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2. The national legislation governing mutual benefit societies is primarily con- tained in the Code de la Mutualité, in the version enacted by Law No 85-773 of The question centres on the effects of the 25 July 1985 4 ('Mutuality Code'). so-called 'principle of exclusivity', estab- lished by the First Directive, under which insurance undertakings are required to limit their business activities to the business of insurance and operations directly arising therefrom, to the exclusion of all other commercial business (Article 8(1)(b)). 3. Article L.111-1 of the Mutuality Code defines a mutual benefit society as a non- profit-making association which, mainly by * Original language: Spanish. virtue of the subscriptions paid by its 1 — First Council Directive 73/239/EEC of 24 July 1973 on the members, provides, in the interests of the coordination of laws, regulations and administrative provi- latter or their families, a service of welfare sions relating to the taking-up and pursuit of the business of direct insurance other than life assurance (OJ 1973 L 228, provision, support and mutual assistance, p. 3). 2 — Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provi- sions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC 3 — Case C-241/97 [1999] ECR I-1879. (third non-life insurance Directive) (OJ 1992 L 228, p. 1). 4 — journal officiel de la République Française, p. 8483.

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for the purposes of which it pursues, inter regimes. To this end, the Government can alia, the following objectives: lay down, by decree, after consulting the Council of State ('décret en Conseil d'État'), model rules containing compul- sory provisions (Article L.411-6).

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mutual benefit society is entitled to vote Community legislation (Article L.125-1).

11. There have been three stages in the evolution of Community legislation on insurance:

9. Model mutual benefit society statutes, incorporating the provisions whose inclu- sion is required by law, are set out in the annexes to Decree No 86-1359 of 30 December 1986. 5 These provisions — a first generation of directives (Direc- include the power of each association or tive 79/267/EEC on life assurance 7 and federation to allocate votes at the general Directive 73/239, cited above, on insur- assembly among the participating mutual ance other than life assurance) aimed at benefit societies, either in proportion to the facilitating actual exercise of the right number of members of each society, or in of establishment by insurance under- proportion to their respective contribu- takings; tions, or, alternatively, according to a combination of the two criteria (Arti- cle 26).

Member State where the insurance of adequate technical provisions and the undertaking has its head office. covering of those provisions by matching assets. The result of this was that the need for coordination of the relevant national rules became imperative within a system of mutual recognition of authorisations and 12. The Community legislation has, there- prudential control systems. fore, on the one hand, sought to enable insurance undertakings to carry on their business activities freely and, on the other, to provide citizens with free access to the widest possible range of insurance products available in the Community and to guar- antee them the necessary legal and financial protection. 15. For this same reason, Community law prohibits insurance undertakings from extending their business activities to other classes of commercial business. In this regard, the wording of Article 8(1)(b) is 13. The legislation's first objective required identical in both Directive 73/239 and that insurance undertakings holding an Directive 79/267 and provides that the authorisation in one of the Member States home Member State is to require an should be able to carry on business insurance undertaking to 'limit its business throughout the Community, from the point activities to the activities referred to in this of view both of the right of establishment Directive and operations directly arising and of the freedom to provide services. therefrom, to the exclusion of all other With this aim in mind, the third generation commercial business.' of directives opted in favour of... bringing about such harmonisation as is essential, necessary and sufficient to achieve the mutual recognition of authorisations and prudential control systems, thereby making it possible to grant a single authorisation valid throughout the Community and apply the principle of supervision by the home 16. Furthermore, Article 8(1)(a) of Direc- Member State.' 9 tive 73/239 provided that, in the case of the French Republic, insurance undertakings should adopt one of the following forms: 'société anonyme', 'société à forme mutuelle', 'mutuelle', 'union de mutuelles'. 14. That principle implies that each Mem- Following the amendment effected by ber State must monitor the financial health Directive 92/49, that same article provides of the insurance undertakings under its that the legal forms are to be: 'société supervision, having particular regard to anonyme', 'société d'assurance mutuelle', their state of solvency, the establishment 'institution de prévoyance régie par le code de la sécurité sociale', 'institution de pré- voyance régie par le code rural', 'mutuelles 9 — Fifth recital in the preamble to Directives 92/49 and 92/96. régies par le code de la mutualité'.

18. To that end, the articles dealing with technical provisions in the first generation of directives (Article 15 of Directive 73/239 and Article 17 of Directive 79/267) were 21. In its current version, Article 18(1) of reformulated. Pursuant to those rules, the Directive 73/239 provides: 'Member States home Member State is to require all shall not prescribe any rules as to the choice insurance undertakings to establish ade- of the assets in excess of those representing quate technical provisions in respect of the technical reserves referred to in Arti- their entire business. The amount of these cle 15.' provisions is determined according to the rules set out in Directive 91/674/EEC 11 and Directive 92/96. Technical provisions in respect of an undertaking's entire busi- ness must be covered by matching assets. 22. Finally, pursuant to Article 57(1), first indent, of Directive 92/49, Member States were to adopt the laws, regulations and administrative provisions necessary to com- ply with the directive by no later than 31 December 1993 and to bring them into force by no later than 1 July 1994. 19. The directives regulate the rules relat- ing to the spread, localisation and matching of such assets. Specifically, only certain

10 — Thirteenth recital in the preamble to Directive 92/49 and fifteenth recital in the preamble to Directive 92/96. 23. Because France had failed to transpose 11 — Council Directive 91/674/EEC of 19 December 1991 on the aforementioned rules covering the annual accounts and consolidated accounts of insur- ance undertakings (OJ 1991 L 374, p. 7). 'mutuelles régies par le code de la mutua-

25. The observations submitted by the 28. The national court acknowledges that Association Basco-Béarnaise des Opticiens it cannot find anything in the documents Indépendants ('ABBOI'), a local body before it which would enable it to state representing the interests of optical profes­ with certainty either that an association of sionals and an applicant in the main mutual benefit societies, which does not proceedings, make clear that Adour is a carry on any business of insurance, falls mutual benefit society which offers its within the scope of the Directive, or that members supplementary medical insurance the provisions of the Directive should be and the services of an eye centre, while UPA interpreted as precluding the administrative is an association of mutual benefit societies authority from granting its approval of the which operates various mutual benefit statutes of a mutual benefit body carrying services but does not carry on any insur­ on a commercial business under the rele­ ance business whatsoever. vant national laws.

26. ABBOI contested both decisions of the Préfet before the Tribunal Administratif, 29. That being so, the Tribunal Adminis­ tratif stayed proceedings and, pursuant 12 — Case C-239/98 [1999] ECR I-8935. to Article 177 of the EC Treaty (now

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Article 234 EC), sought a preliminary rul- opinion that the questions referred by the ing from the Court on the following Tribunal Administratif, Pau, do not fulfil questions: the minimum requirements for admissibil- ity.

13 — Case C-238/94 Garcia and Others [1996] ECR I-1673, paragraph 10. 30. The Netherlands Government, which 14 — See, inter alia, the judgment of the Court in Joined Cases C-28/98 and C-29/98 Charreire and Hirtsmann [1999] has submitted observations, is of the ECR I-1963.

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their right to submit observations pursuant statement 'mutual benefit societies whose to Article 20 of the EC Statute of the Court sole business is that of insurance', used by of Justice. the national court in its questions, are that the purpose of the mutual benefit societies at issue is the creation of 'insurance under- takings', within the meaning of Article 1 of Directive 92/49, and that those societies do not carry on activities covered by a com- pulsory social security scheme. Therefore, a request from a national court which does not contain the aforementioned required information as to the legal and factual background to the cases, or the reasons why it has been judged necessary to put questions to this Court, must be ruled inadmissible. 33. It is my view, therefore, that the request for a preliminary ruling from the Tribunal Administratif, Pau, should be admitted in the above terms.

32. In my view, although the order for reference, which is not a model of clarity, contains only the briefest description of the factual and legal background to the dis- pute, it is at least possible to extract from the tenor of the questions all the informa- tion needed to provide the national court with a helpful interpretation of Community law and for the parties to the action, the Substance Member States and the Commission to be able to exercise effectively their right to submit observations.

The first question referred for a preliminary mutual benefit societies to create an entity, ruling such as an eye centre, the French legislation is in contravention of the principle of specialisation contained in Article 8(l)(b) of the Directive, even where that entity has 35. By its first question, the national court legal personality of its own. This is because, is seeking to ascertain whether Community in so far as Article L. 123-2, second indent, law, and in particular Article 8(1)(b) of of the Mutuality Code provides that the Directive 73/239, as amended, precludes decisions duly adopted by the association's provisions of national legislation, such as general assembly are binding on the parti- Articles L.123-1 and L.123-3 of the French cipating mutual benefit societies (see Mutuality Code, which allow insurance point 7 above), those entities may find undertakings to create between them enti- themselves called upon to cover the asso- ties which have legal personality and ciation's losses by a sum possibly in excess engage in commercial business. of their initial financial contributions and of their own resources. In this way, the financial difficulties of an eye centre man- aged by an association of mutual benefit societies, or simply the need to finance its investments, could ultimately affect the The fact that the insurance undertakings in solvency of the participating mutual benefit question are constituted as mutual benefit societies. The bankruptcy and dissolution societies, together with the fact that the of the eye centre might lead to a similar purpose of the entity they create is to situation. operate an eye centre, although perhaps relevant in other respects, does not appear to be of any consequence as regards the answer which the Court is called upon to give. For the purposes of the present case, the Directive contains no specific provi- ABBOI concludes from the foregoing con- sions applicable according to the legal form siderations that the French legislation, as it of the undertaking, nor does it accord a now stands, does not ensure complete legal, different treatment, according to their nat- accounting and financial separation ure, to the commercial operations, other between the participating mutual benefit than insurance operations, carried out by societies and the association, and so is the insurance undertakings. 15 contrary to Article 8(1)(b) of the Directive.

I acknowledge at once that the solution resulting from this approach does not 38. The Netherlands Government, in a simply prohibit or permit the creation by direct extension of its argument on admis- insurance undertakings of entities such as sibility, contends, on the substance of the the eye centres in this case. However, it case, that Directive 73/239 does not apply does make the creation of such entities to a national social security scheme. subject to the single condition that it must not affect any of the undertakings' resources apart from their free assets. To my mind, no other principles can be derived from the Community law currently in force. It will be for the national court to 39. The French Government, for its part, assess whether it is possible to give effect by contends that Article 8(1)(b) of Directive judicial action to this requirement in a 73/239 lacks direct effect by reason of the situation which has not been adapted to the uncertainty as to the definition and scope provisions of the Directive, as amended, of the concept of commercial business taken as a whole, as is the case with the contained in that provision. situation in relation to mutual benefit societies regulated by the French Mutuality Code. In addition to the difficulties posed by the personal nature of mutual benefit societies, it is likely that, in its current form, the regime governing them does not recog- 40. For the Commission, Directive 73/239 nise parameters equivalent to that of 'free does not preclude national legislation assets' or that the latter parameter does not allowing insurance undertakings to partici- accord with that specified in the Commu- pate in setting up an entity with legal nity legislation. 16 personality of its own, whose purpose is to carry on business activities other than insurance, provided that the obligations of 16 — The security rules in Community legislation are more the participating undertakings is limited to stringent than the ones currently governing mutual benefit societies. In this regard, see Jean-Charles, G. and Lafargue, their initial financial contributions and G., Les mutuelles face à l'Europe, Paris, 1994, p. 62.

42. To begin with, therefore, I shall dispose it can be concluded from the order for of the objections raised against this solu- reference that both Adour and UPA are tion. entities covered by the Mutuality Code and constituted in a legal form provided for in Article 8(l)(a) of the Directive (see point 16 above), which invites the assump- tion that they are not responsible for administering the statutory social security 43. In the submission of the Netherlands scheme. 19 Government, the provisions of the Direc- tive do not apply to a legal situation embodied in a social security scheme. Community law does not restrict Member States' powers to organise their social security systems. 17 In those circumstances, it is essential to adhere to the wording of the question, which quite clearly refers to 'mutual benefit societies whose sole business is that of insurance.' It will be sufficient to limit the scope of the answer to the point whether Nevertheless, as I have already explained that condition is satisfied or not, which it is (see point 32 above), there is no reason to for the national court to verify. 20 suppose that Adour and UPA — or, to be precise, the mutual benefit societies making up the latter — are entities responsible for the administration of the compulsory social security scheme. The documents before the 44. According to Adour and UPA, Direc- Court contain no information whatsoever tive 73/239 does not apply to an associa- about the nature of the activities pursued tion of mutual benefit societies which does by the mutual benefit societies participating not itself carry on insurance business.

That kind of business activity falls expressly within the scope of the Directive. 18 Finally, 19 — It is true, however, that Article L.111-2, final indent, of the Mutuality Code provides that, without prejudice to their own rules, mutual benefit societies administering a com- pulsory social security scheme are governed by that code. At the hearing, unfortunately, Adour and UPA's legal 17 —See Article 2(1)(d) of Directive 73/239, Case 238/82 representatives were unable to remove the doubts which Duphar [1984] ECR 523, paragraph 16, and Joined Cases exist as to whether or not their clients do in fact administer C-159/91 and C-160/91 Poucet and Pistre [1993) such schemes. ECR I-637, paragraph 6. 20 — The national court must also check whether any of the 18 — As may be inferred, in particular, from the wording of other grounds for non-application of the Directive, listed Article 54 of Directive 92/49. in Articles 2 and 3, apply.

47. I am therefore of the opinion that the statement of the principle of exclusivity contained in the Directive complies with 46. These objections are groundless. Arti- the conditions of precision and uncondi- cle 8(1 )(b), inserted into Directive 73/239 tionality which are necessary for it to be by Directive 92/49 (see point 15 above), possible to invoke it directly. creates the 'principle of exclusivity', by virtue of which insurance undertakings must limit their business activities to those specified in the Directive and to operations 48. Turning to the case before the Court, it directly arising from them, to the exclusion is evident that the business of an eye centre, of all other commercial business. The consisting, it would appear, 24of the sale to Directive clearly defines its own scope the general public of products such as, inter which, broadly speaking, is confined to alia, sunglasses and contact lenses, does not the taking-up and pursuit of the self- employed activity of direct insurance in 22 — Following the amendments introduced by Council Direc- tive 84/641/EEC of 10 December 1984 amending, parti- cularly as regards tourist assistance, the First Directive 21 — In spite of this, during the hearing, the French Govern- (73/239/EEC) on the coordination of laws, regulations and ment, in response to a question put by the Court, and, in administrative provisions relating to the taking-up and particular, to one put to it by myself, was unable to explain pursuit of the business of direct insurance other than life what exactly the French legislature has done in terms of its assurance (OJ 1984 L 339, p. 21). clarification exercise relating to the other legal forms which insurance undertakings may adopt and which have 23 — Unlike what happens · in relation to the 'principle of been the object of transposition into French law, namely specialisation', for example, which requires separation of those governed by the Code des Assurances (société the business of life assurance from other kinds of insurance anonyme, société d'assurance mutuelle) and those gov- business. erned by the Code de la Sécurité Sociale or the Code Rural 24 — See the notarially authenticated statement attached to (institutions de prévoyance). ABBOI's observations.

25 — Generally, in the field of insurance, European legislation 49. However, it does not follow from this only provides for specific services in the sphere of tourist assistance, regulated by Directive 84/641, cited in foot- conclusion that there is an absolute prohi- note 23, although it is true that nowhere are they bition on insurance undertakings partici- prohibited. 26 — Which, in any event, would only be certain in relation to pating, if only indirectly, in commercial the entity itself and not to the actual business of selling business other than insurance. Not every optical products to the general public, which it would be difficult to carry out without a profit margin. This was the participation affects the objects of the Cour d'Appel de Douai's understanding when, in its judgment of 6 April 1998, it interpreted Article L.111-1 undertaking. of the Mutuality Code (see point 3 above) as requiring that an optical centre operated by a mutual benefit Dodv must restrict its services to the members of the mutual benefit body itself (cited in Mr Rocard's report, Mission mutualité et droit communautaire, 1999, p. 9). 28 — Skandia, cited in point 3 above, paragraph 47 of the 27 — On the concept of an undertaking within the meaning of judgment. Articles 85 and 86 of the Treaty, see, inter alia, the 29 — According to the construction given to the concept of judgments in the following cases: C-41/90 Höfner and 'commercial business other than insurance' on p. 29 of the Elser [1991] ECR I-1979, paragraph 21; Poucet and Rocard report (cited in footnote 26). Pistre, cited in footnote 17, paragraph 17; C-364/92 SAT 30 — This appears to have been the French legislature's under- Fluggesellschaft [1994] ECR I-43, paragraph 18; and standing of the situation when it amended, in the light of C-244/94 Federation Fançaise des Sociétés d'Assurances Directive 92/49, the rules governing 'institutions de [1995] ECR I-4013, paragraph 14. In particular, see the prévoyance', one of the other forms laid down in judgment in Joined Cases C-115/97, C-116/97 and Article 8(1 )(a) of the Directive (see point 16 above), so C-117/97 Brentjens' Handelsonderneming [19991 as to permit them to 'engage in social action for the benefit ECR I-6025, paragraph 71 et seq., where a non-profit- of their members, which, when this entails the exploitation making body responsible for managing a supplementary of collective social achievements, must be conduct by one pension scheme, to which affiliation was compulsory, was or more legal persons distinct from the institution itself' found to constitute an undertaking. (Article L.931-1 of the Code de la Sécurité Sociale).

51. I believe now, as I did then, that the investment of free assets in any other given assets, if it does not distort the objects of the insurance undertaking which thus 54. The reply to be given to the national invests its available funds, is not to be court must therefore be that Article 8(1)(b) regarded as 'business other than insurance', of the Directive does not prohibit an in which that type of company is not insurance undertaking from holding a allowed to engage. It is only where, by capital interest in other entities carrying means of those holdings, the undertaking on commercial business other than insur- seeks to circumvent the limitation imposed ance, provided that their contribution does by its objects through the creation of not exceed the sum of their free assets and intermediary companies through which it that their liability is limited to the amount engages in other types of business, that the of that contribution. national supervisory authorities will be able

32 — Skandia, paragraph 46 of the judgment. 31 — [1999] ECR I-1881. 33 — Ibid-, paragraph 47.

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The second question referred for a preli- 56. The answer to the second question minary ruling follows from the wording of the answer I propose to the first. It is possible for insurance undertakings to engage in com- mercial business other than insurance by 55. In its second question, the Tribunal Administratif, Pau, wishes to know whe- transferring their free assets to a third ther the prohibition on a mutual benefit person, provided that their liability is body engaging in commercial business limited to the amount so transferred. For other than insurance is general and abso- the rest, and as may be inferred from lute or, alternatively, whether it is open to Article 18(1) of the Directive, as amended, Member States to define the conditions Member States do not have the power to under which and the spheres in which a lay down any rules regarding those assets. commercial business may be pursued.

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