Case C-460/14, Massar – is the insured free to choose his lawyer? [judgment 2016, ECLI:EU:C:2016:216]

Where a consumer has bought an insurance policy to cover his legal expenses, and his employer seeks to terminate his contract of employment in such a way that the consumer believes he can bring a legal claim for unfair dismissal, then is the consumer able to choose his own lawyer and have those costs reimbursed under the insurance policy? Or is the insurer at liberty to refuse reimbursement of those costs on the basis that the insured is not free to choose his lawyer, and ‘unfair dismissal’ is not an ‘inquiry’ for the purposes of the EU’s ‘legal expenses insurance’ Directive 87/344?

Facts
One of the easiest ways for a Dutch employer to terminate a contract of employment is to write to the Dutch state’s Agency for Employee Insurance [Uitvoeringsinstituut Werknemersverzekeringen], and request permission to terminate a particular employee’s contract of employment.

On receiving such a request, the Agency will assess the employer’s request against various criteria. There are a couple of policy reasons for this assessment. It is thought to deter employers from picking on employees who belong to socially weak groups, and thereby discourage their unfair dismissal. It is also thought to deter employers from pushing employees unnecessarily into the social security system, which is funded by the public purse.

In the context of its assessment, the Agency will also follow a procedure. One phase of the procedure is to allow the employee to give their view on the employer’s request. After hearing what the employee and then the employer have to say, the Agency can ask both parties to review and reappraise their interpretations of the situation. The Agency can then grant permission or refuse permission to terminate the contract of employment. There is no appeal from the Agency’s decision. Occasionally, an employee may well go on to bring a claim before a judge in a sub-district court for damages resulting from ‘manifestly unfair dismissal’ but this rarely happens in practice.

Against this backdrop of public administrative law in Dutch labour law, the present reference to the CJEU arises. Mr Massar’s employer had contacted the Employee Insurance Agency for permission to terminate his contract of employment. However, Mr Massar believed that his contract of employment was being terminated incorrectly; indeed, he thought there were sufficient grounds for him to bring a claim for damages resulting from unfair dismissal.

Fortunately for Mr Massar, he was the owner of a legal expenses insurance policy. He thought his policy would not only cover these legal expenses but also give him the right to choose his own lawyer.

Unfortunately for Mr Massar, his Dutch insurer (the legal predecessor to ASR), disagreed. It pointed out that the standard terms and conditions stated clearly that the insurance contract would be performed by a completely different insurance company, namely, the Dutch branch of the legal insurer ‘DAS’.

Mr Massar had no joy with the DAS either. It disclaimed any responsibility for providing cover for Mr Massar’s legal expenses; under its policy, he did not have the right to choose his lawyer.

Undeterred, Mr Massar disagreed with DAS. He referred to the specific terms and conditions of the contract, and explained how those provisions should be interpreted in light of Dutch contract law’s doctrine of reasonableness and fairness.

He also sought to interpret those terms in light of EU legislation and the CJEU’s latest case law. In essence, he could access EU law because an insurance contract for legal assistance insurance is one that is expressly governed by a specific piece of Dutch public law which implements the EU’s ‘legal expenses insurance’ Directive 87/344/EEC of 22 June 1987 on the coordination of laws, regulations and administrative provisions relating to legal expenses insurance.

Article 4 of that Directive provides:

1. Any contract of legal expenses insurance shall expressly recognize that:
(a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person;
(b) the insured person shall be free to choose a lawyer or, if he so prefers and to the extent that national law so permits, any other appropriately qualified person, to serve his interests whenever a conflict of interests arises.

2. Lawyer means any person entitled to pursue his professional activities under one of the denominations laid down in Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services.

According to Mr Massar, the key phrase in his favour was ‘in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person’.

However, DAS disagreed with Mr Massar’s interpretation of EU law. It believed that legal expenses for an unfair dismissal claim was, as a matter of legislative history, not intended to be covered by the Directive. The phrase ‘in any inquiry or proceedings’ was not intended to cover pre-trial costs. It was an understanding of the Directive which also explained the approach being taken in a number of other Member States, namely, only those hearings which were akin to court hearings would be covered. Finally, the DAS warned that if the Directive were to be interpreted broadly, as Mr Massar was contending, then this would have serious economic repercussions for the provision of, and access to, legal assistance insurance policies.

Questions Referred
According to the Curia website, the Dutch Supreme Court has asked:

1. Must the term ‘inquiry’ in Article 4(1)(a) of Council Directive 87/344/EEC […] of 22 June 1987 on the coordination of laws, regulations and administrative provisions relating to legal expenses insurance be interpreted as covering the procedure before the UWV [Uitvoeringsinstituut Werknemersverzekeringen (Employee Insurance Agency)], in which the employer requests a dismissal permit in order to bring to an end the employment contract with the employee (who is covered by legal expenses insurance)?

2. If the answer to Question 1 depends on the characteristics of the specific procedure, in combination, if necessary, with the facts and circumstances of the case, on the basis of which characteristics, facts and circumstances must the national court then determine whether that procedure is to be regarded as constituting an inquiry within the meaning of Article 4(1)(a) of the Directive?