Supreme Court of Cassation confirms that the applicable substantive law transposing an EU directive must be consistently interpreted in the context of the CJEU preliminary rulings on that directive

Our team was successful in a case before the Bulgarian Supreme Court of Cassation (“SCC”) concerning correct application of EU private international law and foreign substantive law by the Bulgarian courts, the recognition of EU Motor Insurance directives’ effect and the case law of the Court of Justice of the European Union (“CJEU”). 

The claim was brought by four Bulgarian natural persons against the National Bureau of Bulgarian Motor Insurers seeking compensation for non-monetary damages arising out of the loss of their relative who died in a car accident in another EU Member State. The Bureau is the national compensation body under the Green Card system. Bulgarian legal system awards compensation for non-monetary damages ex aequo et bono – the exact amount is determined by the judge hearing the case. The claim was successful before the court of first instance but was rejected by the Court of Appeal on the grounds that the applicable substantive law provided only a fixed-amount compensation which had already been paid out to the claimants. The Court of Appeal confirmed that the applicable substantive law did not transpose correctly the relevant directives but failed to interpret it in conformity with EU law, on the grounds that the relevant preliminary rulings were passed after the insurance event’s day.

Access to cassation in Bulgaria is selective and provided by the SCC only if the raised legal questions with the appeal of cassation meet one of the few criteria set forth in the Bulgarian Civil Procedure Code. Our appeal was admitted to cassation because the SCC found that it raises a question relevant to the correct application of law and further development of the legal system. 

The question raised by our team concerned the interaction between the principles of autonomy and primacy of EU law, of effet utile of directives and of conform interpretation, on the one hand, and, on the other, the appellate court’s failure to interpret the applicable substantive law transposing an EU directive in the context of CJEU preliminary rulings on the same directive.

The SCC ruled that the relevant clauses of the directives comply with the CJEU criteria and may have direct effect against state bodies. The SCC further ruled that the Bureau has the capacity of a body authorised by the Bulgarian state with the task of providing compensation within the meaning of Article 1, para 4 of the Second Council Directive 84/5/EEC and that, therefore, the relevant clauses of the Motor Insurance Directives have direct effect against the Bureau. The SCC further ruled that the Bureau is a state-controlled organisation which on its own is a sufficient condition for the recognition of the direct effect. 

The SCC also found that the Court of Appeal has erroneously ignored the CJEU case law on the interpretation of the Motor Insurance Directives and as a result, the foreign substantive law established as applicable as per Regulation 593/2008 (Rome I) was applied incorrectly. The SCC noted that the claimed damages were significantly lower than the minimum guaranteed insurance coverage as per the Motor Insurance Directives.