C-98/80

JUDGMENT OF 14. 5. 1981 — CASE 98/80

Member State B which is reduced by recipient recovered by the competent the amount of the full pension institution in Member State A to granted by the competent institution exceed the amount of pension or in Member State A, it is not arrears of pension transferred to that compatible with Article 51 of the institution by the social security Treaty for that legislation to be institution in Member State B and applied in a way which in any given converted into Member State A's period would allow the amount of the national currency on the date of advance payments made to the transfer.

In Case 98/80

REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal du Travail [Labour Tribunal], Brussels, for a preliminary ruling in the action pending before that court between

GIUSEPPE ROMANA

and

ROMANO v INAMI

JUDGMENT

Facts and Issues

The order making the reference and the Belgian Law of 9 August 1963 instituting observations submitted under Article 20 and implementing a compulsory sickness of the Protocol on the Statute of the and invalidity insurance scheme the Court of Justice of the EEC may be invalidity pension paid in Belgium in summarized as follows: respect of the period 1 September 1970 to 31 December 1975 had to be reduced by the amount of the Italian invalidity pension. Accordingly, by a decision notified to Mr Romano on 24 September 1976 it reduced the amount of the Belgian pension by the amount of the I — Facts and written p r o c e d u r e Italian pension using the exchange rate applicable on 1 January 1975 which was LIT 1 = BFR 0.05784. That decision stated that a recovery of the provisional The facts advances reckoned on the same basis at BFR 107 848 would be made. It continued : Mr Romano, an Italian national living in Belgium, received a full invalidity pension from the Alliance Nationale des Mutualités Chrétiennes [National "If the payment made to us does not Alliance of Christian Mutual Insurance exactly cover the amount of allowance Associations] from 29 August 1970 to 31 paid on a provisional basis we will December 1975. From 1 January 1976 he instruct your insurance institution to was awarded a retirement and survivor's arrange, with your agreement, for the pension. recovery of the difference. If, however, there is a balance in your favour, this will be paid by ourselves". By a decision sent to the Institut National d'Insurance Maladie-Invalidité (hereinafter referred to as "the Belgian Institution") on 6 April 1976 and Without questioning the principle that completed on 1 July 1976 the Istituto the Belgian benefits should be adjusted, Nazionale della Previdenza Sociale on 7 October 1976 Mr Romano brought [National Social Welfare Institution] against that decision an action in which (hereinafter referred to as "the Italian he challenged the exchange rate used by Institution") at Palermo awarded Mr the Belgian Institution to calculate the Romano an invalidity pension under sums to be recovered and the view that Italian legislation back-dated to 1 any difference could be recovered. September 1970.

LIT 3 109 670 representing the arrears of benefit recovered may not exceed the Italian pension in respect of the period 1 amounts received under other legislation, September 1970 to 30 June 1977. The the result of the method of calculation Belgian Institution converted that sum used by the Belgian Institution was to into Belgian francs on the basis of the reduce the Belgian invalidity pension by exchange rate obtaining on the day of an amount higher than that of the Italian payment which was LIT 1 = BFR invalidity pension actually received by 0.040355. That gave BFR 125 491. The him in respect of the period in question. difference of BFR 17 643 between that sum and the sum at which the pro- visional advances to be recovered had been calculated was paid to Mr Romano. The relevant regulations Mr Romano did not believe that his Article 107 of Regulation No 574/72 of claim was thereby satisfied. In his view the Council, as amended by Regulation only the amount due from the Italian No 2639/74, determines the rules to be Institution in respect of the period at issue, namely 1 September 1970 to 31 applied for converting into any given December 1975, could be recovered. On national currency amounts shown in the other hand, he asks that the Belgian another national currency when benefits Institution be ordered to pay him the come to be awarded and paid. equivalent in Belgian francs of the benefits payable by the Italian Institution Paragraph (6) of that article lays down in respect of the period 1 January 1976 the following general rule: to 30 June 1977 subject to a deduction of the BFR 17 643 already paid. "In cases not covered by paragraph (1), the conversion shall be made at the The Belgian Institution told the Tribunal official rate of exchange on the day of du Travail that the reason for its payment both for the payment and application of two different exchange reimbursement of benefits". rates was that it believed that it had to apply, Paragraph (1) contains specific rules for various cases in which provisions of (a) the provisions of Article 107 (6) of Regulation No 1408/71 apply (for Regulation No 574/72 of the example — to keep to cases more or less Council as amended by Regulation akin to the one in point — Article 12 No 639/74 of the Council of 15 (2), (3) or (4), and Article 46 (3)). October 1974 (Official Journal, L 283, p. 1) upon receiving the Paragraph (4) of the same article payment by the Italian Institution, provides : and, "The date to be taken into account for (b) Decision No 101 of the Admin- determining the rates of conversion to be istrative Commission on Social applied in the cases referred to in Security for Migrant Workers of 29 paragraph (1) shall be fixed by the May 1975 when determining the Administrative Commission on a Belgian benefit. proposal from the Audit Board".

"Decision No 101 of 29 May 1975 of the Administrative Commission of the II — W r i t t e n o b s e r v a t i o n s sub- EEC published at page 3 of the Official mitted to the C o u r t Journal of the European Communities N o C 44 of 26 February 1976 states inter alia that for pensions to which a right Mr Romano contends that if the legality was acquired before 1 January 1975 and of Decision N o 101 of 29 Mav 1975 which have not been put into payment by cannot be contested, that decision 1 March 1976, the rate of conversion to should, however, be applied by taking be taken into consideration shall be that into account the limits fixed by Article 7 applicable on 1 January 1975, that is, a of Regulation N o 574/72 so that the rate of conversion of 1 lire = 0.05784 provisional advances recovered may Belgian francs, as published in the never exceed the amount of the arrears Official Journal, C 143 of 18 November of pension due under the foreign scheme 1974 at page 1; in respect of the period in which over- lapping occurred, which in this case is Is that decision lawful and if so how the equivalent in Belgian francs of the must it be interpreted in view of the arrears of Italian pension in respect of provisions contained in Article 7 of the period 1 September 1970 to 31 Regulation (EEC) No 574/72 which December 1975 calculated at the rate provides in effect that sums recovered obtaining on the day of payment by the may not exceed the amount actually Italian Institution to the Belgian received under another legislation?" Institution.

JUDGMENT OF 14. 5. 1981 — CASE 98/80

Therefore, when applying a provision of Belgian domestic law against overlapping benefits the Belgian Institution wrongly assumed that it could rely on the above- The Commission makes the following mentioned provisions as a basis for the preliminary observations : application of the rate of conversion

ROMANO v INAMI

which it used to determine Mr Romano's they are bound to take a certain entitlement to invalidity benefit. In such amount of time. a case, in which national legislation alone is applied, the rate of conversion to be used can be only prescribed by the relevant national legislation. Conse- The Commission states that it is essential quently the Commission doubts the to counter the risk of the validity of the relevance of the question put to the calculations being affected by day-to-day variations in the exchange rates of the Court. various currencies. That necessarily entails the adoption of a fixed reference period applicable to all the institutions or organizations involved in the award of The reference to Article 7 of Regulation any given benefit. The selection of that N o 574/72, which applies only to quite reference period inevitably involves a specific cases enumerated in paragraph certain degree of approximation and of (1) thereof, is also lacking in relevance. rounding figures up or down.

JUDGMENT OF 14. 5. 1981 — CASE 98/80

through intermediary institutions (in In any event it seems obvious to the which case under Article 107 (6) Commission that the recipient of a conversion from one national currency pension or an apportioned pension into another takes place at the official payable by an institution of another rate of exchange obtaining on the day of Member State should not suffer any payment; the result in both cases is disadvantage as a result of delays (over basically the same) In the case of which he has no influence) in the award invalidity benefits awarded pursuant to and payment of his entitlements and as a Article 46 of Regulation N o 1048/71 result of the use of different exchange each national benefit is then governed by rates at the time when his entitlements its own national rules. are determined and at the time when the sums are transferred by the debtor institution of a Member State to the liaison body of another Member State. In the present case, it would not be in keeping with the requirements of the The Commission believes that it is not Community rules if, in so far as benefits possible to conceive of a different are recovered, the Belgian Institution system. Undoubtedly as a result of the were able to fix the amount to be present system recipients of benefits have recovered at a sum higher than that to bear the unfavourable consequences corresponding to the Italian benefits to (when the currency of the debtor State be taken into consideration. In practice depreciates) or favourable consequences that would constitute a real and (if that currency should rise) of the fluc- unjustified reduction of the Belgian tuations in exchange rates. That situation pension which had been duly granted. is the result not of the application of the Nor would such a result be in Community regulations but of the conformity with the national provision distortion of the monetary situation adopted (in so far as this may be relied which has existed for a decade. on), namely Article 70 (2) of the Belgian Law of 9 August 1963 according to which "in each case a recipient must receive sums which at least are equal to the amount of the insurance benefits".

Decision

1 By order of 6 March 1980 which was received at the Court on 13 March 1980 the Tribunal du Travail [Labour Tribunal], Brussels, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question concerning, first, the interpretation of Regulation N o 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation N o 1408/71 on the application of social security schemes to employed persons and their families moving within the Community (Official Journal, English Special Edition 1972 (I), p. 159) and, secondly, the valditiy of Decision No 101 of the Administrative Commission of the European Communities on Social Security for Migrant Workers (Official Journal, C 44 of 26 February 1976, p 3).

2 That question was raised in the context of a dispute between the plaintiff in the main action, Mr Giuseppe Romano, and the defendant in the main action, the Institut National d'Assurance Maladie-Invalidité [National Sickness and Invalidity Insurance Institution] a Belgian social security institution, hereinafter referred to as "the Belgian Institution".

3 From 29 August 1970 to 31 December 1975 the plaintiff in the main action received a full Belgian invalidity pension. Since 1 January 1976 he has been in receipt of a Belgian retirement pension. By a decision adopted on 6 April 1976 and completed on 1 July 1976 the Istituto Nazionale della Previdenza Sociale [National Social Welfare Institution], Palermo, (hereinafter referred to as "the Italian Institution") awarded the plaintiff an invalidity pension under Italian legislation as from 1 September 1970.

5 In reliance on that provision the Belgian Institution took the view that the grant of the Italian invalidity pension should entail a proportionate reduction of the invalidity pension paid in Belgium in respect of the period 1 September 1970 to 31 December 1975. Consequently, by a decision notified to the plaintiff on 24 September 1976, it then amended the decision to grant a Belgian invalidity pension. That decision reduced the amount of the Belgian pension by the amount of the pension provided by the Italian Institution. In addition it specified that a recovery of the provisional advances reckoned at BFR 107 848 would be made. It stated that "if the payment made to us does not exactly cover the amount of allowance paid on a provisional basis we will instruct your insurance institution to arrange, with your agreement, for the recovery of the difference; if, however, there is a balance in your favour, this will be paid by ourselves".

6 Eventually, on 29 July 1977 the Italian Institution paid the Belgian Institution a sum of LIT 3 109 670 representing the arrears of Italian pension in respect of the period from 1 September 1970 to 30 June 1977.

ROMANO v INAMI

7 Tocalculate the amount to be recovered the Belgian Institution applied the exchange rate obtaining on 1 January 1975, which was LIT 1 = BFR 0.05784, whereas in order to convert the sum of LIT 3 109 670 paid by the Italian Institution into Belgian francs it used the exchange rate obtaining on the date of payment which was LIT 1 = BFR 0.040355. The amount paid was therefore BFR 125 491. Having deducted the amount of BFR 107 848, which, it claimed, represented the provisional advances, the Belgian Institution paid the balance of BFR 17 643 to the plaintiff.

JUDGMENT OF 14. 5. 1981 — CASE 98/80

"(1) For the purposes of Article 12 (2), (3) and (4), the last sentence of Article 19 (1) (b), the last sentence of Article 22 (1) (ii), the penultimate sentence of Article 25 (1) (b), Article 41 (1) (c) and (d), Article 46 (3) and (4), Article 50, the last sentence of Article 52 (b), the last sentence of Article 55 (1) (ii), the first subparagraph of Article 70 (1) and the penultimate sentence of Article 71 (1) (b) (ii) of the regulation, and for the purposes of Article 34 (1) and Article 119 (2) of the implementing regulation, the rate of conversion into a national currency of amounts shown in another national currency shall be as follows :

(a) in the case of two currencies in respect of which the difference between the market exchange rate and the rate that corresponds to their de facto parity ratio as understood under the first subpara- graph of paragraph (2) may not exceed a margin of 2.25%; the latter rate as applied on the last business day of the reference period specified in the second subparagraph of paragraph (2) below;

(b) in the case of two currencies in respect of which the difference between the market exchange rate and the rate that corresponds to their de facto parity ratio may exceed 2.25%: a rate calculated by the Commission on the basis of the arithmetic mean on each of the two national foreign exchange markets during the reference period specified in the second subparagraph of paragraph (2) below.

(2) By de facto parity is meant the parity declared to the International Monetary Fund or the central rate in force.

(3) The exchange rates to be used for the purposes of subparagraph (1) (b) above shall be:

(a) for the Belgian franc and the Luxembourg franc: the average official rate quoted on each business day on the Brussels exchange;

(b) for the German mark: the average official rates quoted on each business day on the Frankfurt exchange;

(c) for the French franc: the average official rates quoted on each business day on the Paris exchange;

(d) for the Italian lira : the average of the average official rates quoted on each business day on the Rome and Milan exchanges;

(e) for the Dutch guilder: the average official rates quoted on each business day on the Amsterdam exchange;

12 The Administrative Commission was established pursuant to the provisions contained in Article 80 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 (Official Journal, English Special Edition 1971 (II), p. 416). The duties of the Administrative Commission are stated in Article 81 and include inter alia that of dealing with all administrative questions and questions of interpretation arising from the regulation and subsequent regulations, or from any agreement or arrangement concluded thereunder, without prejudice to the right of the authorities, institutions and persons concerned to have recourse to the pro- cedures and tribunals provided for by the legislation of Member States, by the regulation or by the Treaty.

1 3 The Administrative Commission, considering that in view of the provisions contained in Regulations Nos 1408/71 and 574/72 of the Council a new decision should be adopted concerning the date to be taken into consideration for determining the rates of conversion to be applied when calculating certain benefits, decided, in its Decision No 101 of 29 May 1975, inter alia, that:

"For pensions to which a right was acquired before 1 January 1975 and which have not been put into payment by the date of entry into force of the present decision, the rate of conversion to be taken into con- sideration shall be that applicable on 1 January 1975 in accordance with Article 107 (1) of Regulation (EEC) No 574/72 as amended by Regulation (EEC) No 2639/74."

15 In the oral proceedings before the Court the Belgian Institution stated that the Belgian pension had been calculated according to Belgian legislation alone, which was considered to be more favourable to Mr Romano than the application of Article 46 of Regulation No 1408/71. It pointed out that that method of calculation involves the application of provisions of national law against overlapping benefits. It observed that the Court has said in its judgments of 13 October 1977 in Case 22/77 Mura [1977] ECR 1699 and Case 37/77 Greco [1977] ECR 1711 that when the last sentence of Article 12 (2) of Regulation N o 1408/71 is not applicable (that is to say, in the cases in which the provisions contained in Article 46 (3) of the regulation are not applicable because they bring about a reduction in the benefit acquired by virtue of a Member State's national legislation alone), the first sentence applies, with the consequence that national legislative provisions for reduction, suspension or withdrawal of benefit may be invoked.

i6 Consequently the Belgian Institution took the view that Article 107 of Regu- lation N o 574/72 applies to the calculation of the Belgian benefit referred to in Article 70 (2) of the Law of 9 August 1963 which is applicable by virtue of Article 12 of Regulation No 1408/71.

17 If, however, as the Commission contended, Article 12 (2) of Regulation N o 1408/71 did not apply in this case, then, according to the Belgian Insti- tution, the provisions of Article 107 of Regulation No 574/72 apply by analogy, since, prior to 1 July 1976, the date on which Article 241 bis of the Royal Decree of 4 November 1963 entered into force, there was no provision of Belgian law governing the decision on the amount of the benefit

22 However, it is appropriate to set out a number of further considerations which might help that court to arrive at a decision in the case pending before it.

ROMANO v INAMI

23 It appears from the papers placed before the Court that the incapacity for work which gave rise to the grant of the benefits in question dates from before 1 January 1973 which is the date on which Regulations No 1408/71 and No 574/72 entered into force. However, the parties to the main action, the Tribunal du Travail, Brussels, and the Commission, which has submitted observations to the Court, appear to have taken the view that those regu- lations applied in the case in point. In the Court's view, unless the worker asked for the provisions of Regulation No 1408/71 to be applied, the provisions of Regulation No 3 of the Council of 25 September 1958 (Journal Officiel No 30, p. 561) should be applied in this case. In this respect, however, it should be observed that it makes no difference to the outcome of the dispute whichever system is applied.

JUDGMENT OF M. 5. 1981 — CASE 98/80

arrears of pension transferred to that institution by the social security institution in Member State B and converted into Member State A's national currency on the date of transfer.

Costs

26 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (First Chamber)

Delivered in open court in Luxembourg on 14 May 1981.

J. A. Pompe T. Koopmans Deputy Registrar President of the First Chamber

O P I N I O N OF MR ADVOCATE GENERAL WARNER DELIVERED O N 20 NOVEMBER 1980

My Lords, Institut National d'Assurance Maladie- Invalidité (or "INAMI"). This case comes before the Court by way The question at issue in those of a reference for a preliminary ruling by proceedings is, in substance, how as the Tribunal du Travail of Brussels. between the parties an exchange loss, caused by the diminution in the value of The plaintiff in the proceedings before the Italian lira between the time when an the Tribunal is Mr. Giuseppe Romano, Italian pension to which Mr Romano who is an Italian citizen resident in was entitled accrued due and the time Belgium. The defendant is the Belgian when it was actually paid, is to be borne.