JUDGMENT OF 9. 7. 1975 — CASE 20/75 D'AMICO v LANDESVERSICHERUNGSANSTALT RHEINLAND-PFALZ

In Case 20/75 Reference to the Court under Article 177 of the EEC Treaty by the Bundessozialgericht, Kassel, for a preliminary ruling in the action pending before that court between:

THE COURT composed of: R. Lecourt, President, J. Mertens de Wilmars and A. J. Mackenzie Stuart (Rapporteur), Presidents of Chambers, A. M. Donner, R. Monaco, P. Pescatore, H. Kutscher, M. Serensen and A. O'Keeffe, Judges, Advocate-General: A. Trabucchi Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

I — Facts and procedure

Under Section 1248 of the Reichsversicherungsordnung (German National Insurance Regulation) an insured person who:

1) has attained 60 years of age:

2) has completed 180 insurance months, called the waiting period: and

3) has been continuously unemployed for at least one year: shall upon application be entitled to early retirement benefit.

Mr d'Amico, who was born in Italy on 21 December 1907, was employed as a worker in Italy from 1932 to 1940, then in the German Reich from June 1940 to July 1943, after that in Italy once more and finally in France from 1947 to December 1968. Since December 1968 he has been unemployed in France.

On 27 July 1971 he submitted to the Caisse autonome nationale de la sécurité sociale des mines (Miners' Independent National Social Security Fund) an application for old-age pension which was forwarded to the defendant in the main action in order to obtain German social security benefits. The latter rejected the application for early retirement benefit but decided to grant a proportion of the normal retirement pension from the date when Mr d'Amico reached the age of 65 years, this proportion being about 7 %.

The first condition for the application of Section 1248 is satisfied, and the second condition is satisfied by aggregating his insurance periods in the EEC. Although Mr d'Amico had been continuously unemployed for at least one year, the defendant considered that the third condition was not satisfied, since under German law to be unemployed the worker must be available to the German Employment Office.

The Sozialgericht Speyer (Speyer Social Security Court) dismissed Mr d'Amico's appeal. The Landessozialgericht Rheinland-Pfalz (Rhineland-Palatinate Land Social Court) dismissed the appeal he lodged in October 1972, on the ground that there is no provision in the EEC Treaty or Regulations Nos 3 and 1408/71 whereby a period of unemployment completed in France may be treated as though it were a period of unemployment completed in Germany.

Mr d'Amico appealed to the Bundessozialgericht (Federal Social Security Court) and the latter referred the following question to the Court by order of 18 December 1974:

‘Under Article 27 (1) of Regulation No 3 of the Council of the EEC and Article 45 (1) of Regulation (EEC) No 1408/71 of the Council is account to be taken, for the acquisition of the right to benefits, of insurance periods completed in another Member State, which in essence are equivalent periods but which under the internal law of the Federal Republic of Germany are not reckonable towards the qualifying insurance period for the acquisition of the right to make a claim and in calculating the benefit, but the completion of which before a claim is made is simply an additional condition of the right to benefits?’

The order of reference was entered in the Court Register on 12 February 1975.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by Mr d'Amico on 12 March 1975, by the Commission of the European Communities on 20 April 1975 and by the Italian Government on 29 April 1975.

After hearing the report of the Judge-Rapporteur and the views of the Advocate-General, the Court decided to open the oral procedure without instituting a preparatory inquiry.

II — Summary of the written observations

Mr d'Amico observes that the refusal to grant him early retirement benefit on the ground that he was not living in Germany at the time when he acquired the right but in another Member State of the EEC is incompatible with Article 48 et seq of the EEC Treaty.

He claims that freedom of movement for workers within the Community, which is guaranteed by Article 51, is not ensured when some benefits are subject to the person entitled being resident in a specific Member State. All periods which might in some way come into consideration for the acquisition or retention of the right to benefits must in fact be taken into account

This means that periods of unemployment certified by the relevant French employment exchange must be taken into account when, in application of Section 1248 (2) of the Reichsversicherungsordnung in its former version, an application for a pension is considered, since if the territories were not also treated in the same way as regards permanent residence, the principle of free movement for workers would be defeated.

The Commission observes that according to the established case-law of the Court, Articles 48 to 51 of the Treaty supply not only the legal basis, but also the criterion on the basis of which Regulation No 3 and Regulation No 1408/71 must be interpreted.

In interpreting these provisions it is particularly necessary to ensure that workers who exercise their right of free movement are not in any way handicapped in relation to other workers.

This guiding principle is a factor which argues in favour of recognizing events other than the insurance periods laid down in Article 27 of Regulation No 3 and in Article 45 of Regulation (EEC) No 1408/71.

Article 51 (a) of the EEC Treaty not only provides for aggregation of insurance periods and equivalent periods but aggregation … of all periods taken into account under the laws of the several countries'.

Since this article determines both the framework and the limits of the interpretation of Regulation No 3 and Regulation (EEC) No 1408/71, the Commission maintains that Article 27 of Regulation No 3 and Article 45 of Regulation (EEC) No 1408/71 must be interpreted generally, to the extent required by national law, to the effect that periods completed in other Member States should be recognized as giving rise to the right to social security benefits.

The result of an interpretation in accordance with the spirit of the Treaty is to state that the Federal Republic of Germany is obliged, in spite of the letter of Regulation No 3 and Regulation (EEC) No 1408/71, to treat the period of unemployment completed in France by the plaintiff as though it were a period of unemployment completed in Germany.

This interpretation can also be deduced from the preamble to Regulation (EEC) No 1408/71, which states that the provisions of this regulation fall within the framework of freedom of movement for workers. The purpose of these provisions is to guarantee for all nationals of Member States equality of treatment under the various national legislations and for workers and their dependants ‘social security benefits … regardless of their place of employment or of residence’.

The fact that a person entitled has his place of employment in a Member State other than the Member State in which he claims his right to social security benefits is not by itself a sufficient reason to refuse a claim which is in other respects well-founded. This statement must still hold good as regards the place where a national of a Member State is registered as a person seeking work when his employment comes to an end.

The objectives laid down in the fifth recital of the preamble to Regulation (EEC) No 1408/71 must be attained, according to the terms of the sixth recital, not only by the aggregation of insurance periods which have been properly certified but also by ‘aggregation of all the periods taken into account under the various national legislations for the purpose of acquiring and retaining the right to benefits and of calculating the amount of benefits, and by the provision of benefits for the various categories of persons …’.

Regulation No 3 and Regulation (EEC) No 1408/71 contain a number of provisions which impose an obligation on Member States to recognize the events upon which the grant of benefits is conditional under social insurance legislation, even if they occurred in another Member State.

As regards the unemployment field in particular, although the unemployment benefits referred to in Articles 67 and 71 of Regulation (EEC) No 1408/71 must as a rule only be provided by the Member State to the authorities of which the person seeking work is available, Regulation No 3 and Regulation (EEC) No 1408/71 consider that unemployment per se is a common problem to solve which all the Member States must work together according to their means.

The Commission recalls that it is now possible to draw unemployment benefit in a Member State other than that in which the person seeking work was last employed.

A migrant worker who is a national of a Member State and who has had to interrupt his employment with an undertaking in another Member State in order to fulfil his obligations for military service in the country of which he is a national, has the right to have the period of his military service taken into account in the calculation of his seniority in an undertaking, to the extent to which the periods of military service in the country of employment are also taken into account for the benefit of national workers (Case 15/69, Ugliola v Südmilch AG, Rec. 1969, p. 363).

It must follow automatically from this judgment that periods of unemployment completed by the plaintiff in France must be treated as equivalent periods.

If an event which takes place abroad and which complies exactly with the conditions imposed by the national legislature as to its kind, definition and length were not recognized in the country in question only because it took place abroad, this would be indirect discrimination.

There can also be discrimination when the decision of a court is not based directly on the nationality of the migrant worker, but on other criteria, for example, his habitual residence (Case 152/73, Sotgiu v Deutsche Bundespost [1974] ECR 153).

The judgment delivered by the Court in Case 4/66, Hagenbeek v Raad van Arbeid [1966] ECR 425, clearly argues in favour of a wide interpretation of Articles 27 and 45 to the effect that these articles, besides providing for the aggregation of insurance periods and equivalent periods, impose on Member States an obligation to recognize events which justify the acquisition, retention or recovery of a right under their various national legislations, even if these events took place in similar circumstances in another Member State.

The Commission therefore suggests the following answer to the question referred for a preliminary ruling:

‘In accordance with the objectives of the freedom of movement for workers, Article 27 (1) of EEC Regulation No 3 and Article 45 of Regulation (EEC) No 1408/71 must be interpreted as providing that periods completed in other Member States which under the legislation of the competent State are not insurance periods or equivalent periods within the meaning of Article 1 (p) and (r) of the abovementioned regulations, but which are periods the completion of which is only a further condition to which the right to benefits laid down by the national law is subject, must also be taken into account for the acquisition of a pension right.’

The Italian Government observes that both Article 27 (1) of EEC Regulation No 3 and the provisions of Article 45 (1) of Regulation (EEC) No 1408/71 set forth, albeit in different terms, the principle whereby insurance periods completed in one Member State must be taken into account by the institution of another Member State as though they were periods completed under the legislation of the latter State.

Article 1 of Regulation No 3 and Article 1 of Regulation (EEC) No 1408/71 define the term ‘insurance periods’ and ‘periods of employment’ by reference to the legislation under which these periods were completed. This system is intended to allow insurance periods or equivalent periods which have been completed in several Member States to be aggregated so that a worker who has been employed in different Member States can acquire the right to benefits and consequently the right to a part of the pension in proportion to the period completed in each State without fulfilling in each of them the conditions prescribed. This result presupposes the abolition of the residence qualification which the legislation of a Member State may possibly make a condition of the grant of benefits.

On the basis of the concrete fact of residence in another Member State and of the completion of an insurance period or equivalent period in that State is built the legal fiction which consists of treating this insurance period or equivalent period as though it had been completed under the legislation of the State in which the benefit is claimed.

But if the Community system imposes the obligation to observe this legal fiction, it ought a fortiori to impose the obligation to observe the concrete fact upon which the fiction is based. This means that if a Member State must take into account a period of unemployment undergone in another Member State in order to assess whether insurance periods have been completed, then the first Member .State ought all the more to take account of the concrete fact of unemployment although it was undergone in another Member State, when this concrete fact is regarded as a prerequisite for the grant of the benefit.

Thus the Italien Government considers that periods of unemployment undergone in another Member State must likewise be taken into account for the acquisition of the right to benefits, and that therefore the preliminary question must be answered in the affirmative.

III — Oral procedure

At the public hearing on 27 May 1975 Mr Karpenstein, for the Commission, in reply to a question put to him by the Court, rejected the existence of a parallel between early retirement benefits for unemployed persons and unemployment benefits themselves. However, he recalls that under Regulation No 3, which was in force for at least some part of the period in question in this case, there was no question of a Member State other than the State in which the unemployed worker last worked having to pay unemployment benefit. On the other hand, under Regulation No 1408/71 it is possible for a worker who is unemployed in a given State to move to another State to look for work and to obtain unemployment benefit in the latter State for a certain period of time. But this new right of a migrant worker is not only limited in time but also subject to specific conditions laid down by Article 69 of Regulation (EEC) No 1408/71.

Without denying that there is, as regards unemployment benefits, a close link with the State in which a worker originally became unemployed, this link does not exist as regards early retirement benefit for unemployed persons.

Early retirement benefit is based on the consideration that the person concerned has failed to be reintegrated into the work process, and this fact distinguishes it from unemployment benefit.

The Commission, which is aware that the solution of this problem is uncertain, argues in favour of a wide interpretation.

The Advocate-General delivered his opinion on 12 June 1975.

Grounds of Judgment

1. By order of 18 December 1974, received at the Court Registry on 12 February 1975, the Bundessozialgericht referred to the Court under Article 177 of the EEC Treaty a question on the interpretation of Article 27 (1) of EEC Regulation No 3 (OJ 1958, No 561) and of Article 45 (1) of Regulation (EEC) No 1408/71 (OJ English Special Edition 1971 (II), p. 416).

2. This question asks whether, under Article 27 (1) of EEC Regulation No 3 and Article 45 (1) of Regulation (EEC) No 1408/71 account is to be taken, for the acquisition of the right to benefits, of insurance periods completed in another Member State, which in essence are equivalent periods but which are not reckonable under the national law of the Federal Republic of Germany towards the qualifying insurance period for the acquisition of the right to benefit or in calculating the benefit, but the completion of which before a claim is made is simply an additional condition of the right to benefits.

3. It emerges from the file that under the German legislation in force at that time, a person who, inter alia, has been continuously unemployed for at least one year shall be entitled to early retirement benefit before attaining 65 years of age. The plaintiff in the main action, who is of Italian nationality, was employed in the German Reich from June 1941 to July 1943, for the first three months of which he was employed within the territory of what is now the Federal Republic of Germany; from 1947 he was employed in the French Republic where he was registered as unemployed with a French employment bureau in December 1968. In the main action, he claims that the defendant should grant him early retirement benefit, on a proportional basis, on the ground of those three months' work and membership of the social insurance scheme within the territory of what is now the Federal Republic of Germany, aggregated with the periods completed under the legislation of other Member States. The defendant in the main action refused this application on the ground that under German law the term ‘unemployment’ implies that the unemployed person is available to the German employment bureau and on the ground that there is no provision of Community law which calls for any different interpretation.

4. The right to unemployment benefit presupposes that the unemployed person is available to the employment bureau at which he is registered, as appears from Chapter 6 of Regulation No 1408/71, in particular Articles 69 and 71 thereof. Because vacant posts vary from one region of the Community to another, unemployment benefits are linked to the geographical region in which the person concerned became unemployed.

5. To enable an unemployed worker to move to seek work, Community law has provided that an unemployed worker may under certain conditions move within the Community whilst retaining the right to unemployment benefit. Thus, according to the ninth recital in the preamble to Regulation No 1408/71, in order to facilitate search for employment in the various Member States, it is appropriate to grant to an unemployed worker, for a limited period, the unemployment benefits provided for by the legislation of the Member State to which he was last subject.

6. Article 69 of this regulation lays down the conditions which the person seeking work must satisfy in order to be able to retain the right to these benefits for a maximum of three months, in particular by requiring that he register within seven days with the employment services of the Member States to which he goes and that he be subject to the control procedure organized therein. The link with the State where the worker became unemployed is retained by these provisions by the fact that the competent institution of that State must still reimburse the amount of unemployment benefits provided by the competent institution of another Member State. Therefore, with certain exceptions, Community law does not provide for the right of an unemployed worker to claim unemployment benefits under the legislation of a Member State other than the State in which he became unemployed.

7. It is necessary, therefore, to examine whether the provisions of Community law quoted by the national court require this territorial link to be disregarded in respect of the benefits at issue in the main action.

8. Article 27 (1) of Regulation No 3 provides that for the acquisition, maintenance or recovery of the right to benefits, where an insured person has been successively or alternately subject to the legislation of two or more Member States, the insurance periods and assimilated periods completed under the legislation of each of the Member States shall be aggregated in so far as they do not overlap.

9. Article 45 (1) of Regulation No 1408/71 provides that an institution of a Member State whose legislation makes the acquisition, retention or recovery of the right to benefits conditional upon the completion of insurance periods shall take into account, to the extent necessary, insurance periods completed under the legislation of any Member State as though they had been completed under the legislation which it administers.

10. The said articles, like the entire system of which they form part, have as their basis, their framework and their bounds Articles 48 to 51 of the Treaty, which are aimed at securing freedom of movement for workers. Under Article 51, implementing regulations must secure for migrant workers aggregation, for the purpose of acquiring the right to benefit, of all periods taken into account under the laws of the several countries. The aim of this provision is to allow the migrant worker to acquire the right to benefit for all periods of employment or periods treated as such which have been completed by him in various Member States, without discrimination as against other workers by reason of the exercise of his right to freedom of movement. The periods which must be treated as though they were periods of employment as regards aggregation may under Article 1 (r) of Regulation No 3 and under Article 1 (s) of Regulation No 1408/71 include periods of unemployment to the extent to which they are regarded as equivalent to periods of employment by the legislation under which they were completed.

11. On the other hand, when national legislation makes the early acquisition of the right to retirement benefit conditional upon the person concerned having been unemployed for a certain time, as well as upon the completion of a period of membership of a social insurance scheme, and when therefore the length of this period of unemployment is not intended to be included in the period of membership required or to be used in the calculation of the benefit, but constitutes a separate additional condition, it does not follow from the provisions of the regulations that Community law requires the fact that the person concerned is registered as unemployed in another Member State to be taken into consideration in such a case.

12. Therefore the answer to be given to the national court is that the provisions of Article 27 (1) of Regulation No 3 and Article 45 (1) of Regulation No 1408/71 do not prohibit a rule of national law which requires, for the acquisition of the right to early retirement pension, that the person concerned shall have been unemployed for a certain time and thus available to the employment bureau of the Member State in question.

Costs

13. The costs incurred by the Government of the Italian Republic and the Commission of the European Communities which have submitted their observations to the Court are not recoverable. As the proceedings are, so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT in answer to the question referred to it by the Bundessozialgericht Kassel by order of 18 December 1974 hereby rules: