C-79/76

JUDGMENT OF THE COURT 31 MARCH 1977 1

Carlo Fossi v Bundesknappschaft (preliminary ruling requested by the Bundessozialgericht)

Case 79/76

1. Social security for migrant workers — Community system — Area of application (EEC Treaty, Article 51)

2. Social security for migrant workers — Invalidity and pensions insurance — German legislation — Insurance periods completed before 1945 outside the territory of the Federal Republic of Germany and West Berlin — Benefits — Community law — Inapplicability

1. Legislation which confers on the exist or are situated outside the beneficiaries a legally defined position territory of the Federal Republic of which involves no indivudual and Germany and the purpose of such discrectionary assessment of need or legislation is to alleviate certain personal circumstances comes in situations which arose out of events principle within the field of social connected with the National Socialist security within the meaning of Article regime and the Second World War 51 of the Treaty and of Regulations and where the payment of the Nos 3 and 1408/71. benefits in question to nationals is of 2. Where the competent insurance a discretionary nature where such institutions to which the persons nationals are residing abroad, those referred to by German legislation had benefits are not to be regarded as in been affiliated before 1945 no longer the nature of social security.

JUDGMENT OF 31. 3. 1977 - CASE 79/76

on the interpretation of Article 8 of Regulation No 3 and of Article 3 (1) of Regulation No 1408/71,

THE COURT

composed of: H. Kutscher, President, A. M. Donner and P. Pescatore, presidents of Chambers, J. Mertens de Wilmars, M. Sørensen, Lord Mackenzie Stuart, A. O'Keeffe, G. Bosco and A. Touffait, Judges,

Advocat-General: J.-P. Warner Registrar: A. Van Houtte

gives the following

FOSSI v BUNDESKNAPPSCHAFT

the area of application of the Article 3 (1) of Regulation No 1408/71 Reichsknappschaftsgesetz and that the provides that: provisions of Community law governing social security are no obstacle to the 'Subject to the special provisions of this application of the provisions of the regulation, persons resident in the Reichsknappschaftsgesetz governing territory of one of the Member States to suspension. The plaintiff in the main whom this regulation applies shall be action then appealed to the subject to the same obligations and enjoy Bundessozialgericht on a point of law. the same benefits under the legislation of He maintained that the restriction set out any Member State as the nationals of that in the annexes to Regulation No 1408/71 State.' of the principle in Article 10 (1) is incompatible with the provisions of Article 10 (1) of Regulation No 1408/71 Articles 48 et seq. of the EEC Treaty and provides that: that the contested decision leads to

JUDGMENT OF 31. 3. 1977 - CASE 79/76

nationals are subject, is inapplicable since periods at issue. The question therefore under Article 8 of Regulation No 3 and arises whether, when it pays the pension, Article 3 (1) of Regulation No 1408/71 the constitution is discharging an Mr Fossi must be treated as a German original duty or merely a derivative one national. On the other hand, the and the conclusion may be drawn that provision on suspension contained in although the benefit payable under Paragraphs 107 et seq. of the Paragraph 108 c of the Reichs­ Reichsknappschaftsgesetz applies to Mr knappschaftsgesetz is founded on Fossi since it also applies to German insurance contributions it represents a nationals; burden arising from the war assumed for reasons of social welfare and presupposes — It emerges from the provisions of the materialization of the risks in the Annex G 1 A 2 to Regulation No 3 and form of occupational invalidity or of of Annex V B 1 b to Regulation No disablement.

EEC Treaty, Article 2 (1) (b) of Regulation No 3 and Article 4 (1) (b) of First of all, the Government of the Regulation No 1408/71. Paragraph 108 c Federal Republic of Germany gives 4 of the Reichsknappschaftsgesetz certain details concerning the substitute provides, however, that the pension in pensions (Fremdrenten) and the pensions question shall not be regarded as a social awarded to certain categories of persons security benefit; who are resident abroad (Auslandsrenten). It has been provided that refugees and — The competent institution in the persons deported who could no longer main action in fact received no enforce their acquired rights to social contributions in respect of the insurance security or their rights to future

FOSSI v BUNDESKNAPPSCHAFT

When it certain burdens arising from the war. adopted that amending law, which was intended to improve the legal position of The aim pursued explains why refugees and persons deported, the responsibility for payment was only legislature made a logical application of provided for in those cases in which the the principle of the integration of such persons concerned — whether or not persons into the community of insured German nationals — had taken up persons in the Federal Republic. That residence in the Federal Republic. Those necessarily brought about a certain who after the war had taken up residence modification of the legal position where outside the territory of the Federal the beneficiaries were resident abroad. Republic of Germany had not The logical application of the principle contributed by their labour to the of integration required that all persons reconstruction of the German economy resident abroad who had completed and of the German State. insurance periods outside the territory of the Federal Republic be informed in As regards German nationals residing advance of the benefits which they would abroad, however, in particular those who be awarded if they transferred their place had previously suffered under the of residence to the territory of the National Socialist regime, the Federal Republic.

The abovementioned position adopted by the German legislature has been accepted The territorial area of application of by foreign States and all the countries Regulations Nos 3 and 1408/71, which with which the Federal Republic has were adopted in order to facilitate the

free movement of migrant workers The German Government maintains that within the Community, corresponds to the rules laid down by Paragraph 108 c the territory of the European Economic of the Reichsknappschaftsgesetz are not Community. The territorial area of covered by the Community concept of application of the rights of free social security. In fact, the provisions in movement and the Community system question constitute rules relating to of aggregation, for the purposes of burdens arising from the war which, in acquiring a right to social security accordance with the basic principle in benefits and for the calculation of such Article 2 (3) of Regulations No 3 or of benefits, of all periods completed under Article 4 (4) of Regulation No 1408/71, is national systems of legislation cannot be excluded from the area of social security. restricted or, a contrario, extended by In addition, the provisions of Paragraph legislative measures adopted by the 108 c do not confer any right on the Member States. person which they are intended to benefit but leave the grant of a benefit to It follows that although, when Regulation the competent institution, which is No 3 was adopted, the German required to exercise its discretion. legislation on pension insurance allowed Finally, the origin of Regulations Nos 3 periods completed before 1945 outside and 1408/71 also shows that the the territory of the Federal Republic of particular rule laid down by Paragraph Germany to be taken into account, the 108 c is not contained in the implementation of Regulations Nos 3 Community concept of social security. and 1408/71 as regards their territorial When Regulation No 3 was adopted the area of application as defined by the other Member States were aware that the Treaty of Rome cannot result in an Federal Government had protected the extension in certain cases of the area of refugees and persons deported who had

Even supposing that Paragraph 108 c is covered by the concept of social security, It is in any case very doubtful whether a it is not covered by the Community worker who has never made use of his system. The paragraph in question is right of free movement may rely on the typical of the many rules adopted as a principle of equality of treatment laid consequence of the war. Rules relating to down by Regulation Nos 3 and 1408/71. insurance obligations became necessary In the statement of reasons for the each time that as a result of territorial proposal for what was to become changes or movements of population, Regulation No 1408/71 the Commission generally as a consequence of war, social rightly defined the persons covered by insurance institutions were divided, the regulation as only those 'moving disestablished or taken over by new within the Community'. institutions, or that the rights acquired or

whose enjoyment was expected were no provisions are generally to be found in longer granted by the insurance the internal law of the third State with institution which was originally com which it has been impossible to make an petent. agreement which is, per se, necessary on the question of the insurance obligations. On the other hand, the principle of Thus, in its statement of reasons for its freedom of movement for workers as laid proposal for a regulation, the down by the rules of the EEC Treaty Commission rightly maintained that the and by the regulations adopted in rules contained in Annex II to implementation thereof forms a system Regulation No 1408/71 may attach which is oriented towards the future and reservations to the principle of equality which serves to allow the movement of of treatment, in particular so labour within the Community. Its aim .as to permit of bilateral provisions cannot be to challenge or even to set governing questions other than those aside the rules relating to the distribution dealt with in the regulation, that is, of social security burdens, whose purpose chiefly, provisions concerning periods of is to make a final settlement of a past war whose application to persons other

distribution. The fact that the Com power by which the German insurance munity legislature was aware of that organization may pay the pension to restriction when it adopted Regulation German nationals, even in the case of No 3 is shown by Annexes D and G to residence abroad. that regulation, which provide that the rules relating to the insurance obligations Although residence in another Member in question remained applicable. State is quite exceptional for German pensioners, it is quite normal and The legal difficulties raised by the common for other, non-German, integration of the insurance periods in Community nationals.

bilateral treaty. In so far as such security benefit appear to be unfounded, provisions have been adopted unilaterally since in the light of the very content and by a Member State, complementary purpose of the benefit, its connexion

with the system of contributions paid by The Italian Government refers to the the recipients and the name given to the observations made in its statement in administrative authorities which are Case 32/75 (Cristini v SNCF7 [1975] ECR competent to award it, that description 1085). must be used. The Italian Government refers to the views expressed in Case The Commission observes that the 187/73 (Callemeyn v Belgian State, Bundessozialgericht judges whether the [1974] ECR 553). suspensory provisions of Paragraphs 105 et seq. of the Reichsknappschaftsgesetz To deny the applicability of the are generally compatible with Com­ Community rules in the present case on munity law solely in the light of the rule the ground that the plaintiff is a of equality of treatment and not of the pensioner rather than a worker who has. guarantee that the benefit will be payable actually been employed in Germany is abroad. incompatible with the very aims of the Community legal order and is likely to However, one question remains open: result in discrimination which is not whether the freedom of the German permissible. legislature to provide for the exportation of the benefit is inherent, in that the To the extent to which the exception in Community law is, in principle, Annex V C 1 b to the general principle inapplicable to insurance periods contained in Article 10 of Regulation No completed outside the territory of the 1408/71 refers only to benefits payable in Member States, or whether it is derived respect of accident or occupational from the fact that the validity of Article disease, it appears to be inapplicable to 10 of Regulation No 3 and Article 10 of the main action, since that action Regulation No 1408/71, which cover concerns a genuine invalidity benefit. such insurance periods, is suspended by Furthermore, secondary Community the provisions of Annex G I A 2 and legislation cannot compromise and have Annex V B 1 (b) of those regulations, a concrete effect on the application of within the limits which they lay down. such fundamental principles of the EEC Both the observations of the Treaty as the principle of non- Bundessozialgericht and the question discrimination. Similarly, it is necessary referred to the Court itself are based to rule out any idea that overwhelming upon the implied conditionMr that importance is to be attached to the Fossi's right to pension falls within the discretionary power available to the territorial area of application of administrative authorities. Regulations Nos 3 and 1408/71.

maintained that the Member States Secondly, the Commission considers the remain free to decide the scope of social questions which arise when preference is benefits, since Article 51 refers expressly given to a wider interpretation of the to the aggregation of all periods taken matters covered. For example, in the into account under the laws of the abovementioned Case 187/73, the Court several countries. It is possible to counter of Justice found that the question that argument by stating that the whether a benefit falls within the area of freedom to lay down social security social security depends chiefly on the provisions which is available to the absence of any clearly-defined legal right, legislatures of the Member States must in conjunction with the grant of the not include the power to determine the benefit on the basis of an individual area of application of Community law. assessment. As regards the plaintiff in the That would, however, be the case if, by main action, the important factor is not taking account under its national the right to the benefit but the payment legislation of insurance periods which, whilst acknowledging the right in completed outside the Community, a principle, the Reichsknappschaftsgesetz Member State could, by unilateral action, makes conditional upon the assessment transform them into insurance periods made by the competent social insurance within the meaning of Community law institution.

JUDGMENT OF 31. 3. 1977 - CASE 79/76

governing the payment of pensions to 1408/71 does not apply for the purposes persons entitled thereto who reside of the implementation of the national outside the Federal Republic of legislation referred to in Annex G I A 2 Germany, in so far as such payment is of Regulation No 3 and Annex V B 1 (b) left to the discretion of the competent of Regulation No 1408/71 and governing institution and is based upon an the payment of pensions to persons individual assessment of the particular entitled thereto who reside outside the facts of the case. territory of the Federal Republic of Germany.' On the other hand, if, as the Commission prefers, the two regulations The Government of the Federal Republic in question are interpreted as being of Germany, represented by Professor K. limited to insurance periods completed Jantz and M. Seidel, acting as Agent, and within the Community the reply to the the Commission of the European question referred to the Court might be Communities, represented by N. Koch, as follows: acting as Agent, presented oral argument at the hearing on 1 February 1977. The rule of equality of treatment laid down in Article 8 of Regulation No 3 The Advocate-General delivered his and Article 3 (1) of Regulation No opinion at the hearing on 8 March 1977.

Decision

1 By order of 29 June 1976, received at the Court Registry on the following 6 August, the Bundessozialgericht referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Article 8 of Regulation No 3 of the Council of 25 September 1958 concerning social security for migrant workers (JO 1958, p. 561) and of Article 3 (1) of Regulation No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (OJ, English Special Edition, 1971 (II), p. 416).

The Bundesknappschaft maintains that the suspension is not incompatible with the prohibition contained in Article 10 (1) of Regulation No 1408/71, since Annex V B 1 b to that regulation provides for an exception to that prohibition in cases such as the present, whilst the plaintiff maintains that the exception is incompatible with Articles 48 et seq. of the EEC Treaty and that the refusal of the Bundesknappschaft results in discrimination against foreign nationals.

3 The question asks whether 'an Italian national living in Italy who at no time had lived or worked in the territory of the Federal Republic of Germany or of West Berlin, is to be treated, by virtue of Article 8 of Regulation No 3 and of Article 3 (1) of Regulation (EEC) No 1408/71 on the same footing as a German national when applying Paragraph 108 c of the RKG, so far as concerns insurance periods which were completed before 1945 with the Reichsknappschaft (the competent social security institution for mineworkers) under the law of the Reich outside the territory of the Federal Republic of Germany or West Berlin'.

4 The reply to be given to the question referred to the Court depends on whether a provision such as Paragraph 108 c of the RKG is covered by Regulation No 3 and Regulation No 1408/71 as legislation on social security.

5 In order to facilitate the economic and social integration of refugees and persons deported who could no longer enjoy their rights to insurance because the competent institutions no longer existed or were situated outside the territory of the Federal Republic of Germany, the Fremdrenten- und

National Socialist regime and the Second World War and, finally, that the payment of the benefits in question to nationals is of a discretionary nature where such nationals are residing abroad, those benefits are not to be regarded as in the nature of social security.

That conclusion is, moreover, confirmed by the reservation contained in Annex G I A 2 of Regulation No 3 and in Annex V B 1 (b) of Regulation No 1408/71.

8 The answer must therefore be that Article 8 of Regulation No 3 and Article 3 (1) of Regulation No 1408/71 do not apply to benefits such as those provided for in Paragraph 108 (c) of the Reichsknappschaftsgesetz in respect of insurance periods completed before 1945 outside the territory of the Federal Republic of Germany and of West Berlin.

Costs

9 The costs incurred by the Government of the Federal Republic of Germany, the Government of the Italian Republic and the Commission of the European

FOSSI v BUNDESKNAPPSCHAFT

Kutscher Donner Pescatore Mertens de Wilmars Sørensen

Mackenzie Stuart O'Keeffe Bosco Touffait

Delivered in open court in Luxembourg on 31 March 1977.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE-GENERAL WARNER DELIVERED ON 8 MARCH 1977