What happened is that for some reason that nobody really understands, in November 2003 the Commission decided that it was unfair to charge different insurance premiums to men and women, even if it is because, say, women happen to live longer. They included an opt-out, but it was limited to six years after the transposition deadline. The European Parliament then conditioned the opt-out on difficulties with implementation, and limited it to four years, as they would. Fortunately, the Directive was proposed under the old art. 13(1) EC, meaning that the EP did not get a vote. That is why art. 5 of the Directive (art. 4 of the proposal) ended up looking as follows:
Article 5The problem with today's judgement in Association Belge des Consommateurs Test-Achats e.a. v. Conseil des ministres is not paragraph 3, the part where I have to subsidise women's pregnancy and maternity insurance. That is dumb enough in itself, but at least vaguely sensible from the point of view that we do not want to punish women unnecessarily for getting pregnant. Also, paragraph 3 at least has the merit of being categorically and clearly formulated. Paragraph 2, on the other hand, quite notably left the possibility of completely undoing paragraph 1, because the original 6 year deadline was omitted. Hence the question before the court: Is a Member State really allowed to rely on the exception of par. 2 indefinitely?
1. Member States shall ensure that in all new contracts concluded after 21 December 2007 at the latest, the use of sex as a factor in the calculation of premiums and benefits for the purposes of insurance and related financial services shall not result in differences in individuals' premiums and benefits.
2. Notwithstanding paragraph 1, Member States may decide before 21 December 2007 to permit proportionate differences in individuals' premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. The Member States concerned shall inform the Commission and ensure that accurate data relevant to the use of sex as a determining actuarial factor are compiled, published and regularly updated. These Member States shall review their decision five years after 21 December 2007, taking into account the Commission report referred to in Article 16, and shall forward the results of this review to the Commission.
3. In any event, costs related to pregnancy and maternity shall not result in differences in individuals' premiums and benefits.
Member States may defer implementation of the measures necessary to comply with this paragraph until two years after 21 December 2007 at the latest. In that case the Member States concerned shall immediately inform the Commission.
One might think that the answer to that question is quite simple. As a matter of statutory interpretation, it is clear that the Member States, as Masters of the Treaties as well as sole EU legislator in this area, deliberately deleted the deadline, and allowed themselves the possibility of an indefinite opt-out. On the other hand, it is also clear that the current paragraph 2 is formulated much more hesitantly than the original proposal, which stated simply that "Member States may defer implementation of the measures necessary to comply with paragraph 1 until [six years after date referred to in paragraph 1] at the latest", albeit with the usual reporting requirements.
In its infinite wisdom, though, the ECJ decided today that none of this kind of thinking matters. After all, the Treaty of Lisbon brought us the binding nature (cf. art. 6 TEU) of the EU Charter of Fundamental Rights, which includes among its many provisions the general right of non-discrimination (art. 21) and the right of equality between men and women (art. 23). And on that basis, the Grand Chamber of the European Court of Justice decided to restore, on its own authority, the deadline originally envisaged by the Commission. After the end of next year, the exemption of art. 5(2) of Directive 2004/113 will no longer be available:
Apparently, it is for the ECJ to decide what the appropriate balance of equities is here, just like it is for the ECJ to decide what constitutes "an appropriate transitional period". Never mind that this will involve a massive subsidy from women to men in the life assurance sector, and generally a distortion of the efficiency of the insurance industry. Never mind that it seems singularly unconscionable to force insurance companies to deliberately disregard relevant actuarial information. Never mind that the Council, the EU's only lawmaker in this area, already weighed all these factors and decided to strike a different balance. (By the way, note that under art. 19 TFEU this Directive would now have to be enacted under the consent procedure.) The Grand Chamber hath spoken, and so it will be.
30 It is not disputed that the purpose of Directive 2004/113 in the insurance services sector is, as is reflected in Article 5(1) of that directive, the application of unisex rules on premiums and benefits. Recital 18 to Directive 2004/113 expressly 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. Recital 19 to that directive describes the option granted to Member States not to apply the rule of unisex premiums and benefits as an option to permit ‘exemptions’. Accordingly, Directive 2004/113 is based on the premiss that, for the purposes of applying the principle of equal treatment for men and women, enshrined in Articles 21 and 23 of the Charter, the respective situations of men and women with regard to insurance premiums and benefits contracted by them are comparable.
31 Accordingly, there is a risk that EU law may permit the derogation from the equal treatment of men and women, provided for in Article 5(2) of Directive 2004/113, to persist indefinitely.
32 Such a provision, which enables the Member States in question to maintain without temporal limitation an exemption from the rule of unisex premiums and benefits, works against the achievement of the objective of equal treatment between men and women, which is the purpose of Directive 2004/113, and is incompatible with Articles 21 and 23 of the Charter.
33 That provision must therefore be considered to be invalid upon the expiry of an appropriate transitional period.
34 In the light of the above, the answer to the first question is that Article 5(2) of Directive 2004/113 is invalid with effect from 21 December 2012.
It is important to realise that this case sets a dangerous precedent well beyond the insurance industry. It creates a very real risk of legislation by constitutional interpretation, as in the United States, a risk that is also posed by a number of recent ECtHR judgements. Cases like this take a normal matter of legislative discretion, where the lawmaker weighs the pros and cons of different alternatives in order to strike a balance that is fair given the circumstances at the time, and turn it into a question of human rights law, a question that by nature must have an answer that is absolute and valid for all ages. In Europe, we have been able to avoid having questions like abortion and same-sex marriage "resolved" by judicial command, and we should count ourselved fortunate for it. (Cf. last year's Strasbourg cases of A, B, and C v. Ireland on abortion and Schalk and Kopf v. Austria on SSM.) Fortunate, not only because the parliamentary route allows a much more legitimate public debate, but also fortunate because this way the answer is not forever cast in stone. Only recently there was somewhat of a debate again in the Netherlands about the number of weeks during which abortion should be available on demand, and it is only proper that such a question should be periodically revisited. The more we reach the technocratic details of sectoral regulation, as in today's insurance case, the less appropriate it is to make such reconsideration effectively impossible.
UPDATE: Here's an op-ed in EUObserver by the European Women's Lobby defending the judgement.