C-63/89

The applicants claim essentially that the directive in question is discriminatory, and therefore unlawful, because, as part of the The observations which follow will, in the harmonization of the financial guarantees main, concentrate on those two points. required of insurance companies for the However, before considering those and protection of third parties, it imposed such other important aspects, it is essential to guarantee requirements — and hence the outline the substance and above all the related costs — on private sector companies origin of the rules at issue. It should be alone, thereby exempting public sector emphasized that the legislative history of the export credit insurance agencies. The directive, and in particular the positions directive is therefore a source of discrim­ adopted by the institutions during the legis­ inatory burdens (for the private sector), lative procedure, are of considerable namelv the costs incurred in creating importance, particularly for the purpose of and maintaining the required financial determining whether the directive at issue is instruments. And it is precisely the economic discriminatory. damage arising from that situation that is the subject-matter of the present action for damages.

The relevant provisions and the legislative history of Directive 87/343 Obviously, the subject-matter of the action is delicate and of considerable importance from a legislative and economic point of view. But 1 should here point out that beyond those matters of general concern the 2. In 1973, with Council Directive action raises two important questions of 73 / 239 / EEC (Official Journal 1973 L 228,

p. 3), the Community took the first steps was expressly subject to 'further coordi­ towards coordination of the provisions nation, which shall be implemented within relating to insurance other than life four years'. assurance. In order to afford greater freedom of establishment and freedom to provide services in this sector, the directive, which is based in particular on Article 57(2) of the Treaty, provided that certain diver­ 3. Further coordination turned out to be gences between national supervisory legis­ much more difficult than anticipated. When, lation should be eliminated and that the on 13 September 1979, it submitted a provisions relating to the financial guar­ proposal for the amendment of the antees required of insurance undertakings Directive 73/239, the Commission for the protection of insured and third confirmed the exclusion of operations for parties should be harmonized. In particular, the account or with the support of the State, Articles 15, 16 and 17 of the directive and, what is more, removed all reference to impose an obligation on the Member States further coordination in that regard. to require undertakings in their territory to establish respectively 'technical reserves', a 'solvency margin' and a 'guarantee fund'. Those elements taken together constitute the so-called common prudential rules which However, that position was resolutely are intended to ensure that undertakings opposed by both the Economic and Social throughout the Community remain solvent. Committee and the European Parliament. In an opinion of 27 February 1980 the Economic and Social Committee expressed its regret that 'because of the basically It should be pointed out that — as the political nature of the problems facing Commission stated in its defence — the export credit insurance the Commission has proposal submitted to the Council not carried out any coordination here'. The envisaged, in the export credit insurance European Parliament, in a resolution of market, the extension of those prudential 17 October 1980, made the following rules to all the undertakings concerned, and assessment (which is reproduced in full made no distinction between those in the because of its importance for consideration private sector and those in the public sector. of the case):

— exports to third countries in so far as the guarantee granted by the State is not yet governed by rules laid down under the common commercial policy; 'whereas — as regards export credit insurance operations — free competition should be guaranteed between public and Considers that having regard to the private sector undertakings; whereas the statement ' to the Legal Affairs Committee risks covered by export credit insurance in by the Member of the Commission trade within the Community are not of a responsible, the exclusion of credit different economic kind from those covered insurance operations from the scope of by credit insurance for transactions within application of the Directive should be the domestic market of a Member State; limited pending subsequent coordination to whereas, therefore, in this case credit trade with third countries; insurance operations for the account of or with the guarantee of the State should be included within the scope of this Directive; whereas — as regards export credit Considers that only the amendment in those insurance operations in the context of trade terms of the proposal under consideration between Member States and third would enable greater progress to be made countries — further coordination of national towards freedom of establishment in the provisions is required to achieve a common sector concerned, but that it remains expon policy, which is essential to the necessary: common commercial policy'.

2 — See the resolution on the harmonization of export aid systems adopted by the European Parliament on 15 June 1977 (OJ 1977 C 163. p 42) and the Couste repon — to draw up a Community position on (Doc. 129/77) the question of aid for expons to third 3 — See the resolution on the seventh report of the Commission of the European Communities on competition policy adopted by the European Parliament on 1 — Sec Annex II to lhe report of che Legal Affairs Committee 13 October 1978 (OJ 1978 C 261, p. 48) and the (Doc 1-457/80). Damseaux report (Doc. 334/78)

So much for the scope of the directive. With regard to its content, on the other hand, 'after consultation with those concerned, it Directive 87/343 confirms the prudential accepts that the application of the present rules already introduced by Directive Directive to public sector bodies acting in 73/239, but adds a new instrument, the this area is practicable and will make a usefitl 'equalization reserve', intended to further contribution to the achievement of these strengthen the system of financial guar­ conditions'. antees for third parties.

The Commission emphasized in addition Admissibility that the same objectives of competitive neutrality and transparency were also important where the customer of the insured was outside the Community; it 6. The defendant institutions raise two pointed out, however, that, as the European objections of inadmissibility. The first Parliament itself had recognized, in such a objection concerns the action as a whole;

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the second is directed specifically against autonomous where the damage allegedly one of the claims made by the applicants in sustained stems not from an actual deed or their conclusions. conduct attributable to the Community, but from a legal act — which is supposedly unlawful — adopted by the Community.

The first objection of inadmissibility

Consequently, what must be determined is not whether the applicants should have The only submission relied on by the brought an action for annulment under Council and the Commission in support of Article 173 instead of an action for their objection of inadmissibility is that an damages, but whether they should not action to establish non-contractual liability rather have challenged before the national may not be used as an alternative to courts the national measures adopted under proceedings under Article 173. However, it the directive and, in those proceedings, to is clear that, expressed in those terms, the have raised the question of the validity of objection is unfounded for the simple reason the Community act, namely the directive, that the Community measure at issue in this on which those provisions were based. case is, as I have pointed out, a directive — that is to say a measure which could not conceivably be challenged by the applicants under the second paragraph of Article 173. In my view that is the issue which is raised by the defendants' objection of inadmiss­ ibility and which must be considered. In any event, I would point out that, as was confirmed in the judgment in the most However, in my view it is clear that recent Roquette case (Case 20/88 Roquette consideration of the question of admiss­ Frères v Commission [1989] ECR 1553, at ibility cannot be confined just to an analysis paragraph 14), the Court may, of its own of the relationship between actions to motion, verify whether an action to establish establish non-contractual liability under non-contractual liability is inadmissible on Article 215 and actions for annulment. The the ground that it is subsidiary to national problem raised by the defendant institutions remedies, and the question of inadmissibility proves on closer examination to be much should therefore be examined irrespective of wider in scope; it concerns, in general, the what is held to be the scope of the objection extent to which claims for compensation are raised by the defendants.

The Court has stated that 'where an indi­ It seems that the following vidual considers that he has been injured by inference — which is, moreover, in the application of a Community legislative accordance with the views of academic 4 measure that he considers illegal, he may, writers — may be drawn: when an action when the implementation of the measure is can be brought before a national court, that left to the national authorities, contest the remedy takes precedence over an action validity of the measure, when it is under Article 215, although the action for implemented, before a national court in an damages may still be brought auton­ action against the national authorities', omously, in other words irrespective of although, of course, 'that court may, or whether national remedies have already even must, as provided for in Article 177, been exhausted, if such remedies cannot refer the question of the validity of the ensure effective judicial protection of the Community measure in dispute to the Court legal situations which have allegedly been ment m of Justice' ( judg Case 281/82 damaged. Unifrex v Commission and Council [1984] ECR 1969, at paragraph 11), and that, consequently, the existence of such 'an action is by itself of such a nature as to ensure the efficient protection of the indi­ viduals concerned' (judgment in Joined Nevertheless, having regard to the Cases 116 and 124/77 Amylum v Council importance of the question, the scope of the and Commission [1979] ECR 3497, at relevant case-law cannot, in my view, be paragraph 14). deduced from the foregoing general statements alone but must also be examined in the light of the different situations which gave rise to that case-law. That is, I believe, the only way in which it is possible to define Similarly, and in even more general terms, the Court has held that 'such actions must 4 — On the subsidiary nature of a claim for damages in be examined in the light of the whole relation to national remedies (at least) where the Community measure has given rise to national system of legal protection for the individual implementing measures, see J. Rideau and J. L. Charrier, established by the Treaty and ... the Code des Procedures Européennes, Paris, 1990, pp. 185 — 186 ; R. /oliet, Le Droit Institutionnel des admissibility of such an action may in Communautés Européennes, Le Contentieux, Liège, 1986, certain cases be dependent on the p. 250 et seq; M. Waelbroeck, in Megret, Le Droit de la Communauté Economique Européenne, vol. 10, pan 1, exhaustion of national rights of action pp. 276-281.

the conditions under which an action for nature of a judgment obtainable in the damages must be held to be admissible national courts, the Court of Justice has whether or not recourse has been had to accepted the admissibility of an action under national remedies. Article 215 as an alternative to the national remedy, even if the compensation sought corresponds to the sum which the applicant is seeking from the national authorities. 5 Analysis of the case-law shows that an action under Article 215 is as a rule (with the sole exception of the judgment in Joined The rationale of that case-law, correctly Cases 67 to 85/75 Lesieur v Commission identified in the Opinion of Advocate

up to the Community legislature to draw The Court appears to reach an entirely the consequences of the Court's declaration different conclusion, however, regarding the of invalidity and introduce the positive act without which the national authority would 6 — Judgment in Case 90/78 Granaria v Council and Commtiuon, [1979] ECR 1081. After citing the case-law at be unable to adopt the measures sought by issue Advocate General Capotorti pointed out significantly the plaintiff. that 'In all the judgments cited the Court accepted the admissi bility of the actions without objecting that internal remedies must first be exhausted That is explained, in my opinion, by the fact that they were cases in which, even if the applicants had succeeded in convincing the national court of the illegality of the Community measures which had caused them damage, they still could not have In view of those circumstances, and thus obtained from the national administration the benefit to which they claimed to be entitled without the pnor inter essentially because of the unsatisfactory vention of the Community legislature.

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admissibility of actions for damages in cases amounts; because of the provision, which in which the national remedies ensure the applicant claimed was unlawful, it was effective protection, to the extent that required to pay sums which it considered to academic writers are inclined to accept that be in excess of the sums due; it was it is an actual principle that actions under precisely to obtain reimbursement of those Article 215 are subsidiary to national sums by way of compensation that the remedies. action for damages was brought.

The question of the legality of such implementing measures adopted in Similarly, in IBC (Case 46/75 IBC v pursuance of Community law is, therefore, Commission [1976] ECR 65), the applicant a matter for the competent national courts company sought compensation for the or tribunals to decide, using the procedures damage caused when the Italian authorities laid down under national law and after applied to it a provision of a regulation application, where appropriate, of Article concerning monetary compensatory 177 of the Treaty.'

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In the judgment declaring the application inadmissible the Court held that:

The action by the applicant is seeking in fact compensation for the damage resulting 'The action for damages provided for in from the fact that the applicant did not Articles 178 and 215 of the Treaty was succeed in rendering the refusal by the included as an independent form of action, Federal Office ineffective. Whatever the with a particular purpose to fulfil within the reasons which have led the applicant not to system of legal remedies, and subject to bring an action against that decision before conditions on its use arising out of its the national courts having jurisdiction, the specific nature. Its purpose is not to enable Court cannot allow an action for damages the Court to examine the validity of such as that in the present case against the decisions taken by national agencies Community without disregarding the whole responsible for the implementation of system of legal recourse conceived inter alia certain measures within the framework of to protect the undertakings concerned the Common Agricultural Policy or to against a wrongful application of the assess the financial consequences resulting measures adopted within the framework of from any invalidity of such decisions. the Common Agriculture Policy.

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8. Of course, the case-law cited may be interpreted differently depending on what is held to be its rationale. That interpretation is borne out, in my view, by the statements of a general nature made by the Court, in particular in the judgment in Wagner, concerning the need to respect the specific function which the various If the view were taken that the Court acted remedies envisaged by the Treaty assume essentially with the intention of preventing within the overall system of judicial the Community proceedings for damages protection. becoming merged with proceedings for repayment of sums unduly paid, which must be brought before national courts, the logical conclusion would be that the action for damages is inadmissible only if the damage complained of corresponds exactly to the amount paid in application of the In Wagner the applicant undertaking did allegedly unlawful national implementing not seek the reimbursement, by way of provision. In that case, however, the claim compensation, of the sums unduly paid; it for damages would be inadmissible simply sought compensation for the loss of profits because the Community would thereby be arising from the refusal to cancel the placed under an obligation to reimburse the licence. In that case the Court evidently loss suffered by the individual, whereas it is took account of the fact that the applicant obviously for the national authority to repay could have obtained a similar outcome by the sums which it levied wrongfully. challenging the refusal before the national courts. The Court therefore wished to prevent an action under Article 215 from being used as a kind of alternative to national remedies, even if in some circum­ stances — as in the Wagner case However, in my view that case-law is also itself—national remedies involve greater open to a wider interpretation. I believe that risks for the person concerned. In other

In my view that interpretation is also consistent with the balanced structure of judicial protection in the Community. In this regard it should be pointed out that the case under consideration is one of non-contractual liability due not to an Moreover, even if an action under Article actual deed or conduct, but to a supposedly 215 is successful, the declaration of unlaw­ unlawful legal act. In this case therefore fulness is still purely incidental and certainly review of the legality of the act is a funda­ does not produce the effects which follow mental precondition for determining from a declaration of invalidity under whether there is liability and consequently Article 177. Such a declaration entails — at an obligation to pay compensation. Since least — the non-application of the the Community legal order lays down Community act declared invalid within the appropriate procedures for carrying out that context of the dispute referred for a verification, it would be entirely unjustified preliminary ruling, which generally involves to disregard them and use as an alternative the annulment of the national implementing the action for damages, which is not measure challenged before the national intended or designed for reviewing the court. Moreover, the Court, when ruling lawfulness of measures. under Article 177, has not confined itself to declarations of invalidity; it has recognized (see the operative parts in the judgments in Joined Cases 117/76 and 16/77 Ruckdeschel v Hauptzollamt Hamburg-St Annen [1977] ECR 1753, and Case 300/86 Van Land- Indeed, as the Court has pointed out, schoot v Meyrer [1988] ECR 3443) that the proceedings under Article 215 concern only Community authorities are under an obliga­ compensation and, in particular, they are tion to adopt the necessary measures not intended to permit review of the validity (revocation or amendment) to remedy the of measures adopted by national bodies on incompatibilities found to exist; a further the basis of unlawful Community acts. In instance is where the Court found a regu­ the case of acts of the institutions adopted lation invalid for infringement of the under discretionary powers, there can be principle of equal treatment in so far as it question of compensation only if the did not grant an exemption from the conditions exhaustively listed in HNL co-responsibility levy to some categories of (Joined Cases 83 and 94/76, 4, 15 and operators, and held that, pending the 40/77 HNL v Council and Commission adoption by the Community legislature of [1978] ECR 1209) have been fulfilled. It the necessary measures to restore equality of follows that the review carried out within treatment, the national authorities should the context of Article 215, being solely for continue to apply the exemption laid down the purpose of compensation, will not be a in the provision declared invalid but should

The interpretation which I propose is, of course, supported and not contradicted by the fact that exceptionally the Court considers an action for damages admissible That objection has in part already been if national remedies appear unable to ensure answered by the observation that it is also in effective judicial protection (although in the the interests of the plaintiff to challenge the light of recent judgments, such as Van measure adversely affecting him directly Landschoot, cited above, it must be before the national court (without prejudice considered that an action before the to the possibility of an action under Article national courts, with the consequent 215 seeking compensation for greater reference for a preliminary ruling, damage). represents in almost all cases the most appro- priate means of ensuring the effective protection of the rights of plaintiffs). In this case the action is not seeking to achieve a similar result to that which is obtainable by As for the greater length or complexity of means of national remedies but one which it the national procedure, it is, in my view, a is impossible to achieve in national proceedings. 7 — See M. Waelbroeck, op. cit., p. 281.

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However, even in the event that is not possible to bring a direct challenge against the national provisions implementing a 9. Those are the principles to be applied. directive (for example because they are in Turning now to the case at issue, it should the form of a law and there is no other be pointed out first of all that the action for regulatory act which can be challenged) the damages is based on the submission that the situation with regard to the possibility of provisions of Directive 87/343 concerning national judicial protection is only slightly the equalization reserve are unlawful in so more complicated. It should be pointed out far as they infringe the principle of equal that Article 20 et seq. of Directive 73/239, treatment. which is the legislative framework of which the directive at issue forms a part, envisage a series of measures which the national supervisory authorities may adopt should insurance undertakings fail to comply with The first thing which must be determined is the prudential rules and related whether there were national judicial requirements. In particular, the directive remedies available to the applicants within provides for withdrawal of authorization as the framework of which they could raise the an 'extreme' measure (Article 22) and at the question of the validity of the Community same time provides that each Member State act in question. is to make provision for a right to apply to

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neutralize, if not to remove, the economic exist (leaving aside the possibility that the effects of the directive which the applicants Court might even specify the measures consider to be discriminatory. However, which the national authorities must adopt even that objective could have and should following the ruling and pending changes in have been achieved by a reference for a the Community rules in question). There is preliminar)' ruling to obtain a declaration no doubt therefore that a reference for a that the effects of the directive are discrimin­ preliminary ruling as to the validity of the atory and that therefore the directive itself is directive would have afforded the applicants invalid. much more effective protection of the right (not to be subject to discriminatory burdens) which they seek to establish in a different way by the alternative course of an action under Article 215.

10. In the conclusions set out in the Finally, it should be pointed out that in the application the applicants request the Court, present case the national judicial remedies inter alia, to order the institutions to adopt would have not only enabled the same appropriate measures to bring to an end the objective to be achieved as is sought with illegalities found to exist. The defendant the present action for damages, but would institutions contend that that request is also have ensured effective and more inadmissible on the ground that the Court extensive judicial protection. As I have does not have the power to make such already mentioned, the Court has held on a orders. number of occasions, in the context of references under Article 177, that measures which impose burdens on (or conversely confer advantages on) only certain In my view that objection must be upheld. categories of economic operators are discriminatory. A declaration of invalidity means that the national implementing measures cease to apply and that the Community institutions are under an obliga­ Contrary to what the applicants claim, the tion to remedy the unlawfulness found to Court does not have such a power under

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However, it should be pointed out that, in their reply, the applicants have at least in part changed the scope of the claim made in the application. Indeed it would seem that they are essentially asking the Court to declare, once it has been established that the contested rules are discriminatory, that the The argument that the Court could adopt institutions are under an obligation to adopt injunctive measures under the second the necessary measures to restore equality of paragraph of Article 176 — which is also treatment. put forward only in the reply — must be rejected too. The interpretation of the article put forward by the applicants is in my view a complete distortion of its purport. The second paragraph of Article 176 merely reserves the right of a person who has been harmed by an act which has (already) been As stated above, such an obligation does annulled under Article 173 to apply to the flow from a declaration that an act is invalid Court to obtain compensation for any but not from a judgment which upholds an further damage; however, that does not

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serve to change the competence of the on public insurers any burden comparable to Court within the context of an action for the reserve laid down by the directives, that compensation, which is confined, as I have is a choice for which the Member States repeatedly observed, to making an order for themselves are legally responsible and not the payment of a sum of money and does the Community. In the final analysis, there not include the power to order the is nothing to stop the Member States from institutions to adopt measures with a adopting prudential rules for public insurers particular content. which are similar to those laid down by the directive for private insurers.

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rules envisage or entail the placing of a directive introducing partial harmon­ burdens (or the conferring of benefits) on ization, as in this instance. In such cases, the particular economic operators. In such cases Community legislature merely lays down there is an obvious risk that rules which the common rules which are applicable to differentiate between those to whom they the operators covered by the harmonizing apply will create distortions of competition directive. However, no Community rule which are unjustified and harmful both from applies to persons outside the scope of the the point of view of the overall balance of directive; they remain subject to the national the market and from the point of view of rules alone. The content of the national the individuals who suffer direct damage. rules may or may not be the same as the content of the harmonized rules. If it is not the same, a difference in treatment may still result in so far as dual rules are in fact applied to operators who are, ultimately, competitors. But that unequal treatment, according to the defendants, will depend That is the situation in general terms. exclusively on the legislative choices made However, the defendants contend that the by the Member States, and it is to them, situation is different where the Community therefore, that any infringement of the act in question is not a regulation, but a principle of equal treatment is attributable. directive introducing partial harmonization. The defendants' argument may be summarized in the following terms.

If therefore two sets of rules are created, Furthermore, that argument would lead to consisting in the application of the the absurd result that if discrimination were Community rules on the one hand and the objectively shown to exist, it would not be national rules on the other, that is due imputable to anyone. The Member States solely to the choice made by the could not be held responsible, since they Community legislature in defining the could legitimately adopt or retain their own persons covered by the directive. And if rules by virtue of the fact that the directive then — to be even more explicit — the harmonized the field in question only in effect of those two sets of rules is that, by part (unless it is to be held that even in the virtue of the directive, the private sector is event of partial harmonization the Member subject to a burden such as the equalization States are still required, in the sectors for reserve, while the public sector, which is which they retain competence, to adopt regulated by the national rules, is not rules which are similar in content to the subject to any financial constraint, that rules laid down by the directive in the inequality of treatment can be related and is harmonized sectors; that would clearly be attributable exclusively to the Community anomalous since it would surreptitiously legislature in so far as it was the transform the partial harmonization into a Community legislature which allowed the complete harmonization); nor could the national legislature to apply rules which Community be held responsible since it were different from the common rules. takes the view that it is not answerable for differences in treatment due to the limi­ tation of the persons covered by the directive. In short, it would mean that should the Council introduce a partial harmonization of the conditions under That is particularly evident in the case at which a particular economic activity is issue if account is taken of the legislative pursued, imposing burdens on a certain history of the rules at issue, which I dealt category of economic operator and at the with earlier. From when the first directive in same time excluding other categories of the field was adopted, the Community competing operators from the harmon­ institutions were perfectly aware of the fact ization and therefore from the burdens that no financial guarantee was required in themselves, that situation could never be the Member States from undertakings in the scrutinized in order to determine whether public sector. As the Commission stated, the the principle of equal treatment had been Community accepted that situation. Conse­ complied with. quently, by subjecting — albeit tempor­ arily — only the private sector to the common prudential rules, the Council was allowing — neither more nor less — the public sector to remain exempt from any burden of that kind. The scope of the alleged discrimination

Article 2(2)(d) of Directive 73/239 provides operator executes all operations for its own that the directive does not apply to export account; elsewhere, for example in France, credit insurance operations for the account the public operator pursues part of its activ of or with the support of the State. Article 1 ities for its own account. However, as of Directive 87/343 uses the same wording. emerges from the answers given by the Strictly speaking, therefore, it is the oper Commission to the Court, the rules ations and not the operators that are outside contained in the Community directive do the scope of the harmonized rules. not apply to those cases either; at most — where provided for — prudential rules laid down in national provisions may

In conclusion, and also Greece, Italy and Ireland — the therefore, Article 2(2)(d) of Directive public operator in question can act only for 73/239, as amended by the directive at the account of the State, any activity for its issue, must be interpreted as excluding own account being excluded. In those cases public sector export credit insurance from therefore the exclusion of the operations laid the common prudential rules laid down for down by the directive is entirely equivalent the private sector. Moreover, the to the exclusion of the operators since those Commission, in paragraph 10 of its defence operators may execute operations only for states that 'it was .

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same prudential requirements'. The Competition between the private sector and European Parliament also expressed itself in the public sector in the field of export credit exactly the same terms in the resolution of insurance 17 October 1980 referred to above.

14. In a report annexed to the application, 13. That is the actual scope of the rules at the applicants claim that it is only in issue in relation to which it must be long-term export credit insurance that there determined whether or not there is unlawful is no competition between the private sector discrimination. and the public sector. On the other hand, there is vigorous competition for the insurance of short to medium-term commercial risks relating to intra- Community exports (or to OECD countries). However, there is very little For reasons of clarity it is appropriate to competition for the insurance of political describe in outline the analysis which risk, at least for exports to developing follows below. countries. Those general conclusions are supported by detailed analyses of the three markets in question (the United Kingdom, France and Belgium) which are not reproduced here so as not to burden my In the first place, it must be determined opinion any further. whether, and to what extent, there is competition between the operators subject to the different rules.

The defendant institutions, for their part, do not in any way dispute the existence of market sectors in which there is competition Once the existence of competition has been between the private and the public sectors. established, it will be necessary to ascertain Indeed the Court asked a specific question whether the different treatment, which is in this regard and in its reply the damaging to private operators (or to the Commission confirmed the truth of the operations executed by them), is justified for applicants' assertions. objective reasons.

— with regard to France, the public It is also established that Directive 87/343 operator, COFACE (a limited company has increased the financial burdens on the the majority of whose capital is held, private sector by introducing the equal­ indirectly, by the State), is in competition ization reserve; the public sector on the with private insurers, including Les other hand continues to be excluded from Assurances du Crédit de Namur, for the common rules (the practical result of short-term commercial risks (in addition, which is that it is not in substance subject to one of the private insurers, the PARIS a real comparable burden). pool, covers political risk with no State guarantee) ;

There exist therefore two sets of rules which are liable to lead to differences in treatment — with regard to Belgium, the public of competing economic operators. It must operator, the OND , is in competition therefore be determined whether or not the with private insurers, including Les differences are objectively justified.

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Justification for the different treatment However, in the areas where there is competition, the position is quite different. In those areas it is highly doubtful whether the States can legitimately provide financial backing for public operators. To do so might be incompatible with the rules on 15. The defendant institutions essentially public aid and on conduct which the State put forward two reasons to justify the must adopt with regard to public under­ exclusion of the public sector from the takings or in any event those subject to its scope of the directive. influence.

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situations which is connected with circum­ by the Council to justify rules which impose stances or conditions whose lawfulness is by on the private sector, but not the public no means certain. sector, the burdens inherent in establishing reserves.

The directive does indeed take account of the fact that the public bodies in question 16. It is perhaps precisely because of that act with the financial backing of the State, incongruous situation that during the but on the other hand it says nothing proceedings the defendants have regarding the fact that the competing increasingly dwelled on the second reason private operators do not receive similar for deciding to exclude the public sector backing. The directive therefore passes from the scope of the directive. without comment over the fact that the financial intervention of the State is itself discriminatory and distorts competition in so far as it is only for public bodies; that is discrimination which should in turn be In brief, they contended that having regard justified but for which no objective explana­ to the special characteristics of the bodies tion is given although it would appear to be operating for the account of or with the contrary to the principle of equal treatment support of the State, it proved to be between private undertakings and public impossible to adopt uniform rules in undertakings set out in Article 90 of the Directive 87/343. Treaty.

What the Court was not told was why those characteristics justified the outright exclusion of the public sector from the directive Having regard to those circumstances, it is not possible in my view to hold that reasons derived from the structure or the status of the bodies in the public sector allowed those bodies to be excluded from the directive. Furthermore, even if it is accepted that the It is true, of course, that different situations adoption of uniform rules comes up against exist in the Member States. However, it is technical difficulties, those difficulties, precisely such diversity which a harmonizing which are after all not insurmountable, directive serves to eliminate and it cannot could not in any event justify keeping therefore in itself be regarded as an discretionary rules in force indefinitely. insuperable obstacle. The Council, when it decided to restrict harmonization to a single category of operators, ought therefore to have justified that limitation — which as I have said distorts competition — by adducing additional, specific difficulties other than those which normally exist when With regard to the argument that the differing national rules are harmonized. It is choices made by public bodies take account unacceptable for the Council to seek to of foreign policy considerations, it is justify failure to adopt uniform rules by sufficient to point out that those consider­ merely asserting that it would have involved ations play a part in the market sectors in tackling dissimilar sets of rules; the Council which private insurers do not operate ought to have specified why such inter­ (long-term risk and political risk) and in vention was not possible in practice. where, therefore, there is no competition. However, that does not mean that in other sectors, where there is competition and where political considerations play little or no part, it is not possible or necessary to adopt uniform rules. In addition, it should be pointed out that at a time when the matter was not in issue the Commission itself had claimed not only that uniform rules were necessary in order to ensure competitive neutrality and trans­ parency, but also that it was practicable to In conclusion, Directive 87/343 is, in my extend the harmonized scheme to the public view, discriminatory since it excludes indef­ sector (see memorandum cited above). initely public sector export credit insurance Moreover, as I have mentioned more than from the scope of the common prudential once, the European Parliament and the rules. Moreover, since such discrimination Economic and Social Committee had results in a disadvantage for the private

The applicants also claim that the guarantee accorded by the State to public sector insurers constitutes an aid within the Other grounds of unlawfulness of the directive meaning of Article 92. I have already at issue observed that it is highly unlikely that the State guarantee is compatible with the Community rules on aids. However, that leads to the conclusion that the alleged discrimination is not objectively justified but does not in itself vitiate the directive. The 17. In view of the conclusion reached with compatibility of the aid itself with regard to the infringement of the principle Community rules will in any event have to of equal treatment, only a few very brief be verified in accordance with the procedure observations need be made regarding the laid down for that purpose. other grounds of unlawfulness alleged by the applicants, particularly since the documents before the Court show plainly that the principal criticism on which this action is based is that the directive is Next, with regard to the complaint of discriminatory, whereas the other criticisms misuse of power in so far as the additional are either barely developed or merge with guarantees introduced by Directive 87/343 the arguments put forward with regard to were due not to genuine requirements for the infringement of the principle of equal the protection of third parties, but exclus­ treatment. ively to political pressure brought to bear by one Member State, it is sufficient to point out that that is merely an allegation without any supporting evidence and that it must therefore be rejected. As regards the infringement of Article 90(1) and Article 52 of the Treaty, the applicants claim that the discrimination against the private sector has negative effects on the establishment of private insurance Finally, with regard to the complaint that companies. Without having to consider the Community institutions acted unlawfully whether there has been an infringement of when they failed to adopt uniform rules for Article 52 in the present case, I would only the two sectors within the four-year period observe that, in any event, a necessary laid down by Directive 73/239, it suffices to pre-condition for that criticism is that the observe that that period is merely indicative directive at issue be discriminatory and that, and is not intended to impose on the therefore, when the Court gives its ruling on institutions any obligation to take action. the claim for compensation, it need only Moreover, that is accepted by the applicants determine whether the alleged discrimina­ themselves who, in their reply, changed

18. As from the judgment in Schöppenstedt (Case 5/71 Zuckerfabrik Schöppenstedt v Council [1971] ECR 975) the Court has held that: 'Where legislative action involving measures of economic policy is concerned, In the present case not only has there been the Community does not incur an infringement of the principle of equal non-contractual liability for damage treatment, but that infringement is suffered by individuals as a consequence of particularly flagrant. By prolonging indef­ that action, by virtue of the provisions initely, by means of Directive 87/343, the contained in Article 215, second paragraph, exclusion of the public sector from the of the Treaty, unless a sufficiently flagrant harmonized rules, the Council completely violation of a superior rule of law for the disregarded the views expressed by the other protection of the individual has occurred' institutions which had unanimously 8 emphasized both the necessity of bringing to (paragraph ll ). an end the situation in which two sets of 8 — See the judgments in Joined Cases 83 and 94/76, 4, 15 and rules apply, because it is discriminatory and 40/77 HNLi Council and Commission [19781 ECR 1209; distorts competition, and the technical poss- Case 238/78 Ireks-Arkady v Council ana Commission [1979) ECR 2955; Joined Cases 241, 242 and 245-250/78 ibility of achieving that objective by simply DGVv Council and Commission [19791 ECR 3017; Joined Cases 261 and 262/78 Interludi Stärke-Chemie v Council extending to the public sector the prudential and Commission [1979] ECR 3045; Joined Cases 116 and rules already laid down with regard to the 124/77 Amylum v Council and Commission [1979] ECR 3497; Joined Cases 197 to 200, 243, 245 and 247/80 private sector; moreover, those opinions Ludwigsba/ener Walzmühle v Council and Commission were quite consistent with the provisions of [1981] ECR 3211; Case 59/83 Biovilac v EEC [1984] ECR 4057; Joined Cases 194 to 206/83 Asteris v the 1973 directive which had envisaged the Commission [1985] ECR 2815; Case 20/88 Roquelia Frères v Commission [1989] ECR 1553 and Case 152/88 dual rules as a purely provisional measure to Sofiimporti Commission[1990] ECR 1-2477. be abolished within four years.

19. As emerges from the report annexed to the application, the applicants expressly seek compensation for the damage arising from Moreover, in the present case the damage the entry into force of Directive 87/343, in arising from the discrimination did not other words the damage caused by the fact affect 'very wide categories of traders' (see that the equalization reserve laid down in the judgment in HNL, at paragraph 7); on Article 1 of the directive must be established the contrary, it affected a limited and well- only by private undertakings and not by defined group of undertakings. public undertakings.

The claim for compensation is based on the I believe that the fact that the private sector fact that the private undertakings, precisely was subject to a scheme of onerous financial because of the competition from public guarantees, whereas its principal competitor operators, find it impossible to transfer to was exempt from that burden, must in any their premiums, and hence to pass on, the

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ASSURANCES DU CREDIT v COUNCIL AND COMMISSION

costs involved in establishing and main­ defendants have not adduced any evidence taining the reserve. It follows that those to challenge the correctness of that undertakings are forced to bear the full reasoning. burden, which consequently reduces the return on capital invested. I consider, therefore, that the applicants have proved the existence of economic damage caused by the entry into force of That reasoning is obviously to a large extent the directive at issue. With regard to the conjectural, although it is based on an amount, the Court should in my view argument — the impossibility of passing on request the parties to come to agreement on the costs — which is entirely plausible in the amount of damages by a certain date, view of the proven competition between the failing which it will be for the Court to two categories of operators; moreover, the decide.