CJEC, June 9, 1977, No 90-76

1 By order of 29 April 1976 which was received at the Court registry on 27 September 1976 the tribunale civile e penale of Milan referred to the Court, pursuant to article 177 of the EEC treaty, four questions relating to the interpretation of Council directive No 72-166-EEC of 24 April 1972 on the approximation of the laws of the member states relating to insurance against civil liability in respect of the use of motor vehicles, and to the enforcement of the obligation to insure against such liability (oj, english special edition 1972 (ii), p.360), of Commission recommendation No 73-185-EEC of 15 may 1973 (oj l 194 of 16. 7. 1973, p.13), of first Commission decision No 74-166-EEC of 6 February 1974 (oj l 87 of 30. 3.1974, p.14) and of articles 7, 52, 59, 85, 86 and 90 of the treaty.

2 These questions were raised in the course of proceedings between a loss-adjusters ' undertaking, the plaintiff in the main action, and the ufficio centrale italiano di assistenza assicurativa automobilisti in circolazione internazionale, hereinafter referred to as ' the UCI ', the defendant in the main action, wherein the plaintiff requested the national Court to declare illegal the claim made by the UCI that it could entrust the investigation and settlement of claims in respect of accidents caused by motor vehicles insured abroad solely to those insurance companies which are affiliated to the defendant and, consequently, to declare illegal any action taken by the UCI in relation to third persons in order to restrict the free activities of the plaintiff and to send its customers elsewhere.

3 The UCI is the national bureau, recognized by national legislation, to which are affiliated all or most of the insurers against civil liability in respect of motor vehicles who operate in Italy and it is responsible under the so-called ' green card'system for compensation in respect of accidents caused by motor vehicles insured by foreign insurance companies in the terms of the agreements between the national bureaux of countries adopting that system or, following supplementary agreements, caused by foreign vehicles which are not insured.

General observations

4 Two observations of a general nature may be made in respect of the questions referred, the first relating to the meaning of the word'settle ' used in the questions and the other concerning the development of the green card system in the community context.

5 (a) in the text of the questions with regard to loss-adjusters the Italian Court refers to their business as being the'settling ' of accident claims caused by foreign vehicles.

However it is evident from the file that the profession of loss-adjuster consists in particular in supplying an insurance company with extensive, accurate and complete information to enable it to decide whether or not the accident should give rise to payment of damages and the amount of such damages while the final decision as to payment is always to be taken by the insurer.

In comparison to an insurer a loss-adjuster plays an auxiliary and not indispensable role in view of the fact that an insurer can carry out the same tasks through his own organization.

In the reply to be given to the questions referred the word'settle ' with regard to the profession of loss-adjuster must be understood in this limited sense.

6 (b) it also appears from the file that pursuant to an international agreement to which all member states both new and old are parties, which was signed at Strasbourg on 20 April 1959, the system of compulsory insurance for civil liability in respect of motor vehicles was adopted by Italy and that the UCI has to assume direct responsibility, both by virtue of the national legislation and by virtue of a system of bilateral agreements, for settling the amount of the damages in respect of any accident caused in Italy by a foreign vehicle whose driver possesses a green card.

7 Under article 6 of Italian law No 990 of 24 December 1969 vehicles registered or listed in foreign states which are being driven temporarily in the territory of Italy must be covered by an insurance policy within the meaning of the said law.

Nevertheless the obligation to be insured is to be deemed to have been discharged if the driver is in possession of an international certificate of insurance issued by the appropriate body constituted abroad known as the ' paying bureau ' which testifies to the existence of an insurance policy for civil liability for damages caused by the vehicle provided that the certificate is recognized by the UCI authorized for this purpose by decree of the minister for industry of 26 may 1971.

8 The agreements between bureaux which constitute an integral part of the green card system provide that where an accident results in a claim being made against an insured the bureau in the country where the accident took place, known as the ' handling bureau ', will handle and settle such claim as if the policy of insurance had been issued by them '.

If the paying bureau, having supplied a certificate to a member which itself issued it to an insured, has an organization situated in the country of the handling bureau and established there for the purpose of transacting motor insurance, the handling bureau will, if so requested, leave the handling and settlement of claims to the member.

9 On the other hand it is only by virtue of an optional clause (optional clause 4 (b) of the uniform agreement between bureaux) that the paying bureau may request the handling bureau to leave the handling and settlement of claims to a nominated correspondent, who, in the terms of that clause, may be one of the following:

(i) a member of the handling bureau;

(ii) an organization established in the country of the handling bureau for the purpose of transacting insurance, whether motor insurance or some other class of insurance ;

(iii) an organization established in the country of the handling bureau and specializing in the handling of claims on behalf of insurers.

Even when the handling bureau has accepted the optional clause the nominated correspondent remains responsible to the handling bureau for the handling of claims as the duly appointed agent of the said bureau and must comply with both the general and particular instructions received from the handling bureau.

10 On the community plane Council directive No 72-166-EEC of 24 april 1972 concerns the approximation of the laws of the member states relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability and has the object of facilitating the free movement of goods and of persons by abolishing checks at the frontier on green cards for vehicles normally based in a member state entering the territory of another member state.

In the terms of the seventh recital in the preamble to that directive that objective can be effected by means of an agreement between the six national insurers ' bureaux, whereby each national bureau would guarantee compensation in accordance with the provisions of national law in respect of any loss or injury giving entitlement to compensation caused in its territory by one of those vehicles, whether or not insured.

11 By recommendation No 73-185-EEC of 15 may 1973 the Commission, reciting that the original member states had taken or were about to take the measures necessary to comply with the directive of 24 April 1972 provided in article 1 that:

' from 1 July 1973 each original member state shall refrain from making checks on insurance against civil liability in respect of the use of vehicles which are normally based in the European territory of another original member state and have not been the subject of notification under article 4 (b) of the Council directive of 24 April 1972.'

12 By decision No 74-166-EEC of 6 February 1974 the Commission, reciting that on 12 December 1973 the national insurers ' bureaux of the member states had concluded an agreement in conformity with the said directive provided that:

' from 15 may 1974 each member state shall refrain from making checks on insurance against civil liability in respect of vehicles which are normally based in the European territory of another member state and which are the subject of the agreement of national insurers ' bureaux of 12 December 1973. '

13 Thus the objective of the aforementioned directive, namely to facilitate the free movement of goods and of persons, has been achieved by means of the said agreements and the said decision.

The first question

14 This question seeks to ascertain whether the said directive, recommendation and decision must be interpreted as authorizing provisions of national law, agreements, decisions and practices agreed between national insurers ' bureaux or action by any individual national bureau or of the undertakings affiliated thereto which have as their object or effect the restriction of the business of loss-adjusters in the sphere of the settlement of claims in respect of accidents caused by foreign vehicles.

15 The said directive, recommendation and decision seeking, as set out above, to abolish checks on the green card at frontiers between member states cannot be regarded as authorizing the existence of national provisions or agreements between national insurers ' bureaux or their members which are incompatible with the provisions of the treaty relating to competition, the right of establishment and the freedom to provide services.

A fortiori they may not authorize any agreements or practices agreed between national insurers ' bureaux or any conduct by them which is incompatible with the said provisions of the treaty.

The second question

16 The second question seeks to ascertain whether the provisions of articles 85, 86 and 90 of the treaty relating to competition prohibit any provision of national law, any agreement between bureaux and any decision or concerted practice which tends to exclude loss-adjusters from the settlement of claims in respect of damage caused by foreign vehicles even though they may have been nominated by the insurers of the vehicle causing the damage who are based in its country of origin.

17 It is necessary to deal separately with the national provisions and the agreements between bureaux on the one hand and the decisions and concerted practices on the other.

National provisions and agreements between bureaux

18 The green card system, recognized and perfected by community provisions, is intended to facilitate the free movement of persons and goods while safeguarding the interests of persons who have suffered loss or injury by the creation in each member country of a national bureau composed of insurance companies each one of which is subject to particular checks and to the obligation to supply the guarantees required by national law.

Thus a national provision which reserves exclusively to insurance companies the settlement of claims in respect of accidents caused by foreign vehicles in the sense of the final decision concerning the compensation of the accident victims does comply with one of the objectives of the green card system.

In giving to the national bureau whose members are insurance companies the exclusive right to settle itself accident claims within the meaning referred to above, or to entrust settlement to one of its members, the member state does not lay down any measure contrary to the rules of the treaty in particular article 90 in conjunction with articles 85 and 86 so long as such exclusivity does not conflict with the freedom of the insurer to whom the settlement is entrusted to rely, for the purposes of the investigation of the accident claim, on another undertaking specialized in such matters which is not a member of the bureau.

19 In the view of the plaintiff in the main action the refusal of the Italian bureau to incorporate in its agreements the optional clause so that members of the foreign bureau are denied the opportunity of choosing as their correspondent in Italy for the handling and settlement of claims, an organization of the kind referred to under (b) (iii) of that clause, constitutes a decision, by an association of insurance undertakings, prohibited by article 85 (1) of the treaty.

20 Where the national legislation restricts the business of insurance, including the decision concerning the compensation of accident victims exclusively to insurers, the adoption of that optional clause would enable the foreign insurer to evade the said legislation by means of a loss-adjuster.

Furthermore where the national legislation specifies that liability to persons injured is always borne by the handling bureau the abandonment of the handling and settlement of a claim to an organization which is not a member of the bureau and which does not do the business of an insurer would run contrary to the national legislation.

On the other hand there is nothing in the agreement between bureaux to exclude the collaboration of loss-adjusters in their normal auxiliary business of the settlement of claims in respect of accidents caused by foreign vehicles.

21 Consequently in this respect the agreement does not infringe either article 85 or article 86 of the treaty.

22 A national provision or an agreement between national bureaux established in the context of the green card system which declares that the national bureau bears sole responsibility for the settlement of claims for damage caused in the territory of that member state by vehicles insured by foreign insurance companies but which still allows the national bureau or its members to rely on undertakings whose business consists solely in the settlement of accident claims on behalf of insurers in the sense of the handling and investigation of claims, is not incompatible with article 90 (1) of the treaty in conjunction with articles 85 and 86.

Decisions and concerted practices

23 As such national legislation is not incompatible with the provisions of the treaty relating to competition the refusal of the handling bureau, in implementation of such legislation, to accept the optional clause in its entirety but in particular subclause (b) (iii) of that clause cannot constitute an infringement of articles 85 and 86 of the treaty.

Furthermore neither such legislation nor the fact that the optional clause was not accepted prevents the handling bureau or its members from having recourse, if they deem it necessary, to a loss-adjuster for his normal, auxiliary business, that is to say the handling and investigation of accident claims.

24 A decision or a course of conduct of a national bureau or concerted practices of its members which have the object or effect of excluding undertakings whose business consists solely in the settlement, in the restricted sense referred to above, of accident claims on behalf of insurers, may possibly fall under the prohibition of article 85 and, if the national bureau is in a dominant position, under the prohibition contained in article 90 of the treaty in conjunction with article 86.

25 It is for the national Court to determine whether the conditions for the application of those prohibitions are fulfilled.

The third question

26 The third question asks whether articles 7, 52 and 59 of the treaty prohibit any provision of national law or any action the effect of which is directly or indirectly to obstruct in a member state the effective carrying on of the business of a loss-adjuster established in that member state, even if the provision concerns a national insurers ' bureau within the meaning of the definition given in directive No 72-166-EEC or when the conduct is attributable to that bureau.

27 Article 7 of the treaty prohibits in general terms all discrimination based on nationality.

In the respective spheres of the right of establishment and the freedom to provide services articles 52 and 59 guarantee the application of the principle laid down by article 7.

It follows therefore that if rules are compatible with articles 52 and 59 they are also compatible with article 7.

28 Articles 52 and 59 prohibit directly any discrimination based on nationality.

For discrimination to fall under the prohibitions contained in those articles it suffices that such discrimination results from rules of whatever kind which seek to govern collectively the carrying on of the business in question.

In that case it is not relevant whether the discrimination originated in measures of a public authority or, on the contrary, in measures attributable to the national insurers ' bureaux, that is to say the bureaux answering to the definition set out in directive No 72-166-EEC.

29 Nevertheless the fact of reserving to insurance companies or to such a national bureau established in the territory where the accident was caused by a vehicle normally based in another member state the decision concerning the compensation of the victim does not constitute discrimination within the meaning of articles 52 and 59 if the exclusion of other categories of undertakings is not based on the criterion of nationality.

30 Rules or conduct having the effect of reserving to the national bureau of a member state or to its members or to insurance companies with an establishment there the final decision as to the payment of damages to victims of accidents caused in the territory of that state by vehicles normally based in another member state are not discriminatory within the meaning of articles 52 and 59 of the treaty.

The fourth question

31 As the answer to the first question was in the negative the fourth question has lost its purpose.

Costs

32 The costs incurred by the Italian government and the Commission of the European Communities which submitted observations to the Court are not recoverable and as these proceedings are, so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national Court, the decision on costs is a matter for that Court.

On those grounds,

The Court

In answer to the questions referred to it by the tribunale civile e penale di milano by order of 29 April 1976, hereby rules:

1. Council directive No 72-166-EEC of 24 April 1972, Commission recommendation No 73-185-EEC of 15 may 1973 and Commission decision No 74-166-EEC of 6 February 1974 which seek to abolish checks on the green card at frontiers between member states cannot be regarded as authorizing the existence of national provisions or agreements between national insurance bureaux or their members which are incompatible with the provisions of the treaty relating to competition, the right of establishment and the freedom to provide services.

2. (a) a national provision or an agreement between national bureaux established in the context of the green card system which declares that the national bureau bears sole responsibility for the settlement of claims for damage caused in the territory of that member state by vehicles insured by foreign insurance companies but which still allows the national bureau or its members to rely on undertakings whose business consists solely in the settlement of accident claims on behalf of insurers in the sense of the handling and investigation of claims, is not incompatible with article 90 (1) of the treaty in conjunction with articles 85 and 86.

(b) a decision or a course of conduct of a national bureau or concerted practices of its members which have the object or effect of excluding undertakings whose business consists solely in the settlement, in the restricted sense referred to above, of accident claims on behalf of insurers, may possibly fall under the prohibition of article 85 and, if the national bureau is in a dominant position, under the prohibition contained in article 90 of the treaty in conjunction with article 86.