Report for the Hearing in Case C-63/89
I — Facts and procedure
A — Relevant Community legislation
B — Background to the proceedings
The companies Assurances du Crédit S.A. and Compagnie Belge d'Assurance Crédit S.A. engage in export credit insurance. Both companies have their registered offices in Belgium. Assurances du Credit also has branch offices in Great Britain and France.
Those companies are in competition with bodies operating on the export credit insurance market for the account of or with the guarantee of the State; in particular they are:
With regard to operations carried out for the account of or with the guarantee of the State, those bodies are not subject to the financial constraints introduced by Directives 73/239 and 87/343.
The companies Assurances du Crédit and Compagnie Belge d'Assurance Crédit, which are subject to those constraints, believe, for that reason, that they have suffered damage arising, in their view, from Directive 87/343 and the Community institutions' delay in adopting the measures of coordination referred to in the original version of Directive 73/239.
They have brought an action based on Article 178 and the second paragraph of Article 215 of the EEC Treaty, which was lodged at the Court Registry on 3 March 1989.
The procedure followed the normal course. The Court, having heard the report of the Judge-Rapporteur and the views of the Advocate General, decided to open the oral procedure without any preparatory inquiry.
II — Conclusions of the parties
The applicants claim that the Court should:
The Council contends that the Court should:
The Commission claims that the Court should:
IN — Summary of the submissions and arguments of the parties
A — Admissibility
The Council and the Commission contend that the application is inadmissible on the ground that it in fact seeks the annulment of Directive 87/343 and its replacement by another directive. The action based on Article 178 of the Treaty thus enables the applicants to circumvent the procedural rules governing actions for annulment under Article 173 and, more particularly, the rules relating to the periods within which the proceedings must be instituted and to locus standi. An action for damages is a form of action independent of and separate from an action for annulment; under no circumstances can it lead to the annulment of the measure in question (judgment of 13 July 1972 in Case 79/71 Heinemann v Commission [1972] ECR 579).
In any event, even if the Court were to hold the main claims for damages to be admissible, the claims for an order requiring the Community institutions to end the situation of illegality resulting from Directive 87/343 by adopting, as soon as possible, measures designed to harmonize all export credit insurance operations amount in effect to an application for annulment or, at the very least, to a claim for an order which cannot be entertained. In particular, the applicants may not, according to the Council and the Commission, rely on the second paragraph of Article 176, since that provision cannot be understood as providing an exception to the rule that only the Community institutions may take the measures necessary to comply with a judgment of the Court.
The applicants request the Court to dismiss those objections of inadmissibility.
In the first place, their application does not seek the annulment of Directive 87/343 and its replacement by another directive, but simply compensation for the damage caused by a wrongful act on the part of the Community institutions in the performance of their functions (judgment of 14 July 1961 in Joined Cases 9/60 and 12/60 Société Commerciale Antoine Vloeberghs S. A. v High Authority of the ECSC [1961] ECR 197). As the Court has consistently held, the action for damages is an autonomous form of action which differs from an application for annulment (judgment of 2 December 1971 in Case 5/71 Aktien-Zuckerfabrik Schòppenstedt v Council [1971] ECR 975) and from an action for failure to act (judgment of 2 July 1974 in Case 153/73 Holtz & Willemsen GmbH v Council and Commission [1974] ECR 675). A wrongful act or omission of such a kind as to involve the liability of the Community presupposes the existence of an illegal act or a persistent failure to act on the part of the Council or Commission; that is the justification for the applicants' submissions made in support of their application which, inter alia, dispute the legality of Directive 87/343.
In the second place, with more particular reference to the claim for an order to put an end to the situation of illegality, the applicants submit that the Community institutions are obliged to put an end to such illegality. Failure of the institutions to act in such a case is penalized by the Court (judgment of 28 April 1971 in Case 4/69 Liitticke GmbH v Commission [1971] ECR 325; judgment of 21 January 1976 in Case 40/75 Société des Produits Bertrand S.A. v Commission [1976] ECR 1). Moreover, in the case of an application based on Article 178, the Court has an ancillary jurisdiction to reduce the damage attracting compensation by adopting measures of a kind such as to end immediately the situation of illegality. Finally, the applicants submit that the Court could accede to their claims on the basis of Article 186, which allows the Court to prescribe any necessary interim measures, and on the basis of the second paragraph of Article 176, which allows the Court to prescribe the measures necessary to comply with a judgment delivered upon an application based on Article 178.
B — Substantive issues
1. Basis for the liability of the Community
The Council and the Commission submit that the case-law which makes actions for damages brought against Community institutions subject to restrictive conditions where legislative measures involving choices of economic policy are concerned is applicable by analogy (judgment of 25 May 1978 in Joined Cases 83/76 and 94/76, 4/77, 15/77 and 40/77 Bayerische HNL Vermehrungsbetriebe GmbH and Others v Council and Commission [1978] ECR 1209). In the sphere of the approximation of national laws pursuant to Article 57(2) of the Treaty, the Council has in fact to choose from among a number of possible options.
Under that case-law, the Community can therefore incur liability only in the case of a flagrant breach of a superior rule of law for the protection of individuals.
The applicants, on the other hand, argue that the principles derived from the case-law on which the defendants rely are not applicable.
That case-law is applicable only in the context of the implementation of the common agricultural policy which involves choices of economic policy. On the other hand, Article 57(2) of the Treaty, on the basis of which Directive 87/343 was adopted, does not allow such a choice but requires the Community institutions to adopt harmonization measures within a specified period; they have no discretionary power of appraisal in the matter.
The illegality of Directive 87/343 and the Community institutions' culpable delay in enacting harmonization measures are therefore sufficient in themselves to make the Community liable. However, if the Court should take the view that the principles laid down in the case-law cited by the defendants apply, the applicants submit that the wrongful acts or omissions on which they rely constitute in any case a sufficiently serious breach of a superior rule of law for the protection of individuals.
(a) Directive 87/343
Breach of the principle of nondiscrimination and infringement of Articles 90(1) and 3(f) of the Treaty
The applicants, after referring to the objectives laid down in the Commission's White Paper and in the Single European Act with regard to the establishment of a single market, go on to call in question the circumstances under which the directive carried out no more than a partial harmonization in the sector of export credit insurance. Partial harmonization has to avoid all discrimination against economic operators who find themselves in competition. That, the applicants submit, is not the position in the present case. Because it exempts from its scope export credit insurance operations carried out for the account of or with the guarantee of the State and also increases the restrictions placed on private insurers, Directive 87/343 creates distortions in competition in a manner advantageous to State or para-State insurers.
In the applicants' view, there has been a failure to comply with the following:
The rules on competition laid down in those provisions are applicable in the insurance sector (judgment of 27 January 1987 in Case 45/85 Verband der Sachversicherer e.V. v Commission [1987] ECR 405), competition in that sector having in fact increased since the entry into force of Council Directive 88/357/EEC of 22 June 1988 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and laying down provisions to facilitate the effective exercise of freedom to provide services and amending Directive 73/239/EEC (Official Journal 1988 L 172, p. 1).
The Council contends that the directive did not have the object of creating or maintaining discrimination against private insurers but was designed simply to achieve partial harmonization. The Council has a wide discretion in the matter, as is clear from Articles 57, 52 and 8a of the Treaty and from the case-law of the Court (judgment of 29 February 1984 in Case 37/83, cited above). In the present case, the Council properly exercised its discretion in excluding temporarily from harmonization export credit insurance operations carried out for the account of or with the guarantee of the State by reason, in particular, of the wide range of views held by Member States on the role of the State in export credit insurance, views which are themselves based on choices of external policy.
Finally, the Council submits that any failure to comply with Community rules on nondiscrimination and competition can result only from national rules applicable to State and para-State export credit insurers and not from the directive. Moreover, Article 3 of the Treaty, which refers to other Treaty provisions, cannot be relied on as such by an individual in an action for compensation.
The Commission points out that the object of Directive 73/239 is to facilitate the exercise of freedom of establishment in the insurance sector. However, guarantees are required to be given by insurance undertakings in order to provide adequate protection for their customers. Concern of this kind is unnecessary with regard to public undertakings, since these are unable to establish themselves in other Member States; in addition, such guarantees are unnecessary in view of the State support which they enjoy. Consequently, the question concerning the position of public-sector insurers vis-à-vis their private competitors has to be dealt with under Article 90 of the Treaty, which deals with the position of public undertakings, rather than under Article 57.
The different treatment of the public and private sectors is therefore objectively justified in the opinion of the Commission. It follows that there has been no failure to comply with the principle of nondiscrimination (judgment of 6 December 1984 in Case 59/83 Biovilac N. V. v EEC [1984] ECR 4057).
Infringement of Article 90(1) and Article 52
The applicants submit that there has been a failure to comply with Article 52 in so far as the directive directly or indirectly prevents or hinders the establishment of private insurance companies. By virtue of the powers conferred on it by Articles 155 and 169 of the Treaty, the Commission has the task of ensuring that Article 52 is strictly applied (see, for example, the judgment of 30 June 1988 in Case 226/87 Commission v Hellenic Republic [1988] ECR).
The Council and the Commission claim that any restrictions on the freedom of establishment would result, not from the directive, but rather from provisions of national law applicable to insurance undertakings. Moreover, Article 52 is inapplicable to situations which are purely internal and thus to discrimination which may exist within a Member State. Finally, individuals can always assen rights conferred on them by Article 52 before the national courts.
Infringement of Article 92 and Article 54(3)(h)
The applicants contend that, due to the absence of harmonization, the rules at present applicable to public insurers constitute aid for exports to other Member States in contravention of the abovementioned provisions (judgment of 10 December 1969 in Joined Cases 6 and 11/69 Commission v French Republic [1969] ECR 523). There is no way in which such aid can be justified by the requirements of consumer protection.
The Council points out that any aid which might exist could result only from national rules and that the concept of aid does not apply to State or para-State bodies. Article 54 of the Treaty, which has as its objective to ensure that freedom of establishment is not distorted through State aids, in no way concerns special arrangements which apply to State or para-State bodies.
The Commission argues that the aid allegedly granted to State insurers is either State aid, in which case it alone has competence to decide, subject to review by the Court, whether such aid is incompatible with Community law, or Community aid, in which case the abovementioned provisions are not applicable.
The existence of a misuse of power
The applicants claim that the additional guarantees which the directive requires of private insurers represent the quid pro quo sought from the Community institutions by the Government of the Federal Republic of Germany for the latter's agreement to abolish its system of compulsory specialization for insurance undertakings. The directive was accordingly designed to protect German undertakings rather than to provide protection for the consumer.
The Council and the Commission reject that submission and claim that it is pure conjecture; the difference in treatment between public and private insurers can be objectively justified.
(b) The delay in adopting harmonization measures
The applicants contend that the Community institutions failed to pursue the harmonization of laws relating to insurance under the conditions originally envisaged in Directive 73/239.
In refusing to adopt harmonization measures applicable to export credit insurance operations carried out for the account of or with the guarantee of the State even though the Commission had been fully aware since 1966 of the problems in this matter relating to competition between public and private insurers, the Community institutions committed a wrongful act such as to make them liable.
The Council and the Commission submit that the period of four years laid down in Directive 73/239 for the adoption of harmonization measures was indicative in nature. The Treaty itself does not specify any period and in no way precludes the Community institutions from altering the period originally laid down.
(c) Sufficiently serious breach of a superior rule of law for the protection of individuals
The applicants claim that the principle of nondiscrimination and the rules on competition which the Community institutions have failed to observe are superior rules of law designed to afford protection to individuals (judgment of 25 May 1978 in Joined Cases 83/76 and 94/76, 4/77, 15/77 and 40/77, cited above).
The Commission challenges that argument and submits that the application of Directive 87/343 only entails unfavourable financial consequences for private insurers owing to the guarantees required. Those guarantees, the Commission claims, are justified on the ground of consumer protection.
2. Damage
(a) The existence of damage
On the basis of a report which is included among the documents submitted to the Court, the applicants seek compensation for the financial damage which they have incurred by reason of the additional guarantees required under Directive 87/343. In particular, they claim that they shall have to make provision to meet the new requirements relating to the equalization reserve before the period laid down for implementation of the directive expires on 1 July 1990. Although the damage cannot as yet be precisely quantified, it can form the basis of an application for compensation (judgment of 2 June 1976 in Joined Cases 56 to 60/74 Kampffmeyer Mühlenvereinigung K. G. and Others v Commission and Council [1976] ECR 711).
(b) The seriousness of the damage
Even if the case-law relating to damage caused by a legislative measure in the exercise of a choice of economic policy were applicable to the present case, which they dispute, the applicants claim that the damage which they have suffered meets the criteria laid down by that case-law in any event. The damage affects only a limited group of economic operators; moreover, it goes beyond the bounds of the economic risks inherent in the activities in the sector concerned.
(c) The existence of a causal link between the damage and the alleged wrongful acts
The Council and the Commission dispute the existence of such a causal link and claim that:
(d) Finally, the applicants invoke the legal principles laid down by the Court in its judgment of 4 October 1979 in DGV, Deutsche Getreideverwertimg und Rheinische Kraftfutterwerke GmbH and Others v Council and Commission (Joined Cases 241, 242 and 245 to 250/78, [1979] ECR 3017) and submit that the solution found in that judgment can be transposed in all respects to the present case for the purpose of establishing the liability of the Community.
The Council, on the other hand, believes that the principles enunciated in that case, which related to an agricultural matter in which Community legislation governed all activity in the sector, may not be applied by analogy to the matter of the harmonization of laws.
IV — The Commission's replies to the questions put by the Court
First question:
The Commission is requested to indicate the status of the undertakings which in the Member States engage in export credit insurance business on behalf of or with the guarantee of the State, in particular in regard to the provisions of Article 90(1) of the EEC Treaty on public undertakings, and to specify the conditions under which the State intervenes in the insurance transactions carried out by those undertakings.
Reply:
1. Concerning the status of undertakings which in the Member States engage in export credit insurance business on behalf of or with the guarantee of the State and the circumstances under which the State intervenes in the transactions carried out by those undertakings:
2. Concerning the applicability of Article 90(1) of the EEC Treaty:
Second question:
The Commission is requested to indicate the rules of secondary Community law at present applicable to those undertakings.
Reply:
The only provisions of Community law which at present apply in the area of export credit insurance are:
Third question:
The Commission is requested to state, giving precise reasons for its answer, whether the services offered by those undertakings are distinct from those offered by
the other insurance undertakings which operate on the export credit insurance market.
Reply:
According to the Commission, it would appear from the annexes appended to its replies that competition in the export credit insurance sector is largely limited to the covering of short-term commercial risks.
1 Language of the case: English.