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GENDER DIFFERENTIATION IN INSURANCE CONTRACTS AFTER THE JUDGMENT IN CASE C- 236/09, ASSOCIATION BELGE DES CONSOMMATEURS TEST-ACHATS ASBL v. CONSEIL DES MINISTRES

March 2012

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Eveline Goessens

KU Leuven

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Columbia Journal of European Law

Spring, 2012

Case Law

*339 GENDER DIFFERENTIATION IN INSURANCE CONTRACTS AFTER THE JUDGMENT IN CASE C-

236/09, ASSOCIATION BELGE DES CONSOMMATEURS TEST-ACHATS ASBL v. CONSEIL DES MINIS-

TRES

Geert De Baere [FNa1]

Eveline Goessens [FNaa1]

I. INTRODUCTION 339

II. FACTUAL AND LEGAL BACK-

GROUND AND THE QUESTIONS

REFERRED FOR A PRELIMINARY

RULING TO THE ECJ

340

III. FINDINGS OF THE ECJ 342

IV. COMMENTS 344

A. The Prohibition of Sex Discrim-

ination in EU Law 344

B. Gender as a Differentiating

Factor in Insurance Contracts 347

C. The Impact of the Judgment on

Insurance Law 352

1. Impact on life insurance con-

tracts: the Commission guidelines 352

2. Impact on premiums and tariffs

of insurance products 357

D. References for a Preliminary

Ruling on Validity and the Relationship

Between the Court of Justice and the

EU Legislator

359

18 CLMJEURL 339 Page 1

18 Colum. J. Eur. L. 339

V. CONCLUSION 365

I. INTRODUCTION

Is it justified for insurers to use gender as a factor in the calculation of insurance premiums and benefits in rela-

tion to insurance contracts? That is, in essence, the *340 fundamental question the Court of Justice of the European

Union (“ECJ”) [FN1] was faced with in the Test-Achats case, [FN2] the first reference for a preliminary ruling on

Directive 2004/113/EC (“the Directive”), [FN3] which is an instrument specifically designed to combat sex discrim-

ination. The difficulty of the adjudicating task in the annotated case can be readily appreciated if one considers for a

moment by what standard it should be judged whether gender differentiation in insurance contracts “serves a proper

policy that respects the rights of all members of the community to be treated as equals”. [FN4] The answer to that

conundrum, and hence the key to the difference between acceptable differential treatment and unacceptable discrim-

ination “lies not in whether people are treated differently, but in whether society accepts as justifiable the criteria

whose application results in different treatment, or whether, on the contrary, they are considered as arbitrary”. [FN5]

What follows considers the answer the ECJ provided in the annotated judgment, and the consequences of that an-

swer for insurance contracts and insurance law more broadly. After setting out the background to the judgment and

the holdings of the ECJ, the present article offers some reflections, divided in four sections. Firstly, the prohibition of

sex discrimination as a general principle of EU law will be discussed. That is followed, secondly, by a consideration

of whether gender is an appropriate criterion for differentiation in insurance contracts. Thirdly, the impact of the an-

notated judgment on insurance contracts will be examined. Fourthly and finally, the article offers some thoughts on

the preliminary ruling procedure on validity and on the relationship between the ECJ and the EU legislature.

II. FACTUAL AND LEGAL BACKGROUND AND THE QUESTIONS REFERRED FOR A PRELIMINARY

RULING TO THE ECJ

The Directive prohibits all discrimination based on sex in the access to and supply of goods and services. Thus,

in principle, it prohibits the use of gender as a factor in the calculation of insurance premiums and benefits in relation

to insurance contracts entered into after December 21, 2007. By way of derogation, however, Article 5(2) of the Dir-

ective provides that Member States may, as from that date, permit exemptions from the rule of unisex premiums and

benefits, so long as they can ensure that the underlying actuarial and statistical data on which the calculations *341

are based are reliable, regularly updated and available to the public. Member States may allow such an exemption

only if the unisex rule has not already been applied by national legislation. Five years after the transposition of the

Directive into national law--that is to say, on 21 December 2012--Member States must re-examine the justification

for those exemptions, taking into account the most recent actuarial and statistical data and a report to be submitted by

the Commission three years after the date of transposition of the Directive.

In June 2008, the Association beige des Consommateurs Test-Achats ASBL (“Test-Achats”), a non-profit con-

sumer organization, and two private individuals brought an action before the Constitutional Court of Belgium for an-

nulment of the Law of 21 December 2007, which transposes the Directive into Belgian law. In essence, the applic-

ants in the main proceedings submitted that the Law of 21 December 2007 is incompatible with the principle of equal

treatment for men and women. It infringes Articles 10, 11 and 11a of the Belgian Constitution [FN6] read in conjunc-

tion with Article 13 EC, [FN7] Directive 2004/113, Articles 20, 21 and 23 of the Charter of Fundamental Rights (the

“Charter”), [FN8] Article 14 of the European Convention on Human Rights (“ECHR”), [FN9] Article 26 of the Inter-

national Covenant on Civil and Political Rights, [FN10] and the Convention on the Elimination of All Forms of Dis-

crimination against Women. [FN11]

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18 Colum. J. Eur. L. 339

The Law in dispute made use of the derogation under Article 5(2) of the Directive, and the Constitutional Court

found that the applicants' complaints therefore also applied to that provision of the Directive. In these circumstances,

the Constitutional Court regarded it as necessary, before ruling on the action pending before it, to decide on the

validity of Article 5(2) of the Directive. The Constitutional Court expressly accepted that the ECJ alone has jurisdic-

tion to decide on that issue of validity and that under the third paragraph of Article 234 EC (now *342 the third para-

graph of Article 267 TFEU [FN12]) it is required, as a national court against whose decisions there is no judicial

remedy under national law, to bring the matter before the ECJ. The Constitutional Court decided to stay the proceed-

ings and to refer the following questions to the ECJ for a preliminary ruling:

1. Is Article 5(2) of Directive 2004/113 ... compatible with Article 6(2) [EU] and, more specifically, with the

principle of equality and non-discrimination guaranteed by that provision?

2. If the answer to the first question is negative, is Article 5(2) of the Directive also incompatible with Article

6(2) [EU] if its application is restricted to life assurance contracts?

III. FINDINGS OF THE ECJ

Since the Constitutional Court had mentioned ex TEU art. 6(2), and indeed since that provision is mentioned in

Recital 1 in the preamble to the Directive, the ECJ started its consideration of the first question by recalling that ex

TEU art. 6(2) provided that the Union was to respect fundamental rights as guaranteed by the ECHR, and as they res-

ulted from the constitutional traditions common to the Member States, as general principles of Union law. However,

the ECJ immediately added that, since December 1, 2009, the Charter, which equally incorporates those fundamental

rights, has the same legal status as the Treaties. In particular, Articles 21 and 23 of the Charter provide, respectively,

that any discrimination based on sex is prohibited and that equality between men and women must be ensured in all

areas. The ECJ had had the chance to refer to the Charter as a binding instrument for the first time in Schecke &

Eifert,[FN13] and it relied on that judgment here to hold that, since recital 4 in the preamble to the Directive ex-

pressly refers to Articles 21 and 23 of the Charter, the validity of Article 5(2) of the Directive must be assessed in the

light of those provisions. [FN14]

The ECJ then emphasized that, while it is up to the EU legislature to decide when to take action to implement the

principle of equality between women and men, when such action is decided upon, it must contribute, in a coherent

manner, to the achievement of the intended objective, although transitional periods or derogations of limited scope

must remain possible. In particular, given that the use of actuarial factors related to sex was widespread in the provi-

sion of insurance services at the time when the Directive was adopted, [FN15] it was permissible for the EU legis-

lature to provide in Article 5(1) of the Directive that the differences in premiums and benefits arising from the use of

sex as a factor in the calculation thereof were to be abolished by December 21, 2007 at the latest. [FN16]

*343 Nevertheless, by way of derogation, Article 5(2) of the Directive grants Member States in which national

law did not yet apply unisex premiums and benefits at the time when the Directive was adopted the option of decid-

ing before December 21, 2007, to permit proportionate differences in individuals' premiums and benefits where the

use of sex is a determining factor in the assessment. of risks based on relevant and accurate actuarial and statistical

data. Any decision to make use of that option is to be reviewed five years after December 21, 2007, account being

taken of a Commission report. [FN17] However, crucially, the ECJ remarked that the Directive is silent as to the

length of time during which those differences may continue to be applied. By consequence, Member States which

have made use of the option are permitted to allow insurers to apply the unequal treatment without any temporal lim-

itation. [FN18]

The Council's line of defense consisted of raising doubt as to whether there was in fact any unequal treatment at

all. Indeed, the Council pointed out that from the point of view of the modus operandi of insurers, in accordance with

which risks are placed in categories on the basis of statistics, the levels of insured risk may be different for men and

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18 Colum. J. Eur. L. 339

for women. Therefore, it could be doubted whether, in the context of certain branches of private insurance, the re-

spective situations of men and women policyholders may be regarded as comparable. [FN19]

The ECJ disagreed. It repeated its familiar formula according to which the principle of equal treatment requires

that comparable situations must not be treated differently, and different situations must not be treated in the same

way, unless such treatment is objectively justified. [FN20] How does one establish whether situations are

“comparable”? The ECJ specified that comparability must be assessed in light of the subject-matter and purpose of

the EU measure which makes the distinction in question, which in the present case is Article 5(2) of the Directive.

[FN21] The comparability of the situations of women and men as regards premiums and benefits therefore had to be

assessed in the light of the purpose of the Directive. As is clear from Article 5(1) of the Directive, its purpose is the

application of unisex rules on premiums and benefits. Furthermore, Recital 18 in the preamble to the Directive ex-

pressly states that, in order to guarantee equal treatment between men and women, the use of sex as an actuarial

factor must not result in differences in premiums and benefits for insured individuals, while Recital 19 describes the

option granted to Member States not to apply the rule of unisex premiums and benefits as an option to permit

“exemptions.” The ECJ therefore concluded that the Directive was based on the premise that, for the purposes of ap-

plying the principle of equal treatment for men and women, the respective situations of men and women with regard

to insurance premiums and benefits contracted by them are comparable. [FN22] Without explicitly referring back to

the fact that the Directive is silent as to the length of time *344 during which those differences may continue to be

applied, [FN23] the ECJ concluded that there was a risk that EU law might permit the derogation from the equal

treatment of men and women, provided for in Article 5(2) of the Directive, to persist indefinitely. The ECJ held that

this arrangement worked against the achievement of the objective of equal treatment between men and women,

which is the purpose of the Directive. What is more, Article 5(2) of the Directive was incompatible with Articles 21

and 23 of the Charter. [FN24]

Having reached that conclusion, the ECJ declared Article 5(2) invalid. Without any further explanation, it held

that the invalidity would take effect after the expiry of a transitional period, i.e. on December 21, 2012. [FN25]

Even though the referring court's second question was premised on a negative answer to the first question, which

the ECJ gave, it did not think it necessary to reply to the second question of whether Article 5(2) of the Directive

would suffer the same fate if its application were to be restricted to life assurance contracts. From the manner in

which the ECJ phrased its conclusion, [FN26] and from the fact that the declaration of invalidity in the operative part

of the judgment is in no way qualified ratione materiae,[FN27] it would appear that life insurance contracts cannot

lay claim to any special derogation from the principle of equal treatment between women and men either.

IV. COMMENTS

A. The Prohibition of Sex Discrimination in EU Law

The prohibition of sex discrimination within the EU has its origins in what is now Article 157 TFEU, which es-

tablishes the principle of equal treatment between women and men as regards equal pay for equal work or work of

equal value. In the second Defrenne case, the ECJ clarified that the aim of that provision was to avoid a situation in

which undertakings in Member States that had implemented the principle of equal pay suffered a competitive disad-

vantage as compared with undertakings established in Member States that had not yet eliminated discrimination

against women with respect to pay. [FN28] It thus called attention to the origins of EU sex equality law in an eco-

nomic rationale, aiming to provide the Member States with the competitive advantage of cheap female labor. [FN29]

Crucially, however, the ECJ added that what is now TFEU art. 157 also formed “part of the social objectives of the

Community, which is not merely an economic union, but is at the same time *345 intended, by common action, to

ensure social progress and seek the constant improvement of the living and working conditions of their peoples, as is

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18 Colum. J. Eur. L. 339

emphasized by the preamble to the Treaty.” [FN30] This subsequently formed the basis for the ECJ's bold line of

case-law constructing a powerful right to equal pay for women and men. [FN31] The prohibition of discrimination

between women and men is now considered a part of the fundamental human rights the respect of which is one of the

general principles of EU law. [FN32] Article 2 TEU lists respect for equality as one of the values on which the Union

is founded and which are common to the Member States “in a society in which pluralism, non-discrimination, toler-

ance, justice, solidarity and equality between women and men prevail.” [FN33] Furthermore, Article 21 of the

Charter prohibits any discrimination based, inter alia, on sex. That prohibition is complemented by Article 23 of the

Charter, which requires equality between women and men to be ensured in all areas, including employment, work,

and pay, while not preventing the maintenance or adoption of measures providing for specific advantages in favor of

the under-represented sex.

Sex discrimination is, of course, a specific manifestation of discrimination prohibited by the general principle of

equality of treatment well known in EU law. [FN34] That principle requires that comparable situations must not be

treated differently and different situations must not be treated alike unless such treatment is objectively justified.

[FN35] As argued by Advocate General Sharpston in her Opinion in Bartsch, classic formulations of the principle of

equality, such as Aristotle's “treat like cases alike” leave open the crucial question of which aspects should be con-

sidered relevant to equal treatment and which should not:

Any set of human beings will resemble each other in some respects and differ from each other in others. A

maxim like Aristotle's therefore remains an empty rule until it is established what differences are relevant for

the purposes at hand. In short, the answers to the questions “who is covered by the principle of equal treat-

ment?” and “what aspects of economic, social, political, civic and personal life are encompassed by that prin-

ciple?” are not immutable. They evolve with society. As they do so, the law reflects that change by starting to

state explicitly that certain forms of discriminatory treatment, previously unnoticed or (if noticed) tolerated,

will be tolerated no longer. Such legal changes are an extension--a new and further expression--of the general

principle of equality. [ ... ] Once the possible (new) scope of the principle has emerged, the natural next step is

to define it more precisely and to put in place the rules to combat the discrimination that has been identified.

[FN36]

That is why TEC art. 13(1) (now TFEU art. 19(1)), which forms the legal basis of the Directive, enables the

Council to take appropriate action to combat *346 discrimination based on, inter alia, sex. A number of other provi-

sions of the Treaties also contain the principle of equal treatment between women and men. TEU art. 3, which con-

tains the objectives of the Union, provides in the second subparagraph of its third paragraph that the Union is to com-

bat social exclusion and discrimination and to promote, inter alia, equality between women and men. Furthermore,

TFEU art. 8 provides for the Union to aim to eliminate inequalities, and to promote equality, between men and wo-

men in all its activities, and TFEU art. 10 adds that in defining and implementing its policies and activities, the Uni-

on is to aim to combat discrimination based on, inter alia, sex. [FN37] The ECJ itself has persistently described the

principle of equal treatment between women and men as “fundamental” to EU law. [FN38]

Combating discrimination based on sex is the very purpose of the Directive at issue in the annotated judgment. In

particular, it lays down a framework for combating discrimination in access to and supply of goods and services,

with a view to putting into effect in the Member States the principle of equal treatment between men and women

(Article 1). That principle means that there is to be no direct discrimination [FN39] nor indirect discrimination

[FN40] based on sex (Article 4(1)). While the Court did not explicitly mention whether the discrimination at hand

was direct or indirect it is quite clear, as Advocate General Kokott has pointed out, that Article 5(2) constitutes an in-

stance of direct discrimination based on sex, for which justification is “conceivable only in limited circumstances and

has to be carefully reasoned,” adding that the Union legislature “is by no means at liberty to allow arbitrary excep-

tions to the principle of equal treatment and thereby to undermine the prohibition against discrimination.” [FN41]

The ECJ's definition of the principle of non-discrimination requires a two-stage analysis: “First, are the situations

comparable, so that they call for the same treatment, or are they different, so that their treatment should be differenti-

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18 Colum. J. Eur. L. 339

ated? Second, if the two situations are not treated as indicated by the answer to the first *347 question, is there ob-

jective justification for the divergence?” [FN42] The crux of the matter for the case at issue is therefore whether men

and women are in comparable situations with regard to insurance contracts and, if so, whether there exists any ob-

jective justification for the difference in treatment between them.

B. Gender as a Differentiating Factor in Insurance Contracts

The use of gender as a differentiating factor in insurance contracts is not as old as it may seem. For example, in

US insurance industry, until the 1840s the norm had been gender-merged mortality tables and unisex premium rates

for insurance coverage of men and women. However, during the pre-Civil War period, life insurance companies re-

solved the conflict between equality of contract for married women and the traditional dependencies of the home

through the selective adoption of gender-differentiated contract rates [FN43] Indeed, it has been argued that incon-

sistencies in the use of risk assessment in the pricing of products, gender-based pricing practices did not result from

even-handed application of actuarial methodology and principles. While factors such as variations in mortality exper-

iences of policy-holders over time had an impact on the practices that developed, the origins of gender-based pricing

suggest the operation of powerful social and cultural norms. In particular, it reflected the categorization of women as

different in nature from men and of lesser individual economic value, thereby tempering the law's recognition of wo-

men's equality of contract in the marketplace. [FN44] Conversely, within the European Union, the unisex rule

already existed in the national legislation of several Member States, arguably as an application of the European call

for equality, before its general introduction in the Directive. For example, there was a practice in Belgium of unisex

tariffs in life insurance before the Royal Decree of 17 December 1992. [FN45]

Yet, since a few decades there has been a widespread practice in the insurance industry to take gender into ac-

count in insurance products, which are accordingly offered on different terms to women and men. The basis for that

practice is what is often referred to as the insurance industry's “group approach” to equality: [FN46] risks, premiums,

and benefits. are determined in terms of groups, and the insurance classification schemes rely on the assumption that

individuals answer to the average *348 characteristics of a group--here the male or female gender--to which they be-

long. From that point of view, women and men are not in comparable situations as regards insurance contracts.

However, instruments such as the Directive are intended as a response to the fact that applicants for insurance who

do not represent an “attractive risk” are refused insurance coverage or at least affordable coverage. [FN47] It is there-

fore unsurprising that in its proposal for the Directive, the Commission took the view that women and men were in

comparable situations, [FN48] which explains why the proposal did not contain a derogation like Article 5(2) of the

Directive. In Test-Achats, the ECJ agreed that the Directive was indeed based on the premise that the respective situ-

ations of women and men with respect to insurance premiums and benefits were comparable. [FN49] Nevertheless,

during the proceedings regarding the annotated case, the Commission apparently took the view that Article 5(2) of

the Directive was perfectly in accordance with the principle of equal treatment between women and men, on which

Advocate General Kokott observed drily, “Even when asked, the Commission was unable to provide a plausible ex-

planation for its sudden change of mind.” [FN50] It could also have been pointed out to the Commission that back in

1993, it had taken the following view in the proceedings in Ten Oever, albeit in the context of pension schemes: “The

fact that women generally live longer than men has no significance at all for the life expectancy of a specific indi-

vidual and it is not acceptable for an individual to be penalized on account of assumptions which are not certain to be

true in his specific case.” [FN51] At any rate, in her Opinion in Test-Achats, Advocate General Kokott went on to

note that Article 5(2) of the Directive was intended to take into account the specific characteristics of insurance,

“Insurance companies offer services with regard to which it cannot be said with certainty at the time when the con-

tract is concluded if, when and to what extent the insured person will have recourse to them. Recourse to prognoses

is indispensable in actuarial calculations of premiums and services in order to make that risk calculable and develop

the products in such a way as to do justice to the risk.” [FN52] More specifically, Article 5(2) of the Directive

“concerns cases in which different insurance risks can at most be associated statistically with gender.” [FN53] For

example, statistically speaking, women have a higher life expectancy than men and cause fewer traffic accidents,

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18 Colum. J. Eur. L. 339

while arguably taking advantage of more medical benefits, in particular preventive tests and medicinal products, than

men. [FN54] However, as with the relationship between attributes such as sex and race on the one hand, and crime

on the other hand, it is important to keep in mind that predictive value does not in any way equal causation. If it is

possible to measure the real causative factors, there would appear to be no *349 need to include attributes such as

sex, which are at best markers of the real causative factors. [FN55]

Advocate General Van Gerven had addressed the use of such sex-based actuarial factors in the calculation of em-

ployee contributions and benefits in occupational pension schemes in his Opinion in Ten Oever.[FN56] There, he ar-

gued that while it is true that women as a group prove to live longer than men, it is equally true that not all individual

men and women exhibit the average characteristics of their sex. The key question, according to Van Gerven, is

whether discrimination “exists when men and women are treated, not as individuals, but as a group and unequal treat-

ment for individual men or women arises as a result.” [FN57] The Advocate General then went on to cite a number

of factors having a direct impact on the life expectancy of a specific individual that could be taken into account in or-

der to justify individual' differences in contributions and/or benefits, such as risks associated with a particular occu-

pation or smoking, eating and drinking habits. Van Gerven did not take differences in average life expectancy

between men and women to fall within that category: “These differences bear no relation to the life expectancy of a

specific individual and are thus irrelevant for the calculation of the contributions and/or benefits which may be

ascribed to that individual.” [FN58] In reaching that conclusion, the Advocate General relied on the case-law of the

United States Supreme Court on the use of actuarial factors varying according to sex for the calculation of contribu-

tions to pension schemes. Such factors have been considered contrary to the Civil Rights Act of 1964 since the Su-

preme Court's ruling in Los Angeles Department of Water and Power v. Manhart,[FN59] while their usage with re-

spect to benefits under such schemes was condemned by the ruling in Arizona Governing Committee for Tax De-

ferred Annuity and Deferred Compensation Plans v. Norris.[FN60] The conception of equality espoused by the U.S.

Supreme Court and by Advocate General van Gerven was based on an analysis of the principle of equal treatment in

terms of individuals as opposed to in terms of groups. [FN61] In its judgments, the ECJ did not address the permiss-

ibility of actuarial factors based on the difference between women and men in abstracto, as it did not need to do so in

order to reach its decision. The ECJ limited itself to holding that the pension contributions under consideration did

not fall under what is now TFEU art. 157(1), *350 as the actuarial factor at issue only applied to employer contribu-

tions and not to employee contributions. The principle of equal pay for male and female workers as laid down in

TFEU art. 157(1) was therefore unaffected. [FN62] Nevertheless, the Court did point out that contributions paid by

employees are an element of their pay since they are deducted directly from their salaries, which by definition consti-

tute pay, [FN63] and that the amount of those contributions must therefore be the same for all employees, male and

female. [FN64] After reviewing these cases in her Opinion in Test-Achats, Advocate General Kokott concluded: “If

anything, the case-law in Neath and Coloroll Pension Trustees suggests the conclusion that the prohibition of dis-

crimination on grounds of sex under European Union law precludes differences between men and women which are

purely statistical from being taken into consideration with regard to insurance risks.” [FN65] That conclusion has

been criticized as “somewhat exaggerated” on the basis that it is not because the Court does not address an issue dir-

ectly that its silence should be interpreted as an implicit finding of incompatibility. [FN66] While that assessment is

correct, it should be kept in mind that the Advocate General's statement was made arguendo [FN67] and in reply to a

position defended in the course of the proceedings.

Whether or not sex is a relevant risk-rating factor in (life) insurance, remains a contentious issue. The insurers

rely on the statistically-proven difference of life expectancies of men as a whole and of women as a whole, [FN68]

which is why they base their premium-tariffs and payments on actuarial calculation factors that are different for both

genders. [FN69] The underlying idea of this approach is actuarial fairness: by using different mortality tables, the in-

surance industry wishes to avoid a situation where one group--here one gender--subsidizes the other group. Insurers

find support for that view in an Oxford Economic Research Associates (Oxera) study of 2011 [FN70] and, perhaps

unsurprisingly, with the Comité Européen des Assurances (CEA). [FN71] However, there is research suggesting that,

though women live statistically longer than men, the proposition that there is a genuine causal link between sex and

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18 Colum. J. Eur. L. 339

longevity can be questioned. According to that account, many other factors play an *351 important role in the life ex-

pectancy evaluation of insurance risks, such as behavioral and environmental causes. [FN72] These lifestyle condi-

tions could even have a greater causal impact on the individual's life expectancy than a person's sex. Advocate Gen-

eral Kokott adhered to that view in her Opinion: “The life expectancy of insured persons ... is strongly influenced by

economic and social conditions as well as by the habits of each individual ... In view of social change and the accom-

panying loss of meaning of traditional role models, the effects of behavioral factors on a person's health and life ex-

pectancy can no longer clearly be linked with his sex.” [FN73] Though insurers do not deny that other socio-eco-

nomic factors may exist that influence life expectancy, gender is still most frequently used because it is a simple,

usually stable, and clearly distinguishable criterion and does not entail transaction costs nor involve the examination

of individual cases in order to obtain information. [FN74] Of course, that argument constitutes a shift from the evalu-

ation of relevance of gender as a risk-rating factor to a more economic evaluation. As Advocate General Kokott notes

in her Opinion, “Admittedly, it is especially easy to implement distinctions on the basis of sex in respect of insurance

products. The correct recording and evaluation of economic and social conditions and of the habits of insured per-

sons is much more complicated and is also more difficult to verify, particularly since those factors may be subject to

changes over time. Practical difficulties alone do not justify the case, however, of the insured person's sex as a distin-

guishing criterion. The use of a person's sex as a kind of substitute criterion for other distinguishing features is in-

compatible with the principle of equal treatment for men and women.” [FN75]

However, whether gender is a per se relevant risk-rating factor or merely a substitute criterion for other risk rat-

ing factors that may economically be not as easy to quantify, the outcome is the same. With the Directive, the

European Union legislator fundamentally drew the card of the principle of equal treatment between women and men

as a fundamental right: discrimination based on sex has to be combated, also in areas outside employment, and in

particular when goods and services are offered. The derogation, which mitigated the scope of the principle and which

was inserted by the insurance lobby, [FN76] was excised by the ECJ in the Test-Achats judgment. As a consequence,

it is now legally prohibited to use sex as a risk-rating factor. The insurance industry must now opt for other criteria,

such as behavioral and environmental factors, which are resistant to manipulation, provided that these criteria too are

applied in accordance with higher-ranking EU law. [FN77] In its guidelines on the application of the directive in the

light of the Test-Achats judgment, the European Commission points in the same direction, opting “to *352 encourage

a competitive and innovative industry such as the insurance sector to make the necessary adjustments and offer at-

tractive unisex products to consumers without an unjustified impact on the overall price levels.” [FN78] It is to a

closer analysis of those guidelines that this article now turns.

C. The Impact of the Judgment on Insurance Law

1. Impact on life insurance contracts: the Commission guidelines

In Test-Achats, the ECJ declared Article 5(2) of the Directive invalid effective from December 21, 2012. From

that moment onwards the use of different premiums and benefits for women and men in private insurance will no

longer be allowed. Some commentators had argued that Article 5(2) exempted insurance (concerning the calculation

of premiums and benefits on the basis of actuarial and statistical data) from the field of application of Directive

2004/113. [FN79] In case of an exemption or “non-harmonization,” their argument went, there is no room for a test

of constitutionality by the ECJ on the basis of the requirements of EU fundamental rights. However, Article 3 does

not list insurance as being outside the scope of the Directive, contrary to “the content of media and advertising,” edu-

cation, and “matters of employment and occupation”, which are explicitly exempted by Article 3(3)-(4). A contrario,

it would seem that insurance, including life insurance, is included in the field of application of the Directive as

defined in Article 3. It is, however, governed by a special substantive regime under Article 5. What the Directive

provides for as regards. insurance contracts is therefore not a blanket exemption from the scope of the Directive, but

as the ECJ itself terms it in the judgment in Test-Achats, a specific derogation. [FN80]

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However, the ECJ remained somewhat vague regarding the consequences of its judgment on current life insur-

ance contracts, the effect on occupational pensions and the use of age and disability as a differentiation factor in in-

surance contracts, and the inevitable debates ensued. At the beginning of 2012, with a view to facilitate compliance

with Test-Achats at the national level, [FN81] the European Commission published its long-expected guidelines on

the application of the Directive in the light of the judgment. It must of course be borne in mind that these guidelines

are nonbinding and that the Commission's position “is without prejudice of any interpretation the Court of Justice

may give to Article 5 in the future.” [FN82] The CEA has therefore called on the EU legislator to put the Directive in

line with the Test-Achats judgment. [FN83] While such an amendment to the Directive is legally possible, it *353 is

politically rather unlikely to materialize. [FN84] In addition, the procedural context has changed since the entry into

force of the Lisbon Treaty. Indeed, should the Council wish to amend the Directive, TFEU art. 19(1) requires it to act

“unanimously in accordance with a special legislative procedure and after obtaining the consent of the European Par-

liament.” [FN85] Be that as it may, the Commission Guidelines arguably form rules of practice from which the ad-

ministration may not depart in an individual case without giving reasons compatible with the principle of equal treat-

ment. [FN86] Furthermore, in a case on Commission guidelines on the method of setting fines, the ECJ held that in

adopting such rules of conduct and announcing them by publishing that they will henceforth apply to the cases to

which they relate, the Commission imposed a limit on the exercise of its discretion and could not depart from those

rules under pain of being found, where appropriate, to be in breach of the general principles of law, such as equal

treatment or the protection of legitimate expectations. [FN87]

With regard to the premiums and benefits in life insurance contracts, there are three situations to be examined:

contracts ending before December 21, 2012, contracts concluded after December 21, 2012, and contracts running as

of December 21, 2012. For the first category of contracts, ending before December 21, 2012, differences in premi-

ums and benefits between men and women remain possible until these contracts end. [FN88] Contracts concluded

after December 21, 2012, on the other hand, must be adapted to the principle of equal treatment between men and

women. That follows clearly from the ECJ's declaration of invalidity of Article 5(2) of the Directive with effect from

December 21, 2012. As a consequence, from December 21, 2012 onward, “the unisex rule contained in Article 5(1)

must be applied without any possible exception in relation to the calculation of individuals' premiums and benefits in

new contracts.” [FN89] The assessment is most controversial as regards the third category of life insurance contracts,

running as of December 21, 2012. Some commentators have argued that the binding unisex character of premiums

and benefits should only apply to new contracts, while others have taken the view that running contracts would also

be affected by the judgment. [FN90] In its guidelines, the *354 European Commission relies on Recital 18 in the pre-

amble to the Directive to underscore its position that a sudden readjustment of the market has to be avoided. [FN91]

As the Test-Achats ruling is in line with the Directive's objective, the unisex rule must be restricted to new contracts

only. Contrary to what Advocate General Kokott had argued, [FN92] the Commission takes the view that different

premiums and benefits for women and men in contracts running as of December 21, 2012 may be preserved. [FN93]

The importance of a clear definition of the concept of a ‘new contract,’ is also stressed in the guidelines. To reach

the aim of the Directive in the insurance field, i.e., to implement the unisex rule after the expiry of a transitional peri-

od, “the concept [of a ‘new contract’] should be regarded as designating an autonomous concept of European Union

law which must be interpreted uniformly throughout the Union.” It relies in that respect on settled case-law accord-

ing to which it follows from the need for uniform application of EU law “that the terms of a provision of that law

which makes no express reference to the law of the Member States for the purpose of determining its meaning and

scope must normally be given an autonomous and uniform interpretation throughout the European Union.” [FN94]

Without such an interpretation, the Commission warns, there exists a risk of different transitional periods delaying

the comprehensive application of the unisex rule and for an uneven playing field for insurance companies. [FN95]

In general, the unisex rule of Article 5(1) is to apply “when a contractual agreement requiring the expression of

consent by all parties is made, including an amendment to an existing contract and the latest expression of consent by

a party that is necessary for the conclusion of that agreement occurs as from 21 December 2012.” [FN96] For a fuller

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comprehension of the concept and to avoid further *355 interpretation difficulties, the Commission gives specific,

non-exhaustive, examples of what is considered as a “new contract” and what is not. It must be borne in mind that a

transitional period for “new contracts” to implement the unisex rule is only possible when the national legislation had

not already prohibited the use of different premiums and benefits. [FN97] Consequently, agreements concluded as

from December 21, 2012, to extend pre-existing contracts that would otherwise expire are new contracts, while the

automatic extension of a pre-existing contract is not. The adjustment made to individual elements of an existing con-

tract, based on predefined parameters, if the consent of the policyholder is not required, is also considered as an ex-

isting contract to which the unisex rule does not apply. [FN98] The same applies for the conclusion of top-up or fol-

low-on policies by the policyholder, when the terms were pre-agreed in contracts concluded before December 21,

2012, and only need a unilateral decision of the policyholder to become active, as well as for a transfer of an insur-

ance portfolio from one insurer to another, when it does not change the status of the contracts included in that portfo-

lio. [FN99] In other words, the insurance industry's fear that the unisex rule would also apply to running contracts per

December 21, 2012, appears not to have materialized, [FN100] at least not in accordance with a rather limitative in-

terpretation of Test-Achats.

Furthermore, the Commission lists a number of gender-related insurance practices that remain possible, as Article

5(1) only prohibits the use of gender as a calculation factor that results in differences in individual's premiums and

benefits and not the use of gender as a risk-rating factor in general (as long as it does not lead to differentiation at in-

dividual level). It thus remains compatible with the unisex rule to use gender-related information to calculate re-

serves and set internal pricing (for internal risk assessment), to set reinsurance pricing, and to use marketing and ad-

vertising to influence their portfolio (as the Directive does not apply to the content of media and advertising). The

use of other risk factors, such as health status or family history, is also allowed, even if insurers need to take gender

into account for their assessment (e.g. breast cancer, obesity). [FN101] According to the Commission, it also remains

possible for insurers to offer gender-specific insurance products, to *356 cover conditions that exclusively or primar-

ily concern males or females. [FN102] Other gender correlated risk-rating factors used by insurers are not addressed

in the Test-Achats judgment and consequently would remain in principle permissible, at least when they are not

merely a proxy for gender, but true risk factors in their own right. Furthermore, indirect discrimination, defined in

Article 2(b) of the Directive as “where an apparently neutral provision, criterion or practice would put persons of one

sex at a particular disadvantage compared with persons of the other sex,” can be justified when that “provision, cri-

terion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and

necessary.”

As women and men were found to be in comparable situations by the EU legislature and by the ECJ in the Test-

Achats judgment, one might assume that a similar reasoning applies to gender differentiation in other EU legal in-

struments. For example, it could be asked whether the Court's declaration of invalidity of Article 5(2) of the Direct-

ive might not equally sound the death knell for Article 9(1)(h) of Directive 2006/54, [FN103] which provides that

setting gender differentiated levels of benefit is contrary to the principle of equal treatment, “except in so far as may

be necessary to take account of actuarial calculation factors which differ according to sex in the case of defined-

contribution schemes; in the case of funded defined-benefit schemes, certain elements may be unequal where the in-

equality of the amounts results from the effects of the use of actuarial factors differing according to sex at the time

when the scheme's funding is implemented.” [FN104] However, the Commission considers that the Test-Achats judg-

ment has no legal implications for Article 9(1)(h) of Directive 2006/54/EC, “which applies in the different and

clearly separable context of occupational pensions and which is also drafted in a very different way from Article 5(2)

of the Directive.” [FN105] Indeed, the Commission confirms that the judgment in Test-Achats only has implications

for insurance and pensions under the Directive, that is if they are private, voluntary, and separate from the employ-

ment relationship. Equal treatment of women and men in relation to occupational pensions, including occupational

pension schemes that provide for the payment of a benefit under a specific form, such as annuities, even when an in-

surer pays out the benefit, are covered by Directive 2006/54/EC. The use of gender related criteria continues to be

possible in second pillar pension schemes, as far as it is justified by actuarial factors. [FN106]

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However, whether other suspect grounds [FN107] listed in Article 19(1) TFEU will be condemned as unequivoc-

ally as sex or whether other derogations or exemptions similar or at least comparable to Article 5(2) of the Directive

will suffer a similar *357 fate if the Court has the opportunity to rule on the matter, [FN108] depends in each case on

whether the categories between which a distinction is introduced or maintained are considered comparable and

whether that distinction is justifiable. Furthermore, the proposal for a directive on equal treatment does not contain a

general principle such as the unisex rule, according to which the use of age and disability should not result in differ-

ent premiums or benefits. The Commission takes the view that this is not a derogation from the principle of equal

treatment, but a recognition that these situations are not comparable and as a consequence should be treated differ-

ently. [FN109]

Finally, the Commission stresses the obligation of the Member States to adapt their legislation before December

21, 2012 to the Test-Achats judgment and calls upon the insurance industry to be innovative in making the necessary

adjustments, without any unjustified impact on the overall price levels. The Commission will strictly monitor the

situation in order to guarantee the application of the unisex rule by insurers and it will evaluate that in 2014, in the

context of a more general report on the implementation of the Directive. [FN110]

2. Impact on premiums and tariffs of insurance products

It is important to note that the declared invalidity of Article 5(2) of the Directive and the resulting obligation to

utilize unisex rules from December 21, 2012 onwards only has effect on insurance contracts designated in national

legislation as an exception to Article 5(1). Other insurance contracts already had to be adjusted to the prohibition to

make use of gender as a risk-rating factor in insurance agreements as of December 21, 2007. [FN111] However, be-

cause most of the Member States made use of *358 Article 5(2), the practical impact of the judgment on national le-

gislation will still be significant.

In its guidelines, the Commission insists on a limited change of price levels of insurance products. [FN112] That

appears to be intended to counter the insurance industry's dire warning that by applying unisex mortality tables, the

prices of insurance products might or will go up, not only for the formerly advantaged group, but also for those who

pose the least risk. [FN113] According to the industry, this is because “if premium rates do not take account of

known risk factors, people in higher risk categories may buy more insurance while those in lower risk categories may

buy less or none. This phenomenon of self-selection creates a moral hazard for insurers, which is why the Groupe

Consultatif thinks that the insurance industry's response will be to add ah ‘uncertainty premium’ into the rates they

charge.” [FN114] Furthermore, the insurers are apprehensive for the additional cost entailed by the more sophistic-

ated, and hence more expensive, risk management tools that are to be applied, and fear the potential additional sales

and marketing costs. [FN115] However, others take the view that because all insurance companies across business

segments are bound to offer unisex premiums and benefits, the danger of adverse risk selection is low. [FN116] Ad-

vocate General Kokott also believes in “meeting in the middle” with regard to premium rates: “Higher premiums

have to be balanced against lower premiums for insured persons of the other sex in each case”. Nevertheless, this is

only the case for insurers who have a balanced portfolio of women and men. It is to be expected that it will be easier

for large insurers to attain a unisex tariff for their premiums, as they have more statistical data at their disposal.

[FN117] On both sides, the argument is advanced that France has unisex rates in life insurance. Some claim that the

rates did not go up and hence that the influence of Test-Achats on tariffs and premiums will be insignificant, while

others claim precisely the opposite. [FN118]

*359 Only the future will tell whether the rates of premiums and tariffs will rise. [FN119] However, Advocate

General Kokott took a firm stance against “purely financial considerations,” such as the danger of an increase in

premiums for a proportion of the insured persons or even for all of the insured persons, which “do not in any event

constitute a material reason which would make discrimination on grounds of sex permissible.” [FN120] Whether or

not one agrees with that assessment as a matter of economic rationality, it does seem to be in accord with the ECJ's

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settled case-law that budgetary considerations cannot justify discrimination. [FN121]

D. References for a Preliminary Ruling on Validity and the Relationship Between the Court of Justice and the EU Le-

gislator

As the Court held in International Chemical Corporation, the main purpose of the powers accorded to the court

by Article 267 TFEU is to ensure that EU law is applied uniformly by national courts, which is imperative not only

when the Court of Justice is asked for its assistance in the interpretation of the Treaties: “[I]t is just as imperative

when the Court is confronted by a dispute as to the validity of an act of the institutions.” [FN122] Indeed, diver-

gences between Member State courts regarding the validity of Union acts would be liable to place in jeopardy the

very unity of the EU legal order and “detract from the fundamental requirement of legal certainty,” as well as

threaten the coherence of the system of judicial protection in the Union. [FN123] That coherence requires that where

the validity of a Union act is challenged before a national court the power to declare the act invalid must be reserved

to the ECJ. [FN124]

Recital 4 of the Directive specifically refers to Articles 21 and 23 of the Charter, and the Court relied on that ref-

erence to justify testing the validity of Article 5(2) of the Directive on the basis of the Charter. However, that justific-

ation is redundant and hence perhaps a little confusing, as the Court could have sufficed by referring to the fact that

the Charter now has the same legal value as the Treaties, pursuant to Article 6(1) TEU, as it did in Schecke and Eifert

.[FN125] It is settled case-law that the respect for human rights is a condition of lawfulness of EU acts, and that

measures incompatible with respect for human rights are not acceptable in the Union. [FN126] At any rate, the juris-

diction of the Court to give preliminary rulings under Article 267 TFEU concerning the validity of acts of EU institu-

tions is not limited by the *360 grounds [FN127] on which the validity of those measures may be contested. [FN128]

Since the Court's jurisdiction regarding references for a preliminary ruling on validity extends to all grounds capable

of invalidating EU measures, the Court can examine whether their validity may be affected by reason of the fact that

they are contrary to the Charter. [FN129] The jurisdiction of the Court to assess the validity of Article 5(2) of the

Directive on the basis of the Charter therefore appears to be rather unassailable.

It is no secret that the inclusion in the Directive of Article 5(2), which was not part of the original Commission

proposal, was the direct result of successful lobbying by the insurance sector during the decision-making procedure

from which the Directive resulted. [FN130] While Advocate General Kokott referred to that original Commission

proposal to query the inclusion of Article 5(2) in a Directive which was intended to establish equality between wo-

men and men in insurance contracts, [FN131] the Court cautiously stayed as closely as possible to the text of the Dir-

ective itself. Referring to Article 5(1) and Recitals 18 and 19, the Court held it to be undisputed that the purpose of

the Directive was the application of unisex rules on premiums and benefits, and that the Directive was based on the

premise that the respective situations of women and men with regard to insurance premiums and benefits are compar-

able. [FN132] That purpose and that premise were incompatible with a provision such as Article 5(2) of the Direct-

ive, which enabled the Member States to maintain without temporal limitation an exemption from the rule of unisex

premiums and benefits. That provision works against the achievement of the Directive's objective of equal treatment

between men and women, and is moreover incompatible with Articles 21 and 23 of the Charter. [FN133] The Court

therefore declared Article 5(2) invalid effective December 21, 2012. In doing so, it implicitly appeared to intend to

make the Directive more coherent with respect to its purpose, and restore the spirit of the original Commission pro-

posal.

A rather different approach to a similar problem was taken in Sturgeon.[FN134] There, the ECJ was asked how

to distinguish a delay from a cancellation within the meaning of Article 2(1) of Regulation (EC) No 261/2004,

[FN135] and whether a delay may be treated as a cancellation within the meaning of the Regulation after a certain

amount of time has elapsed. Similarly to what the Court later did in Test-Achats, Advocate General Sharpston pro-

posed to analyze the compatibility of that distinction with the principle of equal treatment by reference to the object-

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ive of the Regulation. *361 The Court had already held in IATA and ELFAA “that the immediate objective pursued

by the Community legislature ... is to strengthen protection for passengers who suffer cancellation of, or long delays

to, flights, by redressing, in an immediate and standardised manner, certain damage caused to passengers placed in

such circumstances.” [FN136] Nevertheless, regardless of the seriousness of the inconvenience caused, Regulation

(EC) No 261/2004 provides that the cancellation of a flight automatically triggers a right to compensation (under Art-

icle 7), while a delay never does. Finding no reasonable explanation why this should be so, the Advocate General

took the opinion that the existing distinction between cancellation and delay in the Regulation appeared to be at odds

with its purpose, and fell foul of the principle of equal treatment. [FN137] However, the Court had heard no argu-

ment as to the potential impact of the principle of equal treatment on the questions referred in Sturgeon. Bearing in

mind the necessity of allowing the institutions and the Member States the opportunity to comment on the analysis ad-

vanced in her Opinion and to put forward arguments relating to objective justification, Advocate General Sharpston

proposed that the Court should reopen the oral procedure in accordance with Article 61 of its Rules of Procedure

[FN138] and invite submissions on that matter from the Member States, the Commission, the European Parliament,

and the Council. [FN139] It is indeed well-established that the ECJ may of its own motion, or on a proposal from the

Advocate General, or at the request of the parties, order the reopening of the oral procedure if it considers that it

lacks sufficient information, or that the case must be dealt with on the basis of an argument which has not been de-

bated between the parties. [FN140] In case the ECJ did not wish to follow her, Advocate General Sharpston added a

rather stern word of caution: “the Community legislator can select a particular time-limit (23 and a half hours, 24

hours, 25 hours, or 48 hours--whatever it be) triggering a right to compensation. The Court cannot. Any figure one

cared to pick would involve reading into the Regulation something it plainly does not contain and would be a judicial

usurpation of the legislative prerogative.” The ECJ agreed with the Advocate General that passengers whose flights

are delayed and passengers whose flights are cancelled cannot be treated differently without the principle of equal

treatment being infringed. [FN141] Nevertheless, it did not reopen the oral procedure, but opted for a rather different

approach. Relying on the general principle according to which a Union measure must be interpreted, as far as pos-

sible, in such a way as not to affect its validity and in *362 conformity with primary law as a whole, including with

the principle of equal treatment, [FN142] the Court found that “passengers whose flights are delayed may rely on the

right to compensation laid down in Article 7 of Regulation No 261/2004 where they suffer, on account of such

flights, a loss of time equal to or in excess of three hours, that is to say when they reach their final destination three

hours or more after the arrival time originally scheduled by the air carrier.” [FN143] The judgment was greeted with

some bewilderment in various quarters, including with certain national courts. In particular, the Landgericht Köln in

Germany referred the following question to the ECJ: “Is it compatible with the principle of the separation of powers

in the European Union if, in order to remedy what would otherwise be unequal treatment, Regulation No 261/2004 is

interpreted as meaning that a passenger who is affected by a mere delay of more than three hours is entitled to com-

pensation under Article 7 of the Regulation, although the Regulation provides for this only in the case of denied

boarding or cancellation of the booked flight, but in the event of delay, restricts the passenger's claims to assistance

under Article 9 of the Regulation and if the delay is for more than five hours, also assistance under Article 8(1)(a) of

the Regulation?” [FN144] The judgment also elicited further references for a preliminary ruling from national courts

asking for clarification. [FN145]

Leaving to one side the debate on the merits and demerits of judicial review per se,[FN146] it may be asked

which of those two contrasting judicial techniques as displayed in the judgments in Test-Achats and Sturgeon is most

deferential to the legislator's intentions. Prima facie, in explicitly opting for an interpretation based on the maxim ut

res magis valeat quam pereat [FN147] and thus avoiding declaring the legal instrument at issue wholly or partly in-

valid, the Sturgeon judgment appears to qualify for that predicate. However, it may legitimately be asked whether

what the ECJ did in Sturgeon is not perilously close to slipping from an interpretation in conformity with primary

law into a wholesale rewriting of the regulation at issue. By contrast, while it has been suggested that the ECJ could

have applied that same technique of interpretation in Test-Achats, it is arguably more respectful of the division of

tasks between the judiciary and the legislator to declare part of a provision invalid and to leave the legislator to de-

cide whether any further action is needed. That said, both *363 judgments appear to rely rather heavily on the pre-

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amble to the act in question to sustain the interpretation sought. In order to counter the Advocate General's stern

warning on the separation of powers, the ECJ in Sturgeon relied on Recital 15 in the preamble to the Regulation,

which concerns the notion of extraordinary circumstances allowing air carriers to be released from the obligation to

pay compensation and mentions the notion of long delay in that context. The ECJ held that to be proof of the fact that

the legislature linked that notion to the right to compensation. [FN148] However, it is not entirely clear how that

counters the argument of the Advocate General that the “actual selection of the magic figure is a legislative prerogat-

ive.” [FN149] In Test-Achats, the ECJ referred to Recitals 18 and 19 to support its holding that the Directive is based

on the premise that, for the purposes of applying the principle of equal treatment for men and women, the respective

situations of men and women with- regard to insurance premiums and benefits contracted by them are comparable.

[FN150] However, the ECJ arguably ought to be very cautious in that respect, as the preamble to a Union act has no

binding legal force and cannot be relied on either as a ground for derogating from the actual provisions of the act in

question or for interpreting those provisions in a manner contrary to their wording. [FN151] A recital cannot there-

fore create rights or possibilities not provided for by the enacting terms of the regulation. In both cases, the Court

could have perhaps had resort to the travaux préparatoires, as the respective Advocates General had done. [FN152]

Of course, travaux préparatoires too have to be treated with caution, and their use is only ancillary to other tech-

niques of interpretation. [FN153] That said, the Court has now and again used them as an aid to interpretation when

ascertaining the legislator's intention. [FN154]

Regarding the legal effect of the ECJ's declaration of invalidity in proceedings under Article 267 TFEU, its de-

cision requires the competent EU institutions to take the necessary measures to remedy that illegality, as the obliga-

tion laid down in Article 266 TFEU in the case of a judgment annulling a measure applies in such a *364 situation by

analogy. [FN155] It is then for the national authorities to draw the consequences in their legal system. [FN156] Fur-

thermore, although a judgment of the ECJ given under Article 267 TFEU declaring an act of an institution to be in-

valid is directly addressed only to the national court that brought the matter before the it, it is sufficient reason for

any other national court to regard that act as invalid for the purposes of a judgment which it has to give. [FN157]

Where it is justified by overriding considerations of legal certainty, the second paragraph of Article 264 TFEU,

which is also applicable by analogy to a reference under Article 267 TFEU for a preliminary ruling on the validity of

EU acts, confers on the ECJ a discretion to decide in each particular case, which specific effects of the act in question

must be regarded as definitive. [FN158] Without referring to that settled case-law or any further explanation, the

Court in Test-Achats opted to declare Article 5(2) of the Directive invalid with effect from December 21, 2012, in

contrast to Advocate General Kokott, who had proposed that the effects of Article 5(2) ought to be maintained until

the expiry of a period of three years following the delivery of the judgment of the ECJ. Furthermore, in accordance

with settled case- law, [FN159] the Advocate General had proposed that the three year-period ought not to apply to

persons who, prior to the date of delivery of the judgment of the ECJ, had initiated legal proceedings or raised an

equivalent claim under the applicable national law. The ECJ opted for a shorter period of temporal limitation of the

judgment, but without any exceptions. It did not motivate its choice for December 21, 2012, but one may assume that

the ECJ took its cue from Article 5(2) of the Directive itself, according to which the Member States could decide be-

fore December 21, 2007 to permit gender differentiation as regards premiums and benefits, and were to review that

decision five years after that date. [FN160] The decision of the ECJ to opt for such a temporal limitation of the judg-

ment would seem to be conducive to legal certainty in that it provides one single date for full compliance with the

judgment. In that sense, it could in practice also benefit the insurance industry. [FN161]

In Sturgeon too, the ECJ calculated a temporal limitation by analogy to another temporal limitation in the Regu-

lation. However, while the ECJ in Test-Achats reasoned by analogy to calculate the temporal limitation of the effects

of its judgment, in Sturgeon it used that technique of interpretation to modify a fundamental aspect of the substantive

elements of the Regulation. That would seem to be a far greater intrusion into legislative competences than borrow-

ing from the legislator to modify the effects ratione temporis of the Court's own judgment. [FN162] *365 Neverthe-

less, given the unlikelihood of an amendment in the foreseeable future, as mentioned above, the ECJ has had a major

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and possibly lasting impact in declaring invalid Article 5(2) of the Directive.

mV. CONCLUSION

The Court of Justice's landmark decision that sex is not acceptable as a differentiation factor in insurance con-

tracts will have significant consequences on the sector. Its impact is, however, likely to be much wider than that. As

the Court confirmed in Luxembourg v. Parliament and Council,[FN163] the comparability of different situations

must be assessed with regard to “all the elements which characterise them. These elements must in particular be de-

termined and assessed in the light of the subject-matter and purpose of the European Union act which makes the dis-

tinction in question. The principles and objectives of the field to which the act relates must also be taken into ac-

count”. In other words, it is self-evident that situations are never identical in all respects, and “assessment of compar-

ability, difference or justification must concern characteristics which are relevant to determining the nature or terms

of the treatment in question. Unlawful discrimination occurs when criteria which are not relevant are relied upon to

override those which are relevant. It will always be necessary, therefore, to ascertain first which criteria are relevant

to the choice of treatment and which are not.” [FN164]

As argued above, one should therefore be cautious to draw conclusions from Test-Achats as regards other differ-

entiating factors (such as age), or as regards comparable exemptions or derogations in other EU legal instruments. In

particular, the judgment should arguably not be read as preventing measures of positive action, [FN165] provided

that the principle of proportionality is respected, which requires that derogations must remain within the limits of

what is appropriate and necessary in order to achieve the aim in view and that the principle of equal treatment must

be reconciled as far as possible with the requirements of the aim pursued. [FN166] Article 23 of the Charter expli-

citly acknowledges as much in providing that the principle of equality is not to “prevent the maintenance or adoption

of measures providing for specific advantages in favour of the under-represented sex.” [FN167] As Ronald Dworkin

*366 points out, there is nothing paradoxical in the idea that an individual's right to equal protection may sometimes

conflict with an otherwise desirable social policy, including that of making society more equal overall. [FN168] In

order to determine what the principle of equality requires in any given case it is of crucial importance to remind one-

self of the values underlying equality, which Advocate General Poiares Maduro identified as human dignity and per-

sonal autonomy. [FN169] Recognizing the equal worth of every human being means that we should be blind to con-

siderations of sex or any of the suspect grounds listed in Article 19 TFEU when we impose a burden on someone or

deprive someone of a benefit. “Put differently, these are characteristics which should not play any role in any assess-

ment as to whether it is right or not to treat someone less favourably.” [FN170] That is, of course, an eminently legal

conception of equality and fairness.

As Yves Thiery and Caroline Van Schoubroeck point out, the reason why insurers still vehemently oppose legal

instruments espousing that conception, is that theirs is fundamentally different. That difference can be traced back to

the distinction between an individualistic human rights conception of equality on the one hand, and the group con-

ception of equality espoused by the insurers. However, they argue that the two approaches can be reconciled if the

legal instrument prohibiting discrimination enables insurers to justify unequal treatment on objective and reasonable

grounds. [FN171] The core issue therefore remains the identification of such grounds. In that regard, it may be true

that there is statistically significant correlation between gender and, for example, life expectancy and in that regard

insurers were in the past arguably justified in relying on that ground to calculate differentiated tariffs and premiums.

However, as and when new research becomes available that questions that correlation and introduces a more sophist-

icated causal relationship that takes account of a series of factors, the justification of gender differentiation in insur-

ance contracts ought to be reexamined. If, in the light of new scientific evidence, it appears that gender-based distinc-

tions in insurance premiums and tariffs can no longer be rationally justified on actuarial grounds, they should be ree-

valuated on the basis of the prohibition on discrimination. Whether that evidence is available is an empirical ques-

tion. Whether it suffices to strike down gender-based distinctions is, however, a legal question, the answer to which

will differ depending on the fundamental conception of equality espoused by the society in question. In Test-Achats,

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18 Colum. J. Eur. L. 339

the ECJ has confirmed that in EU law, that conception is based on the equal worth of individuals, regardless of the

group or groups to which they belong.

More broadly, what both the judgments in Sturgeon and Test-Achats expose is the inherently problematic charac-

ter of a legislative process that appears to be under *367 such strong influence of the respective industry lobbies.

[FN172] In a Press release on the preliminary agreement within the Council on what would become Directive

2004/113, the Comité Européen des Assurances (CEA) welcomed the decision to allow the continued use of gender

as an insurance pricing factor. [FN173] The CEA Director was quoted as pointing out that the CEA had “repeatedly

warned that a ban on the use of gender, although laudable at first sight, could result in higher insurance premium for

all consumers,” concluding that the compromise reached “clearly shows that the industry's arguments have been re-

tained by a number of Governments”. It is of course true that, pursuant to Article 11(1) and (2) TEU, the institutions

of the EU are to give representative associations the opportunity by appropriate means to make known and publicly

exchange their views in all areas of Union action, and are to maintain an open, transparent and regular dialogue with

representative associations. Furthermore, Article 11(3) TEU obliges the European Commission to carry out. broad

consultations with parties concerned in order to ensure that the Union's actions are coherent and transparent.

However, those obligations ought not be interpreted as meaning that the institutions should allow lobby organizations

to have an undue influence on the legislative process, which forms an integral part of the Union as a representative

democracy, in which decisions are to be taken as openly and as closely as possible to the citizens (Article 10(1) and

(3) TEU). Moreover, the Commission's task is to “promote the general interest of the Union” (Article 17(1) TEU)

and all the institutions are to aim to promote the EU's values, “advance its objectives, serve its interests, those of its

citizens and those of the Member States, and ensure the consistency, effectiveness and continuity of its policies and

actions” (Article 13(1) TEU). In other words, the obligations in Article 11(1) to (3) must be interpreted in the light of

“the spirit, the general scheme and the wording” of the Treaties. [FN174] Whatever else the judgment in Test-Achats

holds, it makes clear that the EU legislator is not free to let itself be swayed to amend a proposal in such a way that it

fails to comply with the fundamental principles of the EU.

[FNa1]. Assistant Professor of International Law and EU Law at the Faculty of Law and Senior Member at the

Leuven Centre for Global Governance Studies, University of Leuven.

[FNaa1]. PhD Candidate, Institute for Insurance Law, University of Leuven. Many thanks to Professor' Kathleen

Gutman and Dr. Yves Thiery for their helpful comments and suggestions. Any errors and omissions remain our own.

[FN1]. Under the Consolidated Version of the Treaty on European Union, art. 19(1), Mar. 30, 2010, 2010 O.J. (C 83)

13 [hereinafter TEU], the institution of the Court of Justice of the EU encompasses the Court of Justice, the General

Court, and specialized courts (at present, the EU Civil Service Tribunal). For reasons of clarity, this article refers to

the Court of Justice as the European Court of Justice (ECJ) in the sense of the highest court of this institution. Fur-

thermore, unless otherwise indicated, references to the TEU are to its post-Lisbon incarnation. A reference to an art-

icle of the pre-Lisbon Consolidated Version of the Treaty on European Union, 2006 O.J. (C 321 E) 5, will be pre-

ceded by “ex”.

[FN2]. Case C-236/09, Association Beige des Consommateurs Test-Achats v. Conseil des Ministres, 2 C.M.L.R. 38

(2011).

[FN3]. Council Directive 2004/113, Implementing the principle of equal treatment between men and women in the

access to and supply of goods and services, 2004 O.J. (L 373) 37 (EC).

[FN4]. RONALD DWORKIN, TAKING RIGHTS SERIOUSLY 239 (1977).

[FN5]. Opinion of Advocate General Sharpston, Case C-427/06, Birgit Bartsch v Bosch und Siemens Hausgerate,

18 CLMJEURL 339 Page 16

18 Colum. J. Eur. L. 339

2008 E.C.R. I-7245, ¶ 56.

[FN6]. These provide as follows: Article 10: “No class distinctions exist in the State. Belgians are equal before the

law; they alone are eligible for civil and military service, but for the exceptions that can be created by a law for par-

ticular cases. Equality between women and men is guaranteed.”; Article 11: “Enjoyment of the rights and freedoms

recognised for Belgians must be provided without discrimination. To this end, laws and federate laws guarantee

among others the rights and freedoms of ideological and philosophical minorities.”; Article 11a: “The law, federate

law or rule referred to in Article 134 guarantees that women and men may equally exercise their rights and freedoms,

and in particular promotes their equal access to elective and public mandates. The Council of Ministers and the Gov-

ernments of the Communities and the Regions include both women and men. The law, federate law or rule referred to

in Article 134 provides for women and men to sit on the permanent deputations of the provincial councils, the col-

leges of the burgomasters and aldermen, the councils and permanent committees of the social welfare centres and on

the executives of any other inter-provincial, inter-municipal or intra-municipal territorial body ...” Translation avail-

able on the website of the Constitutional Court of Belgium: http://www.const-court.be/.

[FN7]. Consolidated Version of the Treaty establishing the European Community, Dec. 29, 2006, 2006 O.J. (C 321

E)37.

[FN8]. Charter of Fundamental Rights of the European Union, Mar. 30, 2010, 2010 O.J. (C 83) 389.

[FN9]. Convention for the Protection of Human Rights and Fundamental Freedoms, Nov. 4, 1950, E.T.S. No. 5, 213

U.N.T.S. 221.

[FN10]. International Covenant on Civil and Political Rights, Dec. 16, 1966, GA res. 2200A (XXI), 21 UN GAOR

Supp. (No. 16) at 52, UN Doc. A/6316 (1966); 999 UNTS 171; 6 ILM 368 (1967).

[FN11]. Convention on the Elimination of All Forms of Discrimination Against Women, Dec. 18, 1979, GA res.

34/180, 34 UN GAOR Supp. (No. 46) at 193, UN Doc. A/34/46; 1249 UNTS 13; 19 ILM 33 (1980).

[FN12]. Consolidated Version of the Treaty on the Functioning of the European Union, Mar. 30, 2010, 2010 O.J.

(C83) 47 [hereinafter TFEU].

[FN13]. Joined Cases C-92/09 and C-93/09, Volker und Markus Schecke GbR & Hartmut Eifert v. Land Hessen &

Bundesanstalt fur Landwirtschaft und Ernahrung, 2010 E.C.R. I-0000, ¶¶ 45-46.

[FN14].Test-Achats, 2 C.M.L.R. 38, ¶¶ 16-17 (2011).

[FN15]. Recital 18 in the preamble to the Directive.

[FN16].Test-Achats, 2 C.M.L.R. 38, ¶¶ 20-24 (2011).

[FN17].Id. ¶¶ 25-26.

[FN18].Id. ¶ 26.

[FN19].Id. ¶ 27.

[FN20].Id. ¶ 28, referring to Case C-127/07, Arcelor Atlantique et Lorraine and Others, 2008 E.C.R. I-9895, ¶ 23.

See, most recently, Case C-177/10, Rosado Santana v. Consejeria de Justicia y Administración, 2011 E.C.R. I-0000,

¶ 65.

[FN21].Test-Achats, 2 C.M.L.R. 38, ¶ 29 (2011).

18 CLMJEURL 339 Page 17

18 Colum. J. Eur. L. 339

[FN22].Id. ¶ 30.

[FN23].Id. ¶ 26.

[FN24].Id. ¶¶ 31-32.

[FN25].Id. ¶¶ 33-34.

[FN26].Id. ¶ 35 (“In view of that answer, there is no need to address the second question”).

[FN27]. Article 5(2) of Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal

treatment between men and women in the access to and supply of goods and services is invalid with effect from 21

December 2012.

[FN28]. Case 43/75, Gabrielle Defrenne v. Société anonyme beige de navigation aerienne Sabena (“Defrenne II”),

1976 E.C.R. 455, ¶ 10.

[FN29]. Mark Bell, The Principle of Equal Treatment: Widening and Deepening, in THE EVOLUTION OF EU

LAW 611, 615 (Paul Craig & Grainne de Burca eds., 2011).

[FN30].Defrenne II, ¶ 11.

[FN31]. ANTHONY ARNULL, THE EUROPEAN UNION AND ITS COURT OF JUSTICE 535 (2006).

[FN32].Defrenne II, ¶¶ 26-27.

[FN33]. TEU art.2 (Emphasis added).

[FN34]. See, to that effect, the Opinion of Advocate General Sharpston, Case C-427/06, Birgit Bartsch v Bosch und

Siemens Hausgeräte, 2008 E.C.R. I-7245, ¶ 59 (regarding age discrimination).

[FN35].Test-Achats, 2 C.M.L.R. 38, ¶28 (2011). See also Rosado Santana, 2011 E.C.R. I-0000, ¶ 65 and the case-

law cited there.

[FN36]. Op. Advoc. Gen., Bartsch, 2008 E.C.R. I-7245, ¶¶ 44-48.

[FN37]. This policy objective is generally referred to as “mainstreaming”. See Fiona Beveridge, Building Against the

Past: The Impact of Mainstreaming on EU Gender Law and Policy, 32 EUR. L. REV. 193 (2007).

[FN38]. See, for example, Joined Cases C-4/02 and C-5/02, Hilde Schönheit v. Stadt Frankfurt am Main and Silvia

Becker v. Land Hessen, 2003 E.C.R. I-12575, ¶ 85 and the case-law cited there.

[FN39]. Defined in Article 2(a) as “where one person is treated less favourably, on grounds of sex, than another is,

has been or would be treated in a comparable situation, including less favourable treatment of women for reasons of

pregnancy and maternity.”

[FN40]. Defined in Article 2(b) as “where an apparently neutral provision, criterion or practice would put persons of

one sex at a particular disadvantage compared with persons of the other sex, unless that provision, criterion or prac-

tice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.”

For an analysis of the distinction between direct and indirect discrimination in the ECJ's case-law in general, see the

Opinion of Advocate General Sharpston, Case C-73/08, Nicolas Bressol and Others, Celine Chaverot v. Gouvem-

ement de la Communaute francaise, 2010 E.C.R. I-2735, ¶¶ 43-57 (suggesting the following general definition of dir-

ect discrimination: “1 take there to be direct discrimination when the category of those receiving a certain advantage

18 CLMJEURL 339 Page 18

18 Colum. J. Eur. L. 339

and the category of those suffering a correlative disadvantage coincide exactly with the respective categories of per-

sons distinguished only by applying a prohibited classification.”)

[FN41]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 37.

[FN42]. Opinion of Advocate General Sharpston, Case C-227/04 P, Maria-Luise Lindorfer v. Council, 2007 E.C.R. I-

6767, ¶¶ 22-23 (also noting that it is clear from the ECJ's case-law that the analysis as to comparability and the ana-

lysis as to justifiability are quite often somewhat blurred).

[FN43]. Mary L. Heen, From Coverture to Contract: Engendering Insurance on Lives, 23 YALE J. L. & FEMINISM

335 (2011).

[FN44].Id. For some comparative reflections on the US with regard to sex equality, see Ruth Rubio-Marin, A New

European Parity-Democracy Sex Equality Model and Why It Won't Fly in the United States, 60 AM. J. OF COMP. L.

99 (2012), and with regard to antidiscrimination law in general: Grainne de Burca, The Trajectories of European and

American Antidiscrimination Law, 60 AM. J. OF COMP. L. 1 (2012).

[FN45].Belgian State Gazette Dec. 31, 1992. Christian Jaumain, Longévité: evolution et prospective. Conséquences

en matiére de capitalisation des dommages et intérêts en droit commun, in MéLANGES OFFERTS MARCEL FON-

TAINE 787 (Bernard Dubuisson et al. eds., 2003); Catherine Paris, Les dérives de la segmentation en assurance, in

LES DOSSIERS DU JOURNAL DES TRIBUNAUX 94-95 (2005).

[FN46]. Yves Thiery & Caroline Van Schoubroeck, Fairness and Equality in Insurance Classification, 31 THE

GENEVA PAPERS 190, 192-193 (2006); Eugenia Caracciolo di Torella, Gender equality after Test Achats, ERA

FORUM 2 (2012).

[FN47]. Thiery & Van Schoubroeck, supra note 46, at 191.

[FN48]. Commission Proposal for a Council Directive implementing the principle of equal treatment between women

and men in the access to and supply of goods and services, COM(2003) 657 final, 7-9.

[FN49].Test-Achats, 2 C.M.L.R. 38, ¶ 30 (201 1).

[FN50]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 22.

[FN51]. Joined Opinions of Advocate General Van Gerven, Case C-109/91, Gerardus Cornelis Ten Oever v. Sticht-

ing Bedrijfspensioenfonds voor het Glazenwassers-en Schoonmaakbedrijf, Case C-110/91, Michael Moroni v. Collo

Gmbh, Case C-152/91, David Neath v. Hugh Steeper Ltd, Case C-200/91, Coloroll Pension Trustees v. James

Richard Russell, 1993 E.C.R. I-4879, ¶ 28.

[FN52].Id. ¶ 44.

[FN53].Id. ¶ 52.

[FN54].Id. ¶ 53.

[FN55]. Peter-Olof Wilkström, In Search of Causes and Explanations' of Crime, in DOING RESEARCH ON

CRIME AND JUSTICE 117-139 (Roy King & Emma Wincup eds., 2007).

[FN56]. Joined Opinions of Advocate General Van Gerven, Ten Oever, 1993 E.C.R. I-4879.

[FN57].Id. ¶ 35.

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18 Colum. J. Eur. L. 339

[FN58].Id. ¶ 36.

[FN59].435 U.S. 702, 98 S. Ct. 1370 (1978). The judgment was also relied on in the Opinion of Advocate General

Jacobs, Case C-227/04 P, Lindorfer v. Council, 2007 E.C.R. I-6767, ¶ 57. See also Sydney J. Key, Sex-Based Pen-

sion Plans in Perspective: City of Los Angeles, Department of Water and Power v. Manhart, 2 HARV. WOMEN'S

L.J. 1 (1979); Lea Brilmayer, Richard W. Hekeler, Douglas Haycock & Teresa A. Sullivan, Sex Discrimination in

Employer-Sponsored Insurance Plans: A Legal and Demographic Analysis, 47 U. CHI. L. REV. 505 (1979-1980).

[FN60].463 U.S. 1073, 103 S. Ct. 3492 (1983).

[FN61]. Thiery & Van Schoubroeck, supra note 46, at 192-193. See also RONALD DWORKIN, JUSTICE FOR

HEDGEHOGS 354 (2011): “Concern for a large group of persons is not the same thing as concern for its member

one by one. Yes, an aggregation strategy values happiness or welfare or some other interpretation of utility, no matter

in which person it resides. But that is concern for a commodity, not for a person”.

[FN62]. Case C-152/91, David Neath v. Hugh Steeper Ltd., 1993 E.C.R. I-6935, ¶¶ 26-34; Case C200/91, Coloroll

Pension Trustees Ltd. v. Russell et al, 1994 E.C.R. I-4389, ¶¶ 75-85.

[FN63]. Case 69/80, Susan Jane Worringham and Margaret Humphreys v. Lloyds Bank Limited, 1981 E.C.R. 767.

[FN64].Neath, 1993 E.C.R. I-6935, ¶ 31, and Coloroll, 1994 E.C.R. I-4389, ¶ 80.

[FN65]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶57 (2011).

[FN66]. Philippa Watson, Equality, fundamental rights and the limits of legislative discretion: comment on Test-

Achats, 36 EUR. L. REV. 898 (2011).

[FN67]. This is clear from the fact that the statement is prefaced by “If anything” or in the original German “Wenn

überhaupt.”

[FN68].E.g., Tables 4 and 5 in Jaumain, supra note 45, at 785, show that, though both women and men gained in

longevity during the 20th century, a difference in life expectancy between them remains.

[FN69]. Women pay less than men for a term life insurance, while men pay less for annuity-benefit systems or for

endowment insurance; See Herman Cousy, Discrimination in insurance law, in NONDISCRIMINATION IN

EUROPEAN PRIVATE LAW 100 (Reiner Schulze ed., 2011); Philippe Colle, Kritische verzekeringsrechtelijke

bedenkingen bij de wet ter bestrijding van discriminatie tussen vrouwen en mannen, BULLETIN DES ASSUR-

ANCES 62 (2007); Paris, supra note 45, at 93.

[FN70]. OXERA, THE IMPACT OF A BAN ON THE USE OF GENDER IN INSURANCE (2011), available at

www.oxera.com.

[FN71]. CEA, THE USE OF GENDER INSURANCE PRICING (2011); and CEA, GENDER EQUALITY IN IN-

SURANCE, FREQUENTLY ASKED QUESTIONS (2004), available at www.cea.eu.

[FN72]. Under identical living conditions, the difference in average life expectancy would only be between zero and

two years, in favor of women; See Felipe Temming, Case Note--Judgment of the European Court of Justice (Grand

Chamber) of 1 March 2010: ECJ finally paves the way for unisex premiums and benefits in insurance and related

financial service contracts, 13 GERMAN L.J. 120 (2012); YVES THIERY, DISCRIMINATE EN VERZEKERING

222-223 (2011).

[FN73]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶¶ 62-63; Cf. Jaumain, supra note 45, at

18 CLMJEURL 339 Page 20

18 Colum. J. Eur. L. 339

789; Paris, supra note 45, at 93-94, n. 215 (referring to studies that claim the opposite).

[FN74]. Bernard Dubuisson, Solidarité, segmentation et discrimination en assurances: Nouveau débat, nouvelles

questions, BANK-EN FINANCIEWEZEN 251 (2007); Temming, supra note, at 119-20.

[FN75]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶¶ 66-67.

[FN76]. Cousy, supra note 69, at 102; Caracciolo di Torella, supra note 46, at 2-3, n. 5.

[FN77]. Temming, supra note 72, at 121; THIERY, supra note 72, at 209 & 647-666.

[FN78]. European Commission Guidelines on the Application of Council Directive 2004/113/EC to insurance, in the

light of the judgment of the Court of Justice of the European Union in Case C-236/09 (Test-Achats), 2012 O.J. (C

11) 1, ¶ 25.

[FN79]. See Christa Tobler, Case C-236/09, Association beige des Consommateurs Test-Achats ASBL, Yann van

Vugt, Cahrles Basselier v. Conseil des ministres, Judgment of the Court of Justice (Grand Chamber) of 1 March

2011, 48 COMMON MKT. L. REV. 2048-49 (2011).

[FN80].Test-Achats, 2 C.M.L.R. 38, ¶ 25.

[FN81].Commission Guidelines, supra note 78, ¶ 4.

[FN82].Id.

[FN83]. As requested by the European Insurance and Occupational Pensions Authority (“EIOPA”) as well as the

Austrian and Czech authorities at the Gender Forum meeting of June 20, 2011 (CEA position paper to the EC ques-

tionnaire on the follow-up to the Test-Achats ruling, available at http:// www.insuranceeurope.eu).

[FN84]. The Commission, which holds the legislative initiative, appears to have no intention to modify Article 5 of

the Directive. In a press release of March 1, 2011 (MEMO/11/123), vice-president Reding expressed her enthusiasm

regarding the ECJ's judgment in Test-Achats, available at http://

europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/123&guiLanguage=en. See also Jean-Marc Binon, 21

decembre 2012: L'Apocalypse maya' pour le sexe en assurance? [December 21, 2012: The ‘Mayan Apocalypse’ for

sex in insurance?], in REVUE DE DROIT COMMERCIAL BELGE [BELGIAN JOURNAL OF COMMERCIAL

LAW] 220 (2012).

[FN85]. As also pointed out by Tobler, supra note 79, at 2060; Temming, supra note 72, at 119.

[FN86]. See, to that effect, Case C-389/10 P, KME Germany AG, KME France SAS and KME Italy SpA v. Comm'n,

2011 E.C.R. I-0000, ¶ 127.

[FN87]. Case C-167/04 P, JCB Service v. Comm'n, 2006 E.C.R. I-8935, ¶ 208.

[FN88]. This much was clear even before the publication of the Commission Guidelines: e.g., Norbert Reich, Non-

Discrimination and the Many Faces of Private Law in the Union - Some Thoughts After the “Test-Achats” Judgment,

EUR. J. OF RISK REG. 289 (2011); Tobler, supra note 79, at 2057.

[FN89].Commission Guidelines, supra note 78, ¶¶ 5-7.

[FN90]. Erik Lutjens, Einde aan hogere premies en lagere uitkeringen voor vrouwen bij particuliere verzekeringen?

[An end to higher premiums and lower benefits for women with private insurance?], NEDERLANDS TIJDSCHRIFT

VOOR EUROPEES RECHT [DUTCH JOURNAL OF EUROPEAN LAW] 290-91 (2011); Tobler, supra note 79, at

18 CLMJEURL 339 Page 21

18 Colum. J. Eur. L. 339

2057; Also the Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 81.

[FN91].Commission Guidelines, supra note 78, ¶¶ 7 & 10; See also the same reasoning in COM (2003) 657 final, 8:

“The Commission recognizes however that the current widespread use of such factors cannot be changed overnight

without causing disruption and turbulence in the market. The Commission accepts, therefore, that it may be neces-

sary for insurance companies to continue to take account of actuarial factors based on sex in certain cases during a

transitional period.”

[FN92].Cf. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 81

[FN93].Cf. Binon, supra note 84, at 221 (warning against continued differentiation in terms of gender in existing

contracts).

[FN94].See, e.g., Case C-72/11, Afrasiabi, Sahabi & Kessel, 2011 E.C.R. I-0000, ¶ 63, and the case-law cited

therein. See also Case C-166/11, Gonzalez Alonso v. Nationale Nederlanden Vida Cia De Seguros y Reaseguros

SAE, 2012 E.C.R. I-0000, in which the ECJ took the view that the EU legislature, when it adopted Council Directive

85/577 of 20 December 1985 to protect the consumer in respect of contracts negotiated away from business premises,

1985 O.J. (L 372) 31 (EEC) and excluded insurance contracts as a whole from the scope thereof, regarded insurance

contracts linked to investment funds as insurance contracts, which consequently are similarly excluded. As Directive

85/577 does not contain any explicit definition of the concept of “insurance contract” and does not refer expressly to

the law of the Member States on that point, the ECJ held that “the scope of the term ‘insurance contract’ must be

sought having regard to the context of the directive and must be given an autonomous and uniform interpretation

throughout the European Union” (Gonzalez Alonso, 2012 E.C.R. I-0000, ¶ 25).

[FN95].Commission Guidelines, supra note 78, ¶ 9; COM(2003) 657 final, 8-9: “A move to sex-neutral pricing must

therefore be co-ordinated across the Union in order to avoid potentially damaging distortions of competition.”

[FN96].Commission Guidelines, supra note 78, ¶ 11 (emphasis added).

[FN97]. Annex 1 to the guideline gives an overview of the use of gender as a rating factor in insurance contracts in

the different Member States.

[FN98]. The Commission thinks, for example, of a premium increase by a percentage, based on the claims experi-

ence.

[FN99].Commission Guidelines, supra note 78, ¶¶ 12--13.

[FN100]. Yves Thiery, La fin de la tarification homme-femme en Europe [The End of Differentiated Tariffs for Men

and Women in Europe], JOURNAL DES TRIBUNAUX [JOURNAL OF THE COURTS] 346 (2011); Tobler, supra

note 79, at 2057; THE USE OF GENDER IN INSURANCE PRICING, supra note 71, at 10; See also Opinion of Ad-

vocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 81 & n. 60: “After that transitional period had expired all fu-

ture insurance premiums, in the calculation of which sex-specific differences are currently still being made, and also

the benefits financed out of the new premiums would however have to be neutral in terms of sex. That would also

have to apply to existing insurance contracts.” Cf. Case C-262/88, Douglas Harvey Barber v. Guardian Royal Ex-

change Assurance Group, 1990 E.C.R. I-1889, ¶ 44, in which the Court exempted entirely from the effect of the

judgment only “legal situations which have exhausted all their effects in the past”, and the interpretation of that

phrase in Joined Opinions of Advocate General Van Gerven, Ten Oever, 1993 E.C.R. I-4879, ¶¶ 10-23.

[FN101].Commission. Guidelines, supra note 78, ¶ 14; Annex 3 gives a more developed list of examples.

[FN102]. However, not for pregnancy and maternity: see the solidarity mechanism in Article 5(3); Commission

Guidelines, supra note 78, ¶ 15.

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18 Colum. J. Eur. L. 339

[FN103]. Directive 2006/54 of the European Parliament and of the Council of 5 July 2006 on the implementation of

the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation

(recast), 2006 O.J. (L 204) 23 (EC).

[FN104]. See Temming, supra note 72, at 122 (arguing that the exception used in Article 9(1)(h) of Directive

2006/54/EC would appear to be difficult to sustain in the light of the judgment in Test-Achats).

[FN105].Commission Guidelines, supra note 78, ¶ 23.

[FN106].Commission Guidelines, supra note 78, ¶¶ 21-23; See also Binon, supra note 84, at 222.

[FN107]. For ah example of that usage, see the Opinion of Advocate General Sharpston, Bartsch, 2008 E.C.R. I-

7245, ¶47.

[FN108]. For example, Article 6(2) of Council Directive 2000/78 of 27 November 2000 establishing a general frame-

work for equal treatment in employment and occupation, 2000 O.J. (L 303) 16 (EC) allows Member States to

“provide that the fixing for occupational social security schemes of ages for admission or entitlement to retirement or

invalidity benefits, including the fixing under those schemes of different ages for employees or groups or categories

of employees, and the use, in the context of such schemes, of age criteria in actuarial calculations, does not constitute

discrimination on the grounds of age, provided this does not result in discrimination on the grounds of sex.” See Wat-

son, supra note 66, at 902-904 (arguing that the Court's judgment in Test-Achats is difficult to reconcile with its

judgment in Case C-423/04, Sarah Margaret Richards v. Secretary of State for Work and Pensions, 2006 E.C.R. I-

3585, which concerned Council Directive 79/7 of 19 December 1978 on the progressive implementation of the prin-

ciple of equal treatment for men and women in matters of social security, 1979 O.J. (L 6) 24 (EEC)); Kristina

Koldinská, Case Law of the European Court of Justice on Sex Discrimination 2006-2011, 48 COMMON MKT. L.

REV. 1636-37 (2011) (noting that Article 6(1)(h) of Council Directive 86/378 of 24 July 1986 on the implementation

of the principle of equal treatment for men and women in occupational social security schemes, 1986 O.J. (L 225) 40

(EEC) provides an exception for using actuarial factors similar to Article 5(2) of Directive 2004/113).

[FN109]. Article 2(7) of the Proposal for a Council Directive on implementing the principle of equal treatment

between persons irrespective of religion or belief, disability, age or sexual orientation, COM(2008) 426 final; Com-

mission Guidelines, supra note 78, ¶¶ 18-20 & n. 5. This implies that for example two persons of a different age are

not in a comparable situation with regard to life insurance, if the differences of treatment are proportionate and based

on a sound risk assessment. Cf. the Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 50 & n. 37

(arguing that age is different from race and gender in that respect). See also Binon, supra note 84, at 223.

[FN110].Commission Guidelines, supra note 78, ¶¶ 24-26.

[FN111]. See Commission Guidelines, supra note 78, Annex I, for an overview of the use of gender as a rating factor

in the national legislation of the different Member States. These have to be adopted by December 21, 2012; Yves

Thiery, Het gebruik van geslacht in venekeringsovereenkomsten: is er leven na 21 december 2007? [The use of

gender in insurance contracts: is there life after December 21, 2007?], RECHTSKUNDIG WEEKBLAD [LEGAL

WEEKLY] 348 (2008); THIERY, supra note 72, at 354-355; Laurence Thébault, L'arret Test-Achats: des enjeux à

nuancer pour les services financiers [The Test-Achats Judgment: challenges to financial services], EUREDIA 371

(2011).

[FN112].Commission Guidelines, supra note 78, ¶ 25.

[FN113]. THIERY, supra note 72, at 208; Cousy, supra note 69, at 100; Thiery, supra note 100, at 346-47 (the in-

dustry expects that women will pay more for motor vehicle insurance, life insurance, and term life insurance, while

men pay more for annuity benefit systems).

18 CLMJEURL 339 Page 23

18 Colum. J. Eur. L. 339

[FN114]. Press Release, Groupe Consultatif Actuariel Européen, Society should consider the full impact of unisex in-

surance, say actuaries, (Oct. 13 2010), available at http://www.gcactuaries.org/documents/GC_Gender_Press_ Re-

lease_131010.pdf.

[FN115].See OXERA, supra note 70; Yves Thiery, The Opinion of A.G. Kokott on Gender Discrimination in Insur-

ance: Effects for the Insurance Market, ZEITSCHRIFT FOR GEMEINSCHAFTSPRIVATRECHT [JOURNAL FOR

PRIVATE COMMUNITY LAW] 30 (2011); Tobler, supra note 79, at 2057.

[FN116]. Temming, supra note 72, at 122; This argument is however only true in regard to obligatory insurance con-

tracts. For non-obligatory insurance contracts, people with a lower risk will try to find other ways to insure them-

selves.

[FN117]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 68; Colle, supra note 69, at 64; Thi-

ery, supra note 100, at 347.

[FN118]. Paris, supra note 45, at 95; Colle, supra note 69, at 64; FREQUENTLY ASKED QUESTIONS supra note

71, at 4.

[FN119]. As predicted by, e.g., Civic Consulting, Study on the use of age, disability, sex, religion or belief, racial or

ethnic origin and sexual orientation in financial services, in particular in the insurance and banking sectors, pre-

pared for European Commission DG Employment, Social Affairs and Equal Opportunities, Final Report, Part II:

Country Reports, (July 16, 2010), available at http://ec.europa.eu/social/BlobServlet?docId=5600&langId=en; Reich,

supra note 88, at 289; Caracciolo di Torella, supra note 46, at 9.

[FN120]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 68 & n. 47.

[FN121]. Case C-393/10, O'Brien v. Ministry of Justice, 2012 E.C.R. I-0000, ¶ 66.

[FN122]. Case 66/80, International Chemical Corporation v. Amministrazione delle fianze dello Stato, 1981 E.C.R.

1191, ¶ II.

[FN123]. Case 314/85, Foto-Frost v. Hauptzollamt Lübeck-Ost, 1987 E.C.R. 4199, ¶¶ 15-16.

[FN124].Id. ¶ 17.

[FN125].Schecke & Eifert, 2010 E.C.R. I-0000, ¶¶ 45-46.

[FN126]. Joined Cases C-402/05 P and C-415/05 P, Kadi and Al Barakaat International Foundation v. Council and

Commission, 2008 E.C.R. I-6351, ¶ 284 and the case-law cited therein.

[FN127]. See Art. 263 TFEU, ¶ 2, which lists as possible grounds for nullity: “lack of competence, infringement of

an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or

misuse of powers.” Fundamental rights fall within the scope of that provision: Case 4/73, J. Nold, Kohlen- und Baus-

toffgroBhandlung v. Comm'n, 1974 E.C.R. 491, ¶ 13.

[FN128]. Case C-162/96, Racke v. Hauptzollamt Mainz, 1998 E.C.R. I-3655, ¶ 26.

[FN129].Id. ¶ 27.

[FN130]. Tobler, supra note 79, at 2041; Koldinská, supra note 108, at 1632.

[FN131]. Opinion of Advocate General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶¶ 21-22.

18 CLMJEURL 339 Page 24

18 Colum. J. Eur. L. 339

[FN132].Test-Achats, 2 C.M.L.R. 38, ¶ 30.

[FN133].Id. ¶ 32.

[FN134]. Joined Cases C-402/07 and C-432/07, Christopher Sturgeon, Gabriel Sturgeon, Alana Sturgeon v. Condor

Flugdienst GmbH (C-402/07), & Stefan Bock, Cornelia Lepuschitz v. Air France SA (C-432/07), 2009 E.C.R. I-

10923.

[FN135]. Parliament and Council Regulation 261/2004 Establishing Common Rules on Compensation and Assist-

ance to Passengers in the Event of Denied Boarding and of Cancellation or Long Delay of Flights, and Repealing

Regulation (EEC) No 295/91, 2004 O.J. (L 46) 1(EC).

[FN136]. Case C-344/04, The Queen on the application of Int'l Air Transp. Ass'n, Eur. Low Fares Airline Ass'n v.

Dep't for Transp., 2006 E.C.R. I-7245, ¶ 82.

[FN137]. Opinion of Advocate General Sharpston, Sturgeon, 2009 E.C.R. I-10923, ¶¶ 51-62.

[FN138].Id. “The Court may after hearing the Advocate General order the reopening of the oral procedure.”

[FN139].Id. ¶¶ 65-66.

[FN140].See Case C-404/09, Commission v. Spain, 2011 E.C.R. I-0000, ¶ 57. The European Court of Human

Rights, within the context of examining whether the procedure before the ECJ was accompanied by guarantees which

ensured equivalent protection of the applicant's rights, gave weight to that possibility, which it noted “must be accep-

ted as realistic and not merely theoretical” in the light of the Opinion of Advocate General Sharpston in Case C-

212/06, Gouvemement de la Communaute francaise and Gouvemement wallon, 2008 E.C.R. I-1683 (perhaps rather

surprisingly, as the ECJ did not reopen the oral procedure in that case, though the AG had indeed suggested that it

should do so if it wished to address a certain fundamental point at ¶ 157): Cooperatieve Producentenorganisatie van

de Nederlandse Kokkelvisserij U.A. v. the Netherlands, App. No. 13645/05, Eur. Ct. H.R. (2009).

[FN141].Sturgeon, 2009 E.C.R. I-10923, ¶ 60.

[FN142].See Case C-149/10, Chatzi, 2010 E.C.R. I-0000, ¶ 43.

[FN143].Sturgeon, 2009 E.C.R. I-10923, ¶ 61.

[FN144]. Reference for a preliminary ruling in Case C-413/11, Germanwings, (case in progress).

[FN145]. References for a preliminary ruling in Joined Cases C-581/10 & C-629/10, Emeka Nelson v. Deutsche

Lufthansa AG & TUI Travel PLC v. Civil Aviation Authority (cases in progress).

[FN146].See, e.g., Jeremy Waldron, The Core of the Case against Judicial Review, YALE L.J. 1346-1406 (2006);

Richard Fallon, The Core of an Uneasy Case For Judicial Review, HARV. L. REV. 1693-1763 (2008); Mark Tush-

net, How Different are Waldron's and Fallon's Core Cases For and Against Judicial Review?, 30 OXFORD J. OF

LEGAL STUD. 49-70 (2010).

[FN147]. A principle equally venerable in contract law, EU law, and general treaty law: “When a treaty is open to

two interpretations one of which does and the other does not enable the treaty to have appropriate effects, good faith

and the objects and purposes of the treaty demand that the former interpretation should be adopted.” International

Law Commission, Report of the International Law Commission on the Work of the Second Part of the Seventeenth

Session, 3-28 January 1966, UN Doc. A/6309/Rev.l, 2 Y.B. OF THE INT'L L. COMMISSION, 219. See, in the EU

context, for example, the Opinion of Advocate General Jacobs in Joined Cases C-354/88, C-355/88 & C-356/88, Ro-

18 CLMJEURL 339 Page 25

18 Colum. J. Eur. L. 339

ermond v. Produktschap voor Vee en Vlees, 1990 E.C.R. I-2753, ¶ 39, and the Opinion of Advocate General Trsten-

jak in Case C-l99/08, Dr Erhard Eschig v. UNIQA Sachversicherung AG, 2009 E.C.R. I-8295, ¶ 64.

[FN148].Sturgeon, 2009 E.C.R. I-10923, ¶¶ 43 & 62.

[FN149]. Opinion of Advocate General Sharpston, Sturgeon, 2009 E.C.R. I-10923, ¶ 93. See also Niels Baeten,

Judging the European Court of Justice: the Jurisprudence of Aharon Barak Through a European Lens, 18 COLUM.

J. EUR. L. 135, 148 (2011) (describing the reasoning of the Court as “anything but straightforward”). See, however,

Koen Lenaerts & José A. Gutiérrez-Fons, The Constitutional Allocation of Powers and General Principles of EU

Law, 47 COMMON MKT. L. REV. 1629, 1637 (2010) (arguing that “the ECJ did not encroach upon the prerogatives

of the EU legislature but simply limited itself to clarifying a legislative choice already contained in Regulation No.

261/2004”).

[FN150].Test-Achats, 2 C.M.L.R. 38, ¶ 30.

[FN151]. See, to that effect, Case 215/88, Casa Fleischhandels-GmbH v. Bundesanstalt fur Landwirtschaftliche

Marktordnung, 1989 E.C.R. 2789, ¶ 30-31; Case C-136/04, Deutsches Milch-Kontor GmbH v. Hauptzollamt Ham-

burg-Jonas, 2005 E.C.R. I-10095, ¶ 32.

[FN152]. Opinion of Advocate General Sharpston, Sturgeon, 2009 E.C.R. I-10923, ¶ 61 and Opinion of Advocate

General Kokott, Test-Achats, 2 C.M.L.R. 38, ¶ 21.

[FN153]. Opinion of Advocate General Sharpston, Case C-173/07, Emirates Airlines Direktion fur Deutschland v.

Diether Schenkel, 2008 E.C.R. I-5237, ¶ 44. Further: Soren Schonberg & Karin Frick, Finishing, Refining, Polishing:

on the Use of Travaux Préparatoires as an Aid to the Interpretation of Community Legislation, 28 EUR. L. REV.

149-71 (2003).

[FN154].See, e.g., Case C-495/10, Centre hospitalier universitaire de Besancon v. Thomas Dutrueux & Caisse

primaire d'assurance maladie du Jura, 2011 E.C.R. I-0000, ¶ 25.

[FN155]. Case C-333/07, Société Régie Networks v. Direction de contrôle fiscal Rhône-Alpes Bourgogne, 2008

E.C.R. I-10807, ¶ 124.

[FN156]. Case C-351/04, Ikea Wholesale Ltd. v. Commissioners of Customs & Excise, 2007 E.C.R. 1-7723,¶ 67.

[FN157]. Case 112/83, Société des produits de maïs SA v. Administration des douanes et droits indirects, 1985

E.C.R. 719, ¶ 16.

[FN158].Schecke & Eifert, 2010 E.C.R. I-0000, ¶ 93.

[FN159].See, e.g., Regie Networks, 2008 E.C.R. I-10807, ¶127.

[FN160].Cf. Tobler, supra note 79, at 2058.

[FN161]. Watson, supra note 66, at 901.

[FN162]. For a commentary on the possibility for the Court to provide for a temporal limitation of the effect of its

judgments as introduced by the second Defrenne judgment, see Thymen Koopmans, Retrospectivity Reconsidered, 39

CAMBRIDGE L.J. 287-303 (1980); and Eleanor Sharpston, The Shock Troops Arrive in Force: Horizontal Direct

Effect of a Treaty Provision and Temporal Limitation of Judgments Join the Armoury of EC Law, in THE PAST

AND FUTURE OF EU LAW--THE CLASSICS OF EU LAW REVISITED ON THE 50TH ANNIVERSARY OF

THE ROME TREATY 251, 258-61 (Miguel Poiares Maduro & Loi'c Azoulai eds., 2010). For further reflections on

18 CLMJEURL 339 Page 26

18 Colum. J. Eur. L. 339

the relationship between the Court of Justice and the legislator, see Paul Craig, The ECJ and Ultra Vires Action: A

Conceptual Analysis, 48 COMMON MKT. L. REV. 395 (2011); PHILIP SYRPIS, THE JUDICIARY, THE LEGIS-

LATURE, AND THE EU INTERNAL MARKET (2012); Maurice Adams, Johan Meeusen, Gert Straetmans & Henri

De Waele, Judging Europe's Judges--THE LEGITIMACY OF THE CASE LAW OF THE EUROPEAN COURT OF

JUSTICE EXAMINED (2013).

[FN163]. Case C-176/09, Luxembourg v. Parliament & Council, 2011 E.C.R. I-0000, ¶ 32.

[FN164]. Opinion of Advocate General Sharpston, Lindorfer, 2007 E.C.R. I-6767, ¶ 24.

[FN165]. Lisa Waddington & Mark Bell, Exploring the Boundaries of Positive Action under EU Law: a Search for

Conceptual Clarity, 48 COMMON MKT. L. REV. 1515 (2011).

[FN166]. Case C-319/03, Serge Briheche v. Ministre de l'lnterieur, Ministre de l'Éducation nationale & Ministre de la

Justice, 2004 E.C.R. I-8807, ¶ 24.

[FN167]. Compare the more positive wording in 157(4) TFEU: “With a view to ensuring full equality in practice

between men and women in working life, the principle of equal treatment shall not prevent any Member State from

maintaining or adopting measures providing for specific advantages in order to make it easier for the underrepresen-

ted sex to pursue a vocational activity or to prevent or compensate for disadvantages in professional careers”

(emphasis added). See Bell, supra note 29, at 634.

[FN168]. DWORKIN, supra note 4, at 226.

[FN169]. Opinion of Advocate General Poiares Maduro, Case C-303/06, S. Coleman v. Attridge Law & Steve Law,

2008 E.C.R. 1-5603, ¶ 8.

[FN170].Id. ¶ 10.

[FN171]. Thiery & Van Schoubroeck, supra note 46, at 191.

[FN172]. Tobler, supra note 79, at 2060; Temming, supra note 72, at 112.

[FN173]. Press Release, Comité Européen Des Assurances, Preliminary Agreement on Gender Equality Directive,

European insurers welcome opportunity, to continue using gender in pricing, (Oct. 4, 2004), available at http://

www.insuranceeurope.eu/uploads/Modules/Newsroom/communique183.pdf.

[FN174]. Case 26/62, NV Algemene Transport- en Expeditie Onderneming van Oend & Loos v. Netherlands Inland

Revenue Administration, 1963 E.C.R. 1, ¶¶ 12-13.

18 Colum. J. Eur. L. 339

END OF DOCUMENT

18 CLMJEURL 339 Page 27

18 Colum. J. Eur. L. 339

Some Examples of Discrimination

Chapter

May 2024

Arthur Charpentier

We return here to the usual protected, or sensitive, variables that can lead to discrimination in insurance. We mention direct discrimination, with race and ethnic origin, gender and sex, or age. We also discuss genetic-related discrimination, and as several official protected attributes are not related to biology but to social identity, we return to this concept. We also discuss other inputs used by insurers, that could be related to sensitive attributes, with text, pictures, and spatial information, and could be seen as some discrimination by proxy. We also mention the use of credit scores and network data.

Fairness by awareness? On the inclusion of protected features in algorithmic decisions

Article

Apr 2022
Comput Law Secur Rep

AI decisions are increasingly determining our everyday lives. At present, European anti-discrimination law is process-oriented; it prohibits the inclusion of sensitive data that is particularly protected. However, especially in the context of AI decisions, constellations can be identified in which the inclusion of sensitive characteristics will lead to better and sometimes even less discriminatory result. A result-oriented approach, therefore, might be a more fitting strategy for algorithmic decision making. In this paper we examine the legal framework for including sensitive features in a Support Vector Machine for a fictitious scenario and discuss the resulting challenges in practical application. It turns out that generally ignoring sensitive features - as has been the practice up to now - does not seem to be a fitting strategy for algorithmic decision making. A process-oriented procedure only supposedly comes closer to individual case justice: If one assumes that fewer errors occur when protected characteristics are included, individuals will ultimately also be assessed incorrectly less often, especially when one protected group is more prone to errors than the other. This paper aims to support the current debate about legal regulation of algorithmic decision making systems by discussing an often neglected perspective.

Reconsidering insurance discrimination and adverse selection in an era of data analytics

Article

Apr 2020

David Cather

This article demonstrates how replacing age- and gender-based pricing variables with telematics data in auto insurance risk classification systems minimises insurance discrimination and increases cream skimming adverse selection. The study explains how incorporating telematics data into insurance pricing schemes reduces pricing heterogeneity, consistent with the anti-discrimination objective of Aristotelian equality. It also describes how anti-discrimination prohibitions of age- and gender-based insurance pricing can result in regulatory adverse selection; traditional adverse selection, where asymmetric information favouring applicants can result in an overpopulation of high-risk drivers in risk pools; and cream skimming adverse selection, where asymmetric information favouring telematics-based insurers supports premium discounts that attract safer drivers, prompting an underpopulation of low-risk drivers among non-telematics insurers. The study explains how insurers minimise their vulnerability to cream skimming by quickly entering the pricing “arms race” with their own telematics-based products and how incorporating telematics data increases the efficiency of risk classification systems.

Case C-236/09, Association belge des Consommateurs Test-Achats ASBL, Yann van Vugt, Charles Basselier v. Conseil des ministres, Judgment of the Court of Justice (Grand Chamber) of 1 March 2011, nyr

Article

Full-text available

Dec 2011
COMMON MKT LAW REV

Christa Tobler

Exploring the boundaries of positive action under EU law: A search for conceptual clarity

Article

Oct 2011
COMMON MKT LAW REV

Positive action is a central element of EU anti-discrimination legislation. It allows measures to be taken to further the realization of full equality in practice by redressing past or present disadvantages experienced by groups such as women, ethnic minorities, etc. With the expansion of EU anti-discrimination law, additional methods of promoting equality have been introduced, such as reasonable accommodation duties, mainstreaming and equality data collection. This has given rise to some terminological and conceptual confusion as to the distinction between these measures and positive action, including within court judgments. This article argues that positive action can be separated from other techniques for promoting equality and that maintaining this distinction is important. In particular, there are a specific set of requirements for positive action measures to be lawful, including respect for the principle of proportionality. Applying these requirements in an over-inclusive manner could have the effect of imposing unnecessary restrictions, as well as generating confusion for organizations and individuals with regard to what positive action entails.

Equality, Fundamental Rights and the Limits of Legislative Discretion: Comment on Test-Achats

Article

Dec 2011
Eur Law Rev

Philippa Watson

In its judgment in Test-Achats, the Court of Justice ruled that the use of derogations within the framework of Directive 2004/113 is strictly limited in time where such derogations allow a departure by the Member States from the general principle of equality of treatment. The judgment potentially has implications for the validity of derogations in several directives on equality and the prohibition of discrimination. The legislative process for social and employment measures may also be affected; these potential implications remain yet to be seen. © 2011 Thomson Reuters (Professional) UK Limited and Contributors.

Judgment of the European Court of Justice (Grand Chamber) of 1 March 2010: ECJ finally paves the way for unisex premiums and benefits in insurance and related financial service contracts

Article

Jan 2011

Felipe Temming

The reference for preliminary ruling concerns the validity of Article 5(2) of Council Directive 2004/113/EC of 13 December 2004, implementing the principle of equal treatment between men and women in the access to and supply of goods and services (hereinafter “Directive 2004/113”). The legal issue is the hotly debated question of whether and to what extent the sex of an insured person can be taken into account as a risk factor in the formulation of private contracts in insurance and related financial services.

The Core of the Case Against Judicial Review

Article

Apr 2006
YALE LAW J

Jeremy Waldron

This Essay states the general case against judicial review of legislation clearly and in a way that is uncluttered by discussions of particular decisions or the history of its emergence in particular systems of constitutional law. The Essay criticizes judicial review on two main grounds. First, it argues that there is no reason to suppose that rights are better protected by this practice than they would be by democratic legislatures. Second, it argues that, quite apart from the outcomes it generates, judicial review is democratically illegitimate. The second argument is familiar; the first argument less so. However, the case against judicial review is not absolute or unconditional. In this Essay, it is premised on a number of conditions, including that the society in question has good working democratic institutions and that most of its citizens take rights seriously (even if they may disagree about what rights they have). The Essay ends by considering what follows from the failure of these conditions.

The Core of an Uneasy Case for Judicial Review

Article

May 2008
HARVARD LAW REV

Richard H. Fallon

The best case for judicial review in politically and morally healthy societies does not depend (as is commonly believed) on the idea that courts are more likely than legislatures to define vague rights correctly. It rests instead on the subtly different ground that legislatures and courts should both be enlisted to Protect fundamental rights and, accordingly, that both should have veto powers over legislation that might reasonably be thought to violate such rights. In developing this case for judicial review, Professor Fallon proceeds by confronting recent, influential, philosophically probing arguments against judicial review by Professor Jeremy Waldron. Professor Fallon concedes arguendo that, as Professor Waldron argues, courts are no better than legislatures at defining rights correctly, but maintains that the crucial question is not whether courts or legislatures are less likely to err, but which kinds of errors are most important to avoid - those that result in rights being overprotected or those that result in rights being infringed. Insofar as judicial review can be designed to prevent errors in just one direction, involving failures to protect rights adequately, then judicial review may be supportable even if courts are no better than legislatures at identifying rights correctly. Professor Fallon also argues, contra Professor Waldron, that judicial review can actually contribute to the political legitimacy of an otherwise democratic scheme of government when the demands of political legitimacy are understood correctly. Professor Fallon's revised justification for judicial review, which does not presume courts to be better than legislatures at identifying fundamental rights, has important implications for how judicial review should be practiced. It implies a diminished role for courts in cases in which fundamental rights are pitted against one another such that the overenforcement of one entails the underenforcement of the other. It also implies that courts should withhold review when legislatures conscientiously seek to protect one fundamental right without plausibly threatening another.

How Different are Waldron's and Fallon's Core Cases For and Against Judicial Review?

Article

Jan 2010

Mark Tushnet

Recently Jeremy Waldron offered the 'core of the case against judicial review'. Richard Fallón responded with the 'core of an uneasy case for judicial review.' The core case for judicial review rested on a number of important conditions, and the core case against it incorporated a number of important qualifications. The two cases are quite similar once we take the conditions and qualifications into account. At its heart Professor Fallon's case rests on the proposition that '[l]egislative action is more likely to violate fundamental rights than legislative inaction'. I call this the libertarian presupposition in Professor Fallon's case. This article examines the libertarian presupposition, raising questions about its implication that private violations of fundamental rights are less serious or pervasive than violations of fundamental rights pursuant to legislation. It then discusses Professor Waldron's argument that an important part of the core case against judicial review is the existence of reasonable disagreement about the proper specification of fundamental rights. I argue that, while Professor Fallón provides a plausible psychological account of why the existence of such disagreement is unlikely to do much work in persuading people to accept the core case against judicial review, that psychological account offers a path toward understanding the different dispositions that lead Professors Waldron and Fallón to characterize their quite similar positions in the more dramatic 'against-for' manner.

Gender equality after Test Achats

Article

Jun 2012

Eugenia Caracciolo di Torella

The relationship between the principle of gender equality and insurance has always been a difficult one. On the one hand, gender equality is a fundamental principle of European Union Law. At the moment, the solution lies in the unsatisfactory compromise encapsulated in Article 5 of the Goods and Services Directive which entails a principle (Art 5(1)) and an exception (Art 5(2)). On 1 March 2011, the Grand Chamber of the Court of Justice in the Test Achats case declared void the exception encapsulated in Article 5(2) of the Goods and Services Directive. This note aims to offer some thoughts on the decision and to contribute to what is likely to become a growing debate in this area. It argues that, although the result of this case is to be welcomed because it reiterates that gender equality is a fundamental right, in practise the way in which the Court has reached its decision has created further ambiguities which de facto might have the effect of watering down the very message that it aims to send.

Charter of Fundamental Rights of the European Union

Article

Jan 2010

The European Convention

From Coverture to Contract: Engendering Insurance on Lives

Article

Dec 2011

Mary L. Heen

In the 1840s, state legislatures began modifying the law of marital status to ease the economic distress of widows and children at the family breadwinner’s death. Insurance-related exceptions to the common law doctrine of “marital unity” under coverture permitted married women to enter into insurance contracts and protected life insurance proceeds from their husbands’ creditors. These early insurance-related statutory exceptions to coverture introduced an important theoretical question that persisted for the rest of the nineteenth century — and into the next — as broader legal and social reforms took hold. How could equality of contract for married women be reconciled with the traditional dependencies of the home? Equality of contract also introduced the practical economic problem of how the lives of women could be valued apart from their husbands when the law otherwise enforced their economic dependency. The theoretical and practical issues were resolved for life insurance and annuity contracts, the Article argues, by an increased emphasis on “natural” differences between men and women when those differences comported with traditional gender status hierarchies and dependencies. Gender-distinct mortality tables and higher rates for coverage of women first appeared in annuity contracts used to fund lifetime financial support independent of or as a substitute for marital rights. Gender-merged tables and unisex rates generally prevailed, however, in life insurance contracts used to protect wives and children from the family breadwinner’s death, a more traditional pattern of household dependency. Gender-distinct rates thus tempered, in both symbolic and practical/economic terms, the equality of contract recognized by the statutory exceptions to coverture. The selective adoption of gender-distinct insurance rates during the first wave of woman’s rights activism illustrates the role played by marketplace contracts in reinforcing the traditional status relationships and dependencies of the home.

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