C-386/00

2. The Third Life Assurance Directive seeks 3 — Recital 1 in the preamble. Progress had already been made in this direction by the First and Second Life Assurance to complete the internal market in direct Directives (First Council Directive 79/267/EEC of 5 March life assurance to make it easier for assur- 1979 on the coordination of laws, regulations and adminis- trative provisions relating to the taking up and pursuit of the ance undertakings with head offices in the business of direct life assurance, OJ 1979 L 63, p. 1, and Council Directive 90/619/EEC of 8 November 1990 on the coordination of laws, regulations and administrative provi- sions relating to direct life assurance, laying down provi- sions to facilitate the effective exercise of freedom to 1 — Original language: English. provide services and amending Directive 79/267/EEC, 2 — Council Directive 92/96/EEC of 10 November 1992 on the OJ 1990 L 330, p. 50). coordination of laws, regulations and administrative provi- 4 — Defined in Article 1(d) of the Directive as the Member State sions relating to direct life assurance and amending Direc- in which the head office of the assurance undertaking tives 79/267/EEC and 90/619/EEC, OJ 1992 L 360, p. 1. covering the commitment is situated.

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19. Whereas the harmonisation of assur- State and be objectively necessary and ance contract law is not a prior con- in proportion to the objective pursued; dition for the achievement of the inter- nal market in assurance; whereas, therefore, the opportunity afforded to the Member States of imposing the application of their law to assurance contracts covering commitments within their territories is likely to provide adequate safeguards for policy- holders;

' 1 . Before the assurance contract is con- 5 — Defined in Article 2(e) of the Second Life Assurance Directive, cited in note 3, as the Member State where the cluded, at least the information listed in policy-holder has his habitual residence or, if the policy- point A of Annex I Ishall be communicated holder is a legal person, the Member State where the farter's establishment to which the contract relates is situated. to the policy-holder.

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AXA ROYALE BELGE

2. The policy-holder shall be kept informed 6. Point A of Annex II lists detailed infor- throughout the term of the contract of any mation about the assurance undertaking change concerning the information listed in and about the commitment, including: point B of Annex II.

'(a)4. Definition of each benefit and each option. 3 The Member State of the commitment may require assurance undertakings to furnish information in addition to that listed in Annex II only if it is necessary for a proper understanding by the policy- (a)5. Term of the contract. holder of the essential elements of the commitment.

(a)6. Means of terminating the contract.

8. It may be helpful to explain at this point 10. The referring court states in the order the various means of terminating a life for reference that the Royal Decree of assurance policy (or contract, in the ter- 17 December 1992 on life assurance was minology of the Directive) at issue in the adopted in implementation of the Third present case. A policy-holder who wishes to Life Assurance Directive. The Commission pay no further premiums on an existing life has stated in its written observations, assurance policy has a number of options. however, that according to information Where the policy has no surrender value he provided to it by the Belgian authorities may simply cancel it by stopping paying the Directive was implemented by three premiums. Where however the policy has a royal decrees adopted in 1994. 6In par- surrender value, he may surrender it and ticular, Article 31 of and Annex II to the the assurance undertaking will pay him that Directive were transposed verbatim by two amount. Alternatively a policy-holder may of those later decrees. 7 wish to stop paying premiums or reduce their amount but keep the policy on foot, in which case the sum insured will be reduced to take account of the fact that less has been or will be paid by way of premium than originally anticipated; that is known as reduction. The proceedings

11. The order for reference simply states that in the main proceedings Axa Royale

The national legislation at issue 6 — Royal Decree of 12 August 1994 amending the Law of 9 July 1975 on the supervision of insurance undertakings, Royal Decree of 12 August 1994 amending the Royal Decree of 22 February 1991 regulating the supervision of insurance undertakings and Royal Decree of 22 November 1994 amending the Royal Decree of 22 February 1991 regulating the supervision of insurance undertakings. 9. The national legislation at issue is 7 — In Article 20(2) of the Law of 9 July 1975 as amended and Article 15 of the Royal Decree of 22 February 1991 as Article 4(2)(b) of the Royal Decree of amended.

— a consumer who has been informed of the generally detrimental nature of cancellation, reduction or surrender of an existing life-assurance policy is not encouraged to compare the various assurance products available in the 13. AXA has observed that the Cour d'Ap- Community so that he can choose from pel is mistaken in stating that Article 4(2)(b) among them that which best suits his needs but is encouraged rather to maintain his existing policy, whereas 8 — Articles 93 and 94 of the Law of 14 July 1991 on commercial practices and the protection of and provision it follows precisely from the recitals in of information to consumers. the preamble to the Directive that its

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purpose is to offer the policy-holder preamble to the Directive point out, access to the widest possible range of provisions in the general good must be assurance products available in the objectively necessary and in proportion Community so that he can choose that to the objective pursued. which best suits his needs, in particular by ensuring that the policy-holder receives clear and accurate information on the essential characteristics of the products proposed to him;

15. The Cour d'Appel accordingly referred the question set out in paragraph 1 above.

— the obligation to inform policy-holders of the generally detrimental nature of cancellation, reduction or surrender of 16. Written observations have been sub- an existing life assurance policy for the mitted by both parties to the main proceed- purpose of taking out a new policy is ings, the Austrian, Belgian, Greek and liable to confer a competitive advan- Spanish Governments and the Commission. tage on assurers operating within the The parties and the Commission were national territory when the Royal represented at the hearing. Decree entered into force, whereas it is clear from the recitals in the pre- amble to the Directive that it is for the Member State of the commitment to ensure that there is nothing to prevent the marketing within its territory of all the assurance products offered for sale in the Community; and Compatibility of Article 4(2)(b) of the Royal Decree with the Directive

18. The Commission submits t h a t Article 4(2)(b) of the Royal Decree is in very general and abstract terms. While the 20. The Austrian, Belgian, Greek and requirements of the Directive apply to all Spanish Governments all refer to recital possible circumstances in which a life 20 of the Directive in support of the assurance policy may be cancelled, reduced argument that Article 4(2)(b) of the Royal or surrendered, Article 4(2)(b) applies only Decree, being for the general good, non- where a policy-holder so acts with a view to discriminatory, objectively necessary and taking out a new policy. The Commission proportionate, is compatible 9 with the doubts whether such a warning is sufficient Directive. The Austrian Government sub- to protect policy-holders, who benefit from mits that the aim of Article 4(2)(b) is the much greater protection afforded by the consumer protection and it thus reflects Directive. Although Member States may one of the objectives of the Directive, improve consumer information in accord- namely to enable the consumer to weigh ance with Article 31 of the Directive, that up the advantages and disadvantages of information must not confer an advantage taking out a new policy and thus to choose on existing assurers or policies. However, the contract best suited to his needs; 10 the the information required pursuant to Court of Justice has accepted that con- Article 4(2)(b) is not additional infor- sumer protection legislation may be an mation within the meaning of Article 31, imperative requirement in the general inter- since if the policy-holder already has the est justifying restrictions on fundamental specific information required by the Direc- freedoms. 11 The Belgian Government sub- tive (and the Belgian implementing legis- mits that the provision is objectively necess- lation), the simple warning required by ary to ensure consumer protection in the Article 4(2)(b) does not appear to supple- sector, where the terminology is technical ment that information in such a way as to and the consumer is the weaker party; facilitate the proper understanding by the policy-holder of the essential elements of the contract within the meaning of 9 — In part, in the case of the Spanish Government. 10 — See recital 23. Article 31. 11 — Case 205/84 Commission v Germany [1986] ECR 3755.

22. The present case however in my view concerns the scope of Article 31 of the Directive rather than Article 28, since it concerns the specific type of restriction regulated by Article 31. It is common ground that Article 4(2)(b) of the Royal Decree requires that, before an assurance 21. Clearly a provision of national law contract is concluded, the prospective pol- intended to protect consumers may be for icy-holder should be given prescribed infor- the general good 12 and hence a national mation over and above the information restriction on marketing life assurance required by Article 31(1) of the Directive. products may be compatible with the Article 31(1) is manifestly a minimum Directive provided that it is also non-dis- standards provision: Article 31(3) permits criminatory and proportionate. That is the Member State of the commitment to expressly provided by Article 28 of the require assurance undertakings to furnish Directive, which states that the Member information beyond that prescribed by State of the commitment may not prevent a Article 31(1). However, such further infor- policy-holder from concluding a contract mation may be prescribed under that with an assurance undertaking authorised provision 'only if it is necessary for a in accordance with the First Life Assurance proper understanding by the policy-holder Directive 'as long as that does not conflict of the essential elements of the commit- with legal provisions protecting the general ment'. The starting point for an evaluation of the lawfulness of Article 4(2)(b) of the Royal Decree is thus to my mind 12 — Commission v Germany, cited in note 11, paragraphs 30 to 33 of the judgment. Article 31(3) of the Directive.

25. That interpretation is borne out by the statement in recital 23 in the preamble to the Directive, which states that 'the mini- mum provisions must therefore be coor- 27. Admittedly a warning such as that dinated in order for the consumer to receive required by Article 4(2)(b) of the Royal clear and accurate information on the Decree may appear to be in the interests of essential characteristics of the products consumer protection. However, even if proposed to him'. 13 such a generalised warning is correctly regarded as genuinely protecting con- sumers, it concerns only one aspect of the consumer's interest. Without information on alternative possibilities, enabling the consumer to assess the advantages and disadvantages of the various options open 26. It is also corroborated by the expla- nation of the first published version of 14 — Proposal for a Third Council Directive on the coordination of laws, regulations and administrative provisions relating to direct life assurance and amending Directives 79/267/EEC and 90/619/EEC, COM(91) 57 of 22 March 13 — Emphasis added. 1991, OJ 1991 C 99, p. 2.

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to him, any consumer protection in fact correct balance between consumer protec- provided by Article 4(2)(b) is manifestly tion on the one hand and opening up the incomplete. It is clear that, by regulating market in life assurance products on the the information to be provided to policy- other but also does so in terms which holders, the Directive not only strikes what exclude a requirement such as that imposed the Community legislature regarded as the by Article 4(2)(b) of the Royal Decree.