economic activity other than insurance business and operations arising directly therefrom constitutes commercial business liable to engender losses capable of jeopardising the solvency of an insurance undertaking.
63 That being so, it is for the national court to determine whether or not, in the case before it, the value of the capital subscribed to an association managing an eye centre by mutual benefit societies engaged in insurance business exceeds the value of their free assets, and whether or not the liability of each society is limited to the value of the capital which it has subscribed, so that any financial losses arising from commercial business other than insurance business cannot jeopardise their solvency.
64 The answer to the first question must therefore be that Article 8(1)(b) of Directive 73/239 does not preclude mutual benefit societies engaged solely in insurance business from creating between themselves a body with legal personality and legal autonomy - such as an association of mutual benefit societies - which engages in commercial business, provided that the capital subscribed to that body by those societies does not exceed the value of their free assets and provided that, in each case, the society's liability is limited to the value of its capital contribution.
Question 2
65 By its second question, the national court essentially asks whether Article 8(1)(b) of Directive 73/239 is sufficiently precise and unconditional to be relied upon before the national courts as against the administration and to entail the inapplicability of any rule of national law incompatible with it, or whether it stands in need of further definition by the Member States.
66 Adour, the UPA and the French Government argue that Article 8(1)(b) of Directive 73/239 does not have direct effect because the term commercial business is insufficiently precise and cannot therefore be relied upon directly by individuals.
67 It should be noted, first, that the Court held in Case C-239/98, cited above, that, by failing to adopt the laws, regulations and administrative provisions necessary to comply fully with Directive 92/49 and, in particular, by not transposing that directive into national law in respect of mutual benefit societies governed by the Code de la Mutualité, the French Republic had failed to fulfil its obligations under that directive (paragraph 24).
68 Secondly, the prohibition laid down in Article 8(1)(b) of Directive 73/239, under which insurance undertakings must not engage in commercial business other than insurance business, is framed in terms which are clear, precise and unconditional and do not stand in need of any particular implementing measure.
69 Consequently, such a provision may be relied upon before the national courts as against the administrative authorities and entails the inapplicability of any rule of national law incompatible with it.
70 The answer to the second question must therefore be that Article 8(1)(b) of Directive 73/239 is sufficiently precise and unconditional to be relied upon before the national courts as against the administrative authorities and entails the inapplicability of any rule of national law incompatible with it.
Decision on costs
Costs
71 The costs incurred by the French and Netherlands Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT (Sixth Chamber),
in answer to the questions referred to it by the Tribunal Administratif de Pau by judgment of 23 March 1999, hereby rules:
1. Article 8(1)(b) 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, as amended by Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive), does not preclude mutual benefit societies engaged solely in insurance business from creating between themselves a body with legal personality and legal autonomy - such as an association of mutual benefit societies - which engages in commercial business, provided that the capital subscribed to that body by those societies does not exceed the value of their free assets and provided that, in each case, the society's liability is limited to the value of its capital contribution.
2. Article 8(1)(b) of Directive 73/239, as amended by Directive 92/49, is sufficiently precise and unconditional to be relied upon before the national courts as against the administrative authorities and entails the inapplicability of any rule of national law incompatible with it.