Opinion of the Advocate General — ECLI:EU:C:2009:620
Date: 2009-10-06
Language of the case: Czech
Subject matter: Right of establishment;Approximation of laws
Procedure: Action for failure to fulfil obligations - successful;Action for failure to fulfil obligations - inadmissible
Origin: Czechia

summary of the pleas in law on which the application is based, and that that statement must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the application. It is therefore necessary for the essential points of law and of fact on which a case is based to be indicated coherently and intelligibly in the application itself and for the heads of claim to be set out unambiguously so that the Court does not rule ultra petita or indeed fail to rule on an objection (Case C‑195/04 Commission v Finland [2007] ECR I‑3351, paragraph 22 and the case‑law cited, and Case C‑412/04 Commission v Italy [2008] ECR I‑619, paragraph 103). 27 In the present case, it should be pointed out that, in so far as the Commission seeks, by using the term ‘in particular’ in the form of order sought in its application, to include in its action provisions of Directive 2003/41 other than those which are expressly referred to therein, the application does not comply with those requirements, since neither the identity of those other provisions nor the reasons why the Czech Republic failed to transpose them within the prescribed period are specified in the action. 28 Consequently, this action is admissible solely in so far as it relates to the alleged failure by the Czech Republic to transpose Articles 8, 9, 13, 15 to 18 and 20(2) to (4) of Directive 2003/41. Substance 29 It is not contested that Articles 8, 9, 13, 15 to 18 and 20(2) to (4) of Directive 2003/41 were not transposed by the Czech Republic within the period prescribed by that directive or by the expiry of the period set in the reasoned opinion. That Member State, which does not rely on the possibility of partial postponement for which Article 22(3) and (4) of the Directive provides in respect of certain provisions of Articles 17 and 18 thereof, recognises that the provisions referred to expressly by this action have not been implemented in its domestic legal system within the time‑limits. No provision of Directive 2003/41 makes provision for Member States or certain of them to dispense with such transposition. 30 The Czech Republic contends, however, that it is not required to transpose the provisions of Directive 2003/41 to which the action expressly refers because, in doing so, it would be obliged to change the fundamental principles of its national social security system, the organisation of which, pursuant to the first indent of Article 137(4) EC, falls within the competence of the Member States, by introducing into its retirement pension system an occupational retirement scheme, although no such scheme exists under national law. 31 The Czech Republic explains in that regard that its retirement pension system comprises only two parts, made up of the first and third pillars of retirement pension systems. The first pillar, governed by Law No 155/1995 on pension insurance, comprises the legal, general and mandatory pension for all insured persons and falls within the national social security scheme. The third pillar, governed by Law No 42/1994 on supplementary pension insurance benefiting from a State contribution, comprises individual contracts of pension insurance entered into by insured persons on a voluntary basis with the pension funds established pursuant to the Law. Membership of those funds is not linked to employment, to an employer or to the exercise of a self‑employed activity. The Czech retirement pension system does not, however, include a second pillar made up of supplementary pensions provided in connection with professional, employed or self‑employed activity. 32 Thus, the Czech Republic states that, under the national legislation currently in force, an institution for occupational retirement provision cannot establish itself in the territory of the Czech Republic in order to carry out that activity there, since it would be in breach of the legal provisions governing the pursuit of a professional activity on the financial market and could be subject to proceedings for the imposition of criminal penalties or administrative fines. In addition, there is neither the political will nor sufficient economic potential to introduce an occupational retirement scheme in that Member State. 33 According to the Czech Republic, since the first indent of Article 137(4) EC leaves the power to determine the fundamental structure of their national social security schemes to Member States, a transposition of Directive 2003/41 which would affect the effective exercise of the right guaranteed by primary law cannot be required. As the provisions of that directive expressly referred to in the present action impose precise obligations on Member States in the territory of which institutions for occupational retirement provision are located, their transposition would lead inevitably to the creation of the legal framework necessary for the operation of undertakings established in the territory of the Czech Republic in the field of occupational retirement provision and, accordingly, to the establishment, in fact and in law, to a second pillar in that Member State, which would seriously affect the overall financial equilibrium of the national system of retirement pensions. 34 By way of example, the Czech Republic refers in that regard to Article 9(1) of Directive 2003/41, which obliges Member States to register institutions for occupational retirement provision located in their territory on a national register or to authorise them. The creation of the appropriate register or the establishment of an appropriate system of authorisation would necessarily require the adoption of corresponding legislation. Adopting such legislation in isolation, without the introduction of occupation retirement provision as a complex system, that is, without defining, for example, the rights and the obligations of the contracting parties, would not be possible. 35 The Czech Republic states that it is aware of the fact that, generally, institutions for occupational retirement provision should not be confused with the second pillar of retirement pension systems. Nevertheless, those institutions are an essential element of that pillar and the creation of a framework for their establishment would necessarily lead to changes to the retirement pension systems themselves. 36 The Czech Republic contends, moreover, that the transposition carried out by Law No 340/2006 attains the objective pursued by Directive 2003/41. That law transposes all the provisions concerning the cross‑border provision of occupational pension services by institutions established in other Member States, thus allowing undertakings established in its territory to contribute to retirement pension schemes offered by those institutions and, at the same time, allowing them to offer appropriate services in the Czech Republic. 37 It follows from the foregoing that, by this reasoning, the Czech Republic seeks, essentially, to justify its failure to transpose the provisions of Directive 2003/41 concerned, first, by the fact that no occupational retirement institution is located in its territory as a result of the prohibition which national law imposes on their establishment and, second, by the circumstance that transposition of those provisions would oblige it to change its national retirement pensions system by introducing a second pillar, even though the first indent of Article 137(4) EC, recognises that Member States have competence to organise their national systems in this field. 38 It is thus necessary to examine whether those considerations, drawn, respectively, from national law and Community law, are capable of justifying the failure to transpose the provisions of Directive 2003/41 to which the action expressly refers. 39 In that connection, with regard to the assertion that there is no institution for occupational retirement provision located in the Czech Republic, it must be pointed out that, according to the settled case-law of the Court, the fact that an activity referred to in a directive does not yet exist in a Member State cannot release that State from its obligation to adopt laws or regulations in order to ensure that all the provisions of the directive are properly transposed (Case C‑214/98 Commission v Greece [2000] ECR I‑9601, paragraph 22; Case C‑372/00 Commission v Ireland [2001] ECR I‑10303, paragraph 11; and Case C‑441/00 Commission v United Kingdom [2002] ECR I‑4699, paragraph 15; and judgment of 8 June 2006 in Case C‑71/05 Commission v Luxembourg, paragraph 12). 40 Both the principle of legal certainty and the need to secure the full implementation of directives in law and not only in fact require that all Member States reproduce the rules of the directive concerned within a clear, precise and transparent framework providing for mandatory legal provisions (see, to that effect, Case C‑339/87 Commission v Netherlands [1990] ECR I‑851, paragraphs 22 and 25, and Commission v Greece, paragraph 23). 41 Such an obligation applies to Member States in order to anticipate any change in the situation existing in them at a given point in time and in order to ensure that all legal persons in the Community, including those in Member States in which a particular activity referred to in a directive does not exist, may know with clarity and precision, what are, in all circumstances, their rights and obligations (see, to that effect, Commission v Greece, paragraph 27; Commission v Ireland, paragraph 12; Case C‑441/00 Commission v United Kingdom, paragraph 16; and Commission v Luxembourg, paragraph 13). 42 According to case‑law, it is only where transposition of a directive is pointless for reasons of geography that it is not mandatory (see Commission v Italy, paragraph 13 and Case C‑441/00 Commission v United Kingdom, paragraph 17). 43 In the present case, it should be pointed out that, as follows, in particular, from recitals 1, 6 and 8 of Directive 2003/41, that directive, which was adopted on the basis of Articles 47(2) EC, 55 EC and 95 EC, seeks to introduce an internal market for occupational retirement provision schemes in which institutions for occupational retirement provision must have freedom to provide services and freedom of investment. 44 With that objective in mind, Article 20(1) of Directive 2003/41 provides that the Member States are, first, to allow undertakings located within their territories to sponsor institutions for occupational retirement provision authorised in other Member States and, second, to allow institutions for occupational retirement provision authorised in their territories to accept sponsorship by undertakings located in other Member States. 45 For the purposes of carrying out such cross‑border activities, Directive 2003/41 requires Member States, as follows from recitals 7 and 20, to apply to the institutions for occupational retirement provision located within their territory various minimum prudential rules with respect to their activities and conditions of operation in order to ensure a high degree of security for future pensioners who are to enjoy their benefits. 46 Those rules consist, in particular, under Articles 8, 9, 13 and 15 to 18 of Directive 2003/41, respectively, of the legal separation between the institutions for occupational retirement provision and sponsoring undertakings, in order that, in the event of bankruptcy of those undertakings, the assets of the institutions are safeguarded, of conditions of operation designed to guarantee the reliability of institutions for occupational retirement provision, such as authorisation or registration in a national register by the competent supervisory authority, management by persons of good repute, the adoption of appropriate rules of operation, the establishment of technical provisions certified by an actuary and the provision of information to members of a list of information to be provided to the competent authorities and of the presentation and management of sufficient funds to cover their commitments. 47 In addition, Article 20(2) to (4) of Directive 2003/41 lays down the procedure which an authorised institution for occupational retirement provision in a Member State is to follow where it wishes to provide services in another Member State and the role, in such a case, of the competent authorities. In particular, Article 20(2), like Article 9(5) of the Directive, provides that the institutions for occupational retirement provision wishing to carry out such cross‑border activities are to be subject to a prior authorisation by the competent authorities of the home Member State, that is, the Member State in the territory of which the institution has its registered office and/or main administration. 48 It follows that, as the Czech Republic has pointed out, the provisions of Directive 2003/41 referred to expressly in the present action, that is, Articles 8, 9, 13, 15 to 18 and 20(2) to (4), impose, essentially, obligations on Member States in the territory of which institutions for occupational retirement provision are located. 49 According to the Czech Republic, no institution for occupational retirement provision may legally establish itself in its territory. 50 However, in accordance with the case‑law cited in paragraphs 39 to 41 above, and in the absence of a geographical reason rendering the transposition of the provisions concerned redundant, it is important that, in the event that the Czech Republic might decide to supplement its national retirement pension system with an occupational retirement provision scheme falling under the second pillar, all persons in that Member State, like everyone else in the Community, should know what their rights and duties are. 51 Such development of the national retirement pension system can in no way be regarded as impossible or purely hypothetical, as the Czech Republic claims, on the ground that it would entail a change to the applicable legal framework and not solely the removal of an obstacle of a factual nature. All legislation can be amended. In the present case, it follows, moreover, from that Member State’s own pleadings that draft legislation intended to introduce a second pillar into the national retirement pension system was drawn up in the Czech Republic before Directive 2003/41 was adopted in 1993, when the Minister for Employment and Social Affairs presented a legislative proposal to that effect to the Czech Government, which ultimately chose another option, namely the adoption of a law on supplementary pension insurance benefiting from a State contribution, and in 2001, when the Government presented to the Chamber of Deputies of the Czech Parliament a legislative proposal on occupational pension insurance. Moreover, at the hearing, the Czech Republic conceded that a second pillar could be introduced in the future if the political will to do so were to emerge. 52 It follows that, even if, according to the applicable national legislation, no institution for occupational retirement provision may legally establish itself in the territory of the Czech Republic in the absence of a second pillar in the national retirement pension system, that Member State is obliged to transpose fully the provisions of Articles 8, 9, 13, 15 to 18 and 20(2) to (4) of Directive 2003/41, by adopting and bringing into force in its domestic law, pursuant to the first subparagraph of Article 22(1) thereof, the legislative, regulatory and administrative rules necessary to that end. 53 Contrary to the Czech Republic’s submission, that obligation to transpose does not affect its competence as regards the organisation of the national retirement pension system and maintenance of the financial equilibrium thereof by requiring it to put in place, in the context of that transposition, such a second pillar, in disregard of the prerogatives which the first indent of Article 137(4) EC recognises it as enjoying. 54 First, transposition into its domestic law of the provisions of Directive 2003/41 concerned in no way obliges the Czech Republic to alter its national retirement pension system. 55 In that regard, the Czech Republic is wrong when it claims that such transposition would result ipso facto in the introduction of a second pillar in its national retirement pension system. 56 According to the actual explanation provided by that Member State in response to the written questions of the Court on that point, the creation of such a second pillar, which forms part of a complex system, would require the adoption by the national legislature of comprehensive domestic legislation in order to determine, in particular, the necessary conditions for establishing institutions for occupational retirement provision in its territory and the legal relationship both between the second pillar and the other pillars of the national retirement pension system and, within that second pillar itself, between its various elements, namely, employers, employees, supervision and monitoring bodies and, where appropriate, other State bodies. 57 However, it should be pointed out that none of the provisions of Directive 2003/41 to which the action expressly refers, nor any other of its provisions, requires Member States to implement such legislation. 58 Thus, contrary to what the Czech Republic claims, although the transposition of Article 9(1) of Directive 2003/41 into domestic law does indeed require, inter alia, that all Member States provide in their national legislation for registration or authorisation of the institutions for occupational retirement provision located in their territory, that provision does not include any rule requiring Member States to allow such institutions to establish themselves in their territory. 59 As follows from paragraphs 43 to 47 above, Directive 2003/41 represents merely a first step on the way to an internal market for occupational retirement provision, by putting in place, on a European scale, minimum ‘prudent person’ rules. It is not, however, intended to harmonise, even partially, national retirement pension systems by requiring Member States to amend or abolish the rules of their national law which determine the actual organisation of those systems. 60 In recital 9, that directive thus states expressly that, in accordance with the principle of subsidiarity, Member States retain full responsibility for the organisation of their national retirement pension systems as well as for the decision on the role of each of the pillars of those systems, including that of the second pillar, and it cannot therefore under any circumstance affect such prerogatives. 61 In the same vein, Article 20(1) of Directive 2003/41 provides, moreover, in accordance with recitals 36 and 37 in the preamble thereto, that cross‑border activities of institutions for occupational retirement provision are to be pursued without prejudice to the social and labour legislation of host Member States on the organisation of national retirement pension systems. 62 Consequently, and contrary to what the Commission also contended in its pleadings, Directive 2003/41, as such, can in no way be interpreted as requiring a Member State which, like the Czech Republic, prohibits, by reason of the lack of a second pillar in its national retirement pension system, the establishment in its territory of institutions for occupational retirement provision, to lift that prohibition so as to allow institutions for occupational retirement provision to establish themselves in its territory with a view to providing services which, as is not contested, are covered by the second pillar of national retirement pension systems. 63 Admittedly, such a prohibition in national law must comply with the rules on free movement laid down in the EC Treaty, in particular, the provisions on freedom of establishment which include the prohibition, in principle, of restrictions on the exercise of that freedom (see, to that effect, inter alia, Case C‑372/04 Watts [2006] ECR I‑4325, paragraph 92 and the case‑law cited, and Case C‑228/07 Petersen [2008] ECR I‑6989, paragraph 42), unless they can be justified on the grounds set out in the Treaty or by overriding reasons in the public interest, which include, in particular, the risk of seriously undermining the financial equilibrium of the social security system (see, to that effect, inter alia, Case C‑158/96 Kohll [1998] ECR I‑1931, paragraph 41, and Case C‑350/07 KattnerStahlbau [2009] ECR I‑0000, paragraph 85). 64 However, for the purpose of assessing whether this action is well founded, since it solely concerns infringement of the provisions of Directive 2003/41 rather than the possible infringement of Treaty provisions, which have at no point been relied on by the Commission in support of its reasoning, it is not necessary to examine whether the prohibition imposed by Czech law on the establishment of institutions for occupational retirement provision in the territory of the Czech Republic is contrary to rules concerning free circulation or, accordingly, to examine to what extent that Member State might be required, in order to comply with those rules, to introduce, if necessary, a second pillar into its national retirement pension system. 65 Second, contrary to what the Czech Republic claims, the obligation to transpose fully Directive 2003/41 by implementing in domestic law the provisions laid down in Articles 8, 9, 13, 15 to 18 and 20(2) to (4) thereof, in no way disregards the provisions of the first indent of Article 137(4) EC. 66 In that regard, under the first indent of Article 137(4) EC, the provisions adopted pursuant to that article ‘shall not affect the right of Member States to define the fundamental principles of their social security systems and must not significantly affect the financial equilibrium thereof’. 67 It is clear, first, that Directive 2003/41, which is the subject of this action, was not adopted on the basis of Article 137 EC, which constitutes the legal basis in the Treaty for the approximation of national legislation in the field of social policy. As already indicated in paragraph 43 above, that directive has as its legal bases Articles 47(2) EC, 55 EC and 95 EC, which seek to establish the internal market by means of freedom to provide services and freedom of establishment. 68 Second, Directive 2003/41, in accordance with Article 2(2)(a) thereof, does not apply to institutions which manage social security schemes, so that such institutions cannot be affected by the provisions laid down by that directive. 69 Consequently, it must be held that, by failing to adopt, within the period prescribed, the laws, regulations and administrative provisions necessary to comply with Articles 8, 9, 13, 15 to 18 and 20(2) to (4) of Directive 2003/41, the Czech Republic has failed to fulfil its obligations under Article 22(1) of that directive. The action is dismissed as to the remainder. Costs 70 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Commission has asked for costs and the Czech Republic has failed in its submissions, the Czech Republic must be ordered to pay the costs. On those grounds, the Court (Third Chamber) hereby: 1. Declares that, by failing to adopt, within the period prescribed, the laws, regulations and administrative provisions necessary to comply with Articles 8, 9, 13, 15 to 18 and 20(2) to (4) of Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision, the Czech Republic has failed to fulfil its obligations under Article 22(1) of that directive; 2. Dismisses the action as to the remainder; 3. Orders the Czech Republic to pay the costs. [Signatures] * Language of the case: Czech.