C-222/95

OPINION OF MR ELMER — CASE C-222/95

OPINION OF ADVOCATE GENERAL ELMER delivered on 10 December 1996

1. The French Cour de Cassation has in this seeking payment of FF 1 251 390 corre­ case requested the Court to interpret the sponding to the expenses which Parodi had EEC Treaty rules on the provision of ser­ incurred in connection with the loan. In sup­ vices relating to movements of capital. port of its claim, Parodi argued that, when the loan was granted, Bary et Cie had not been authorized to engage in banking activi­ ties in France, as required by French law.

The facts of the case and the national legis- lation

4. Parodi referred in this connection to French Law No 84-46 of 24 January 1984 'on the activity and supervision of credit institutions' (hereinafter 'the French Law'), which contains the following provisions:

2. In this case, the Banque H . Albert de Bary et Cie (hereinafter 'Bary et Cie'), a Netherlands bank with its registered office in Amsterdam and authorized in the Nether­ lands to engage in banking activities, includ­ 'Article 15 ing the granting of mortgage loans, granted a mortgage loan of DM 930 000 on 29 Novem­ ber 1984 to the French company Société Civile Immobilière Parodi (hereinafter 'Par­ odi').

The Committee may also refuse to grant an authorization if the persons referred to in Article 17 are not of sufficiently good repute Article 17 and lack appropriate experience.

The activities of credit institutions must be directed in practice by at least two persons.

Article 16

Credit institutions having their registered Credit institutions must have paid-up capital office outside France shall appoint at least or funds at least equal to an amount deter­ two persons to whom they shall entrust the mined by the Banking Regulation Commit­ actual determination of the activities of their tee. branch in France.'

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OPINION OF MR ELMER — CASE C-222/95

Article 59 'As regards the period preceding the entry into force of Council Directive 89/646/EEC of 15 December 1989 on the coordination of laws, regulations and administrative provi­ sions relating to the taking up and pursuit of the business of credit institutions and 1 amending Directive 77/780/EEC [hereinaf­ Within the framework of the provisions set ter "the second banking coordination direc­ out below, restrictions on freedom to pro­ tive"], are Articles 59 and 61(2) of the EEC vide services within the Community shall be Treaty to be interpreted as precluding ... abolished ... in respect of nationals of national legislation requiring authorization Member States who are established in a State in order to supply banking services, in par­ of the Community other than that of the ticular in order to grant a mortgage loan, person for whom the services are intended. where the bank concerned is established in another Member State where it has been authorized?'

1 — OJ 1989 L 386, p. 1.

I - 3904

PARODI v BANQUE H. ALBERT DE BARY

Article 61 Article 69

The Council shall, on a proposal from the Commission, ... issue the necessary directives for the progressive implementation of the provisions of Article 67 ...' 2. The liberalization of banking and insur­ ance services connected with movements of capital shall be effected in step with the pro­ gressive liberalization of movement of capi­ tal. 8. At the material time, the directive in force was the First Council Directive of 11 May 1960 for the implementation of Article 67 of the Treaty, 2 as amended by the Second Council Directive of 18 December 1962 add­ ing to and amending the First Directive for the implementation of Article 67 of the 3 Treaty (hereinafter 'the first capital direc­ 4 tive'). That directive was adopted pursuant CHAPTER 4 to, inter alia, Articles 67 and 69 of the Treaty and contains the following provisions mate­ rial to the present case:

2. Where such free movement of capital 9. Bary et Cie takes the view that the French might form an obstacle to the achievement of Law discriminates against credit institutions the economic policy objectives of a Member established in Member States other than State, the latter may maintain or reintroduce France vis-à-vis credit institutions that are the exchange restrictions on capital move­ established in France. The answer to the ments which were operative on the date of question submitted should therefore be that entry into force of this Directive. It shall the provisions in Articles 59 and 61(2) fall to consult the Commission on the matter. be construed as precluding national legisla­ tion such as the French Law.

11. The French Government submits that is not possible to achieve the same result by the rules on freedom to provide services less restrictive means. The Commission also must be construed as meaning that, in the pointed out during the hearing that, accord­ period material to the case, there was noth­ ing to its archives, the French Republic had ing to preclude national legislation such as to some extent used the derogating provision the French legislation, since it is necessary to in Article 3(2) of the first capital directive, in protect the borrower even when a mortgage conjunction with List C of Annex I thereto, loan is granted, and since that protection under which Member States are entitled to could not be regarded as assured by the State maintain restrictions on certain capital move­ of origin at the time in question. The French ments, including mortgage loans, and that Government also explained during the hear­ capital movements in connection with mort­ ing that the establishment of a subsidiary in gage loans had therefore not been completely France was not a precondition for a credit liberalized in France. institution established in another Member State being able to obtain authorization to engage in credit activities in France. At the time in question, France had exercised the right under Article 3(2) of the first capital directive, in conjunction with List C of Annex I thereto, to maintain restrictions in regard to, inter alia, mortgage loans, and the rules on services could therefore not be applied to the extent to which such restric­ tions existed (see Article 61(2) of the Treaty). Discussion

14. The Treaty provisions on services are medium-and long-term loans and credits not thus applicable to banking services con­ related to commercial transactions or to pro­ nected with a movement of capital only in so vision of services' is mentioned in Annex I, far as the form of movement of capital in List C, and is thus covered by Article 3. question has been liberalized (see the Court's Under Annex II, VIII. A, this category cov­ judgment in Case C-484/93 Svensson and ers inter alia medium-and long-term (i. e. for Gustavsson v Ministre du Logement et de more than one year) loans and credits l'Urbanisme 6 ('the Svensson case'), para­ granted by financial institutions. It may graph 11). That case concerned the compat­ therefore be assumed that the grant by banks ibility with Community law of national leg­ of medium-and long-term loans, including islation restricting the grant of State interest- mortgage loans, is covered by the liberaliza­ rate subsidies on building and house- tion of those capital movements resulting purchase loans to cases in which the loan had from Article 3(1) of the directive. Article 59 been taken out with a credit institution established in the Member State in question. of the Treaty on freedom to provide services The Court first considered whether the capi­ thus applies to the grant of such loans (see tal movements of the type in question — a Article 61(2)). mortgage loan — had been liberalized. Since this was the case at the relevant time, the Court applied the Treaty rules on services (Article 59) and on capital (Article 67) to the rules governing interest-rate subsidies for mortgage loans.

17. At the period material to this case, there had not yet been an approximation of Mem­ ber States' legislation regarding the services 19. The requirement of authorization to in question such as would have made it pos­ operate as a credit institution, as set out in sible to assess the situation under such har­ the French law, is in my view likely to monized rules rather than under the general hinder or impede loans by credit institutions Treaty rules in Articles 59 and 67 on the free lawfully established in other Member States movement of services connected with capital to borrowers in France. A national rule such movements. Such harmonization was as the French rule must therefore, in my achieved only with the implementation of view, be regarded as involving a restriction the second banking coordination directive at on the freedom to provide services con­ 8 a date considerably later than that relevant to nected with capital movements. the present case.

20. This does not, however, mean that a rule 7 such as the French rule is at variance with 18. In a judgment of 25 July 1991, the the Treaty. The Court has consistently held 9

Court ruled as follows regarding the details that: of the substance of the Article 59 prohibition of restrictions on the freedom to provide ser­ vices:

'... regard being had to the particular nature of certain services, specific requirements imposed on the provider of the services can­ '... Article 59 of the Treaty requires not only not be considered incompatible with the the elimination of all discrimination against a Treaty where they have as their purpose the person providing services on the ground of application of rules governing such activities. his nationality but also the abolition of any However, the freedom to provide services is restriction, even if it applies without distinc­ tion to national providers of services and to

one of the fundamental principles of the sector (the 'co-insurance cases'), ruling Treaty and may be restricted only by provi­ that: sions which are justified by the general good and which are imposed on all persons or undertakings operating in the said State in so far as that interest is not safeguarded by the provisions to which the provider of the ser­ '... regard being had to the particular nature vice is subject in the Member State of his of certain services, specific requirements establishment. imposed on the provider of the services can­ not be considered to be incompatible with the Treaty where they have as their purpose the application of rules governing such activities. However, the freedom to provide services, as one of the fundamental principles of the Treaty, may be restricted only by pro­ visions which are justified by the general good and which are applied to all persons or undertakings operating within the territory Such a measure [requirement of licences/ of the State in which the service is provided authorization] would be excessive in relation in so far as that interest is not safeguarded by to the aim pursued, however, if the require­ the provisions to which the provider of a ser­ ments to which the issue of a licence is sub­ vice is subject in the Member State of his ject coincided with the proofs and guarantees establishment. In addition, such require­ required in the State of establishment. In ments must be objectively justified by the order to maintain the principle of freedom to need to ensure that professional rules of con­ provide services the first requirement is that duct are complied with and that the interests in considering applications for licences and which such rules are designed to safeguard in granting them the Member State in which are protected.' the service is to be provided may not make any distinction based on the nationality of the provider of the services or the place of his establishment; the second requirement is that it must take into account the evidence and guarantees already furnished by the pro­ 22. The interest in ensuring consumer pro­ vider of the services for the pursuit of his tection, to which the French Government activities in the Member State of his estab­ refers, must undoubtedly be treated as lishment.' 10 important and can, according to the Court's settled case-law, justify restrictions on free­ 12 dom to provide services. Consumers may in general be defined as natural persons who, in a transaction, are acting for purposes

which can be regarded as outside their trade 24. The Court also has before it only scant or profession. However, the right of Mem­ information concerning the specific objective ber States to restrict the freedom to provide pursued by the French legislation's require­ services connected with capital movements ment of authorization, including the practice with a view to protecting the weaker party followed by the authorities in question in to a contract cannot be limited to persons relation to banks in other Member States. I covered by this narrow definition but must would, however, point out that the French also be capable of protecting other persons rules on authorization to carry on a banking who, as borrowers, may be subject to unfair activity do not at first sight appear to contain contractual conditions. rules specifically designed to protect con­ sumers and borrowers, but appear rather to be directed at various aspects of prudential considerations which seek to ensure that banks remain solvent in regard to their depositors. It would appear that these aspects were also taken into account by the competent authorities in the Netherlands when they granted authorization to Bary et Cie to operate as a bank in that country.

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OPINION OF MR ELMER — CASE C-222/95

the answer should be as proposed by the does not in any way set aside the Treaty pro­ Commission and the United Kingdom. visions on the free movement of banking ser­ vices relating to capital movements (see, in this connection, Case 267/86 Van Eycke v 14 ASPA).

26. The French Government pointed out during the hearing that the French Republic had, at the period in question, made use of the derogating provision in Article 3(2) of Any reliance placed on the French Govern­ the first capital directive and maintained ment's information regarding the quantita­ exchange restrictions so far as foreign cur­ tive limits of foreign currency restrictions rency loans with an equivalent value greater will have no bearing on the resolution of this than FF 50 million were concerned. The specific case, in which the amounts bor­ Commission has confirmed that its archives rowed were much less. However, I take the also suggest that France had exercised the view that the Court should leave it to the possibility of maintaining exchange restric­ national court to consider to what extent the tions. French Republic had lawfully maintained exchange restrictions pursuant to Article 3(2) of the first capital directive. The Court has not had an opportunity to examine the rel­ To the extent to which France lawfully main­ evant provisions and documents, which have tained certain restrictions on movements of not been submitted to the Court, and this foreign currency, it follows from the above point does in fact involve a question of the interpretation of Article 61(2) of the Treaty interpretation of national law and the spe­ that the French requirement of authorization cific application thereof.

1960 for the implementation of Article 67 of the Treaty, as amended by the Second Council Directive of 18 December 1962 adding to and amending the First Direc­ tive for the implementation of Article 67 of the Treaty, must be construed as mean­ ing that, prior to the entry into force of Council Directive 89/646/EEC of 15 December 1989 on the coordination of laws, regulations and administrative pro­ visions relating to the taking up and pursuit of the business of credit institutions and amending Directive 77/780/EEC, Articles 59 and 67 on freedom to provide services connected with capital movements applied to the granting by financial institutions of medium-and long-term loans and credits in so far as the Member State in question had not laid down exchange restrictions on such loans and credits under Article 3(2) of the first Council directive.

The provisions in Articles 59 and 67 of the EEC Treaty must be construed as pre­ cluding national legislation in a Member State under which a bank established in another Member State and there authorized to engage in banking activities is allowed to grant such loans and credits to borrowers in the Member State only if it has obtained prior authorization to operate as a credit institution in the Member State, unless that requirement of authorization

— is imposed on every person or company pursuing such an activity within the territory of the Member State of destination;

— is justified on grounds of general interests which are not taken into account under the provisions to which the person providing the service is subject in the Member State of establishment; and