CJEU rules on geographical limitation clauses in wake of PIP scandal
12/06/2020

On 11 June 2020, the Court of Justice of the European Union (CJEU), sitting in Grand Chamber, handed down its judgment in Case C-581/18 RB v. TÜV Rheinland LGA Products GmbH and Allianz IARD SA (see, attached judgment). The CJEU held that an individual cannot rely on the general prohibition of discrimination on grounds of nationality to challenge a clause in a contract between an insurance company and a manufacturer of medical devices limiting civil liability insurance coverage for harm caused by medical devices to a single EU Member State.

The judgment was given in response to a reference for a preliminary ruling from a German court in proceedings initiated by a German patient, residing in Germany, seeking compensation for the damage which she had suffered following the insertion of defective PIP breast implants. The proceedings were directed against both the French civil liability insurer of the French manufacturer of the breast implants, Poly Implant Prothèse (PIP), and the notified body which had certified the breast implants. The insurance contract with PIP included a clause limiting the geographical extent of the insurance coverage to harm that occurred in metropolitan France and the French overseas territories.

The CJEU held that the general prohibition of discrimination on grounds of nationality as enshrined in Article 18 of the Treaty on the Functioning of the European Union (TFEU) can only apply if the situation falls within the scope of application of EU law. This means that the situation must either (i) be regulated by EU secondary law, or (ii) fall within the scope of at least one of the fundamental freedoms (i.e., the free movement of persons, goods, services and capital).

No EU secondary law

First, the CJEU found that in EU secondary law there is no provision which requires the manufacturer of medical devices to take out civil liability insurance designed to cover risks linked to those devices or which regulates, in one way or another, such insurance. Directive 93/42/EEC of 14 June 1993 concerning medical devices (the MDD) does not contain any such provision. As Advocate-General Bobek had noted in his opinion, Regulation (EU) 2017/745 of 5 April 2017 on medical devices, which will repeal and replace the MDD from 26 May 2021 (see, Van Bael & Bellis Life Sciences News Alert of 24 April 2020), will not contain such a provision either.

Fundamental freedoms inapplicable

Second, the CJEU found that the situation did not fall within the scope of any of the fundamental freedoms. In this regard, it noted that:

  • while the breast implants had moved cross-border, there was no specific connecting factor with the free movement of goods as the dispute did not relate to obstacles to the cross-border movement of the breast implants but rather to the harm caused by these implants;
  • the patient did not make use of the free movement of persons as she is seeking compensation in the Member State where she resides (Germany);
  •  the medical treatment did not fall within the scope of the freedom to provide services as the service was provided in the Member State where the patient resides; and
  • the insurance service did not fall within the scope of the freedom to provide services as it was concluded between two companies established in the same Member State (France).

In view of the above findings, the CJEU concluded that the situation did not fall within the scope of application of EU law and that, as a result, the general prohibition of discrimination on grounds of nationality (Article 18 TFEU) did not apply. Accordingly, the clause limiting the geographical extent of the insurance coverage to harm that occurred in metropolitan France and the French overseas territories was left intact. However, the question remains if the CJEU would have reached the same conclusion had the situation fallen within the ambit of a fundamental freedom (e.g., if the patient had travelled abroad to receive the medical treatment).

Related : Van Bael & Bellis


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