JUDGMENT OF 9. 12. 1975 -CASE 57/75 PLAQUEVENT v CAISSE PRIMAIRE D'ASSURANCE MALADIE DU HAVRE

In Case 57/75 Reference to the Court under Article 177 of the EEC Treaty by the Cour de Cassation, Chambre Sociale, of France for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, A. M. Donner, J. Mertens de Wilmars, P. Pescatore, M. Sørensen, Lord Mackenzie Stuart and A. O'Keeffe, Judges, Advocate-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The judgment making the order for reference and the written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I — Facts and procedure

1. Mr Fernand Plaquevent, a French national residing in the Federal Republic of Germany, was employed in France from 1 December 1931 to 30 September 1944 and in the Federal Republic of Germany from 1 October 1944 to 12 December 1952. At that latter date he was forced to give up work as a result of illness; he first of all received sickness insurance benefits and, as from 1 August 1954, was awarded an invalidity pension by the German social security institution on a pro rata basis in relation to insurance periods completed in the Federal Republic. On the basis of Regulations Nos 3 and 4 concerning social security for migrant workers, and in particular on the basis of Article 53 of Regulation No 3, Mr Plaquevent applied in 1961 to the French social security institution for an invalidity pension by virtue of his previous employment in France. French legislation on questions of invalidity is of Type A, that is, legislation under which benefits are calculated without reference to the duration of completed insurance periods; the amount of the pension is equal to a percentage, which varies according to the degree of invalidity, of the average annual earnings of the worker during the last ten insurance years preceding the interruption of work (the ten best years completed after 31 December 1947, according to a decree of 1972). An invalidity pension is awarded to a worker who has been affiliated for twelve months on the first day of the month during which the interruption of work followed by the invalidity occurs and who has, in addition, worked for at least 800 hours during the four quarters of the civil year or the twelve months preceding the materialization of the risk, of which at least 200 hours were worked during the first of those quarters or the first three months, according to whichever reference period is adopted as a basis of calculation. The Caisse Primaire d'Assurance Maladie du Havre (herinafter referred to as ‘the Caisse’) found that the individual concerned did not satisfy the conditions required for the award of such a pension and that in his case the insurance periods completed in the Federal Republic had therefore to be taken into account in order for him to acquire a right to a pension. The Caisse therefore aggregated the French and German insurance periods, making a total of 77 quarterly periods of which 44 were completed in France, calculated the amount of the pension for accounting purposes in accordance with Article 28 (1) (c) of Regulation No 3 and in this way awarded the individual concerned a pension calculated pro rata with the length of the periods completed in France as compared with the overall duration of his working life in France and in Germany, that is, forty-four seventy-sevenths of the amount of the pension for accounting purpose. Mr Plaquevent has questioned the legality of this decision on the grounds that it infringed Articles 27 and 28 of Regulation No 3. He complains in particular that the decision applies subparagraphs (b) and (c) of Article 28 (1) in a cumulative manner; those provisions are worded as follows: He maintains in particular that, although a pro rata calculation is possible in the situation provided for in subparagraph (b), that is, where the criterion adopted for the award of the pension is founded in the duration of insurance, it is, on the other hand, not possible in the situation referred to under subparagraph (c), where the legislation of the State in which the pension is claimed bases the calculation of benefits on criteria other than the duration of insurance periods completed, and in particular on the average wage. The decision was upheld by the Cour d'Appel of Rouen in its judgment of 18 October 1972 and an appeal was lodged before the Cour de Cassation of France on 3 January 1973. As the Cour de Cassation considered that the issue involved in this instance raised a question of interpretation of Regulation No 3 it decided on 11 June 1975 to stay the proceedings and to refer the following question to the Court of Justice under Article 177 of the EEC Treaty:

‘(b) Where the right is acquired by virtue of subparagraph (a) above the said institution shall, for accounting purposes, determine the amount of benefit to which the person concerned would be entitled if all insurance periods or assimilated periods, aggregated in accordance with the procedures set out in the preceding article, had been completed exclusively under its own legislation; taking that amount as a basis, the institution shall determine the amount due pro rata with the length of the periods completed under the said legislation, before the risk materialized, as compared with the total length of the periods completed under the legislation of all the Member States concerned before the risk materialized; this amount shall constitute the benefit payable to the person concerned by the institution in question;

c) Where, under the legislation of one Member State, benefits are calculated on the basis of an average wage, an average contribution or an average increase, or on the ratio between the claimant's gross wage during the completed contribution periods and the average gross wage of all insured persons other than apprentices, such average figures or ratios shall be determined for the calculation of the benefits payable by the institution of that state, taking into account only the insurance periods and assimilated periods completed under the legislation of the said Member State, or taking into account the gross wage of the person concerned in respect of such periods …’

‘Whether in circumstances in which for an insured person who has been successively subject to the legislation of two Member States to acquire a right to an invalidity pension it was necessary to take into account the insurance periods completed in one of these States as such insured person did not fulfil the conditions laid down in the other for entitlement thereto and where, under the legislation of this latter State, the calculation of benefits is based upon an average wage or an average contribution, without regard to the length of the period of employment, the pro rata calculation must be made after aggregation of all the insurance periods, as provided in Article 28 (1) (b) of Regulation No 3, as occurs in the other Member State in order to supplement the benefits awarded by that State on the basis of the insurance periods, or whether the entire pension must be awarded without making any pro rata calculation’.

2. A certified copy of the judgment was received at the Court on 2 July 1975. Mr Plaquevent, represented by J. G. Nicolas, Advocate at the Conseil d'État and at the Cour de Cassation, the Caisse Primaire d'Assurance Maladie, represented by G. H. George, Advocate at the Conseil d'État and at the Cour de Cassation, and the Commission of the European Communities, represented by its Legal Adviser, Miss M.J. Jonczy, submitted written observations under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate-General the Court decided to open the oral procedure without holding any preparatory inquiry.

II — Written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

A — Written observations submitted by Fernand Plaquevent

Mr Plaquevent observes that Article 28 (1) of Regulation No 3, which concerns the method of calculation of a pension, makes a distinction between two situations according to whether the criterion used as the basis for calculation is that of the ‘duration of insurance’ or a different criterion, such as, for example, that of the ‘average wage’.

These two situations are referred to by subparagraphs (a) and (b) and by subparagraph (c) of the abovementioned Article respectively.

The provisions of subparagraph (a) recall the principle of aggregation for acquisition of a right to a pension. The provisions of subparagraph (b) set out the method of calculation of the amount of the benefit. For this purpose they refer to the situation in which the right to the pension has been acquired under the preceding provisions, that is, as a result of the ‘aggregation’ of all the insurance periods or assimilated periods, and they provide for resort to this system of aggregation in order to determine the amount of the benefit for accounting purposes, on the basis of which the institution determines the amount owed pro rata temporis.

It therefore follows, in Mr Plaquevent's view, that the provisions of subparagraph (b) lay down the principle of aggregation not only for the purpose of the acquisition of a right to a pension but also for the determination of the amount to be paid. This being so it is quite reasonable for them to have provided, as regards the determination of that amount, for the application of the principle of pro rata calculation. That principle is the logical corollary of aggregation once this enters into the payment of the benefit.

On the other hand, the provisions of subparagraph (c) do not refer to aggregation either for the acquisition of a right to a pension or for the determination of the amount to be paid. They only take into account the average wage, the average contribution, and so on, which are fixed solely on the basis of the periods completed under the legislation of the State in which the pension is claimed, or on the basis of the claimant's gross wage during those periods alone, to the exclusion of periods completed in the other Member States. In the circumstances it is quite logical that no reference should have been made to a pro rata calculation: since employment in the other Member States is not taken into account in determining the amount of the pension to be paid it is hardly necessary to resort to a pro rata calculation in order to reduce this amount by dividing it up among several social security institutions.

In other words, an analysis of Articles 27 and 28 shows that a pro rata calculation is only possible where aggregation is envisaged not only for the purpose of the acquisition of a right to a pension but also, and in particular, for the award of benefits. Its application thus presupposes that the criterion used as a basis for such award is that of the ‘duration of insurance’. On the other hand, where another criterion, such as that of the average wage, is used as a basis for the award, and where the pension is paid without aggregation, even if aggregation proved necessary in order to acquire a right to benefit, a pro rata calculation is not possible.

In these circumstances, the provisions of Article 28 (1), concerning the conditions under which a right to the pension is acquired, should not be confused with those of the same article concerning the method of calculation of the benefits. The provisions of subparagraphs (b) and (c) cannot be applied in a cumulative manner. The are mutually exclusive since, under subparagraph (b), aggregation is provided for entitlement to a pension as well as for the award of benefits, whilst under subparagraph (c) it is no longer provided for the purposes of such award.

Mr Plaquevent concludes by suggesting that the following answer be given to the question referred:

‘Articles 28 (1) (b) and 28 (1) (c) of Regulation No 3 of the European Economic Community are mutually exclusive; the former, which alone provides for a pro rata calculation, only refers to situations in which the aggregation of periods of insurance was necessary not merely for the purpose of entitlement to a pension but also for the award of that pension. On the other hand, Article 28 (1) (c) excludes a pro rata calculation in situations where, although necessary for the purpose of entitlement to a pension, aggregation is not necessary for the award of that pension, since periods completed abroad are not taken into consideration, the sole criterion adopted for the calculation being that of the average wage, average contribution or average increase, which affect only those periods completed in the State in which the pension is claimed.’

B — Written observations submitted by the Caisse Primaire d'Assurance Maladie du Havre

After setting out the facts preceding the main action and analysing the provisions of Article 28 (1) of Regulation No 3 which are at issue in this instance the Caisse observes that subparagraphs (a) and (b) of that article provide that all insurance periods and assimilated periods shall be aggregated and that the amount for accounting purposes obtained in respect of all those periods under the sole legislation of the Member State in which the pension is claimed shall be calculated pro rata with ‘the length of the periods completed under the said legislation’. As regards the provisions of subparagraph (c) which govern the particular case in which, under the legislation of the Member State in which the pension is claimed, the benefits are calculated on the basis of an average wage, an average contribution, and so on, these provide that such average figures or ratios shall be determined ‘taking into account only the insurance periods … completed under the legislation of the said Member State’. The solutions adopted by Article 28 (1) under subparagraphs (b) and (c) respectively are thus analogous. In both cases the amount of the pension is in fact determined by reference to those periods of insurance alone which were completed in the Member State which must pay the pension. There is thus no conflict between these provisions as in both cases the procedures for calculating the pension involve, first, aggregation and, secondly, a pro rata calculation.

The Caisse concludes by suggesting that the following answer be given to the question referred:

‘In circumstances in which for an insured person who has been successively subject to the legislation of two Member States to acquire a right to an invalidity pension it was necessary to take into account the insurance periods completed in one of these States as such insured person did not fulfil the conditions laid down in the other for entitlement thereto and where, under the legislation of this latter State, the calculation of benefits is based upon an average wage or an average contribution, without regard to the length of the period of employment, the pro rata calculation must be made after aggregation of all the insurance periods, as provided in Article 28 (1) (b) of Regulation No 3, as occurs in the other Member State in order to supplement the benefits awarded by that State on the basis of the insurance periods.’

C — Written observations submitted by the Commission of the European Communities

The Commission does not share Mr Plaquevent's view that subparagraphs (b) and (c) of Article 28 (1) of Regulation No 3 provide for two different and mutually exclusive methods for the payment of benefits, to be applied according to whichever criterion is adopted by the national legislation in question: that of the duration of the insurance periods or that, for example, of the average wage.

On the contrary, both in its original version and as amended (cf. Regulation No 47/67 of the Council of 7 March 1967), subparagraph (c) of Article 28 (1) lays down a rule for the calculation of the amount of the benefit for accounting purposes to be employed in cases where the legislation applied by the relevant social security institution provides that the calculation of the benefit is based in particular upon the wages received by the worker in the period during which he was subject to that legislation. Under this provision the social security institution does not take into account the wages actually received by the worker in the period during which he was subject to the legislation of another Member State, but determines the amount for accounting purposes on the sole basis of the wages received under the legislation which it is applying.

In this instance the French legislation provides that the invalidity pension shall be calculated on the basis of the average wages received during the previous ten years. Since, during that period, Mr Plaquevent was employed in Germany, in accordance with Article 28 (1) (c) the average wage was fixed on the basis not of the wages received in Germany but of those received during the period in which he was insured in France.

The rule contained in that provision thus constitutes a means of simplifying the calculation of the amount for accounting purposes which is justified in view of the practical and administrative difficulties which the institution paying the benefit would meet if it had to take account of the wages received while the individual concerned was subject to the legislation of another Member State.

The Commission maintains that, contrary to the argument put forward by Mr Plaquevent, Article 28 (1) (c) does not lay down a method for the award of benefits: it is subparagraph (b) which provides for this. These two provisions are in no way mutually exclusive since subparagraph (c) does not set aside the possibility of the benefit being awarded pro rata where the legislation of the Member State in question also makes the amount of the benefit dependent upon the duration of the insurance periods completed. This applies in particular to the French legislation concerning old-age pensions, the calculation of which is based upon the wage received during the ten best insurance years and whose amount depends on the number of years of insurance.

As, on the contrary, the French legislation in question does not make the amount of the benefit dependent upon the duration of the insurance periods, with the result that the periods completed in Germany have no effect on the amount of the pension for accounting purposes, the problem which must be resolved is whether, where aggregation carried out for the acquisition of the right to benefit is unnecessary for the calculation of the amount for accounting purposes and, there fore, for the award of the benefit, a reduction of the benefit by calculating it pro rata temporis is justified.

According to the established case-law of the Court it is now accepted that if aggregation is not necessary for the acquisition of a right to benefit in accordance with Article 27 of Regulation No 3, there can be no pro rata calculation, that is, Article 28 is inapplicable. On the other hand, the Court has not yet ruled on the converse question, which is whether recourse to aggregation necessarily entails recourse to pro rata calculation.

To reply to this question it is necessary to consider what are the aims, first, of aggregation and, secondly, of pro rata calculation.

The purpose of the system of aggregation is not solely to add together insurance periods completed in the home country and abroad for the purposes of entitlement to benefit. In the case of Type A legislation it cannot be employed to give entitlement if the individual concerned is no longer subject to that type of legislation. The purpose of the system of aggregation is also to enable a factor which came into existence in one Member State and which is decisive for the acquisition of a right to benefit in another Member State to be regarded as having occurred in the latter State. In the absence of such an assimilation procedure those Member States with legislation of Type A are completely free from any obligation towards workers who are no longer subject to that legislation.

In the Commission's view it may therefore be concluded that where a right to benefit is acquired by means of aggregation the reduction which results from the calculation of the benefit pro rata temporis is justified to the extent to which it is inversely proportionate to the advantage represented by aggregation, without which the worker has no right to benefit. However, in order to draw this conclusion it must be borne in mind that the pro rata calculation fulfils a dual purpose. First, it meets a technical requirement for the calculation of the amount of a benefit (the right to which is only acquired after aggregation) where such amount is not determined on the basis of the ‘duration of insurance’ but on the basis of the ‘frequency of contributions’ (United Kingdom and Ireland). Secondly, it is intended to ensure that a worker receives benefit of an amount which is strictly in proportion to the length of the insurance periods completed, in such a way that all risk of ‘unjustified’ overlapping is avoided.

As, in the majority of cases, the amount of the invalidity benefit represents the value of each insurance year multiplied by the number of insurance years completed, a benefit may be calculated on the basis of rules of internal law alone, even though the right to this benefit is only acquired through aggregation. Since, in these cases, a pro rata calculation is not strictly necessary in order to calculate the amount of the benefit and only represents a rule against the overlapping of benefits, to the extent to which this is its only purpose it must be asked whether its application can be justified.

The position of the Court is clear in cases where the right to benefit is acquired without aggregation: the provisions of Article 28 of Regulation No 3 cannot be applied in order to reduce a pension which is payable without aggregation. If, in certain situations, an unjustified overlapping of benefits results, it is for the national legislative systems to settle the problem.

This being so, to the extent to which the Court has condemned the generalized use of pro rata calculations and where it is merely a question of reducing a benefit in order to avoid overlapping, it is questionable whether there is justification for the application of rules for the reduction of pensions which are different according to whether the right is acquired without aggregation or after aggregation. The Commission observes on this point that if the individual concerned, having the same duration of insurance in Germany and in France, had last worked in France rather than in Germany and had suffered his disablement in France, there would have been no need to aggregate and he would have been entitled to the total pension in France in addition to his German pension. However, while maintaining that systems of legislation of Type A are referred to by Articles 27 and 28 Regulation No 3 and that these provisions may only be applied conjointly, the Court appears to have accepted that where the right to a pension under legislation of this type is acquired without aggregation the rules contained in that legislation alone need be applied but that if, on the other hand, the right is only acquired after aggregation, a pro rata calculation must be made.

The Commission maintains that in the light of the clear connexion which exists between this case and Cases 24/75 (Petroni v Office National des Pensions pour Travailleurs Salaries) and 50/75 (Caisse de Pension des Employés Privés v Massonet) which are at present awaiting judgment, it submits its observations without drawing any conclusion therefrom.

The Commission, represented by Miss M.J. Jonczy, acting as Agent, submitted its oral observations at the hearing on 12 November 1975.

The Advocate-General delivered his opinion at the hearing on 3 December 1975.

Law

1. By judgment of 11 June 1975 received at the Court on 2 July 1975 the Cour de Cassation of France referred to the Court under Article 177 of the EEC Treaty a question on the interpretation of Article 28 of Regulation No 3 concerning social security for migrant workers.

2. This question has been raised in the context of proceedings concerning the calculation by the competent French institution of the invalidity pension of a French national, the appellant in the main action, who had worked first in France, from 1 December 1931 to 30 September 1944, and then in the Federal Republic of Germany, from 1 October 1944 to 12 December 1952.

3. At this latter date the German insurance organization paid the worker, who had become disabled, sickness insurance benefits and then, as from 1 August 1954, awarded him an invalidity pension calculated pro rata with the insurance periods completed in the Federal Republic of Germany.

4. On the basis of Regulations Nos 3 and 4 concerning social security for migrant workers, the appellant in the main action requested the Caisse Primaire d'Assurance Maladie du Havre to pay him an invalidity pension on the basis of his former employment in France.

5. The French legislation on questions of invalidity is of Type A, that is, legislation under which benefits are calculated without reference to the duration of completed insurance periods.

6. The amount of the pension is equal to a percentage, which varies according to the degree of invalidity, of the average annual earnings of the worker during the last ten insurance years preceding the interruption of work (the ten best years completed after 31 December 1947, according to a decree of 1972).

7. An invalidity pension is awarded to a worker who has been affiliated for twelve months on the first day of the month during which the interruption of work followed by the invalidity occurs and who has, in addition, worked for a certain minimum period before the materialization of the risk.

8. The respondent in the main action found that the individual concerned did not satisfy the conditions necessary for the award of such a pension and took into account, for the purposes of the acquisition of a right thereto, the insurance periods completed in the Federal Republic of Germany.

9. It therefore aggregated the French and German insurance periods, making a total of 77 quarterly periods of which 44 were completed in France, calculated the amount of the pension for accounting purposes in accordance with Article 28 (1) (c) of Regulation No 3 and awarded the individual concerned a pension calculated pro rata with the insurance periods completed in France.

10. The appellant in the main action challenged the legality of that decision on the grounds that it infringed Articles 27 and 28 of Regulation No 3 and, in particular, that it applied Article 28 (1) (b) and (c) in a cumulative manner.

11. In the opinion of the appellant, although a pro rata calculation is possible in the situation referred to in subparagraph (b), that is, where the criterion adopted for the award of the pension is based upon the duration of insurance, it is not possible in the situation referred to in subparagraph (c), where the legislation of the State in which the pension is claimed bases the calculation of benefits on criteria other than the duration of the insurance periods.

12. The Cour de Cassation asks ‘Whether in circumstances in which for an insured person who has been successively subject to the legislation of two Member States to acquire a right to an invalidity pension it was necessary to take into account the insurance periods completed in one of these States as such insured person did not fulfil the conditions laid down in the other for entitlement thereto and where, under the legislation of this latter State, the calculation of benefits is based upon an average wage or an average contribution, without regard to the length of the period of employment, the pro rata calculation must be made after aggregation of all the insurance periods, as provided in Article 28 (1) (b) of Regulation No 3, as occurs in the other Member State in order to supplement the benefits awarded by that State on the basis of the insurance periods, or whether the entire pension must be awarded without making any pro rata calculation’.

13. Article 27 (1) of Regulation No 3 provides that: ‘For the acquisition, maintenance or recovery of the right to benefit, 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’.

14. Article 28 (1) (a) is worded as follows: ‘The institution of each of the Member States shall, in accordance with its own legislation, determine whether the person concerned satisfies the conditions for entitlement to the benefits prescribed in that legislation taking into account the aggregation of periods, as set out in the preceding article’.

15. Subparagraph (b) is worded as follows: ‘Where the right is acquired by virtue of subparagraph (a) above, the said institution shall, for accounting purposes, determine the amount of benefit to which the person concerned would be entitled if all insurance periods or assimilated periods, aggregated in accordance with the procedures set out in the preceding article, had been completed exclusively under its own legislation; taking that amount as a basis, the institution shall determine the amount due pro rata with the length of the periods completed under the said legislation, before the risk materialized, as compared with the total length of the periods completed under the legislation of all the Member States concerned before the risk materialized; this amount shall constitute the benefit payable to the person concerned by the institution in question’.

16. Subparagraph (c) states:‘Where, under the legislation of one Member State, benefits are calculated on the basis of an average wage, an average contribution or an average increase, or on the ratio between the claimant's gross wage during the completed contribution periods and the average gross wage of all insured persons other than apprentices, such average figures or ratios shall be determined for the calculation of the benefits payable by the institution of that state, taking into account only the insurance periods and assimilated periods completed under the legislation of the said Member State, or taking into account the gross wage of the person concerned in respect of such periods …’.

17. According to the first words of subparagraph (b) a pro rata calculation shall be carried out in every case in which the right to a pension is acquired under subparagraph (a); its purpose is therefore to determine the amount of the benefit, the right to which would not have been acquired without the process of aggregation.

18. On the other hand, the sole purpose of subparagraph (c) is to free the relevant institutions of Member States in which a pension must be calculated on the basis of an average wage, an average contribution or an average increase, of the obligation to take into account, in order to determine that average, the wages received, the contributions paid or the increases granted in another Member State.

19. As a result, that subparagraph does not depart from the rule laid down in the preceding subparagraphs, according to which the corollary of the aggregation of insurance periods and assimilated periods completed under the legislation of each of the Member States in question is a pro rata calculation by each of the relevant institutions of the amounts of the benefits.

20. Therefore, the answer to be given to the question referred to the Court must be that in circumstances in which for an insured person who has been successively subject to the legislation of two Member States to acquire a right to an invalidity pension it was necessary to take into account the insurance periods completed in one of these States as such insured person did not fulfil the conditions laid down in the other for entitlement thereto and where, under the legislation of this latter State, the calculation of benefits is based upon an average wage or an average contribution, without regard to the length of the period of employment, the pro rata calculation must be made after aggregation of all the insurance periods, as provided in Article 28 (1) (b) of Regulation No 3.

Costs

21. The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and as, in so far as the parties to the main action are concerned, these proceedings are in the nature of a step in the action before the national court, the decision as to costs is a matter for that court.

On those grounds, THE COURT in reply to the question referred to it by the Cour de Cassation of France in accordance with the judgment of that court of 11 June 1975, hereby rules: