JUDGMENT OF 5. 5. 1983 — CASE 238/81 RAAD VAN ARBEID v VAN DER DUNT-CRAIG

In Case 238/81 REFERENCE to the Court under Article 177 of the EEC Treaty by the Centrale Raad van Beroep [Court of last instance in social security matters] for a preliminary ruling in the action pending before that court between

THE COURT (Third Chamber) composed of: U. Everling, President of Chamber, Lord Mackenzie Stuart and Y. Galmot, Judges, Advocate General: Sir Gordon Slynn Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

The facts, the procedure and written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community may be summarized as follows:

I — Facts and written procedure

Mrs Van der Bunt-Craig, of British nationality, lived in the United Kingdom from her birth on 31 January 1914, and followed a career as a nurse there.

In 1938 she married Mr Van der Bunt, of Netherlands nationality, who had been working in the United Kingdom from 1919 and therefore paid contributions to the United Kingdom social security system. From 1 January 1955 Mr Van der Bunt received a retirement pension and in August 1955 he moved to the Netherlands with his wife. From 1 August 1961 Mr Van der Bunt received an old-age pension in the Netherlands pursuant to the Nederlandse Algemene Ouderdomswet [General Law of the Netherlands on Old Age, hereinafter referred to as “the Old-Age Law”].

On 4 February 1974 Mrs Van der Bunt-Craig, then aged 60, was granted a retirement pension in the United Kingdom amounting to £ 6 per week paid exclusively on the basis of her husband's social security insurance and contributions.

Following the death of Mr Van der Bunt, on 17 September 1974, the amount of the retirement pension was increased. From 23 September 1974 Mrs Van der Bunt received a pension of £10 per week which continued to be paid on the basis of her husband's insurance and contributions.

On 4 October 1974 she applied for a widow's pension in the Netherlands under the Nederlandse Algemene Weduwen- en Wezenwet [General Law of the Netherlands of 9 April 1959 on widows and orphans], hereinafter referred to as “the Widows and Orphans Law”.

On 12 July 1976 Mrs Van der Bunt-Craig returned to live in the United Kingdom.

By a decision of 29 December 1975 the Raad van Arbeid granted Mrs Van der Bunt-Craig a widow's pension which, in accordance with Article 8 (1) and (4) and Article 25 of the Widows and Orphans Law, was due to her from 1 September 1974 to 1 January 1979. The aforementioned provisions envisage, on the one hand, that the Netherlands widow's pension accrues from the first day of the month in the course of which the widow fulfils the conditions required for the acquisition of the right to that pension and, on the other hand, that the widow has no longer any right to pension from the month during which she reaches the age of 65.

However, regard being had to the fact that, up to and including February 1975, Mrs Van der Bunt-Craig had been receiving the balance of the retirement pension granted to her husband under the Old-Age Law and that the amount of that benefit was greater than that of the widow's pension, the latter, in accordance with Article 30 (1) of the Widows and Orphans Law could only be paid to her from 1 March 1975.

The main action concerns the application by the Raad van Arbeid of the provisions of the Royal Decree of 20 March 1968 (Staatsblad, No 174), which, on the basis of Article 30 (a) of the Widows and Orphans Law, seeks to avoid or to limit cases of the overlapping of a benefit granted under the Widows and Orphans Law with a benefit granted under the social legislation of another country.

The Raad van Arbeid considered that, to the extent to which the retirement pension is granted to Mrs Van der Bunt-Craig as a result of the insurance and social security contributions of her husband, that benefit is a survivor's benefit within the meaning of Article 1 of the aforementioned Royal Decree which provides:

“(1) In the event of a widow's pension due under the Widows and Orphans Law overlapping over the same period with one or more survivor's benefits due under the social legislation of one or more other States the widow's pension shall be reduced by such an amount as is commensurate with the proportion which the length of completed periods of insurance or work of the person whose death is the basis for entitlement to widow's pension under the legislation of the other State or States bears to the length of the period between the date on which the deceased reached 15 years of age and the date on which he died. ... (3) If the aggregate of the reduced widow's pension and the survivor's benefits payable under the legislation of one or more States is less than the amount of the widow's pension before it was reduced pursuant to paragraph (1) hereof a supplement shall be awarded equivalent to the difference between the aggregate and the last-mentioned amount.”

In application of those provisions, the Raad van Arbeid, by its decision of 29 December 1975, reduced the Netherlands widow's pension, which had been granted at the full legal rate from 1 September 1974, by 52.09% with effect from 23 September 1974 at which date the retirement pension had been increased in the United Kingdom because of the death of Mr Van der Bunt. A supplementary payment was, moreover, granted to Mrs Van der Bunt-Craig pursuant to Article 1 (3) mentioned above.

As far as the rate of exchange applied to the conversion of the retirement pension into Netherlands currency is concerned, the Raad van Arbeid applied the rate referred to at the end of Article 3 of the Royal Decree of 20 March 1968 which provides as follows:

“(1) The conversion into Netherlands currency of the survivor's benefit due under the social legislation of another State, which is necessary for the application of Article 1, shall, in the case of benefits of a State which is a member of the International Monetary Fund, be effected at the rate accepted by that Fund as applicable on the date on which the amount to be paid is determined. If the rate accepted by the International Monetary Fund (that is to say, the parity rate) does not enable a satisfactory conversion to be effected or if there is no such rate, the rate quoted on the Amsterdam stock exchange, or, if there is no such rate, a rate to be given by the Nederlandse Bank, shall be used as the conversion rate.”

The last two rates mentioned in that provision correspond to the conversion rates determined by Regulation (EEC) No 574/72 of the Council of 21 March 1972.

On 22 January 1976 Mrs Van der Bunt-Craig brought proceedings against that decision before the Raad van Beroep [Social Security Court], The Hague.

In her claim she asked the Raad van Beroep to change the disputed decision in the following manner:

1) The retirement pension cannot be assimilated to the widow's pension under the Widows and Orphans Law. The applicant states that in the United Kingdom there is no pension specifically for widows, all retirement benefits being referred to as “retirement pensions”. Under the provisions of the United Kingdom legislation, a married woman's only right to a retirement pension derives from the contributions made by her husband. The amount of that pension is increased after the husband's death. Thus, in Mrs Van der Bunt-Craig's opinion, the retirement pension may be distinguished from the widow's pension under the Widows and Orphans Law inasmuch as the legal character of the latter is determined exclusively with reference to the status by virtue of which it is awarded.

2) The plaintiff should receive the legal amount of the widow's pension as determined by the Netherlands rules. The plaintiff states that the amount of the United Kingdom pension is significantly lower than that of the reduction applied to the Netherlands pension, to such an extent that she receives a pension of a sum lower than the statutory minimum.

3) The plaintiff observes that for the purposes of the conversion of the retirement pension into Netherlands currency, the Raad van Arbeid used the conversion rate laid down by Community regulations. That rate is notional inasmuch as it takes no account of the real value of the pound but of its value in relation to the European unit of account. According to the plaintiff, the Raad van Arbeid also decided not to take into account differences in the exchange rates occurring after 23 September 1974. By a judgment dated 26 April 1977 the Raad van Beroep quashed the contested decision of the Raad van Arbeid in so far as it held that the full amount of the retirement pension was paid to the plaintiff by reason of her status as a survivor within the meaning of Article 1 (1) of the Royal Decree of 20 March 1968. According to the Raad van Beroep it is possible that the question whether the total amount of the retirement pension or only the amount of the increase in that benefit should be deducted from the Netherlands widow's pension is irrelevant when the amount due is awarded. However, in the view of the Raad van Beroep, that is not the case if the amount of the retirement pension converted into Netherlands currency is later reduced as a result of a fall in the value of the pound sterling, the amount of the supplementary payment granted in the Netherlands none the less remaining the same. The Raad van Beroep makes it clear that the Raad van Arbeid was correct in applying the conversion rate on 23 September 1974, which implies that later variations in the rate can have no effect on the amount of the compensating benefit even if, in view of the fall in the value of the pound, that is to the plaintiff's detriment. The Raad van Beroep states that that result arises not from a decision of the Raad van Arbeid which is capable of being quashed, but from the application of mandatory provisions. The Raad van Arbeid brought an appeal against that judgment before the Centrale Raad van Beroep. For the purposes of the investigation of the case, the Centrale Raad van Beroep in January 1980 decided to put the following three questions to the Department of Health and Social Security in London:

Under which Act of Parliament or order was Mrs Van der Bunt's retirement pension awarded as from 4 February 1974 and as from 23 September 1974?

Is the amount of the retirement pension awarded to Mrs Van der Bunt as from 23 September 1974 dependent on the number of contributions paid by her deceased husband?

Does the retirement pension awarded to Mrs Van der Bunt as from 23 September 1974 constitute a “benefit to survivors”? By a letter dated 20 May 1980 the Department of Health and Social Security stated that:

Both the retirement pension paid to Mrs Van der Bunt from 4 February 1974 and the widow's pension paid to her from the death of her husband on 17 September 1974 were paid under the National Insurance Act 1965 as amended by Regulation 7 (1) of the National Insurance (Widow's Benefit and Retirement Pensions) Regulations 1972;

All the United Kingdom benefit paid to Mrs Van der Bunt from 4 February 1974 is regarded as retirement pension to which she is entitled in her own right, despite the fact that it is based entirely on her late husband's contributions. Thus the benefits payable to Mrs Van der Bunt should not be regarded as survivor's pensions.

Having considered the United Kingdom authorities' reply and the judgment of 14 May 1981 (Case 98/80, Romano v Institut National d'Assurance Maladie-Invalidité, [1981] ECR 1241), the Centrale Raad van Beroep, by order of 11 August 1981, decided to refer the following questions to the Court of Justice for a preliminary ruling:

“1. If a pension which is received solely by virtue of national legislation also overlaps with a benefit of a different kind of another Member State should the application of a national provision against overlapping benefits be restricted in such a way that where the application of the national legislation is less favourable than that of the rules contained in Article 46 of Regulation No 1408/71 that article must be applied? 2. Must Article 107 of Regulation No 574/72 be construed to mean that the method for converting currencies laid down by that article also applies to the conversion pursuant to a national provision of overlapping benefits which is saved by Article 12 (2) of Regulation No 1408/71 of benefits of another Member State? 3. Do the objectives underlying Articles 48 to 51 of the Treaty establishing the European Economic Community require that current benefits (calculated solely on the basis of national law or under the rules contained in Article 46 of Regulation No 1408/71) whose amount is dependent at the time they are awarded inter alia on the amount of one or more benefits due under the legislation of one or more Member States should be calculated periodically in accordance or by analogy with the provisions contained in Article 107 of Regulation No 574/72 in view of changes in the exchange rates? If so, when those periodical recalculations are made, should (a) account be taken of the amount of the foreign benefit or benefits applicable on the date of the recalculation notwithstanding the provisions contained in Article 51 of Regulation No 1408/71; (b) a comparison be made on each occasion between the amount of benefit due under national law and the amount calculated in accordance with the rules contained in Article 46 of Regulation No 1408/71?”

It appears from the Supplementary Order submitted to the Court that the Centrale Raad van Beroep is of the view that the retirement pension and the Netherlands widow's pension are payments of the same kind inasmuch as they are both exclusively based on the insurance and contributions paid by the deceased husband. According to the Centrale Raad van Beroep it follows from section 32 of the National Insurance Act 1965 and in particular from the subsidiary conditions in subsection (3) (a) thereof, that the husband's death altered the conditions for the grant of the retirement pension. The fact that it was increased from £6 to £10 after the husband's death is sufficient to demonstrate that the pension changed its nature, or at least its legal basis.

The Centrale Raad van Beroep specifies that the first question submitted for a preliminary ruling is put in case it is necessary to regard the benefits in question as being of a different nature.

Moreover the Centrale Raad van Beroep has considered which conversion rate should be applied in the calculation of the supplementary benefit envisaged by Article 1 (3) of the Royal Decree of 20 March 1968.

The Centrale Raad van Beroep is of the opinion that the conversion rate provided at the end of Article 3 (1) of the aforementioned Royal Decree, namely “the rate quoted on the Amsterdam stock exchange, or, if there is no such rate, a rate to be given by the Nederlandse Bank, shall be used as the conversion rate”, corresponds to the conversion rate provided for by Article 107 of Regulation (EEC) No 574/72 of the Council of 21 March 1972, at least in the version of that regulation applicable until 1 January 1975.

The same does not apply to the rate fixed, pursuant to Regulation (EEC) No 2639/74 of the Council (Official Journal L 283, p. 1), by the new Article 107 which entered into force on 1 January 1975.

Regard being had to the precedence of Community law over the provisions of national law, the Centrale Raad van Beroep is of the view that, in the application of the national provisions for the prevention of overlapping benefits, it should no longer act on the basis of Article 3 (1) of the aforementioned Royal Decree but on the conversion rate determined by the new Article 107 of Regulation No 574/72.

Furthermore, the Centrale Raad van Beroep emphasizes that fluctuations in the conversion rate may affect the amount of the benefits granted to migrant workers and may create an obstacle to the free movement of workers. It observes that in Decision 99 of 13 March 1975 (Official Journal C 150, p. 2) the Administrative Commission of the European Communities on Social Security for Migrant Workers specified that Article 107 (1) of Regulation No 574/72 involves no obligation to recalculate current benefits periodically to take into account variations in conversion rates; however, the Centrale Raad van Beroep believes that that decision is not binding.

Finally the Centrale Raad van Beroep discusses whether, in the course of any periodical recalculations to be carried out as a result of variations in the conversion rate, it must, on the one hand, take into consideration variations in the amount of overseas payments which have arisen, in particular, as a result of changes in the cost of living and, on the other hand, while making those new calculations, once again compare the amount payable under national legislation and the amount payable under the provisions of Article 46 of Regulation No 1408/71.

The reference for a preliminary ruling was lodged at the Court Registry on 27 August 1981.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted by the Raad van Arbeid, represented by its President, L. C. van Dalen, by the Government of the Netherlands, represented by F. Italianer, Secretary General at the Ministry for Foreign Affairs, acting as Agent, and by the Commission of the European Communities, represented by J. Amphoux, Legal Adviser, assisted by G. Vandersanden of the Brussels Bar, acting as Agents.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the1 Court (Second Chamber) decided to carry out a preparatory inquiry pursuant to Article 21 of the Statute of the Court and Article 45 of the Rules of Procedure.

In a letter of 11 June 1982 the Registrar of the Court asked the Raad van Arbeid to provide a detailed, written account by 17 August 1982 of the origin and development of the dispute covering both the facts and the legal issues arising.

The Raad van Arbeid's reply was lodged at the Court Registry on 17 August 1982.

The replies of the Raad van Arbeid to the question put by the Court have been included in the statement of the facts and written procedure set out above.

By order of the President of the Court of 7 October 1982 the case was assigned to the Third Chamber.

The date of commencement of the oral procedure was fixed after the completion of the preparatory inquiry pursuant to Article 54 of the Rules of Procedure.

II — Summary of written observations submitted to the Court

First question

The Raad van Arbeit observes that pursuant to the second sentence of Article 12 (2) of Regulation No 1408/71, national measures for the prevention of overlapping benefits are not applicable when the party concerned receives benefits of the same kind in respect of invalidity, old age or death (pensions) which are awarded by the institutions of two or more Member States in accordance with the provisions of Article 46 of that regulation. Consequently those payments cannot be reduced on the basis of rules against overlapping benefits. According to the Raad van Arbeid, the expression “benefits of the same kind” must be interpreted in the light of the provisions of paragraph 11 of Part I of Annex V to Regulation No 1408/71 (codified version, Official Journal C 138 of 9 June 1980, p. 63), which provides that “For the purpose of applying Article 12 (2) of the regulation to the legislation of the United Kingdom, invalidity, old age and widow's pensions shall be regarded as benefits of the same kind”.

In the opinion of the Raad van Arbeid, the view may be taken that Mrs Van der Bunt-Craig's husband was subject both to Netherlands and to United Kingdom legislation and that in both countries the right to benefit was derived from his insurance. Thus the right to benefit must be established in accordance with the provisions of Article 46 of Regulation No 1408/71 adopted pursuant to Article 51 of the Treaty which, in subparagraph (a), provides for the “aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries”. The Raad van Arbeid leans towards the view that the provisions of Article 46 are applicable to the Netherlands widow's pension and to the United Kingdom retirement pension.

The Raad van Arbeid points out that as United Kingdom legislation does not include a rule against overlapping benefits, the amount of the benefit, awarded exclusively on the basis of that legislation, is not less than the benefit which is awarded on the basis of the first subparagraph of Article 46 (1).

In the opinion of the Raad van Arbeid, it follows that only the Netherlands authorities may apply the second subparagraph of Article 46 (3) of Regulation No 1408/71. Article 46 (3) provides:

“The person concerned shall be entitled to the total sum of the benefits calculated in accordance with the provisions of paragraphs (1) and (2), within the limit of the highest theoretical amount of benefits calculated according to paragraph (2) (a). Where the amount referred to in the preceding subparagraph is exceeded, any institution applying paragraph (1) shall adjust its benefit by an amount corresponding to the proportion which the amount of the benefit concerned bears to the total of the benefits determined in accordance with the provision of paragraph (1).”

On the basis of those provisions, the Raad van Arbeid believes that, to the extent to which the total of United Kingdom and Netherlands benefits exceeds the highest theoretical amount, the total amount of the United Kingdom payment may be deducted from the Netherlands widow's pension.

The Government of the Netherlands, referring to the judgment of 2 July 1981 (Joined Cases 116, 117 and 119 to 121/80, Rijksdienst vor Werknemerspensioenen v Ce/estre and Others [1981] ECR 1737) observes that in Article 46 of Regulation No 1408/71 national rules against overlapping benefits arc not mentioned. The Community provisions relating to the overlapping of benefits of a different kind which are clearly the subject of the first preliminary question, are contained in Article 7 (1) of Regulation No 574/72, and in particular in subparagraphs (b) and (c) thereof.

In the light of the foregoing, the Government of the Netherlands suggests the following reply to the first question put by the Centrale Raad van Beroep: Article 46 of Regulation No 1408/71 does not apply in the case of the overlapping of a widow's pension with a benefit of a different kind paid under the legislation of another Member State, that situation falling within the application of national rules against overlapping benefits.

According to the Commission, the reply to the first question presupposes a prior consideration of the nature of the benefits concerned. The Commission considers that, whatever the circumstances, where benefits derive from the insurance of the same person, they must be treated in an identical manner.

It appears, according to the Commission, both from the spirit of the Community rules and from the case-law of the Court that the payments in issue are benefits of the same kind. The Court has decided in favour of a wide interpretation of that concept in the judgment of 19 June 1979 (Case 180/78, Brouwer-Kaune v Bestuur van de Bedrijfsvereniging voor het Kledingbedrijf[1979] ECR 2111 and the Opinion of Mr Advocate General Capotorti, pp. 2127 to 2129) and the judgment of 15 October 1980 (Case 4/80 Remo D'Amico v Office National des Pensions pour Travailleurs Salariés [1980] ECR 2951).

The Commission further observes that, according to the Administrative Commission on Social Security for Migrant Workers, the concept of a “benefit of the same kind” includes all old-age, invalidity or survivors' benefits which derive from the insurance record of one and the same person and which cover the same risk.

The Commission emphasizes that if the benefits in dispute are of the same kind the amount of the benefit awarded exclusively under national legislation, including the national provisions against overlapping benefits, must be compared with the amount of benefit resulting from the application of the provisions of Article 46 (2) of Regulation No 1408/71.

The judgment of 16 May 1979 (Case 236/78 Fonds National de Retraite des Ouvriers Mineurs v Giovanni Mura [1979] ECR 1819) shows in particular that in cases in which the provisions of Article 46 are more favourable to the worker than the provisions of national legislation alone, the provisions of that article must be applied.

The Commission considers that the position adopted by the Centrale Raad van Beroep is in accordance with the principles set out above and therefore the question asked in that respect is devoid of purpose.

Second question

The Raad van Arbeid considers that to the extent to which benefits are calculated under national legislation alone, the conversion of currency must be carried out in accordance with the provisions of national law. According to the Raad van Arbeid, the Netherlands provisions have not yet been adapted to the drastic changes which have occurred in the international monetary system. The Raad van Arbeid is of the view that to the extent to which there are lacunae in national legislation, it is for the national courts to determine the law by interpreting the principles of Netherlands law and Community law.

According to the Government of the Netherlands, the reply to the second question appears a priori from Article 107 (1) (a) of Regulation No 574/72 which determines the conversion rates which are to be used when the calculation of payments is subject to the provisions of Article 12 (2) of Regulation No 1408/71.

However, the Netherlands Government considers that the application of national rules against overlapping benefits is distinct from the application of any other rule, including Article 12 (2) of Regulation No 1408/71. Thus in the opinion of the Netherlands Government Article 107 of Regulation No 574/72 need not be taken into account.

According to the Commission, a negative reply to the second question would lead to the application of rules against overlapping benefits which differ between one case and another, according to whether or not reference is made to Article 12 (2) of Regulation No 1408/71.

Such a dual system would be contrary to the interests of the worker himself and would diminish legal certainty.

According to the Commission, it is both expedient and in accordance with the aims of Articles 48 to 51 of the Treaty to use the method of conversion of currencies mentioned in Article 107 (1) of Regulation No 574/72 in the application of any rule against overlapping benefits.

In view of the lacunae in the Community rules, an application by analogy with that provision is called for.

The Court has accepted the principle of application by analogy in the case of an obvious lacuna arising from an unintentional omission by the draftsmen of the enactment. However, the individual case must not fall outside the express scope of the provision which is to be extended by analogy.

Third question

According to the Raad van Arbeid neither Article 51 of the Treaty nor its implementing regulations contain provisions which, in the event of fluctuations in rates of conversion of currencies, require a new aggregation and a new apportionment of benefits which have already been awarded under Article 46 (1) and (2) of Regulation No 1408/71.

The Raad van Arbeid makes reference to the report issued by the Commission of the European Communities in 1977, on the effect of variations in exchange rates on the calculation and payment of social benefits to migrant workers. That report was drawn up with the assistance of representatives of the governments sitting on the Audit Board attached to the Administrative Commission of the European Communities on Social Security for Migrant Workers and in collaboration with the Directorate General for Economic and Financial Affairs of the European Communities. That report shows that, in general, fluctuations in exchange rates have beneficial effects for the majority of persons concerned. Even in the case of substantial monetary variations, the positive or negative effects are only partially reflected in changes in the material circumstances of retired people. The aforementioned report demonstrates furthermore that monetary fluctuations are amply compensated for by pension changes.

According to the Raad van Arbeid, the practical impossibility of examining periodically the extent to which a difference has arisen between the rate on the basis of which the pension has been awarded and the rate in accordance with which payments have subsequently been made have led the Council, in Regulation No 1408/71, not to renew the provisions of Regulation No 4 which provided for a review of benefits in case of variations in exchange rates giving rise to a review of benefits: the necessity for Member States to exchange the information essential for new calculations and the difficulty of having such information available in due time would have the effect of imposing such a burden on national administrations that the application of the rules would suffer.

The Netherlands Government states that the object of Article 107 of Regulation No 57'4/72 is to establish rules governing the conversion into one national currency of amounts expressed in another national currency during calculation of the award or of the reimbursement of benefits in cash and in kind in the cases described in the various provisions listed in the regulation. In order to accord as far as possible with monetary reality, in the calculation of benefits whose amount depends also on benefits expressed in another currency, the regulation provides quarterly conversion rates which the awarding institutions must use. However, in adopting those provisions, the Community legislature never had any intention of making provision for a periodic recalculation of benefits. Article 51 (2) of Regulation No 1408/71 sets out the cases in which a recalculation of a benefit must take place. When such a recalculation is carried out, the rate of conversion applicable at the time of the recalculation must be applied, in accordance with Article 107 of Regulation No 574/72.

The Netherlands Government suggests that the third question should be answered as follows: Article 107 of Regulation No 574/72 is not applicable in the case of the periodic recalculation of benefits resulting from variations in the rates of conversion of currencies.

The Commission observes that Article 51 of Regulation No 1408/71 is directed only to the possibility of a revalorization (paragraph (1)) or of a recalculation made necessary by an alteration in the method of determining, or the rules for calculating, benefits (paragraph (2)).

In the Commission's opinion if Article 51 does not apply to the case of variations in the rate of conversion of currency, it is necessary, given the existence of such a lacuna, to apply paragraph (1) of that provision by analogy.

The Commission believes that that solution is justified by reason of the similarity of the assumptions made by that provision and in the preliminary question. In the Commission's opinion any other solution would raise considerable practical problems.

According to the Commission, it follows from the Community provisions, whose import was clarified by Decision No 99 of the Administrative Commission on Social Security for Migrant Workers of 13 March 1975 (cited above), that it is not necessary to recalculate current benefits periodically inasmuch as they may be affected by variations in the rate of exchange during the period of payment. The same applies at the time such benefits are first allocated or in the case of their recalculation following an alteration in their method of determination or in the rules for their calculation.

In the light of the foregoing, the third question should be answered in the negative.

Ill — Oral procedure

The parties to the main action, the Government of the Netherlands and the Commission made oral observations at the sitting on 10 February 1983.

The Advocate General delivered his opinion at the sitting on 10 March 1983.

Decision

1. By an order dated 11 August 1981, which was received at the Court on 27 August 1981, the Centrale Raad van Beroep [court of last instance in social security matters] referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty questions on the interpretation of the provisions 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 (Official Journal, English Special Edition 1971 (II), p. 416) and of Article 107 of Regulation (EEC) No 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation (EEC) No 1408/71 (Official Journal, English Special Edition 1972 (I), p. 159).

2. The questions arise within the context of a dispute between Mrs Van der Bunt-Craig and the Raad van Arbeid [Labour Council] relating to the application by the latter of the provisions of the Royal Decree of 20 March 1968 (Staatsblad No 174). That Decree, issued pursuant to Article 30 (a) of the Algemene Weduwen- en Wezenwet (General Law on Pensions for Widows and Orphans, hereinafter referred to as “the Widows and Orphans Law”), seeks to limit the overlapping of benefits granted under the Widows and Orphans Law with benefits granted under the social legislation of another Member State.

3. The file shows that Mrs Van der Bunt-Craig, of British nationality, lived in the United Kingdom from the date of her birth and followed a career as a nurse. Her husband, Mr Van der Bunt, of Netherlands nationality, worked in the United Kingdom from 1919 and in 1955 was granted a retirement pension there. The couple later settled in the Netherlands. There, from 1961, Mr Van der Bunt was also awarded a retirement pension pursuant to the Algemene Ouderdomswet [General Law on Old-Age Pensions, hereinafter referred to as “the Old-Age Law”].

4. On 4 February 1974, Mrs Van der Bunt-Craig, then aged 60, was granted a United Kingdom retirement pension of £6 per week, awarded solely by reason of the national insurance and social security contributions of her husband. As a result of his death in the Netherlands on 17 September 1974, the amount of Mrs Van der Bunt-Craig's retirement pension, which continued to be paid on the basis of Mr Van der Bunt's contributions, was recalculated and, from 23 September 1974, was increased from £6 to £10 per week. On 4 October 1974 Mrs Van der Bunt-Craig asked the Raad van Arbeid to grant her a widow's pension under the Widows and Orphans Law.

5. Taking the view that the retirement pension awarded to Mrs Van der Bunt-Craig by reason of her husband's insurance and social security contributions was a survivor's pension, the Raad van Arbeid applied the provisions of Article 1 (1) of the Royal Decree of 20 March 1968 which provides:

“In the event of a widow's pension due under the Widows and Orphans Law overlapping over the same period with one or more survivor's benefits due under the social legislation of one or more other States, the widow's pension shall be reduced by such an amount as is commensurate with the proportion which the length of completed periods of insurance or work of the person whose death is the basis for entitlement to widow's pension under the legislation of the other State or States bears to the length of the period between the date on which the deceased reached 15 years of age and the date on which he died.”

6. On the basis of those provisions the Raad van Arbeid, by a decision of 29 December 1975, granted Mrs Van der Bunt-Craig a widow's pension under the Widows and Orphans Law at the rate of 100 % from 1 September 1974 then at the rate of 47.91 % from 23 September 1974, the date on which the amount of the United Kingdom retirement pension was increased by reason of Mr Van der Bunt's death. The Raad van Arbeid moreover granted her a supplementary benefit pursuant to Article 1 (3) of the same Royal Decree which provides :

“If the aggregate of the reduced widow's pension and the survivor's benefits payable under the legislation of one or more States is less than the amount of the widow's pension before it was reduced pursuant to paragraph (1) hereof a supplement shall be awarded equivalent to the difference between the aggregate and the last-mentioned amount.”

7. For the conversion of the retirement pension into Netherlands currency, the Raad van Arbeid, pursuant to the latter part of Article 3 of the Royal Decree of 20 March 1968, used the rate notified by the Nederlandse Bank [Bank of the Netherlands] which was in force on 23 September 1974. That rate corresponded to the conversion rate fixed by Regulation (EEC) No 574/72 of the Council of 21 March 1972. The Raad van Arbeid decided not to take into consideration differences in the exchange rates arising after 23 September 1974.

8. Mrs Van der Bunt-Craig brought an action against that decision before the Raad van Beroep [Social Security Court] which, by a judgment of 26 April 1977, quashed the disputed decision in so far as it determined that the total amount of the retirement pension was a survivor's benefit within the meaning of Article 1 (1) of the Royal Decree of 20 March 1968.

9. The Raad van Arbeid appealed against that judgment to the Centrale Raad van Beroep which has put to the Court the following questions:

“1) If a pension which is received solely by virtue of national legislation also overlaps with a benefit of a different kind of another Member State should the application of a national provision against overlapping benefits be restricted in such a way that where the application of the national legislation is less favourable than that of the rules contained in Article 46 of Regulation No 1408/71 that article must be applied?

2) Must Article 107 of Regulation No 574/72 be construed to mean that the method for converting currencies laid down by that article also applies to the conversion pursuant to a national provision of overlapping benefits which is saved by Article 12 (2) of Regulation No 1408/71 of benefits of another Member State?

3) Do the objectives underlying Articles 48 to 51 of the Treaty establishing the European Economic Community require that current benefits (calculated solely on the basis of national law or under the rules contained in Article 46 of Regulation No 1408/71) whose amount is dependent at the time they are awarded inter alia on the amount of one or more benefits due under the legislation of one or more Member States should be calculated periodically in accordance or by analogy with the provisions contained in Article 107 of Regulation No 574/72 in view of changes in the exchange rates? If so, when those periodical recalculations are made, should

a) account be taken of the amount of the foreign benefit or benefits applicable on the date of the recalculation notwithstanding the provisions contained in Article 51 of Regulation No 1408/71;

b) a comparison be made on each occasion between the amount of benefit due under national law and the amount calculated in accordance with the rules contained in Article 46 of Régulation No 1408/71?”

First question

10. It is apparent from the Supplementary Order of the Centrale Raad van Beroep that the first question concerns cases in which the benefits at issue may be regarded as being of a different kind. In those circumstances it appears that the first question falls into two parts: the first as to whether a retirement pension granted to the widow of a worker pursuant to United Kingdom legislation and a Netherlands widow's pension granted pursuant to the Widows and Orphans Law are benefits of the same kind under Community law; the second part, which depends upon the answer given to the first part of the question, seeks to determine whether national provisions against overlapping benefits or those contained in Article 46 of Regulation No 1408/71 should be applied.

11. In reply to the first part of the question the United Kingdom authorities have observed that the retirement pension cannot be considered a survivor's benefit. It is a retirement pension to which all married women are entitled in their own right even though it is awarded on the basis of the insurance and social security contributions of the husband. The fact that the amount of the benefit is recalculated and increased by reason of the death of the husband has no effect on the nature of the benefit.

12. It should first be noted that according to the terms of paragraph 9 of Part G of Annex V to Regulation No 1408/71, invalidity, old age and widows' pensions awarded under United Kingdom legislation must be regarded as benefits of the same kind.

13. It may then be observed that, irrespective of the characteristics peculiar to the various national laws, social security benefits must be considered as being of the same kind when their purpose and basis of calculation are the same.

14. In that respect, benefits acquired under the legislation of two Member States, which seeks to ensure that an aged person deprived of the income of his or her deceased spouse has sufficient means of subsistence, and the respective amounts of which are determined on the basis of the insurance and social security contributions of that spouse, must be considered to be benefits of the same kind by reason of their identical purpose and basis of calculation.

15. In relation to the answer to the second part of the question, on the applicability of rules against overlapping benefits, it should be pointed out that the national court considered only instances in which those benefits of the same kind are granted exclusively on the basis of entitlement under national law. It should be recalled that, according to well-established case-law, when a worker receives a pension pursuant to national legislation alone, the provisions of Regulation No 1408/71 do not prevent that legislation from being applied to him in its entirety, including the national rules against overlapping benefits. It must be noted however that if it happens that the application of that national legislation is less favourable to the worker than the application of Article 46 of Regulation No 1408/71, the provisions of that article must be applied. In the latter supposition, paragraph (3) of Article 46, which seeks to limit the overlap of acquired benefits, by the means provided in paragraphs (1) and (2) of that article, is applicable, to the exclusion of rules against overlapping laid down by national legislation.

16. The first question, as amended by the Supplementary Order of the court of reference, should therefore be answered as follows: Benefits acquired under the legislation of two Member States, which seeks to ensure that an aged person deprived of the income of his or her deceased spouse has sufficient means of subsistence, and the respective amounts of which are determined on the basis of the insurance and social security contributions of that spouse, are benefits of the same kind. Where a worker receives a pension pursuant to national legislation alone, the provisions of Regulation No 1408/71 do not prevent the national legislation from being applied to him in its entirety, including any national rules against overlapping benefits. If, however, the application of the national legislation proves to be less favourable to the worker than the application of the provisions laid down in Article 46 of Regulation No 1408/71, the provisions of that article must be applied. In the latter circumstances paragraph (3) of Article 46 is applicable to the exclusion of the rules against overlapping contained in national legislation.

Second question

17. In the light of the answer given to the first question, the second question must be regarded as relating to the issue of whether, in case of the overlapping of benefits of the same kind, the method of currency conversion provided for by Article 107 of Regulation No 574/72 of the Council must be applied for the implementation of the national rules against overlapping benefits.

18. Both from the object and from the wording of Regulation (EEC) No 2639/74 of the Council of 15 October 1974 (Official Journal L 283, p. 1) amending Regulation No 574/72 fixing the procedure for implementing Regulation (EEC) No 1408/71, it appears that Article 107 of that regulation seeks to fix the rate of conversion of sums expressed in one national currency into another only in order to allow the application of the provisions of Regulation No 1408/71.

19. In relation to the applicability of that provision in the event of the overlapping of benefits of the same kind for the implementation of rules against overlapping, it is clear from the foregoing that Article 107 can be applied only in the event of benefits' having been awarded to the beneficiary on the basis of Article 46 of Regulation No 1408/71, where that solution is more favourable to him than the result of the straightforward application of national rules. On the other hand when entitlements are calculated on the basis of national rules alone, Article 107 of Regulation No 574/72 cannot be applied and the currency exchange rates remain as determined by national rules.

20. The second question may therefore be answered as follows: where benefits of the same kind are granted or awarded in different Member States on the basis of analogous national rules, without any reference to the provisions of Regulation No 1408/71 there are no grounds for applying the method of currency conversion set out in Article 107 of Regulation No 574/72.

Third question

21. The third question seeks, in essence, to establish whether, regard being had to the variations in rates of conversion between currencies, Community law requires a periodical recalculation of benefits whose amount has been determined by taking into account a benefit acquired in another Member State, whether by application of national legislation relating to the grant and overlapping of benefits or in application of the provisions of Article 46 of Regulation No 1408/71.

22. In the first circumstances envisaged, namely where benefits paid to the worker are exclusively awarded under the provisions of national law, no provision of Community law requiring a periodical recalculation according to the rates of currency conversion is applicable.

23. In the second set of circumstances, namely where benefits are awarded under Article 46 of Regulation 1408/71, it is Article 51 of that regulation which fixes the conditions for the revalorization and the recalculation of the benefits. That article provides :

“(1) If, by reason of an increase in the cost of living or changes in the level of wages or salaries or other reasons for adjustment, the benefits of the States concerned are altered by a fixed percentage or amount, such percentage or amount must be applied directly to the benefits determined under Article 46, without the need for a recalculation in accordance with the provisions of that article.

2) On the other hand if the method of determining or the rules for calculating benefits should be altered, a recalculation shall be carried out in accordance with Article 46.”

24. Article 107 of Regulation No 574/72 determines the rate of conversion applicable in accordance with Article 51 (2) of Regulation No 1408/71. However, Article 107 does not imply the obligation periodically to recalculate current benefits (in particular, pensions) in the event of variations in the rates of conversion of currency. That interpretation is confirmed by Decision No 99 of the Administrative Commission of the Communities on Social Security for Migrant Workers of 13 March 1975 (Official Journal C 150, p. 2) on the interpretation of Article 107(1) of Regulation No 574/72 on the duty to recalculate current benefits.

25. In the light of the foregoing the third question may be answered as follows: No provision of Community law requires the periodical recalculation, by reason of a variation in the rates of conversion of currencies, of a social security benefit whose amount has been established taking into account a benefit acquired in another Member State.

Costs

26. The costs incurred by the Government of the Netherlands and by the Commission, which have submitted observations to the Court, are not recoverable. Since 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, the decision on costs is a matter for that court.

On those grounds, THE COURT (Third Chamber) in answer to the questions put to it by the Centrale Raad van Beroep by order dated 11 August 1981, hereby rules:

1 Benefits acquired under the legislation of two Member States, which seeks to ensure that an aged person deprived of the income of his deceased spouse has sufficient means of subsistence, and the respective amounts of which are determined on the basis of the insurance and social security contributions of that spouse, are benefits of the same kind. Where a worker receives a pension pursuant to national legislation alone, the provisions of Regulation No 1408/71 do not prevent that national legislation from being applied to him in its entirety, including any national rules against overlapping benefits. If however the application of that national legislation proves to be less favourable to the worker than application of the provisions laid down in Article 46 of Regulation No 1408/71, the provisions of that article must be applied. In the latter circumstances, paragraph (3) of Article 46 is applicable to the exclusion of the rules against overlapping benefits contained in the national legislation.

2 Where payments of the same kind are granted or awarded in different Member States on the basis of analogous national rules, without any reference to the provisions of Regulation No 1408/71, there are no grounds for applying the method of currency conversion set out in Article 107 of Regulation No 574/72.

3 No provision of Community law requires the periodical recalculation, by reason of a variation in the rates of conversion of currencies, of a social security benefit whose amount has been established taking into account a benefit acquired in another Member State.