JUDGMENT OF 13. 10. 1977 - CASE 37/77 GRECO v FNROM

In Case 37/77 Reference to the Court under Article 177 of the EEC Treaty by the Tribunal du Travail (Labour Tribunal), Charleroi, for a preliminary ruling in the action pending before that court between

THE COURT composed of: H. Kutscher, President, M. Sørensen and G. Bosco, Presidents of Chambers, A. M. Donner, J. Mertens de Wilmars, P. Pescatore and A. O'Keeffe, Judges, Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

The facts, the procedure 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

Mr Greco, an Italian national, worked in Italy as a building worker from 3 September 1949 to 19 May 1956 (a total of 278 weeks), and in Belgium as an underground worker in the mines from 22 November 1956 to 31 March 1971 (a total of more than 14 years). Mr Greco then became incapacitated and obtained a Belgian pension under the special scheme for mineworkers, on the basis of the insurance periods completed in Belgium alone. That pension was granted to him under Article 1 (2) of the Royal Decree of 19 November 1970, which provides that an invalidity pension shall be granted to any mineworker who can establish that he has worked in the mining undertakings for ten years or more. Mr Greco was also granted a proportion of the invalidity pension payable by the Italian insurance institution, on the basis of the aggregation of the Belgian and the Italian periods of work.

Applying the national rules against the overlapping of benefits (Article 23 (1) of the aforesaid Royal Decree), the competent Belgian fund, the Fonds National de Retraite des Ouvriers Mineurs (FNROM — National Pension Fund for Mineworkers), deducted the amount of the Italian pension from the Belgian pension, and asked Mr Greco to refund the sum of Bfrs 51693 paid as a recoverable advance.

An appeal against the decision to reduce the Belgian pension was brought before the Tribunal du Travail (Labour Tribunal), Charleroi, which by a judgment of 24 March 1977 decided to stay the proceedings and refer the following question to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty:

Is Article 12 (2) of Regulation (EEC) No 1408/71 compatible with the reduction of an invalidity pension granted by a Member State under Article 46 (1) on the ground that similar benefits are awarded by the competent institution of another Member State, where such reduction is effected on the basis of provisions of the internal law of the first Member State?

The judgment of the Tribunal du Travail, Charleroi, was received at the Court on 30 March 1977.

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

II — Summary of the written observations submitted to the Court under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC

Mr Greco refers to the observations submitted by the plaintiff in the main action in Case 112/76 (Manzoni v FNROM), in which judgment has not yet been delivered, and by the defendant in the main action in Case 22/77 (FNROM v Mura), in which judgment has not yet been delivered.

In addition, he makes the following remarks:

It follows from the judgment in Case 35/74 (Alliance Nationale des Mutualités Chrétiennes and Institut National d'Assurance Maladie Invalidité v Thomas Rzepa [1974] ECR 1241) that a benefit to which entitlement arises under the legislation of a Member State alone cannot be classified as ‘a recoverable advance’;

Since the Italian and the Belgian insurance periods do not overlap, the FNROM is not justified in taking the Italian pension into account for the purpose of reducing the pension due under Belgian legislation alone;

Article 12 of Regulation No 1408/71 expressly authorizes the overlapping of benefits of the same kind awarded under the Community rules;

The person concerned has suffered loss as a result both of the different ways in which the benefits are revalorized and of the devaluation of the Italian currency; he receives a Belgian pension and an Italian pension the sum total of which is less than the complete Belgian pension to which he would be entitled under Belgian legislation alone. Moreover, when it converted the Italian pension into Belgian francs for the purpose of deducting it from the Belgian pension, the Belgian fund did not use the conversion rate laid down by Community legislation;

As regards Article 12 of Regulation No 1408/71, the comparison should be made between migrant workers, and not between migrant workers and non-migrant workers. Where two migrant workers who are in the same objective situation obtain the same benefits there is no discrimination incompatible with the Treaty;

If the Court finds that the incompatibility of Article 46 (3) with Article 51 of the Treaty also entails the incompatibility of Article 12 with the said Article 51, it must then be inferred that the rules referred to in Regulation No. 574/72 at Article 7 (1) (b) and (c) also apply to benefits of the same kind. In that case, when it reduces the Belgian pension, the FNROM must take into account a fraction and not the whole of the Italian benefit

In an appendix to his observations, the plaintiff in the main action sets out examples with figures to show how a Belgian survivors pension may be reduced to nothing on the ground that the person entitled is in receipt of a Netherlands old-age pension which amounts to more than the upper limit of the overlap authorized by Belgian legislation, and how it is possible for a worker who has been employed in Italy, in Belgium and in France not to derive any benefit from the periods of work completed in the latter two countries, since the proportionate amounts of the Italian and French pensions are deducted in their entirety from the Belgian allowances.

The FNROM argues that the rules against the overlapping of benefits laid down by Article 12 of Regulation No 1408/71 do not apply to benefits calculated in accordance with Article 46, because the unjustified overlapping of benefits which Article 12 seeks to avoid is prevented by Article 46 (3).

However, the consequences of deciding that the correction provided for by Article 46 (3) is incompatible with Article 51 of the Treaty would be:

that Article 46 introduces discrimination against non-migrant workers;

that Article 12 is also incompatible with the first subparagraph of Article 46 (1);

that Article 12 must be declared incompatible with Articles 7, 48 and 51 of the Treaty and cannot therefore prevail over internal rules against the overlapping of benefits.

The Belgian Government recalls its arguments in the aforementioned Manzoni and Mura cases and, for the rest, submits exactly the same observations as the FNROM.

The Netherlands Government takes the view that the definition of the exception created by the second sentence of Article 12 (2) to the principal rule laid down in the first sentence of that paragraph is such that the exception does not apply to national provisions for reduction. That exception applies only where, in accordance with Article 46, benefits of the same kind are awarded by the institutions of two or more Member States. Benefits to which there is already an entitlement under national law cannot be included amongst those awarded ‘in accordance with Article 46’; consequently, national benefits, which are in issue in the main action, do not come within the exception created by the second sentence of Article 12 (2).

Furthermore, there is no substantial difference between Article 12 (2) of Regulation No 1408/71 and Article 11 (2) of Regulation No 3. Therefore the consequence of the limitation placed on the ambit of Article 46 (3) by the Petroni judgment ([1975] ECR 1149) is that the line followed in the case-law of the Court concerning Regulation No 3 may be continued (cf. Cases 140/73, Mancuso [1973] ECR 1449, and 50/75, Massonet [1975] ECR 1473); this clearly implies that in the case of an overlapping of benefits such as that in issue in the main action national provisions for reduction should be introduced. If it were not possible to introduce such provisions, that part of the benefit which would not be granted thereunder would none the less have to be paid by virtue of the regulation, which, in the light of the Petroni judgment, would mean that there would be no obstacle to applying the provisions of Article 46 (3) thereto. Therefore, in practice, the relationship which exists between the second sentence of Article 12 (2) and Article 46 (3) implies that it must always be possible to make a reduction under one of those two provisions.

Finally, Articles 48 and 51 of the Treaty cannot result in the person concerned s being entitled to benefits which, together, would exceed the sum which he was paid when he was working. Furthermore, the principle of equality of treatment would be infringed if the benefits granted under the legislation of a third State were reduced. In that connexion, the Netherlands Government drawn attention to the questions referred to the Court for a preliminary ruling by the Sozialgericht Augsburg in Case 32/77 (Giuliani v Landesversicherungsanstalt Schwaben).

The Commission points out first of all that the real question of interpretation which arises is whether or not Article 12 (2) allows provisions for reduction laid down by the legislation of a Member State to be applied in cases of overlapping involving benefits of the same kind awarded in respect of invalidity by the institution of another Member State for the purpose of reducing an invalidity pension granted without aggregation in accordance with Article 46 (1). It emerges from the jugdment making the reference that the invalidity pension due to Mr Greco was awarded first of all on the basis of Regulation No 3, then on the basis of Regulation No 1408/71. The Commission points out that under Article 94 (5) of Regulation No 1408/71, the institutions may review benefits awarded on the basis of Regulation No 3 according to the new provisions of Regulation No 1408/71 only on the application of the persons concerned, and that at all events benefits granted under Regulation No 3 cannot be reduced on the basis of the new regulation.

Article 12 first of all lays down the principle that national legislative provisions against the overlapping of benefits may be applied to workers covered by Regulation No 1408/71, except in the case of certain benefits of the same kind, in particular invalidity benefits awarded in accordance with Article 46. It follows that Member States cannot apply their national rules against the overlapping of benefits outside the limits authorized by Article 12 (2) without infringing Community law.

In the case at issue in the main action, it was undoubtedly necessary for the purpose of entitlement to benefit in Italy that the insurance periods should be aggregated, and the pension was awarded on the basis of Article 46 (2). On the other hand, aggregation was not necessary for entitlement to benefit in Belgium. Therefore, the invalidity pension due to Mr Greco was awarded by the FNROM on the basis of Article 46 (1). Thus both benefits were indeed awarded on the basis of Article 46, and in accordance with Article 12 (2) neither the Italian institution — assuming that it has a rule against the overlapping of benefits — nor the FNROM could reduce the invalidity pension on the basis of its internal rules against the overlapping of benefits.

Going beyond the literal interpretation of Article 12 (2), a teleological interpretation of that provision should be undertaken. The implementation of national rules against the overlapping of benefits generally takes the form of the deduction From the pension to which entitlement was acquired under the legislation of a single Member State on the basis of the periods completed under that legislation alone of the pension granted by the institution of another Member State pursuant to the regulation. In addition to the fact that the reduction, under internal rules against the overlapping of benefits, of a pension granted under Article 46 (1) results in a reduction in the amount of a benefit to which entitlement was acquired under national legislation alone, and that such a limitation on the overlapping of two benefits has rightly been found by the Court to be incompatible with Article 51 of the Treaty, it follows that the implementation of such rules runs contrary to the intentions of the Community legislature which, at all events and irrespective of the question whether such a rule is compatible with Article 51 of the Treaty, intended to secure for migrant workers the total sum of the benefits calculated in accordance with Article 46 (1) and (2) within the limit of the highest theoretical amount, which is not necessarily the amount calculated according to the legislation implemented by the institution which awards the benefit under Article 46 (1).

It seems that in its judgment in Case 24/75, Petroni v ONPTS, the Court did not condemn the actual principle of the reduction by the Council of pensions which the persons concerned derive from the Treaty (cf. paragraph 20 of the Decision of the Court in that case). Can it therefore be accepted that a benefit, entitlement to which was acquired under Article 46 (2), may be reduced on the basis of the internal rule against overlapping laid down by the legislation which is applied by the institution awarding the benefit in accordance with Article 12 (2)?

In the present state of the legislation, Article 12 (2) does not allow the implementation of internal provisions against the overlapping of benefits, whether the right to such benefits was acquired under Article 46 (1) or under Article 46 (2). Moreover, if the overlapping of pensions were to be considered unjustified, it does not appear desirable for the reduction to be effected on the basis of internal provisions against overlapping. In the absence of a common social security scheme, it would be preferable by far to have a Community rule enabling unjustified overlapping of benefits to be avoided. However, there would then arise the problem of knowing what is unjustified overlapping.

Consequently, the Commission takes the view that the following answer could be given to the Tribunal du Travail, Charleroi:

‘Article 12 (2) of Regulation No 1408/71 of the Council must be interpreted as meaning that it does not allow the legislative provisions of a Member State against the overlapping of benefits to be applied in cases of overlapping involving benefits of the same kind awarded in respect of invalidity by the institution of another Member State for the purpose of reducing an invalidity pension granted without aggregation in accordance with Article 46 (1) of Regulation No 1408/71 of the Council’.

At the hearing on 14 July 1977, the plaintiff in the main action, represented by Mr Rossini, Director of the Italian welfare service ‘Patronato ACLI’, the FNROM, represented by Mr Stein, and the Commission of the European Communities, represented by Miss Jonczy, acting as Agent, submitted their oral observations.

The Advocate-General delivered his opinion at the hearing on 20 September 1977.

Decision

1. By a judgment of 24 March 1977 which was received at the Court Registry on 30 March 1977 the Tribunal du Travail, Charleroi, referred a question to the Court under Article 177 of the EEC Treaty on the interpretation of Article 12 of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (OJ, English Special Edition 1971 (II), p. 416).

2. That question has been referred in the context of an action concerning the way in which the competent Belgian institution calculated the invalidity pension of an Italian national, the plaintiff in the main action, who worked first in Italy as a building worker, then in Belgium as an underground worker in the mines.

3. In Belgium that worker satisfied all the conditions laid down by the national legislation for entitlement to an invalidity pension under the scheme for mineworkers.

4. On the other hand, for his entitlement to benefit in Italy, he had to have recourse to the provisions of Article 45 of Regulation No 1408/71; for the purpose of calculating that benefit, the periods actually completed in both Member States were aggregated and the Italian benefit was apportioned.

5. Applying the national rules against the overlapping of benefits, the Belgian institution then deducted the apportioned amount of the Italian benefit from the invalidity pension, and asked the person concerned to refund the sum paid as a recoverable advance.

6. The question referred to the Court is whether Article 12 (2) of Regulation No 1408/71 is compatible with the reduction of an invalidity pension granted by a Member State under Article 46 (1) on the ground that similar benefits are awarded by the competent institution of another Member State, where such reduction is effected on the basis of provisions of the internal law of the first Member State.

7. Article 12 (2) of Regulation No 1408/71 provides that ‘The legislative provisions of a Member State for reduction, suspension or withdrawal of benefit in cases of overlapping with other social security benefits or other income may be invoked even though the right to such benefits was acquired under the legislation of another Member State or such income arises in the territory of another Member State. However, this provision shall not apply when the person concerned receives benefits of the same kind in respect of invalidity, old-age, death (pensions) or occupational disease which are awarded by the institutions of two or more Member States in accordance with Articles 46, 50, 51 or Article 60 (1) (b)’.

8. As the Court has already ruled in its judgment of 21 October 1975 (Case 24/75, Petroni v ONPTS [1975] ECR 1149), Article 46 (3) is incompatible with Article 51 of the Treaty to the extent to which it imposes a limitation on benefits acquired in different Member States by a reduction in the amount of a benefit acquired under national legislation alone.

9. It follows that the provisions of that paragraph are not applicable where they bring about a reduction in the benefit acquired by virtue of a Member State's national legislation alone and that, where that is the case, the second sentence of Article 12 (2) is inapplicable.

10. When the second sentence is not applicable, the first sentence applies, with the consequence that national legislative provisions for reduction, suspension or withdrawal of benefit may be invoked.

11. However, it appears from Article 46 (1) that if the application of national provisions on entitlement and calculation alone is less advantageous for the worker than the application of the rules for aggregation and apportionment, the latter must be applied.

12. Therefore the answer should be that, so long as a worker is receiving a pension by virtue of national legislation alone, the provisions of Regulation No 1408/71 do not prevent the national legislation, including the national rules against the overlapping of benefits, from being applied to him in its entirety, provided that if the application of such national legislation proves less favourable than the application of the rules regarding aggregation and apportionment those rules must, by virtue of Article 46 (1) of Regulation No 1408/71, be applied.

Costs

13. The costs incurred by the Belgian Government, the Netherlands Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable.

14. As these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court in question, 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 Tribunal du Travail, Charleroi, by a judgment of 24 March 1977, hereby rules: