Court of Justice 31-03-1981 ECLI:EU:C:1981:81

Observations of the defendant in the main proceedings

With regard to Question I (a), the Insurance Officer points out that according to the case-law of the Court on Regulation No 3 the concept of “wage-earner” has a Community meaning, referring to all those who as such, and under whatever description, are covered by the different national systems of social security (judgment of 19 March 1964 in Case 75/63 Hoekstra (née Unger) [1964] ECR 177). Consequently, a person who is a “worker” in one Member State must be a worker throughout the entire Community.

Having regard to the object of the regulation, namely to encourage free movement of workers between Member States by preserving for a worker rights acquired in the field of social security, the Insurance Officer considers that a person who has been successively subject to the legislation of two Member States, albeit as a self-employed person in one and an employed person in another, is on becoming subject to the legislation of the latter, a worker within the scope of the regulation.

According to the judgments of the Court of 27 October 1971 in Case 23/71 Janssen [1971] ECR 859 and 29 September 1976 in Case 17/76 Brack [1976] ECR 1429, a person who “has been” subject to the legislation of a Member State as an employed person is entitled to rely on the regulation to aggregate periods previously completed as an employed person with periods later completed as a self-employed person for the purposes of the acquisition of a right to benefit. In the same way a person who “is” at the material time subject to the legislation of a Member State as an employed person should be able to take advantage of provisions of the regulation to aggregate periods of insurance previously completed as a self-employed person. The fact that the claimant did not in this case derive any additional benefit in the United Kingdom from the aggregation of insurance periods completed in another Member State is, it is submitted, irrelevant to the question whether he is a “worker” for the purposes of the application of the regulation in the United Kingdom.

Moreover, if the Netherlands authorities were right to regard Mr Galinsky as a “worker” within the meaning of Regulation No 1408/71, it is submitted that it would be absurd to have a situation where one Member State applies the regulation to his case and another Member State applies only its national legislation.

The Insurance Officer therefore submits that the answer to Question I (a) should be in the affirmative. Accordingly, a reply to Question I (b) is unnecessary.

With regard to the second question, the Insurance Officer observes that if Mr Galinsky must be regarded as a “worker” in the United Kingdom within the meaning of Regulation No 1408/71, he is a pensioner to whom Article 77 (2) (b) applies.

As a worker who has been subject to the legislation of two Member States, Mr Galinsky's entitlement to a pension in the United Kingdom falls to be determined in accordance with the provisions of Chapter 3 of Title III of the regulation and therefore necessarily comes within the scope of Article 77. That is so, it is submitted, even though the amount of his United Kingdom pension is based wholly on insurance periods completed in the United Kingdom as a self-employed person.

Referring to the opinion of Mr Advocate General Warner in Case 19/76 Triches [1976] ECR 1243 on the interpretation of Article 42 (2) of Regulation No 3, the predecessor to Article 77 (2) of Regulation No 1408/71, the Insurance Officer stresses that the essential object of Article 77 is to simplify the system for the payment of family benefits and to make it workable in practice, by selecting the legislation of a particular Member State as being applicable in the case of any particular pensioner. In this regard it does not matter whether the pension was acquired by virtue of the regulation or independently under the domestic legislation of a Member State. That is evident, it is submitted, from the provisions of Article 77 (2) (b) (i) under which the State of residence is responsible for the payment of family benefits even though no pension may be payable by that Member State.

Therefore the Insurance Officer submits that the reply to the second question should be that a worker who has acquired a pension under the legislation of a Member State solely by virtue of insurance periods completed as a self-employed person in that Member State is in relation to that pension to be regarded as a pensioner for the purposes of Article 77 of Regulation No 1408/71.

With regard to the third question, the Insurance Officer observes first that it would not arise if the effect of Article 77 (2) (b) (i) is to determine once and for all which is the competent State for payment of family benefits without recourse to the legislation of another Member State which might enable another benefit to be paid.

In support of this argument he points out that the object of Article 77 (2) is to prevent the unjustified overlapping of two or more family benefits and that the provision therefore constitutes an exception to the principle that Community rules may not be applied in such a way as to deprive a migrant worker or his dependants of the benefit of a part of the legislation of a Member State, an exception similar to that recognized by the Court in the judgment of 6 March 1979 in Case 100/78 Rossi [1979] ECR 831 with regard to Article 79 (3) of Regulation No 1408/71. By providing which is the competent State, Article 77 compensates the worker for any rights which he might otherwise have had under another Member State's legislation, particularly as the competent State must provide the family benefits even where there is no entitlement under that State's domestic legislation to family benefits (cf. judgment of 10 December 1969 in Case 34/69 Duffy [1969] ECR 597, paragraphs 7 to 9). Moreover, regard should not be had to the narrow issue of family benefits but to the position of pensioners generally in determining whether the regulation is more favourable than national legislation. If this wider approach is adopted it would be perfectly in order for the regulation to provide for the payment of one set of family benefits as a counter-balance for enabling workers to acquire pensions through the process of aggregation in one or more Member States.

Finally, the Insurance Officer submits that such arguments may not be justified if the benefit in question is an increase of a pension acquired under the national legislation of a Member State alone, since according to the principle established in the judgment of 21 October 1975 in Case 24/75 Petroni [1975] ECR 1149 those rights cannot be reduced or suspended. Viewing the case from this angle he submits in the alternative that Article 6 of Regulation No 1408/71 supersedes the provisions of a reciprocal convention even where the effect would be to diminish rights or to deprive a person of a right to benefit which he would otherwise have under that convention.

Observations of the Government of the United Kingdom

In order to illustrate the scope of the problems raised in this case the Government of the United Kingdom starts with a summary of the classes of person to which the British social security system applies. From that account it may be seen that this system, which began by covering only narrowly defined classes of workers, was later extended to other classes of workers without drawing a distinction between wage-earning workers and those of other classes, but rather in such a way as to cater progressively for the needs of the general working population. Thus, as regards title to retirement pension and supplements to such pension in respect of pensioners' children, the system does not draw any distinction between the different categories, but provides assimilation which protects contributors against any loss of rights which might result from a change of status as respects work.

The Government of the United Kingdom then draws attention to the wide interpretation which the Court gave to the term “wage-earning workers or persons treated as such”, which determined the scope of Regulation No 3, in particular in the judgment of 19 March 1964 in Case 75/63 Hoekstra (née Unger) [1964] ECR 177 and, with regard to the treatment of self-employed persons as wage-earners, in the judgment of 19 December 1968 in Case 19/68 De Cicco [1968] ECR 473 and the judgment of 27 October 1971 in Case 23/71 Janssen [1971] ECR 859.

Although Article 1 of Regulation No 1408/71 provided an entirely new definition of the expression “worker”, it appears from the judgment of the Court of 29 September 1976 in Case 17/76 Brack [1976] ECR 1429 that the principles established by the case-law concerning the former Regulation No 3 remain valid. The effect of that case-law is that a person who has, however many years earlier, been insured as an employed person under a social security scheme such as to affect his rights to benefit in the country concerned is to be treated as a worker whenever he moves to another Member State. Consequently, it must be assumed that all insurance as a self-employed person under a scheme which extends to the self-employed cover comparable to that provided for the employed falls within the scope of Article 51 and regulations made under it.

The British Government considers that on this view a Member State in which a person is an employed person and which is obliged to take into account insurance periods completed in another Member State as a self-employed person ought to be able to take into account a pension awarded by virtue of such insurance by the other Member State. Moreover, if such a pension is within the scope of Article 51 of the Treaty and Regulation No 1408/71 for that purpose, then it should be treated as within the scope of those provisions for all purposes.

For these reasons the Government of the United Kingdom considers that an affirmative answer should be given to Question I (a). It points out that neither the regulations nor the case-law of the Court contemplate the possibility of a person's being regarded at one and the same time as a worker within the meaning of Regulation No 1408/71 in one Member State and not as a worker in another.

With regard to Question I (b) the Government of the United Kingdom suggests that the reply should be to the effect that if a social security scheme under which employed persons are insured against one or more contingencies provides comparable cover to self-employed persons compulsorily insured under it, such self-employed persons should be regarded as “workers” for the purposes of Article 1 (a) of Regulation No 1408/71. It states that the establishment of such a principle would greatly facilitate the administration of the social security schemes of Member States in relation to persons moving within the Community, in particular with regard to their eligibility for medical benefits under the scheme of another Member State in accordance with Article 22 (1) (a) of Regulation No 1408/71.

As regards the second question, the United Kingdom Government observes that it amounts to asking whether Article 77 of Regulation No 1408/71 applies to a person in the position of the claimant having regard to the fact that his pension under the United Kingdom scheme was earned by contributions as a self-employed person. In its submission there is no reason why Article 77 should not apply if it is accepted that Question I (a) and Question I (b) are both answered in the affirmative.

With regard to the validity of Article 6 of Regulation No 1408/71, which is at issue in the third question, the United Kingdom Government draws attention in the first place to the uncertainty of the case-law, of which mention was made in the reference. Then it deals with the concept of “compensating advantage”, which had made it possible to admit an exception to the rule laid down in the Petroni judgment in the case of overlapping of family benefits (cf. judgment of 6 March 1979 in Case 100/78 Rossi [1979] ECR 838). Such an approach is also evident in the judgment of 22 May 1980 (Case 143/79 Walsh [1980] ECR), where it was said that the deprivation of rights to benefit under the legislation of a Member State “would arise only where the other provisions of Regulation No 1408/71 would have led ... to clearly unjustified overlapping of benefits” (paragraph 19).

In this case the government considers that the correct application of the Petroni doctrine discloses no factor of such a kind as to affect the validity of Article 6 even if that doctrine must also be applied to advantages derived from an international convention incorporated into national law. In this regard, it refers to the benefits, essential for the attainment of the aims of the Treaty, which derive from the replacement of the confusing and haphazard network of reciprocal conventions between the Member States by a consistent and properly constructed system of uniform Community law. In addition it points out the administrative difficulties caused by having to distinguish between cases in which a reciprocal convention is applicable and is also more favourable to the person concerned and cases where no such convention applies or is less favourable.

Observations of the Council

The Council confines its observations to the third question. It points out that in proceedings under Article 177 the question of the validity of Article 6 of Regulation No 1408/71 should be examined in abstracto irrespective of whether the reciprocal convention between the United Kingdom and the Netherlands would have been more favourable to the claimant.

After giving a brief account of the history and rationale of the Community regulations in the field of social security, the Council puts forward three arguments in support of the validity of Article 6.

In the first place, to maintain rules derived from bilateral conventions would have been in breach of the system of the Treaty, for on the one hand it presupposes the unique character of Community law throughout the whole territory of the Community and on the other hand it excludes the idea of reciprocity as being the basis for granting rights.

Secondly, to maintain the rules adopted by those bilateral conventions would have been contrary to the very principle of Article 51 of the Treaty. Indeed, the existence of preferential treatment between some Member States and of differences between the various conventions would have been contrary to the principle of the free movement of workers.

Thirdly, the Council possessed a wide discretion in assessing to what extent the continuance of provisions of bilateral conventions would be compatible with the objectives of Article 51 of the Treaty and with the principles of the regulation. While defining certain exceptions to the principle of Article 6, it was in any case entitled to limit the scope of those exceptions, as it did in Annex II to the regulation.

Further, the Council observes that according to the judgment of the Court of 7 June 1973 in Case 82/72 Walder [1973] ECR 599 the application of the regulation seems to take precedence over bilateral conventions even where those conventions are more advantageous to a particular worker.

Whilst acknowledging that the Court has held that the regulation must not have the effect of depriving a worker of benefits to which he would be entitled under national legislation alone, the Council maintains that different considerations apply to bilateral conventions. In this context it refers in particular to the equal and more comprehensive protection afforded by the regulation in comparison with the piecemeal arrangements made between some Member States on a bilateral basis.

Observations of the Commission

According to the Commission, the reply to Question I (a) must be negative. Indeed, an affirmative reply would go beyond the nature of Regulation No 1408/71, which is an exercise in coordination, and would lead to a harmonization of the legislation of the Member States. The Commission believes that it is for the legislation of the Member State under which periods of insurance have been completed to decide whether a particular person is insurable in the scheme operated under its legislation and may be entitled to the benefits provided. In support of its propositon it refers to similar solutions adopted by the Court in the judgment of 23 April 1980 in Case 110/79 Coonan ([1980] ECR 1445) with regard to the laying-down of the conditions for affiliation to a social security scheme, and in the judgment of 6 June 1972 in Case 2/72 Murru [1972] ECR 333 with regard to the expression “assimilated periods” used in Regulation No 3.

With regard to Question I (b) the Commission observes first that the United Kingdom scheme of social security falls within Article 1 (a) (ii) of the regulation. The scope of that provision as regards United Kingdom legislation is defined by paragraph 1 of Annex V, Part I (United Kingdom) and was the subject of detailed consideration in the judgment of 29 September 1976 in Case 17/76 Brack [1976] ECR 1429. It goes on to point out that this case is different from the case cited inasmuch as Mr Galinsky was self-employed or non-employed throughout his period of insurance in Britain. Besides, the Court did not adopt the argument of the British Government in the Brack case to the effect that Regulation No 1408/71 includes all those to whom the legislation of a Member State has extended the provisions of a general scheme of social security, to the extent to which they are considered to be subject to the same risks and contingencies as the generality of workers and are accorded the same protection. Consequently the Commission submits that Question I (b) should be answered in the negative.

In view of the negative replies to both branches of Question I the Commission considers that with regard to the second question it is sufficient to observe that Article 77 of Regulation No 1408/71 applies to the claimant in respect of the pension paid in the Netherlands. On the other hand, as regards the pension paid in the United Kingdom he is not a person covered by the regulation.

With regard to the third question the Commission largely follows the line of argument developed by the Council and suggests that the validity of Article 6 of Regulation No 1408/71 should be upheld even if such a decision would have the effect of depriving a worker of an advantage which he might otherwise obtain under a bilateral convention incorporated into national legislation. In particular, in accordance with the judgment of 13 July 1976 in Case 19/76 Triches [1976] ECR 1243, it stresses “the freedom conferred on the Council by Article 51 to choose any means which, viewed objectively, are justified” (paragraph 18 of the judgment) as well as the general objective advantages, resulting from Article 6, which act as a counterbalance to the specific limitations which that provision might impose (cf. judgment of 10 December 1969 in Case 34/69 Duffy [1969] ECR 597).

Moreover, having regard to the negative replies to Question I, the Commission expresses the opinion that it is for the United Kingdom authorities to consider whether the convention between the United Kingdom and the Netherlands remains applicable in so far as it extends to categories of persons other than employed persons, for example the self-employed. According to the judgment of the Court of 7 May 1969 in Case 28/68 Torrekens [1969] ECR 125, Article 177 of the Treaty does not permit the Court to interpret such a bilateral convention itself.