Report for the Hearing delivered in Case C-37/89

I — Facts and procedure in the main proceedings

1. The plaintiff in the main proceedings was a member of the Paris Bar from 5 December 1967 to 30 June 1984 and affiliated to the Caisse nationale des barreaux français (hereinafter referred to as ‘the Fund’), which manages the pension scheme for members of the Bar. That scheme involves, on the one hand, the constitution of a basic retirement pension, the amount of which is determined by the number of years during which the insured person is in practice and, on the other, the constitution, also compulsory, of an additional old-age and survivors' pension, the amount of which is determined on the basis of the number of points acquired during the same period. Since 1 July 1984, Mr Weiser has been an official of the Court of Justice of the European Communities.

2. By letter of 25 September 1985, he applied to the Fund under Article 11(2) of Annex VIII to Regulation (EEC, Euratom, ECSC) No 259/68 of the Council of 29 February 1968 laying down the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities and instituting special measures temporarily applicable to officials of the Commission (Official Journal, English Special Edition 1968 (I), p. 30, hereinafter referred to as ‘the Staff Regulations’) for the transfer to the Community of his pension rights for the period during which he had paid contributions. That provision is drafted in the following terms:

‘An official who enters the service of the Communities after leaving the service of a government administration or of a national or international organization or of an undertaking shall have the right, on becoming established with that Community, to pay to it either:

i) the actuarial equivalent of retirement pension rights acquired by him in the government administration, national or international organization or undertaking; or

ii) the sums repaid to him from the pension fund of the government administration, organization or undertaking at the date of his leaving its service.

In such case the institution in which the official serves shall, taking into account his grade on establishment, determine the number of years of pensionable service with which he shall be credited under its own pension scheme in respect of the former period of service, on the basis of the amount of the actuarial equivalent or sums repaid as aforesaid.’

3. By letter of 8 October 1985, the Fund rejected that request. By decision of 3 October 1986, Mr Weiser's internal administrative appeal of 6 February 1986 was dismissed by the administrative board of the Fund. On 5 December 1986, Mr Weiser brought an action before the tribunal des affaires de sécurité sociale (Social Security Tribunal), Paris, for the annulment of the abovementioned decisions of the Fund and its administrative board and for a declaration that the Fund was bound to pay to the European Communities the actuarial equivalent of the retirement pension entitlement acquired by him both by way of basic retirement pension and by way of supplementary pension for the period from 5 December 1967 to 30 June 1984 or, in the alternative, the sum due to be repaid to him by the Fund on 30 June 1984.

4. By judgment of 14 March 1984, the tribunal des affaires de sécurité sociale declined jurisdiction and referred the case to the tribunal d'instance (District Court), Paris. Before the latter court, the Fund argued that Article 11 (2) of Annex VIII to the Staff Regulations did not directly apply to Mr Weiser, since there was no agreement between the French State and the Communities. Furthermore, that provision laid down no rules on the transfer of pension rights arising from work as a self-employed person.

5. The plaintiff replied that under the second paragraph of Article 189 of the EEC Treaty a regulation such as the Staff Regulations of Officials of the European Communities was binding in its entirety and directly applicable in all the Member States. He added that the list set out in Article 11(2) of Annex VIII to the Staff Regulations was not exhaustive, because if it were that would constitute discrimination against self-employed occupations, contrary to the prohibition of discrimination.

6. The tribunal d'instance de Paris, in order to be in a position to rule on that dispute and, in particular, on the question of which occupational groups were entitled to take advantage of the Community provision at issue, referred the following question to the Court of Justice for a preliminary ruling:

‘Is a French avocat who abandons his practice in order to become an official of the European Communities entitled to claim the benefit of the provisions of Article 11 (2) of Annex VIII to the Staff Regulations of Officials of the European Communities?’

7. The order for reference was received at the Court Registry on 16 February 1989. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were submitted by the plaintiff in the main proceedings, represented by Jean Rooy, of the Paris Bar; by the defendant in the main proceedings, represented by Robert Collin, of the Paris Bar, and by F. Herbert, of the Brussels Bar; by the Government of the French Republic, represented by Edwige Belliard and Claude Chavance, acting as Agents; and by the Commission of the European Communities, represented by Sean van Raepenbusch, acting as Agent. On 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 — Written observations submitted to the Court

1. The plaintiff in the main proceedings observes that the question submitted by the national court concerns both the validity and the interpretation of Article 11(2) of Annex VIII to the Staff Regulations. He considers that the question may be dealt with in terms of validity because, if the Court were to consider that the contested provision was to be interpreted restrictively and was therefore invalid for infringing the prohibition of discrimination, it would not as a result be totally invalid but invalid only in so far as it did not cover officials -who had previously worked as self-employed persons, and hence a former avocat who had become an official could seek to have it applied to him. With a view to giving the provision practical effect, Mr Weiser argues that it should be interpreted in the light of the objectives which the Community legislature sought to achieve, as set out in the first paragraph of Article 27 to the Staff Regulations, according to which recruitment is to be directed to securing for the institution the services of officials of the highest standard of ability. The various recruitment procedures employed by the institutions are directed generally to persons who already have a certain degree of work experience. However, the objective of the abovementioned provision can only be achieved by not penalizing officials, whether in regard to their careers or their pension rights. Mr Weiser also argues that the combined effect of the second paragraph of Article 32 of the Staff Regulations and Article 11(2) of Annex VIII confers on Community officials a certain degree of equivalence in regard to their previous occupational background, which has been confirmed in unequivocal terms by the Court in its judgment of 20 October 1981 in Case 137/80 Commission v Belgium [1981] ECR 2393. Mr Weiser argues that, since that is the basis of the provision at issue, there is no justification for limiting its application to particular categories of officials, namely those who were formerly national or international civil servants or employed by an undertaking, and excluding others, namely those who were previously self-employed, in any event, where the latter have, as in this case, built up pension rights under the same conditions as employed persons. On the contrary, Mr Weiser considers that it is obvious that, by referring to ‘an official who enters the service of the Communities after leaving the service of a government administration or of a national or international organization or of an undertaking’, Article 11 (2) of Annex VIII, far from setting out an exhaustive list, sought to include any person who, before entering the service of the Communities, engaged in the public or private sector in an occupation in which he paid old-age pension contributions. He adds that in Community law, persons pursuing one of the professions in an independent capacity are equated with employed persons for the purposes of social legislation. Lastly, Mr Weiser argues that a restrictive interpretation of Article 11 (2) of Annex VIII would render that provision invalid inasmuch as it would then infringe the prohibition of discrimination by excluding a particular category of officials from its scope without any objective justification. However, when a provision may be interpreted in two ways one of which renders it invalid, the latter interpretation, which cannot have been intended by the Community legislature, must be rejected. The plaintiff therefore proposes that the reply to the national court's question should be as follows:

‘An official of the European Communities who was formerly self-employed in a Member State is entitled to the benefit of Article 11(2) of Annex VIII to the Surf Regulations.’

2. The defendant in the main proceedings considers that the question referred to the Court, as it is formulated, concerns the application, not the interpretation, of Community law. With regard to the substance of the case, it points out that Article 11(2) of Annex VIII to the Staff Regulations clearly defines the group of persons entitled to benefit from it. That is a conscious and deliberate choice on the part of the legislature, which did not consider it had to extend that provision to cover Community officials who were formerly self-employed. That limitation of the categories of person to which the contested provision applies is borne out by making a comparison with Article 11(1) of Annex VIII, which provides that, in the event of an official's leaving the service of the Communities, only officials entering the service of a government administration or a national or international organization are entitled to have their pension rights transferred, and therefore excludes not only persons intending to work on a self-employed basis, but also those entering the private sector. The defendant observes that even where a rule sets out expressly, in addition to the principal category of beneficiaries of the provision, a category of persons who may be treated as if they were beneficiaries, the Court has decided that the interpretation of the latter category must be strict In that regard, the Fund refers to the judgment of 21 November 1974 in Case 6/74 Moulijn v Commission [1974] ECR 1287. It follows a fortiori that where the legislature itself did not contemplate a category of person who may be treated as if they were included among the beneficiaries set out in an exhaustive list, it is not for the Court to do so through an interpretation which would deprive the terms employed of their specific meaning. It also contends that the requirement of a stria interpretation is confirmed by the position of the Commission, which, in the steps it has taken to have Article 11(2) of Annex VIII to the Staff Regulations implemented by the Member Sutes, has always adhered to the precise terms of the provision. The defendant notes that the negotiations which France is at present conducting with the Communities for the purpose of applying the contested provision concern only persons insured under the general scheme and officials of the French Sute. The defendant admits that Article 11(2) of Annex VIII to the Staff Regulations is binding and directly applicable in all the Member Sutes, since its implementation is not subject to the conclusion of an agreement of the sort provided for in Article 11(1). However, it points out that it is clear from the Court's case-law that that secondary direct applicability covers, first, the binding nature of the provision in regard to the Member Sutes in so far as they are required to adopt specific measures so as to enable officials to exercise the option of transferring rights acquired nationally to the Community pension scheme, secondly, the prohibition on Member Sutes applying national rules precluding the transfer of pension rights and, thirdly, the opportunity for the Community official concerned, as an individual, to rely on that obligation before national courts as against the relevant Member Sute. The defendant points out that whilst the first two characteristics reflect the direct applicability, properly so called, of the Community provisions, that is to say their binding nature in regard to the Member States independently of any implementing measure, the third aspect follows from the direct effect of provisions which may be invoked by individuals in legal proceedings. It observes that although it follows from Article 189 of the Treaty that a provision of a Community regulation is directly applicable and may as such be relied on by parties to legal proceedings, this case confirms that the actual implementation of the direct effect of a rule is not always possible. The defendant points out that the Court held in its judgment of 20 March 1986 in Case 72/85 Commission v Netherlands [1986] ECR 1223, that the right of individuals to rely on Article 11(2) of Annex VIII to the Staff Regulations before their national courts represents only a minimum guarantee and is not sufficient in itself to ensure the full and complete implementation of that provision, which is intended to facilitate coordination of national schemes with the Community pension scheme. With regard to the detailed rules for the implementation of that provision, the Court held, in the judgment of 17 December 1987 in Case 315/85 Commission v Luxembourg [1987] ECR 5391, that the Member States have a measure of discretion and that Article 11(2) of Annex VIII to the Staff Regulations does not imperatively require that both possibilities should be provided for, that is to say, transfer of the actuarial equivalent and transfer of sums repaid, without its being necessary to consider whether or not they exist under national law. The Court also decided in the judgment of 5 October 1988 in Case 129/87 Decker v Caisse de pension des employés privés [1988] ECR 6121, that the Member States have the right to prescribe a certain period within which Community officials who wish to transfer their pension rights to the Community scheme must submit their requests. The defendant concludes that, in the absence of national measures designed to implement Article 11(2) of Annex VIII, the direct effect of that provision remains potential, since the right conferred on officials does not give rise to a sufficiently precise obligation on the part of the Fund. Such implementation presupposes a prior decision on the part of the French legislature as to whether the choice between the actuarial equivalent and the transfer of sums repaid is to be left to the official and, in the event of the actuarial equivalent being chosen, as to the discount rate and the coefficient of reduction to be used in calculating the actuarial equivalent. In the event that the transfer of sums repaid should be chosen, the French legislature would have to determine whether interest should be applied and to fix a time-limit for the submission of applications. Having regard to those real difficulties entailed by the implementation of Article 11(2) of Annex VIII, the defendant suggests, in order to ensure that the Court's reply is of genuine utility to the national court in so far as it will enable the latter to rule on the application without once again having to refer a question to the Court, that the Court should state in its answer the limitations, in the present state of the law, on the direct effect of that provision as regards a private insurance institution. The defendant proposes therefore that the answer to the question referred to the Court should be as follows:

‘Article 11(2) of Annex VIII to the Staff Regulations must be interpreted as meaning that it does not apply to an official who enters the service of the Communities without having previously been in the service of a government administration or of a national or international organization or of an undertaking.’

3. The French Government argues that the Staff Regulations contain an exhaustive list of the cases in which the transfer of pension rights is required of old-age insurance institutions, both national, in regard to the transfer of the rights at issue, and Community, in regard to the acceptance of those rights and the consequent modification of the applicant's pension rights under the Staff Regulations. As far as a person becoming an official of the Communities is concerned, Article 11(2) of Annex VIII to the Staff Regulations covers only employment in a government administration, a national or international organization or an undertaking. That provision therefore does not appear to cover Community officials previously engaged in self-employed activities and the rules of professional conduct of the Bar do not permit its members to work as employed persons. As regards the procedure for the transfer of pension rights, the French Government does not contest the principle of the direct applicability of Community regulations as such, although it points out that whilst the Staff Regulations are indeed binding without its being necessary to adopt implementing measures in French law, there is a need to lay down specific implementing rules for the transfer of rights by means of an agreement between France and the Commission. It points out that an exchange of letters is currently being negotiated between the Communities and the French authorities to determine the detailed rules for the transfer of pension rights of persons who have worked as employed persons and were covered by the general scheme or by a special scheme and of persons having worked in the French administration. However, officials, who, because of the difficulties involved in drawing up those iules, were unable to obtain a transfer of their rights at the time when they entered the service of the Communities will not suffer, because a system for the updating of the sums involved has been set up by agreement between the French authorities and the Commission. The French Government argues that the provisions of the regulation at issue, as currently drafted and interpreted, do not promote equal treatment as between employed persons and self-employed persons affiliated to an old-age pension scheme. However, it points out that that de facto situation is not brought about by any attempt on its part to prevent the transfer of pension rights to the Community pension scheme, a possibility which should be open to self-employed persons. The French Government states that it is not opposed to self-employed persons' having the same opportunities as employed persons in regard to the transfer of pension rights when they enter the service of the Communities after having engaged in an occupational activity covered by a French old-age pension scheme applicable to self-employed persons. Furthermore, such a solution would be consonant with the Court's case-law, as confirmed by the judgment of 18 April 1989 in Case 130/87 Retter v Caisse de pension des employés privés [1989] ECR 865. As regards the solution to be adopted, the French Government awaits any proposals which the Commission may care to make. It would agree to the amendment of Article 11(2) of Annex VIII to the Staff Regulations with a view to extending its scope in order to take account of self-employed activities, such as practising as an avocat. Failing such an amendment, it states that it is prepared to envisage a solution, together with the Commission, which would enable the pension rights of self-employed persons to be transferred, provided that the administrative boards of the old-age insurance funds for self-employed persons can give their agreement thereto in the absence of any legal obligation in that regard. The French Government therefore proposes that the Court should reply to the question referred to it as follows:

‘An avocat cannot rely on Article 11(2) of Annex VIII to the Staff Regulations as it is currently drafted in order to secure the transfer of pension rights from the French old-age insurance scheme applicable to him to the Community scheme.’

4. The Commission points out in limine that the terms used in Article 11(2) of Annex VIII to the Staff Regulations are clear and precise. In its view, that provision undoubtedly covers an employment relationship or, in general, wage- or salaryearners or officials, but it is difficult to regard it as applying to self-employed persons. However, it argues that such an interpretation of the provision cannot be accepted because it would mean that, owing simply to the nature of their occupational activity before they joined the Communities, a significant group of Community officials would be deprived of a right guaranteed by the Staff Regulations and designed to provide continuous and complete social protection. The Commission takes the view that, in order to avoid discrimination between officials in like situations, the only way of reconciling Article 11(2) of Annex VIII to the Staff Regulations with the principle of equal treatment is to adopt a wide interpretation of that provision so that rights acquired at national level can be transferred to the Community pension scheme for the benefit of both Community officials who were employees or officials before they entered the service of the Communities and officials who were previously self-employed. In that regard, it refers to the judgment of the Court of 31 May 1979 in Case 156/78 Newthv Commission [1979] ECR 1941. The Commission adds that although the position of an official who was formerly a self-employed person is not exactly comparable to that of an official who was previously in the service ‘of a government administration or of a national or international organization or of an undertaking’, the nature of the official's previous occupational activity can be assessed only in the light of the objective which the Community legislature sought to achieve. The Commission points out that the purpose of the provision at issue was identified by the Court in the judgments of 20 October 1981 in Case 137/80 Commission v Belgium [1981] ECR 2393, and of 17 December 1987 in Case 315/85 Commission v Luxembourg [1987] ECR 5391. It can be seen from those judgments that the fundamental objective of Article 11(2) of Annex VIII to the Staff Regulations is to secure the transfer of rights from a national insurance scheme to the Community scheme in one of the two forms mentioned therein, namely the actuarial equivalent or sums repaid. Those considerations show that to restrict the benefit of the transfer of pension rights solely to former employees or national or international civil servants would be incompatible with the objective of the provision, which is to ensure that the Communities have the best possible chance of being able to choose qualified staff who already possess suitable experience. The Commission considers that the unequal treatment as between Community officials which would ensue from a strict interpretation of the provision at issue is not exclusively the outcome of differences between the national schemes giving rise to pension rights, and cannot be justified by any objective circumstance distinguishing between the categories of persons referred to in Article 11(2) of Annex VIII to the Staff Regulations and members of the professions working in an independent capacity, albeit such persons also have work experience suited to the needs of the administration of the Communities. It points out that there is no reason why account should be taken only of periods worked at national level as an employee or as an official for the purpose of the settlement of pension rights under the Community scheme. In conclusion, the Commission argues that it is contrary to the prohibition of discrimination for the national authorities to continue to refuse to transfer pension rights acquired under their legislation in respect of periods during which the insured person was self-employed. Consequently, it proposes that the Court should reply as follows to the question referred to it:

‘Article 11(2) of Annex VIII to the Staff Regulations must be interpreted as meaning that it entitles officials of the Communities to transfer pension rights acquired at national level to the Community pension scheme regardless of the nature of the official's occupation — whether it was governed by public law or by private law and whether it was carried on as an employed person or on a self-employed basis — before he entered the service of the Communities.’

III — Oral Procedure

At the hearing on 30 January 1990, the Council also gave its views on this case.

The Council considers that account must be taken of the context and objectives of the contested provision. A literal meaning cannot be given to the terms of Article 11 (2) of Annex VIII to the Staff Regulations. In the Council's view, the terms of the provision in question are not completely clear. The French terms ‘administration’ and ‘organisation’ do not have a precise meaning. In the eight other languages of the Community, the definitions used are also wide and varied. The Council therefore considers that the terms employed in Article 11(2) of Annex VIII to the Staff Regulations cannot be applied literally and that the provision must be interpreted in the light of its aim.

The Council explains that pension rights attach to persons and must be able to follow them when they change their occupation or job. It would be too restrictive to interpret Article 11(2) of Annex VIII to the Staff Regulations in such a way as to exclude many categories of persons, which would have a completely negative effect on the European Communities' ability to recruit officials.

According to the Council, it is plain that the Community legislature did not intend to discriminate between different categories of official. On the contrary, it intended that there should be a right to transfer all pension rights which are capable of being transferred. To interpret the provision at issue otherwise would be tantamount to authorizing a difference in treatment as between officials.

M. Diez de Velasco

Judge-Rapporteur

1 Language of the case: French.