Court of Justice of the European Communities (including Court of First Instance Decisions)

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Officials - Subrogation of the Communities - Event giving rise to subrogation - Occurrence of harmful event - Settlement between an official and a third party who has incurred liability - Availability as a defence against the institution subrogated to the victim' s rights - Exceptions
(Staff Regulations, Art. 85a(1) )

The automatic subrogation of the Communities to the rights of redress of a Community official, provided for in Article 73(4) of the version of the Staff Regulations of Officials of the European Communities in force following the amendments made by Regulation No 912/78 and in Article 85a(1) of the version at present in force, takes effect immediately upon the occurrence of the harmful event. However, a third party who has incurred liability and who has concluded a settlement with the Community official may validly rely on such a settlement as against the institution unless, before the settlement with the official in question is concluded, the institution informs that third party of the existence of the right of subrogation and of its intention to exercise that right, or unless it provides proof that the third party who has incurred liability was informed, before the settlement with the official was concluded, of the existence of the right of subrogation.

In Case C-333/90,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal de Paix (Magistrates' Court), Luxembourg, for a preliminary ruling in the proceedings pending before that court between
Royale Belge
and
Robert Joris
on the interpretation of the Staff Regulations of Officials of the European Communities, in particular Article 73(4) thereof in the version contained in Council Regulation (Euratom/ECSC/EEC) No 912/78 of 2 May 1978 (Official Journal 1978 L 119, p. 1),
THE COURT (Fifth Chamber),
composed of: R. Joliet, President of the Chamber, Sir Gordon Slynn, J.C. Moitinho de Almeida, G.C. Rodríguez Iglesias and M. Zuleeg, Judges,
Advocate General: G. Tesauro,
Registrar: D. Louterman-Hubeau, Principal Administrator,
after considering the written observations submitted on behalf of:
- Royale Belge, by Fernand Zurn, of the Luxembourg Bar,
- the Commission of the European Communities, by J. Griesmar, Legal Adviser, acting as Agent, assisted by Jean-Luc Fagnart, of the Brussels Bar,
having regard to the Report for the Hearing,
after hearing the oral observations of Royale Belge and the Commission at the hearing on 23 October 1991,
after hearing the Opinion of the Advocate General at the sitting on 16 January 1992,
gives the following
Judgment

1 By judgment of 16 October 1990, which was received at the Court Registry on 26 October 1990, the Tribunal de Paix, Luxembourg, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of the version of the Staff Regulations of Officials of the European Communities contained in Regulation No 912/78 of 2 May 1978 (Official Journal 1978 L 119, p. 1).
2 It appears from the documents before the Court that Guy Hinger, an official of the European Communities, was the victim of an accident for which Robert Joris was responsible. Pursuant to the Staff Regulations, the Sickness Fund for Officials of the European Communities defrayed certain medical expenses. In addition, the Commission of the European Communities paid Mr Hinger the sum of BFR 50 218 as compensation for partial permanent incapacity. Under an insurance policy concluded with the Commission, Royal Belge, an insurance company, reimbursed that sum to the Commission and bore certain other medical and pharmaceutical expenses totalling BFR 10 619. Considering that it had been subrogated to the rights of both Mr Hinger and the Commission, Royale Belge brought an action before the Luxembourg Tribunal de Paix in order to recover those sums, totalling BFR 60 837.
3 Mr Joris contended that his debt to Mr Hinger was extinguished by the payment to him of a sum of BFR 32 000, which Mr Hinger accepted, in a negotiated discharge from liability for compensation of 23 November 1982, as covering the entire damage caused to him by the accident, so that he had no further claim against Mr Joris or the latter' s insurer. Relying on the principle that subrogation takes place only as a result, and at the time, of payment, Mr Joris contended that the benefits subsequently paid by the Commission to its official did not give rise to any subrogation to Mr Hinger' s rights since those rights were extinguished by the payments made to Mr Hinger.
4 Royale Belge maintained that the subrogation of the Communities to the rights of their official transferred all the rights of the official to the Communities when the accident occurred. In the opinion of Royale Belge and the Commission, that subrogation of the Communities to the victim' s rights was not conditional upon payment by the Communities of benefits under the Staff Regulations in fulfilment of their obligations, with the result that it took place as soon as the harmful event had occurred. Therefore, a settlement of the kind referred to by the defendant could not be relied on as a defence against the plaintiff.
5 Considering that the decision to be given depended upon an interpretation of the Staff Regulations, the Tribunal de Paix, Luxembourg, stayed the proceedings and referred the following question to the Court of Justice for a preliminary ruling:
"Does the statutory subrogation of the Communities to the rights, including rights of action, of their officials against third parties who have caused death, accidental injury or sickness provided for in Article 85a(1) (and formerly Article 73(4) ) of the Staff Regulations of Officials of the European Communities take effect immediately upon the event causing such death, injury or sickness, or only when benefits are provided to the victim thereof?"
6 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.
7 A preliminary observation is called for: Article 73(4) of the Staff Regulations, in the version in force at the material time, provides that the Communities are, within the limits of the obligations devolving upon them under Articles 72, 73 and 75, automatically to assume the rights of redress of the official or of those entitled under him against the third party responsible for an accident involving the death or injury of an official or persons covered by his insurance.
8 The wording of Article 73(4) of the Staff Regulations does not indicate that the subrogation in favour of the Communities is conditional upon the payment of benefits under the Staff Regulations. On the contrary, it provides that the Communities are automatically to be subrogated to the rights of the official, within the limits not of the payments made but of the obligations devolving upon them under the provisions of the Staff Regulations referred to. It is apparent from the wording of that provision that the event giving rise to subrogation in favour of the Communities is the existence of the obligation to pay benefits under the Staff Regulations, not the payment of them. The subrogation takes place upon the occurrence of the harmful event for which a third party is liable, even though it is not possible immediately to evaluate the Community' s obligations in pecuniary terms.
9 It must next be borne in mind that the purpose of the subrogation of the Communities is to ensure that an official is not compensated twice in respect of the same damage (see judgment in Case 103/81 Chaumont-Barthel v Parliament [1982] ECR 1003, paragraph 11). In so far as the damage suffered by an official renders the Communities subject to the obligation to pay him benefits under the Staff Regulations, the risk of twofold compensation can only be avoided if the official is deprived of his rights against any third party responsible for causing him damage, those rights being transferred to the Communities.
10 It follows that the automatic subrogation provided for by Article 73(4) of the Staff Regulations, in the version in force at the material time, takes place as soon as the harmful event occurs, with the result that the official is not entitled to conclude a settlement with the third party or take proceedings against him for compensation which is covered by obligations imposed on the Communities.
11 The question submitted to the Court also refers to Article 85a(1) of the Staff Regulations as at present in force, according to which "Where the ... accidental injury ... is caused by a third party, the Communities shall, in respect of the obligations incumbent upon them under the Staff Regulations consequent upon the event causing such ... injury ... stand subrogated to the rights, including rights of action, of the victim or of those entitled under him against the third party".
12 The differences between the text of that provision and that of the former Article 73(4) do not affect the answer to the question submitted.
13 It is apparent, however, from the order for reference that the Tribunal de Paix, Luxembourg, has sought a preliminary ruling from the Court in order to determine the more general question whether a third party may rely, as against a Community institution or its insurer, on a settlement concluded with the official before benefits were paid to the latter by the Communities.
14 It is therefore necessary to consider whether the immediacy of the subrogation provided for by the abovementioned provisions of the Staff Regulations prevents reliance on such a settlement as against the Community institution.
15 Whilst it is true that the Staff Regulations may produce effects vis-à-vis third parties (see in particular the judgment in Case 137/80 Commission v Belgium [1981] ECR 2393), it must be observed that at the material time the conditions under which Community officials were covered against the risk of accidents were laid down in internal rules, namely the Rules on the Insurance of Officials of the European Communities against the Risk of Accident and Occupational Disease, which were adopted by the Community institutions on different dates and were not published in the Official Journal of the European Communities.
16 Article 2 of those Rules defined the term accident and gave a number of examples. However, Article 4 contained a list of accidents which, in general, were not covered by Article 73 of the Staff Regulations. It was therefore necessary to read the relevant provisions of the Staff Regulations in conjunction with the Rules in order to determine whether an official was covered against the risk of a particular accident and whether, therefore, the Communities were subrogated to the right of action of the official concerned against the third party who has incurred liability.
17 It would be unreasonable to require the third party to be familiar with the provisions not only of the Staff Regulations but also of the internal rules.
18 It is therefore incumbent on a Community institution which wishes to avail itself of the subrogation provided for in Article 73(4) of the Staff Regulations to inform the third party who has incurred liability of the existence of that subrogation or to furnish proof that the third party knew of the existence of such subrogation before the settlement was concluded between the official and the third party.
19 It must therefore be stated that, although the subrogation at issue takes place as soon as the harmful event occurs, a third party who has incurred liability and who has concluded a settlement with an official may validly rely on it as against the institution unless the institution informs the third party, before the settlement is concluded with the official concerned, of the existence of the right of subrogation and of its intention to exercise it or unless it furnishes proof that the third party was apprised, before concluding the settlement with the official, of the existence of the right of subrogation.
20 It must therefore be stated in reply to the question submitted by the national court that the automatic subrogation of the Communities to the rights of redress of a Community official, provided for in Article 73(4) of the Staff Regulations, takes effect immediately upon the occurrence of the harmful event. However, a third party who has incurred liability and who has concluded a settlement with the Community official may validly rely on such a settlement as against the institution unless, before the settlement with the official in question is concluded, the institution informs that third party of the existence of the right of subrogation and of its intention to exercise that right, or unless it provides proof that the third party was informed, before the settlement with the official was concluded, of the existence of the right of subrogation.

Costs
21 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings before the national court, the decision on costs is a matter for that court.

On those grounds,
THE COURT (Fifth Chamber),
in answer to the question referred to it by the Tribunal de Paix, Luxembourg, by order of 26 October 1990, hereby rules:
The automatic subrogation of the Communities to the rights of redress of a Community official, provided for in Article 73(4) of the version of the Staff Regulations of Officials of the European Communities in force following the amendments made by Council Regulation (Euratom/ECSC/EEC) No 912/78 of 2 May 1978 and in Article 85a(1) of the version at present in force, takes effect immediately upon the occurrence of the harmful event. However, a third party who has incurred liability and who has concluded a settlement with the Community official may validly rely on such a settlement as against the institution unless, before the settlement with the official in question is concluded, the institution informs that third party of the existence of the right of subrogation and of its intention to exercise that right, or unless it provides proof that the third party who has incurred liability was informed, before the settlement with the official was concluded, of the existence of the right of subrogation.