Report for the Hearing in Case C-193/92

I — Facts and procedure

(a) Facts of the main proceedings

Mr Bogana, an Italian national, worked as an employed person in Italy and in Belgium.

When he became incapacitated for work he was granted in both States entitlement to receive invalidity benefits with effect from 1 November 1981.

The Italian invalidity benefit was calculated in accordance with the rules on aggregation and apportionment laid down in Article 46(2) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community (OJ, English Special Edition 1971(11), p. 416; consolidated version contained in OJ 1983 L 230, p. 6).

The Belgian invalidity benefit was determined in accordance with the provisions of national law. In view of the rule against overlapping set out in Article 76c(2) of the Belgian Law of 9 August 1963 establishing and organizing a scheme of compulsory sickness and invalidity insurance, in the version laid down by Royal Degree No 19 of 14 December 1978, the benefit paid to Mr Bogana by the competent Belgian institution was fixed at an amount equal to that of the full Belgian benefit, less the apportioned Italian benefit.

The Belgian benefit was revised with effect from 1 October 1986 in order to take account of changes in the Belgian legislation with regard to the method of calculating invalidity benefits. There is no dispute with regard to that revision.

It is common ground that on the date when the Belgian pension took effect, that is to say, 1 November 1981, and at the date when that pension was revised, that is to say, 1 October 1986, the amount of the benefit determined under Belgian legislation alone, including the rule against overlapping set out in Article 76c(2) of the Law of 9 August 1963, was equal to the amount of the pension calculated under Article 46 of Regulation No 1408/71, including the rule against overlapping set out in Article 46(3).

On 1 November 1981 the invalidity benefit paid to Mr Bogana by way of the Belgian pension came to BFR 472.23 per diem and that paid by way of the Italian pension to BFR 27.21 per diem. As from 1 October 1986, those benefits were fixed at BFR 606.64 and BFR 35.79 per diem respectively.

The Belgian invalidity benefit was adapted in accordance with the rules set out in Article 241a(2)(a) and (b) of the Royal Decree of 4 November 1963 implementing the Law of 9 August 1963, in the version laid down by the Royal Decree of 30 July 1981.

According to that article, the calculation of the amount of benefit paid under Article 76c(2) of the Law of 9 August 1963 is to be revised:

‘(a) where the benefit [granted by foreign law] ... changes by 2% in relation to the amount taken into account on the occasion of the initial or preceding calculation; the new calculation shall be made at the exchange rate ruling in the quarter in which the day on which the change in the benefit occurred ...; (b) where the average exchange rate for the foreign currency changes by 2% in relation to the exchange rate taken into account on the occasion of the initial or preceding calculation, the revision shall be carried out with effect from the first day of the quarter during which the exchange rate which has changed by 2% is applicable; ...’.

Union Nationale des Mutualités Socialistes (hereinafter ‘UNMS’), the Belgian institution responsible for the payment of benefits, found that those provisions had not been correctly applied to Mr Bogana between 1 January 1987 and 28 February 1991 and consequently claimed from him the sums of BFR 4572 and BFR 39093, which it considered he had been unduly paid during that period.

(b) Procedure before the national court

Mr Bogana brought an action against that decision in the Tribunal du Travail (Labour Court), Brussels.

Institut National d'Assurance Maladie-Invalidité (National Sickness and Invalidity Insurance Institution, hereinafter referred to as ‘INAMI’), intervened as a defendant in support of the form of order sought by UNMS.

In the Tribunal du Travail, Mr Bogana argued that the application of the provisions of Article 241a(2)(a) and (b) of the Royal Decree of 4 November 1963, cited above, was contrary to the provisions of Article 51 of Regulation No 1408/71, Article 107 of Council Regulation (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation (EEC) No 1408/71 (OJ, English Special Edition 1972(1), p. 159; version consolidated by Council Regulation (EEC) No 2001/83 of 2 June 1983, OJ 1983 L 230, p. 6) and Decision No 99 of 13 March 1975 of the Administrative Commission of the European Communities on Social Security for Migrant Workers (OJ 1975 C 150, p. 2).

The Tribunal du Travail, Brussels, took the view that the outcome of the proceedings depended on the interpretation of provisions of Community law and, by judgment of 5 May 1992, stayed the proceedings and referred the following question to the Court of Justice for a preliminary ruling:

‘Where the comparative calculation of a benefit made on the basis of national legislation (Article 76a(2) of the Law of 9 August 1963) and of Article 46(3) of Regulation (EEC) No 1408/71 produces the same result, must that benefit — after the date on which entitlement to it has been acquired — be adjusted in accordance with Article 51 of Regulation (EEC) No 1408/71 or in accordance with a provision of national law (Article 241a of the Royal Decree of 4 November 1963) which provides for the benefit due under national law to be recalculated so as to reflect changes in the foreign benefit which are associated in particular with fluctuations in average exchange rates and economic developments (equalization)?’

(c) Procedure before the Court

The judgment of the Cour de Travail, Brussels, was received at the Court Registry on 14 May 1992.

Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were lodged by Mr Bogana, represented by Franco Agostini, of the Rome Bar, by INAMI, represented by Emmanuel Degrez, of the Brussels Bar, and by the Commission of the European Communities, represented by Dimitrios Gouloussis, Legal Adviser, acting as Agent.

Upon 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.

By decision of 18 November 1992, the Court decided to refer the case to the Third Chamber.

II — Summary of the written observations submitted to the Court

1. The plaintiff in the main proceedings, Mr Bogana, argues in the first place that the application to his situation of the provisions of Article 241a of the Royal Degree of 4 November 1963 is contrary to the provisions of Article 51(1) of Regulation No 1408/71, as interpreted by the Court of Justice (see, inter alia, the judgments in Case C-85/89 Ravida v Office National des Pensions [1990] ECR I-1063 and in Case C-93/90 Cassamali v Office National des Pensions [1991] ECR I-1401). He sets out the following arguments to that end: the application of national law alone is not in this case more advantageous than the application of the provisions of Regulation No 1408/71, since the amounts of benefits obtained whichever provisions are applied are identical; accordingly, the provisions of the Community legislation, in particular those of Article 51(1) of Regulation No 1408/71, ought to be applied; if the rules of national law had to be applied, the procedure of comparative calculation laid down by Community law would result in a systematic comparison of the amount of benefit obtained by applying Article 76c(2) of the Law of 9 August 1963 and Article 241a of the Royal Decree of 4 November 1963 with the benefit obtained by applying the provisions of Articles 46 and 51(1) of Regulation No 1408/71. Such a calculation would be contrary to the aim of ‘administrative simplification’ underlying the provisions of Article 51(1) of Regulation No 1408/71, as the Court has indicated (judgments in Ravida and Cassamali, cited above); there is no provision of Community legislation which has a function equivalent to that assigned to the provisions of Article 241a of the Royal Decree of 4 November 1963, the purpose of which is to prevent a recipient of benefit from receiving at any time an amount in excess of the so-called ‘full’ national pension; in particular neither Article 46 of Regulation No 1408/71 nor any other provision of that regulation lays down a rule to the effect that a benefit corrected pursuant to Article 46(3) when it is first granted should subsequently be periodically adjusted in order to avoid its exceeding the amount of the highest of the ‘theoretical’ pensions when it is combined with a benefit of the same nature payable by another Member State. Secondly, the plaintiff in the main proceedings argues that the provisions of Article 241a(2)(b) of the Royal Decree of 4 November 1963 are contrary to the provisions of Article 107 of Regulation No 574/72 and Decision No 99 of 13 March 1975, cited above. In his view, as indicated by Decision No 99 of 13 March 1975 of the Administrative Commission of the European Communities on Social Security for Migrant Workers, the interpretation of which was confirmed by the judgment in Case 238/81 Raad van Arbeid v Van der Bunt-Craig [1983] ECR 1385, Article 107 of Regulation No 574/72 determines the rate of conversion applicable when benefits are determined or when they are recalculated, but does not imply the obligation periodically to recalculate current benefits in the event of variations in the rates of conversion of currency. It adds that INAMI cannot effectively invoke the ‘options’ made available to national institutions by the judgment in Case 98/80 Romano v INAMI [1981] ECR 1241, which is concerned with Decision No 101 of 29 May 1975 of the Administrative Commission of the European Communities on Social Security for Migrant Workers (OJ 1976 C 44, p. 3). Mr Bogana argues thirdly that the judgment in Case 111/80 Fanara v INAMI [1981] ECR 1269 provides the beginnings of an answer to the issue raised in this case. He points out that, in that judgment, where the provisions of Article 241b of the Royal Decree of 4 November 1963, paragraphs 2 and 3 of which were subsequently repealed, were in issue, the Court held that Article 111 of Regulation No 574/72 dealt exhaustively with the question of the recovery of the amount overpaid as regards social security benefits and left the Member States no freedom to legislate on the matter, or in particular to provide that where arrears received from a foreign institution, when converted into national currency, exceeded the amount of the allowances paid on a provisional basis, the balance was not to be paid over if the difference was due either to the difference in the exchange rates used to calculate the amount of the sums due from the foreign institution, or to the adjustment of the allowances to the cost of living. In his view, an identical solution should be adopted with regard to the subsequent evolution of benefits, as moreover the Commission argued in its observations in the Fanara case, cited above. This is all the more true because the amendments made to the provisions of Article 241a(2)(a) and (b) of the Royal Decree of 4 November 1963 by the Royal Decree of 30 July 1981, which lowered the revalorization threshold from 10% to 2% and provided that this reduction was to be retroactive, have increased the frequency of revisions. He adds that INAMI cannot effectively rely on the alleged advantages to migrant workers in order to dismiss that interpretation (see the judgment in Cassamali, cited above). Fourthly, Mr Bogana considers the consequences of the amendments made to Regulation No 1408/71 by Council Regulation (EEC) No 1248/92 of 30 April 1992 amending Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) No 1408/71 (OJ 1992 L 136, p. 7). He considers that the amendments made to the provisions of Article 46, in particular the abandonment of the provision in Article 46(3) providing for reduction, suspension or withdrawal, do not mean that the provisions of Article 241a(2)(a) and (b) of the Royal Decree of 4 November 1963 are henceforward legally applicable. He argues that, in the first place, the application of the provisions of Article 241a is contrary to that which the Court held in the judgment in Ravida, cited above, to the effect that the national rules against overlapping are to be taken into consideration when determining the method of calculating and, where applicable, recalculating the pension but not when ascertaining the circumstances in which a recalculation is appropriate. The application of those provisions is, in his view, also contrary to that which the Court held in the judgment in Cassamali, cited above, to the effect that a pension paid by a Member State, whether it was paid under the provisions of national law alone or in accordance with the provisions of Article 46 of the regulation, must not be affected by increases in a pension paid by another Member State as a result of the general evolution of the economic and social situation in that State and, in particular, must not be adjusted even in order to ensure that the national rule setting an overlapping limit continues to be observed. This seems to him to follow from the judgment in Van der Bunt-Craig, cited above, although he contests the distinction which that judgment seems to make between benefits granted and paid in different Member States under national legislation alone and benefits made under the regulation, which might result in this case to the provisions of Article 51(1) being applied solely to the Italian invalidity pension and not to the Belgian invalidity pension. Mr Bogana therefore proposes that the reply to the national court's question should be as follows:

‘(1) The provision of Article 241a(2)(a) and (b) of the Royal Decree of 4 November 1963 is designed principally to prevent, throughout the period during which a benefit under the sickness and invalidity scheme is received, the ceiling (limit) on overlapping laid down by Article 76c(2) of the Law of 9 August 1963 (formerly Article 70(2)) from being exceeded.

2) Neither Anicie 51(1) of Regulation No 1408/71 nor any other provision of Community law therefore enables the amount of the Belgian invalidity benefit to be changed in order to avoid the ceiling's being exceeded in the event of a change in the invalidity pension payable under a scheme of another Member State and paid in accordance with the provisions of the regulation entailed by the rules on the equalization of pensions. The same is true of variations due to fluctuations in exchange rates under the provisions of Article 107 of Regulation No 547/72 and Decision No 99/75 of the Administrative Commission.

3) The amendment of Regulation No 1408/71 effected by Regulation No 1248/92 of 30 April 1992 does not affect the validity of that interpretation.’

2. The party intervening on the defendant's side in the main proceedings, INAMI points out in the first place that the Court has consistently held that as long as the worker receives a pension under national legislation alone, the provisions of Regulation No 1408/71 do not prevent that national legislation, including its rules against overlapping, from applying in full, and the provisions of Article 46 of the regulation should be applied only if the national legislation turns out to be less favourable to the worker. In the second place, INAMI argues that on 1 November 1981 and on 1 October 1986 calculation of the benefit due to Mr Bogana under Belgian national legislation alone, that is to say, in particular Article 76c(2) of the Law of 9 August 1963, produced the same result as Article 46(2)(b) and Article 46(3) of Regulation No 1408/71. According to INAMI, it follows that on each of those dates the application of national law was not less favourable than the application of Community law and, in accordance with the Court's case-law, it was appropriate to apply national law in its entirety. Thirdly, INAMI argues that the provisions of Article 241a of the Decree of 4 November 1963 form an integral part of the provisions for implementing the national rules against overlapping laid down by Article 76c(2) of the Law of 9 August 1963, as amended, the aim of which is provide the pensioner with income equal to the full invalidity pension provided for in the Belgian legislation, while making the general invalidity scheme bear only the difference between the amount of that benefit and the amount of benefit paid under other — in particular, foreign — schemes. In its view, it follows directly from the Court's case-law that a benefit payable by Belgium under its national legislation must necessarily be adapted subsequently having regard to the rules laid down by its national legislation with regard to the implementation of the applicable rules against overlapping. Fourthly, INAMI contends that the application of the provisions of Article 51(1) of Regulation No 1408/71 is not systematically more favourable than the application of Article 241a of the Royal Decree of 4 November 1963. It observes on the one hand that, contrary to the provisions of Article 51(1) of Regulation No 1408/71, Article 241a of the Royal Decree of 4 November 1963 guarantees the incapacited person at all times an income equal or very close to the full amount of the Belgian pension, and eliminates possible losses as a result of an unfavourable movement in exchange rates and of the various methods of equalization used in the Member States. It further observes that, whilst in some cases the application of Article 241a of the Royal Decree may be reflected in a slower increase in the Belgian benefit than Article 51(1) of Regulation No 1408/71 would permit, Article 241a guarantees at all times that the incapacitated person's income will not fall below the amount that has to be guaranteed both under national law and under Article 46(3) of Regulation No 1408/71, or in other words that it will not fall below the highest theoretical amount. INAMI therefore proposes that the following reply should be given to the national court's question:

‘Where the comparative calculation of the benefit made on the basis of the national legislation (Article 76c(2) of the Law of 9 August 1963) and of Article 46(3) of Regulation (EEC) No 1408/71 produces the same result, that benefit must, beyond the date when the entitlement arises, be adapted in conformity with the provision of national law (Article 241a of the Royal Decree of 4 November 1963) which provides for the recalculation of the benefit due under national law having regard to variations in the foreign benefit resulting, in particular, from fluctuations in average exchange rates and from economic developments (equalization).’

3. The Commission points out in the first place that the system of Article 51 of Regulation No 1408/71 results in a distinction's being drawn between the adaptation of benefits as a result of indexation and the adaptation of benefits owing to changes in calculation methods. In the first case, a percentage or a specific amount is added to the benefits due up until that time and no fresh calculation is carried out. In the second case, a full fresh calculation is carried out. Since Article 51 contemplated no other possibility for altering the benefit, paragraph 1 of that provision lays down the principle of the independent evolution of social security benefits. According to that principle, once benefits have been calculated in accordance with Article 46, they must evolve independently in each of the Member States concerned, and any adaptation made in one or other of them must not affect benefits paid in the other States. Secondly, the Commission argues that, as this is so, the competent institutions in a Member State may not re-adapt periodically the amount of the benefit payable by them to reflect changes in a benefit paid in another State as a result of the application of the equalization rules in force in that State or as a result of fluctuations in exchange rates. Thirdly, it maintains that since the pension granted to Mr Bogana was determined in accordance with the provisions of Community law, that is to say, following a comparison of the amount of the benefit obtained under the national scheme and that obtainable under the Community system, which yields the same result in this case, the competent Belgian institutions cannot effectively rely on the national rules against overlapping, in particular Article 241a of the Royal Decree of 4 November 1963, in order subsequently to carry out a fresh calculation and reduce the amount of the benefit granted to Mr Bogana under the Belgian legislation. The Commission therefore proposes the following reply to the national court's question:

‘Where the comparative calculation of a benefit made on the basis of national legislation and of Community law produces the same result, it is contrary to Article 51 of Regulation No 1408/71 for that benefit to be recalculated so as to reflect changes in the foreign benefit which are associated in particular with fluctuations in average exchange rates and economic developments (equalization)?’

F. Grévisse

Judge-Rapporteur

1 Language of the case: French.