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Grand Chamber

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https://curia.europa.eu/juris/liste.jsf?language=en&num=C-356/05

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https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A62017CJ0122

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In Case C‑122/17,

David Smith

v

Patrick Meade,

Philip Meade,

FBD Insurance plc,

Attorney General,

THE COURT (Grand Chamber),

Advocate General: Y. Bot,

gives the following

This request for a preliminary ruling concerns the issue whether EU law must be interpreted as meaning that, in the context of litigation between private persons, a national court must disapply provisions of national law and a contractual clause based on those provisions which are contrary to Article 1 of Third Council Directive 90/232/EEC of 14 May 1990 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles ( OJ 1990 L 129, p. 33; 'the Third Directive').

Legal context

Article 3(1) of the First Directive provided:

'Each Member State shall ... take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of those measures.'

Article 1(4) of the Second Directive provided:

'Each Member State shall set up or authorise a body with the task of providing compensation, at least up to the limits of the insurance obligation for damage to property or personal injuries caused by an unidentified vehicle or a vehicle for which the insurance obligation provided for in paragraph 1 has not been satisfied. ...'

The first paragraph of Article 1 of the Third Directive provided:

'... the insurance referred to in Article 3(1) of [the First Directive] shall cover liability for personal injuries to all passengers, other than the driver, arising out of the use of a vehicle.'

Under Section 65(1)(a) of the 1961 Act, an 'excepted person', within the meaning of Section 56(1) of that act, was:

'Any person claiming in respect of injury to himself sustained while he was in or on a mechanically propelled vehicle (or a vehicle drawn thereby) to which the relevant document relates, other than a mechanically propelled vehicle, or a drawn vehicle, or vehicles forming a combination of vehicles, of a class specified for the purposes of this paragraph by regulations made by the Minister, provided that such regulations shall not extend compulsory insurance in respect of civil liability to passengers to:

Article 6 of the Road Traffic (Compulsory Insurance) Regulations, 1962, in the version in force at the material time in the main proceedings ('the 1962 Regulations'), provided that:

'The following vehicles are hereby specified for the purpose of [Section 65(1)(a) of the 1961 Act]:

...'

The referring court states that it is, consequently, impossible to interpret those provisions in a way that is compatible with the provisions of the Third Directive, since to interpret them so as to contradict their clear wording would amount to adopting a contra legem interpretation.

The referring court considers, however, that, if the exclusion clause with respect to the passengers in a motor vehicle who are not travelling in a fixed seat were itself removed from the insurance policy at issue in the main proceedings on the ground that it is incompatible with EU law, that policy would automatically revert to being an approved policy, within the meaning of Section 56(1) of the 1961 Act, and the problem of criminal liability on the part of Mr Patrick Meade and Mr Philip Meade would disappear. The referring court is uncertain, in that context, whether it follows from the judgments of28 March 1996, Ruiz Bernáldez ( C‑129/94, EU:C:1996:143), of 30 June 2005, Candolin and Others ( C‑537/03, EU:C:2005:417), and of 19 April 2016, DI ( C‑441/14, EU:C:2016:278), that that clause must itself be removed on the ground of its incompatibility with EU law.

In those circumstances, the Court of Appeal decided to stay the proceedings and to refer to the Court the following question for a preliminary ruling:

'Where:

then, in litigation between private parties and a private insurance company concerning a motor accident involving a serious injury to a passenger in 1999 who was not travelling in a fixed seat, where, by consent of the parties, the national Court joined the private insurance company and the State as defendants, is the national court when disapplying the relevant provisions of national law also obliged to disapply the exclusion clause contained in the motor insurance policy or otherwise preclude an insurer from relying on the exclusion clause which was in force at the time so that the injured victim could then have recovered directly as against the insurance company on foot of that policy? Alternatively, would such a result amount in substance to a form of horizontal direct effect of a directive against a private party in a manner prohibited by EU law?'

It should be noted as a preliminary point that, according to settled case-law, in the procedure laid down by Article 267 TFEU providing for cooperation between national courts and the Court of Justice, it is for the latter to provide the national court with an answer which will be of use to it and enable it to decide the case before it. To that end, the Court should, where necessary, reformulate the questions referred to it. The Court may also find it necessary to consider provisions of EU law which the national court has not referred to in its questions (judgments of 13 October 2016, M. and S., C‑303/15, EU:C:2016:771, paragraph 16 and the case-law cited, and of 31 May 2018, Zheng, C‑190/17, EU:C:2018:357, paragraph 27).

In that regard, it is clear from the order for reference that the question referred for a preliminary ruling rests on the premiss that it follows from the Court's case-law, in particular from the judgment of 19 April 2016, DI ( C‑441/14, EU:C:2016:278), that the referring court must, in the main proceedings, disapply Section 65(1)(a) of the 1961 Act and Article 6 of the 1962 Regulations, on the grounds that, first, the Court held, in the judgment of 19 April 2007, Farrell ( C‑356/05, EU:C:2007:229), that those provisions are contrary to Article 1 of the Third Directive, which fulfils all the conditions required for it to produce direct effect, and, second, that it is impossible to achieve an interpretation of those provisions that is compatible with EU law without resorting to a contra legem interpretation of those provisions.

However, the Court has held that the principle of interpreting national law in conformity with EU law has certain limits. Thus, the obligation on a national court to refer to EU law when interpreting and applying the relevant rules of domestic law is limited by general principles of law and cannot serve as the basis for an interpretation of national law that is contra legem (see, to that effect, judgments of 24 January 2012, Dominguez, C‑282/10, EU:C:2012:33, paragraph 25; of 15 January 2014, Association de médiation sociale, C‑176/12, EU:C:2014:2, paragraph 39; and of 19 April 2016, DI, C‑441/14, EU:C:2016:278, paragraph 32).

In that regard, it is true that the question whether a national provision must be disapplied in so far as it conflicts with EU law arises only if no interpretation of that provision in conformity with EU law proves possible (judgments of 24 January 2012, Dominguez, C‑282/10, EU:C:2012:33, paragraph 23, and of 10 October 2013, Spedition Welter, C‑306/12, EU:C:2013:650, paragraph 28).

The Court has expressly held that a directive cannot be relied on in a dispute between individuals for the purpose of setting aside legislation of a Member State that is contrary to that directive (see, to that effect, judgment of 27 February 2014, OSA, C‑351/12, EU:C:2014:110, paragraph 48).

As regards the judgment of 19 April 2016, DI ( C‑441/14, EU:C:2016:278), to which the referring court makes reference, the Court stated, in paragraphs 35 to 37 of that judgment, that it is the general principle prohibiting discrimination on grounds of age, and not the directive that gave concrete expression to that general principle in the area of employment and occupation, namely Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation ( OJ 2000 L 303, p. 16), which confers on private persons a right which they may rely on as such and which, even in disputes between private persons, requires the national courts to disapply national provisions that do not comply with that principle where they consider that it is impossible to interpret those provisions in a manner that is consistent with EU law.

That conclusion is not called into question by the judgments of 28 March 1996, Ruiz Bernáldez ( C‑129/94, EU:C:1996:143), and of 30 June 2005, Candolin and Others ( C‑537/03, EU:C:2005:417), that are cited by the referring court. In those judgments, the Court gave a ruling on the interpretation of the applicable provisions of EU law but did not have to examine whether a directive could be relied on against an individual.

Nor is the conclusion reached in paragraph 49 of the present judgment called into question by the judgments of 30 April 1996, CIA Security International ( C‑194/94, EU:C:1996:172), and of 26 September 2000, Unilever ( C‑443/98, EU:C:2000:496), to which Ireland refers.

In the cases which gave rise to those judgments, what was at issue was a particular situation, namely the adoption of national technical regulations that did not comply with procedural obligations concerning notification and delayed adoption, set out in Council Directive 83/189/EEC of 28 March 1983 laying down a procedure for the provision of information in the field of technical standards and regulations ( OJ 1983 L 109, p. 8).

On those grounds, the Court (Grand Chamber) hereby rules:

EU law, in particular Article 288 TFEU, must be interpreted as meaning that a national court, hearing a dispute between private persons, which finds that it is unable to interpret the provisions of its national law that are contrary to a provision of a directive that satisfies all the conditions required for it to produce direct effect in a manner that is compatible with that provision, is not obliged, solely on the basis of EU law, to disapply those provisions of national law and a clause to be found, as a consequence of those provisions of national law, in an insurance contract.

In a situation such as that at issue in the main proceedings, a party adversely affected by the incompatibility of national law with EU law or a person subrogated to the rights of that party could however rely on the case-law arising from the judgment of 19 November 1991, Francovich and Others ( C‑6/90 and C‑9/90, EU:C:1991:428), in order to obtain from the Member State, if justified, compensation for any loss sustained.

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In Case C‑122/17, David Smith v Patrick Meade, Philip Meade, FBD Insurance plc, Attorney General, THE COURT (Grand Chamber), Advocate General: Y.