Opinion of the Advocate General — ECLI:EU:C:2020:589
Date: 2020-07-16
Language of the case: Bulgarian
Subject matter: Right of establishment;Freedom to provide services
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
4 June 2019 
Referring court:  
Sofiyski rayonen sad (Bulgaria) 
Date of the decision to refer: 
27 May 2019 
Applicant: 
Joint-stock insurance company ‘Bulstrad Vienna Insurance Group’ 
AD 
Defendant: 
Insurance company ‘Olympic’ 
  
Subject matter of the main proceedings 
The proceedings pending before the referring court — Sofiyski rayonen sad 
(District Court of Sofia) — were initiated by the action for damages brought by a 
Bulgarian insurance undertaking against a Cypriot insurance undertaking with a 
branch in Bulgaria in connection with the payment of an insurance benefit from a 
compulsory civil-liability motor vehicle insurance policy. The referring court 
stayed the proceedings, as it established that the Cypriot insurance supervisory 
authority had withdrawn authorisation from the defendant and appointed a 
provisional liquidator for it. The court now has to decide on the applicant’s 
application that the proceedings be reopened and, to that end, it must assess how 
the decision of the Cypriot authority is to be classified with regard to Directive 
2009/138 and whether the directive requires the application of the relevant 
Cypriot legislation. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-427/19 
 
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Subject matter and legal basis of the request for a preliminary ruling 
Interpretation of EU law; Article 267 TFEU 
Questions referred 
1. When interpreting Article 630 of the Kodeks za zastrahovaneto (Insurance 
Code) in the light of Article 274 of Directive 2009/138/EC of the European 
Parliament and of the Council of 25 November 2009 on the taking-up and 
pursuit of the business of Insurance and Reinsurance (Solvency II), is it to be 
assumed that the decision of an authority of a Member State to withdraw 
authorisation from an insurer and appoint a provisional liquidator for it 
without court-ordered winding-up proceedings having been opened 
constitutes a ‘decision to open winding-up proceedings’? 
2. If the law of the Member State in which an insurer from which the licence 
has been withdrawn has its head office, and in respect of which a provisional 
liquidator has been appointed, provides that, in the event that a provisional 
liquidator has been appointed, all court proceedings against that company 
must be stayed, must that legislation be applied by the courts of the other 
Member States, even if this is not expressly provided for in their national 
law, pursuant to Article 274 of Directive 2009/138/EC of the European 
Parliament and of the Council of 25 November 2009 on the taking-up and 
pursuit of the business of Insurance and Reinsurance (Solvency II)? 
Legislation and case-law of the European Union 
Directive 2009/138/EC of the European Parliament and of the Council of 
25 November 2009 on the taking-up and pursuit of the business of Insurance and 
Reinsurance (Solvency II), recitals 117 to 121 and 125 as well as Article 268 and 
274 
Regulation (EU) 2015/848 of the European Parliament and of the Council of 
20 May 2015 on insolvency proceedings: Article 1(1) and (2)(a) 
Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 
12 December 2012 on jurisdiction and the recognition and enforcement of 
judgments in civil and commercial matters: Articles 11 and 13 
Provisions of Bulgarian law 
Kodeks za zastrahovaneto (Insurance Code): 
‘Article 624(1) A decision to open winding-up or insolvency proceedings with 
regard to an insurer authorised in another Member State shall take effect in the 
BULSTRAD VIENNA INSURANCE GROUP 
 
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Republic of Bulgaria as from the date on which the decision becomes effective in 
the Member State concerned. 
(2) If the [Komisia za finansov nadzor (Financial Supervision Commission)] is 
informed by the competent authority of another Member State of the opening of 
winding-up or insolvency proceedings, it shall take measures to inform the public. 
(3) The notification pursuant to paragraph 2 shall contain information regarding 
the administrative or judicial authority that is competent for the winding-up or 
insolvency in the Member State concerned, regarding the applicable legislation 
and regarding the liquidator or insolvency administrator that has been appointed. 
… 
Article 630(1) Bulgarian law shall apply to winding-up or insolvency proceedings 
with regard to an insurer, unless otherwise provided for in this section.’ 
Kodeks na mezhdunarodnoto chastno pravo (Code on private international law, 
‘the KMChP’): 
‘Article 43(1) The court or other judicial body shall establish the content of the 
foreign law of its own motion. … 
… 
Article 44(1) The foreign law shall be interpreted and applied in accordance with 
its interpretation and application in the State in which it was enacted. 
(2) Non-application of foreign law and incorrect interpretation and application 
thereof shall constitute grounds for an appeal.’ 
Provisions of Cypriot law cited by the referring court 
О περί Εταιρίων Νόμος (Zakon za druzhestvata, Law on companies), Article 220: 
If a decision to open insolvency proceedings is taken or if a provisional liquidator 
is appointed, an action may be brought or proceedings initiated or continued only 
with the approval of the insolvency court and under the conditions stipulated by it. 
О περί Ασφαλιστικών και Αντασφαλιστικών Εργασιών και Άλλων Συναφών 
Θεμάτων Νόμος του 2016 (Νo 38(Ι)/2016) (Zakon za zastrahovatelnite i 
prezastrahovatelnite druzhestva i drugi svarzani vaprosi, Law on insurance and 
reinsurance undertakings and related matters of 2016): Pursuant to Article 315(4) 
of that law, Articles 215, 220, 305 and 306 of the Law on companies shall apply 
mutatis mutandis in relation to the effects of the insolvency within the framework 
of the procedure for settling the claims of individual creditors. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-427/19 
 
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Brief summary of the facts and procedure 
1 The joint-stock insurance company ‘Bulstrad Vienna Insurance Group’ brought an 
action against the insurance undertaking ‘Olympic’, a company registered under 
the law of the Republic of Cyprus, represented by the insurance undertaking 
‘Olympic Insurance Company’ - Bulgaria Branch Office as the Bulgarian branch 
of a foreign commercial undertaking. 
2 It is asserted in the action that, on 5 January 2018 in Bansko, the driver of a motor 
vehicle culpably caused a road accident with another motor vehicle and damaged 
it. The driver of the latter motor vehicle held a comprehensive insurance policy 
with the applicant, which subsequently paid out an insurance benefit of 7603.63 
Leva (BGN) to him. 
3 At the time of the materialisation of the risk, the driver who caused the road 
accident held a compulsory civil liability insurance policy with the defendant. 
4 The applicant asserts that, in paying the insurance benefit, it was subrogated to the 
rights of the person who sustained the damage against the person who caused the 
damage and his insurance company. The applicant sent the defendant a request 
asking it to fulfil its right of redress, which the latter received on 6 July 2018. An 
insurance benefit has not yet been paid, however. The applicant therefore requests 
that the defendant be ordered to pay the sums claimed and that the defendant bear 
the court fees. 
5 In its statement of defence, the defendant asserts that the action is unfounded. 
6 By order of 26 September 2018, the District Court of Sofia stayed the proceedings 
for the following reasons. Pursuant to the Kodeks za zastrahovaneto (Insurance 
Code), the branch has a legal status under which an insurance or reinsurance 
undertaking operates in the territory of a Member State on a permanent basis by 
establishing a place of business that is managed by its employees or other persons 
who have been expressly and permanently authorised by the insurer to act in its 
name. In addition, it follows from Article 13(2) of Regulation No 1215/2012 in 
conjunction with Article 11 thereof that an action can be brought directly against 
the insurer at the domicile of its branch. If, therefore, the Bulgarian branch of an 
insurer registered in another Member State is specified as the defendant in the 
action, it can be assumed that the insurer itself is also named. The translation of 
the decision of the head of insurance supervision in the Republic of Cyprus of 
10 August 2018, by which GH was appointed as the provisional liquidator for the 
insurance undertaking ‘Olympic’, was simultaneously submitted in the present 
proceedings. The District Court of Sofia asked the Komisia za finansov nadzor 
(Financial Supervision Commission, ‘the KFN’) of its own motion for information 
as to whether it had been informed of the opening of winding-up or insolvency 
proceedings in relation to the defendant before the competent court in the 
Republic of Cyprus. According to the letter from the KFN of 19 March 2019, at 
that time there was not yet any information regarding the opening of winding-up 
BULSTRAD VIENNA INSURANCE GROUP 
 
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proceedings in relation to the insurance undertaking ‘Olympic’. It is pointed out 
that GH was entered as the authorised representative of that company in the 
Bulgarian commercial register on 21 September 2018. 
Principal arguments of the parties in the main proceedings 
7 The applicant requests that the proceedings be reopened. It asserts that, taking 
account of the relevant case-law in cassation, there was no reason to stay the 
proceedings. 
8 This relates to the order of the Varhoven kasatsionen sad (Supreme Court of 
Cassation, ‘the VKS’) of 7 February 2019, in which the following is stated: ‘the 
court’s finding that winding-up proceedings (insolvency) were opened in relation 
to the insurance undertaking ‘Olympic’ … is incorrect. Such information cannot 
be gathered from either the website of the KFN or the entry in the commercial 
register regarding the branch of the insurance undertaking ‘Olympic’ …, or from 
the evidence produced in the proceedings. It can be seen from the entries and 
announcements in the commercial register regarding the branch — of which the 
court takes judicial notice — … and the evidence produced in the proceedings that 
authorisation was permanently withdrawn from the Cypriot insurance undertaking 
… A provisional liquidator for the undertaking was appointed on 10 August 2018 
… The appointment… of the provisional liquidator … was carried out on the basis 
of the application filed for dissolution and winding-up owing to the insolvency of 
the insurance undertaking, as the percentage of outstanding commitments from 
compulsory civil-liability motor vehicle insurance policies was 90% of the total 
outstanding commitments of the undertaking. Proceeding on the basis of the facts 
thus established, the court assumes that authorisation was withdrawn from the 
Cypriot insurance undertaking and it was appointed a provisional liquidator, and 
an application to open winding-up proceedings (insolvency without the right to 
restructuring) in relation to the undertaking was filed, but the competent court in 
Cyprus has not yet taken a decision on that application. It can be assumed that, by 
its very nature, the finalised procedure for withdrawing authorisation, which 
precedes the winding-up proceedings, cannot be equated with the opening of 
winding-up proceedings in relation to the insurance undertaking. The appointment 
of a provisional liquidator is significant with regard to the power of representation 
in relation to the undertaking from which authorisation has been withdrawn. 
However, the appointment cannot be equated with a decision to open winding-up 
proceedings either. The application of Article 624(1) of the Insurance Code and of 
Article 274 of Directive 2009/138/EC … requires that a decision to open winding-
up proceedings (owing to insolvency) has been issued in relation to the Cypriot 
insurance undertaking. As no such decision has been issued, however, the 
conclusion of the appellate court that, pursuant to the aforementioned provisions, 
Article 220 of the Cypriot Law on companies is applicable with regard to the 
claims against the Cypriot insurer pending in Bulgaria is incorrect.’ 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-427/19 
 
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Brief summary of the basis for the reference 
9 The defendant in the present case is a joint-stock company registered under the 
legislation of the Republic of Cyprus. Pursuant to Article 624(1) of the Insurance 
Code, a decision to open winding-up or insolvency proceedings with regard to an 
insurer authorised in another Member State takes effect in the Republic of 
Bulgaria as from the date on which the decision becomes effective in the Member 
State concerned. If the KFN is informed by the competent authority of another 
Member State of the opening of winding-up or insolvency proceedings, it must 
take measures to inform the public. The notification pursuant to paragraph 2 must 
contain information regarding the administrative or judicial authority that is 
competent for winding-up or insolvency in the Member State concerned, 
regarding the applicable legislation and regarding the liquidator or insolvency 
administrator that has been appointed. In the exercise of its powers, the KFN 
provided the public with information via its official internet portal, meaning that it 
was evident to the court that insolvency proceedings were opened in relation to 
the insurance undertaking ‘Olympic’ and it was appointed a provisional 
insolvency administrator pursuant to the legislation of the Republic of Cyprus. 
10 Taking the above statements into account, the Chamber finds that it must 
determine the applicable law, as the insolvency proceedings with an international 
dimension are of significance for the outcome of the present court proceedings. 
11 In the present case, the only rule for determining the applicable law can be found 
in Article 630 of the Insurance Code, which must be interpreted grammatically, 
systematically, teleologically and in line with EU law (so-called harmonious 
interpretation, which results in EU law having indirect effect). The national court 
is therefore obliged to interpret and apply national provisions in the light of the 
spirit and purpose of the relevant EU law (see judgment of the Court of Justice of 
10 April 1984, Von Colson [and Kamann], C-14/83, [EU:C:1984:153]). 
According to settled case-law of the Court of Justice of the European Union (see 
paragraph 20 of the judgment of 12 July 1990, Foster and Others, C-188/89, 
EU:C:1990:313; paragraph 23 of the judgment of 14 September 2000, Collino and 
Chiappero, C-343/98, EU:C:2000:441; paragraph 40 of the judgment of 19 April 
2007, Farell, C-356/05, EU:C:2007:229; paragraph 39 of the judgment of 
24 January 2012, Dominguez, C-282/10, EU:C:2012:33), the national court is 
obliged to interpret national law in the light of the relevant EU law, irrespective of 
whether or not the directive has been implemented or the conditions necessary for 
it to produce direct effect have been satisfied (see judgment of 13 November 
1990, Marleasing, C-106/89, EU:C:1990:395). In order to discharge this 
obligation, the national court must do whatever lies within its jurisdiction, taking 
the whole body of domestic law into consideration and applying the interpretative 
methods recognised by the legal doctrine and case-law, with a view to achieving 
an outcome consistent with the spirit and purpose of the provisions of EU law (see 
paragraph 111 of the judgment of 4 July 2006, Adeneler, C-212/04, 
EU:C:2006:443; paragraph 200 of the judgment of 23 April 1999, Angelidaki and 
BULSTRAD VIENNA INSURANCE GROUP 
 
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Others, C-378/07, C-379/07 and C-380/07, EU:C:2009:250; paragraph 27 of the 
judgment of 24 January 2012, Dominguez, C-282/10, EU:C:2012:33). 
12 The referring court finds that Article 630 of the Insurance Code must be 
interpreted in the light of Article 274 of Directive 2009/138. 
13 Recitals 117 to 121 and 125 to that directive provide that, since national 
legislation concerning reorganisation measures and winding-up proceedings is not 
harmonised, it is appropriate, in the framework of the internal market, to ensure 
the mutual recognition of reorganisation measures and winding-up legislation of 
the Member States concerning insurance undertakings, as well as the necessary 
cooperation, taking into account the need for unity, universality, coordination and 
publicity for such measures and the equivalent treatment and protection of 
insurance creditors. It should be ensured that reorganisation measures which were 
adopted by the competent authority of a Member State in order to preserve or 
restore the financial soundness of an insurance undertaking and to prevent as far 
as possible a winding-up situation, produce full effects throughout the 
Community. However, the effects of any such reorganisation measures as well as 
winding-up proceedings vis-à-vis third countries should not be affected. A 
distinction should be made between the competent authorities for the purposes of 
reorganisation measures and winding-up proceedings and the supervisory 
authorities of the insurance undertakings. The definition of a branch for 
insolvency purposes, should, in accordance with existing insolvency principles, 
take account of the single legal personality of the insurance undertaking. 
However, the legislation of the home Member State should determine the manner 
in which the assets and liabilities held by independent persons who have a 
permanent authority to act as agent for an insurance undertaking are to be treated 
in the winding-up of that insurance undertaking. Conditions should be laid down 
under which winding-up proceedings which, without being founded on 
insolvency, involve a priority order for the payment of insurance claims, fall 
within the scope of this Directive. Claims by the employees of an insurance 
undertaking arising from employment contracts and employment relationships 
should be capable of being subrogated to a national wage guarantee scheme. Such 
subrogated claims should benefit from the treatment determined by the law of the 
home Member State (lex concursus). All the conditions for the opening, conduct 
and closure of winding-up proceedings should be governed by the law of the 
home Member State. 
14 Article 268 of the directive, which contains definitions, defines ‘winding-up 
proceedings’ as collective proceedings involving the realisation of the assets of an 
insurance undertaking and the distribution of the proceeds among the creditors, 
shareholders or members as appropriate, which necessarily involve any 
intervention by the competent authorities, including where the collective 
proceedings are terminated by a composition or other analogous measure, whether 
or not they are founded on insolvency or are voluntary or compulsory. Interpreting 
the terms of the directive autonomously, the court therefore concludes that so-
called ‘winding-up proceedings’ also encompass insolvency proceedings. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-427/19 
 
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15 Pursuant to Article 274[(1)](e) of the directive, the decision to open winding-up 
proceedings with regard to an insurance undertaking, the winding-up proceedings 
and their effects, as well as the effects of the winding-up proceedings on 
proceedings brought by individual creditors are governed by the law of the home 
Member State. 
16 Accordingly, in interpreting Article 630 of the Insurance Code in the light of 
Article 274 and the aforementioned recitals 117 to 121 and 125 of the directive, 
the court comes to the conclusion that the law of the Republic of Cyprus governs 
the consequences of the insolvency proceedings. The effects of the insolvency 
proceedings that have been opened should therefore be considered in the light of 
the positive law of the Republic of Cyprus. 
17 Article 43(1) of the KMChP provides that the court or other judicial body is to 
establish the content of the foreign law of its own motion. It may use the methods 
provided for in international treaties, ask the Ministerstvo na pravosadieto 
(Ministry of Justice) or other authorities for information and also request opinions 
from experts and specialist institutes. In this respect, the court is empowered to 
determine and apply relevant foreign law, which is to be interpreted and applied in 
accordance with its application in the State in which it was enacted. 
18 In the exercise of its powers, the Chamber determined the applicable law of the 
Republic of Cyprus of its own motion. 
19 In the present case, the court takes the view that the effects of the insolvency 
proceedings arise from the provisions of Article 220 of the Law on companies of 
the Republic of Cyprus. In interpreting that provision, the court comes to the 
conclusion that the approval of the insolvency court is a prerequisite for 
conducting other proceedings. That being the case, the present proceedings must 
be stayed, and the applicant must lodge its claims in accordance with the 
procedures provided for in the Republic of Cyprus, whereby, in the event that 
those claims are established, the present proceedings would have to be closed. 
They could then only be continued if the insolvency court gives its approval or if 
it is proven that the claims have not been established in the procedures provided 
for in the Republic of Cyprus. 
20 For the sake of completeness, it should be made clear that the provisions of 
Regulation 2015/848 on insolvency proceedings are not applicable in the present 
case, since, pursuant to Article 1(2)(a) thereof, the regulation does not apply to 
proceedings referred to in paragraph 1 that concern insurance undertakings. 
21 For the reasons given, the Chamber comes to the conclusion that the interpretation 
of Article 630 of the Insurance Code in the light of Article 274 of Directive 
2009/138 is of importance for a correct resolution of the dispute, so that it can be 
assessed whether the proceedings should be stayed or closed with a view to 
enforcing the rights of the persons concerned before the competent court in the 
Republic of Cyprus.