C-99/80

JUDGMENT OF 31.3.1981 — CASE 99/80

In Case 99/80

REFERENCE to the Court under Article 177 of the EEC Treaty by the National Insurance Commissioner, London, for a preliminary ruling in the proceedings pending before him between

MAURICE GALINSKY

and

INSURANCE OFFICER

Facts

The facts of the case, the course of the I — Facts and procedure procedure and the observations submitted under Article 20 of the 1. According to the reference from the Protocol on the Statute of the Court of National Insurance Commissioner, Mr Justice of the EEC may be summarized Galinsky, the claimant in the main as follows: proceedings, is a British national born in

GALINSKY v INSURANCE OFFICER

JUDGMENT OF 31.3. 1981 — CASE 99/80

(i) in accordance with the of a dependant if the dependant had legislation of whichever of been in the territory of that party, such these States he resides in benefit shall be paid if the dependant is provided that, taking into in the territory of the other party." account where appropriate the provisions of Article 79 (1) (a), a right to one of the None the less, the Insurance Officer and benefits referred to in the local tribunal dismissed the claim for paragraph (1) is acquired an increase on the ground that at the under the legislation of that time when the claimant attained State; pensionable age Article 35 of the Convention had ceased to be applicable (ii) in other cases . . . " . by virtue of the fact that with effect from 1 April 1973 Regulation N o 1408/71 had come into operation in relation to the United Kingdom. In fact, Article 6 of The Commissioner's reference states that that regulation provides : both the children's allowances paid in the Netherlands and the increases of retirement pension provided for by the " . . . this regulation shall, as regards British legislation are benefits within the persons and matters which it covers, meaning of Article 77 (1) of Regulation replace the provisions of any social N o 1408/71. security convention binding either:

more advantageous to persons entitled to (b) (if the answer to (a) is benefits than the said regulations." negative) that he has been so insured as self-employed under a social security scheme for one or more of the The claimant contests that conclusion on contingencies covered by a the ground that he is not a person social security scheme for covered by Regulation No 1408/71 or employed, self-employed and that this is not a matter which it covers. non-employed persons. In fact, it was as a self-employed person that the claimant was compulsorily insured in the United Kingdom. For that reason it is said that he is not in relation II — (If the answer to either Question to United Kingdom benefit a "worker" I (a) or I (b) is affirmative) within the meaning of the regulation. whether a person who has been insured as a self-employed person (but not as an employed person) in a Member State should in Moreover, the validity of Regulation relation to a pension payable No 1408/71 is in question in so far as under the legislation · of that the effect of Article 6 is to deprive a Member State be regarded as a worker of benefits derived from British pensioner for purposes of Article national law, of which the reciprocity 77 of the said regulation by convention forms part. reason that he is or has been a worker for purposes of that regu- lation and/or by reason of the fact that his pension (though unaffected in the competent State 4. In the reference of 14 March 1980 by the provisions of that regu- the National Insurance Commissioner lation) has been subject to revision requested the Court to rule on the in another Member State under following questions : that regulation.

a "worker" within the meaning of Regu- 1975 in Case 24/75 Petroni [1975] ECR lation No 1408/71 in every Member 1149, namely that Article 51 of the State once he has acquired that status in Treaty does not empower the Council to one of the Member States, in this case legislate to the detriment of workers who the Netherlands. exercise their right to freedom of movement, must be applied in that case irrespective of "whether the advantage of He considers that alternatively it might which the legislation of the Council be argued that since he is insured as a purports to deprive a worker is derived self-employed person under the British from national law alone or from national scheme in the same way as employed law incorporating an international persons and against the same convention" [1977] ECR at p. 1669). contingencies the applicant must be treated as a worker within the meaning The Commissioner adds that the of Article 1 (a) (i) of Regulation question whether Article 6 is effective to N o 1408/71. It is for that reason that take away rights conferred by a Question I (b) returns to a question reciprocal convention has arisen on a raised, but not ruled on, by the Court in number of occasions, in which it has Case 17/76 Brack v Insurance Officer proved possible to determine the matter [1976] ECR 1429. without its being necessary to raise the issue of the validity of Article 6. However, in the present case its validity As regards the second question, the would seem to be crucial for the whole Commissioner explains that there is a case. The Commissioner states that in different but similar argument to the addition it is desirable that uncertainty effect that even if the claimant is a created by the doubts expressed by the person covered by Regulation Advocate General should be ended. N o 1408/71 for the purpose of Article 6 of that regulation this case does not concern a matter to which the regulation relates because the claimant is not a 5. The order making the reference was pensioner within the meaning of Article lodged at the Court Registry on 17 77. March 1980.

represented by J. Forman, a member of and an employed person in another, is its Legal Department, acting as Agent. on becoming subject to the legislation of the latter, a worker within the scope of the regulation. On hearing the report of the Judge- Rapporteur and the views of the Advocate General, the Court decided to According to the judgments of the Court open the oral procedure without any of 27 October 1971 in Case 23/71 preliminary inquiry. Janssen [1971] ECR 859 and 29 September 1976 in Case 17/76 Brack [1976] ECR 1429, a person who "has been" subject to the legislation of a Member State as an employed person is entitled to rely on the regulation to II — S u m m a r y of t h e written aggregate periods previously completed observations submitted to as an employed person with periods later the C o u r t completed as a self-employed person for the purposes of the acquisition of a right to benefit. In the same way a person who "is" at the material time subject to the Observations of the defendant in the main legislation of a Member State as an proceedings employed person should be able to take advantage of provisions of the regulation to aggregate periods of insurance pre- viously completed as a self-employed With regard to Question I (a), the person. The fact that the claimant did Insurance Officer points out that not in this case derive any additional according to the case-law of the Court benefit in the United Kingdom from the on Regulation No 3 the concept of aggregation of insurance periods "wage-earner" has a Community completed in another Member State is, it meaning, referring to all those who as is submitted, irrelevant to the question such, and under whatever description, whether he is a "worker" for the are covered by the different national purposes of the application of the regu- systems of social security (judgment of lation in the United Kingdom. 19 March 1964 in Case 75/63 Hoekstra (née Unger) [1964] ECR 177). Consequently, a person who is a Moreover, if the Netherlands authorities "worker" in one Member State must be were right to regard Mr Galinsky as a a worker throughout the entire "worker" within the meaning of Regu- Community. lation N o 1408/71, it is submitted that it would be absurd to have a situation where one Member State applies the Having regard to the object of the regu- regulation to his case and another lation, namely to encourage free Member State applies only its national movement of workers between Member legislation. States by preserving for a worker rights acquired in the field of social security, the Insurance Officer considers that a The Insurance Officer therefore submits person who has been successively subject that the answer to Question I (a) should to the legislation of two Member States, be in the affirmative. Accordingly, a albeit as a self-employed person in one reply to Question I (b) is unnecessary.

Referring to the opinion of Mr Advocate General Warner in Case 19/76 Triches [1976] ECR 1243 on the interpretation In support of this argument he points out of Article 42 (2) of Regulation N o 3, the that the object of Article 77 (2) is to predecessor to Article 77 (2) of Regu- prevent the unjustified overlapping of lation N o 1408/71, the Insurance two or more family benefits and that the Officer stresses that the essential object provision therefore constitutes an of Article 77 is to simplify the system for exception to the principle that the payment of family benefits and to Community rules may not be applied in make it workable in practice, by selecting such a way as to deprive a migrant the legislation of a particular Member worker or his dependants of the benefit State as being applicable in the case of of a part of the legislation of a Member any particular pensioner. In this regard it State, an exception similar to that does not matter whether the pension was recognized by the Court in the judgment acquired by virtue of the regulation or of 6 March 1979 in Case 100/78 Rossi independently under the domestic [1979] ECR 831 with regard to Article legislation of a Member State. That is 79 (3) of Regulation N o 1408/71. By evident, it is submitted, from the providing which is the competent State, provisions of Article 77 (2) (b) (i) under Article 77 compensates the worker for which the State of residence is any rights which he might otherwise responsible for the payment of family have had under another Member State's benefits even though no pension may be legislation, particularly as the competent payable by that Member State. State must provide the family benefits

even where there is no entitlement under with a summary of the classes of person that State's domestic legislation to family to which the British social security benefits (cf. judgment of 10 December system applies. From that account it may 1969 in Case 34/69 Duffy [1969] ECR be seen that this system, which began by 597, paragraphs 7 to 9). Moreover, covering only narrowly defined classes of regard should not be had to the narrow workers, was later extended to other issue of family benefits but to the classes of workers without drawing a position of pensioners generally in distinction between wage-earning determining whether the regulation is workers and those of other classes, but more favourable than national rather in such a way as to cater legislation. If this wider approach is progressively for the needs of the general adopted it would be perfectly in order working population. Thus, as regards for the regulation to provide for the title to retirement pension and payment of one set of family benefits as supplements to such pension in respect of a counter-balance for enabling workers pensioners' children, the system does not to acquire pensions through the process draw any distinction between the of aggregation in one or more Member different categories, but provides States. assimilation which protects contributors against any loss of rights which might result from a change of status as respects work. Finally, the Insurance Officer submits that such arguments may not be justified if the benefit in question is an increase of a pension acquired under the national The Government of the United Kingdom legislation of a Member State alone, then draws attention to the wide in- since according to the principle terpretation which the Court gave to the established in the judgment of 21 term "wage-earning workers or persons October 1975 in Case 24/75 Petroni treated as such", which determined the [1975] ECR 1149 those rights cannot be scope of Regulation N o 3, in particular reduced or suspended. Viewing the case in the judgment of 19 March 1964 in from this angle he submits in the alter- Case 75/63 Hoekstra (née Unger) [1964] native that Article 6 of Regulation N o ECR 177 and, with regard to the 1408/71 supersedes the provisions of a treatment of self-employed persons as reciprocal convention even where the wage-earners, in the judgment of 19 effect would be to diminish rights or to December 1968 in Case 19/68 De Cicco deprive a person of a right to benefit [1968] ECR 473 and the judgment of 27 which he would otherwise have under October 1971 in Case 23/71 Janssen that convention. [1971] ECR 859.

years earlier, been insured as an insured against one or more employed person under a social security contingencies provides comparable cover scheme such as to affect his rights to to self-employed persons compulsorily benefit in the country concerned is to be insured under it, such self-employed treated as a worker whenever he moves persons should be regarded as "workers" to another Member State. Consequently, for the purposes of Article 1 (a) of Regu- it must be assumed that all insurance as a lation No 1408/71. It states that the self-employed person under a scheme establishment of such a principle would which extends to the self-employed cover greatly facilitate the administration of comparable to that provided for the the social security schemes of Member employed falls within the scope of States in relation to persons moving Article 51 and regulations made under it. within the Community, in particular with regard to their eligibility for medical benefits under the scheme of another Member State in accordance with Article 22 (1) (a) of Regulation N o 1408/71. The British Government considers that on this view a Member State in which a person is an employed person and which is obliged to take into account insurance periods completed in another Member As regards the second question, the State as a self-employed person ought to United Kingdom Government observes be able to take into account a pension that it amounts to asking whether Article awarded by virtue of such insurance by 77 of Regulation No 1408/71 applies to the other Member State. Moreover, if a person in the position of the claimant such a pension is within the scope of having regard to the fact that his pension Article 51 of the Treaty and Regulation under the United Kingdom scheme was N o 1408/71 for that purpose, then it earned by contributions as a self- should be treated as within the scope of employed person. In its submission there those provisions for all purposes. is no reason why Article 77 should not apply if it is accepted that Question I (a) and Question I (b) are both answered in the affirmative. For these reasons the Government of the United Kingdom considers that an affirm- ative answer should be given to Question I (a). It points out that neither the regu- With regard to the validity of Article 6 lations nor the case-law of the Court of Regulation N o 1408/71, which is at contemplate the possibility of a person's issue in the third question, the United being regarded at one and the same time Kingdom Government draws attention in as a worker within the meaning of Regu- the first place to the uncertainty of the lation N o 1408/71 in one Member State case-law, of which mention was made in and not as a worker in another. the reference. Then it deals with the concept of "compensating advantage", which had made it possible to admit an exception to the rule laid down in the Petroni judgment in the case of over- With regard to Question I (b) the lapping of family benefits (cf. judgment Government of the United Kingdom of 6 March 1979 in Case 100/78 Rossi suggests that the reply should be to the [1979] ECR 838). Such an approach is effect that if a social security scheme also evident in the judgment of 22 May under which employed persons are 1980 (Case 143/79 Walsh [1980] ECR),

where it was said that the deprivation of regulations in the field of social security, rights to benefit under the legislation of the Council puts forward three a Member State "would arise only where arguments in support of the validity of the other provisions of Regulation N o Article 6. 1408/71 would have led . . . to clearly unjustified overlapping of benefits" In the first place, to maintain rules (paragraph 19). derived from bilateral conventions would have been in breach of the system of the Treaty, for on the one hand it In this case the government considers presupposes the unique character of that the correct application of the Community law throughout the whole Petroni doctrine discloses no factor of territory of the Community and on the such a kind as to affect the validity of other hand it excludes the idea of Article 6 even if that doctrine must also reciprocity as being the basis for granting be applied to advantages derived from an rights. international convention incorporated into national law. In this regard, it refers to the benefits, essential for the Secondly, to maintain the rules adopted attainment of the aims of the Treaty, by those bilateral conventions would which derive from the replacement of the have been contrary to the very principle confusing and haphazard network of of Article 51 of the Treaty. Indeed, the reciprocal conventions between the existence of preferential treatment Member States by a consistent and between some Member States and of properly constructed system of uniform differences between the various Community law. In addition it points out conventions would have been contrary to the administrative difficulties caused by the principle of the free movement of having to distinguish between cases in workers. which a reciprocal convention is applicable and is also more favourable to the person concerned and cases where Thirdly, the Council possessed a wide no such convention applies or is less discretion in assessing to what extent the favourable. continuance of provisions of bilateral conventions would be compatible with the objectives of Article 51 of the Treaty and with the principles of the regulation. While defining certain exceptions to the Observations of the Council principle of Article 6, it was in any case entitled to limit the scope of those exceptions, as it did in Annex II to the The Council confines its observations to regulation. the third question. It points out that in proceedings under Article 177 the question of the validity of Article 6 of Further, the Council observes that Regulation N o 1408/71 should be according to the judgment of the Court examined in abstracto irrespective of of 7 June 1973 in Case 82/72 Walder whether the reciprocal convention [1973] ECR 599 the application of the between the United Kingdom and the regulation seems to take precedence over Netherlands would have been more bilateral conventions even where those favourable to the claimant. conventions are more advantageous to a particular worker.

the effect of depriving a worker of United Kingdom scheme of social benefits to which he would be entitled security falls within Article 1 (a) (ii) of under national legislation alone, the the regulation. The scope of that Council maintains that different provision as regards United Kingdom considerations apply to bilateral legislation is defined by paragraph 1 of conventions. In this context it refers in Annex V, Part I (United Kingdom) and particular to the equal and more was the subject of detailed consideration comprehensive protection afforded by in the judgment of 29 September 1976 in the regulation in comparison with the Case 17/76 Brack [1976] ECR 1429. It piecemeal arrangements made between goes on to point out that this case is some Member States on a bilateral basis. different from the case cited inasmuch as Mr Galinsky was self-employed or non- employed throughout his period of insurance in Britain. Besides, the Court did not adopt the argument of the British Government in the Brack case to the Observations of the Commission effect that Regulation No 1408/71 includes all those to whom the legislation of a Member State has extended the provisions of a general scheme of social security, to the extent to which they are According to the Commission, the reply considered to be subject to the same risks to Question I (a) must be negative. and contingencies as the generality Indeed, an affirmative reply would go of workers and are accorded the beyond the nature of Regulation N o same protection. Consequently the 1408/71, which is an exercise in coordi- Commission submits that Question I (b) nation, and would lead to a harmon- should be answered in the negative. ization of the legislation of the Member States. The Commission believes that it is for the legislation of the Member State under which periods of insurance have been completed to decide whether a particular person is insurable in the In view of the negative replies to both scheme operated under its legislation and branches of Question I the Commission may be entitled to the benefits provided. considers that with regard to the second In support of its propositon it refers to question it is sufficient to observe that similar solutions adopted by the Court in Article 77 of Regulation N o 1408/71 the judgment of 23 April 1980 in Case applies to the claimant in respect of the 110/79 Coonan ([1980] ECR 1445) with pension paid in the Netherlands. On the regard to the laying-down of the other hand, as regards the pension paid conditions for affiliation to a social in the United Kingdom he is not a security scheme, and in the judgment of person covered by the regulation. 6 June 1972 in Case 2/72 Murru [1972] ECR 333 with regard to the expression "assimilated periods" used in Regulation No 3.

upheld even if such a decision would of the Treaty does not permit the Court have the effect of depriving a worker of to interpret such a bilateral convention an advantage which he might otherwise itself. obtain under a bilateral convention incorporated into national legislation. In particular, in accordance with the III — Oral p r o c e d u r e judgment of 13 July 1976 in Case 19/76 Triches [1976] ECR 1243, it stresses "the freedom conferred on the Council by At the hearing on 17 December 1980 the Article 51 to choose any means which, defendant in the main action, viewed objectively, are justified" represented by G. S. Kerrigan, Senior (paragraph 18 of the judgment) as well Legal Assistant in the Solicitor's Office, as the general objective advantages, Department of Health and Social resulting from Article 6, which act as a Security, the Government of the United counterbalance to the specific limitations Kingdom, represented for the purposes which that provision might impose (cf. of the oral procedure by H . Knorpel, judgment of 10 December 1969 in Case Barrister, of the Inner Temple, Legal 34/69 Duffy [1969] ECR 597). Adviser, Department of Health and Social Security, the Council of the Moreover, having regard to the negative European Communities, represented by replies to Question I, the Commission John Carbery, Adviser in the Legal expresses the opinion that it is for the Department of its General Secretariat, United Kingdom authorities to consider acting as Agent, and the Commission of whether the convention between the the European Communities, represented United Kingdom and the Netherlands by J. Forman, a member of its Legal remains applicable in so far as it extends Department, acting as Agent, presented to categories of persons other than oral argument. employed persons, for example the self- employed. According to the judgment of The Advocate General delivered his the Court of 7 May 1969 in Case 28/68 opinion at the sitting on 11 February Torrekens [1969] ECR 125, Article 177 1981.

5 In support of his claim before the British authorities Mr Galinsky argued that the applicable British legislation makes provision for increases in the retirement pension in respect of dependent children; in that respect it lays down the condition that the children in question should be within United Kingdom territory; however, that condition of residence was abolished by a reciprocal convention on social security concluded between the United Kingdom and the Kingdom of the Netherlands.

6 The competent British institution and the local tribunal, however, considered that the appellant was covered by Regulation No 1408/71 and that Article 77 thereof meant that in this case the family allowances provided for the

GALINSKY v INSURANCE OFFICER

recipient of an old-age pension and the increases to that pension in respect of the recipient's dependent children were governed by Netherlands legislation. According to Article 6 of the regulation, the provisions of Article 77 replace the provisions of the bilateral convention relied upon by Mr Galinsky.

7 In order to resolve this problem the National Insurance Commissioner submitted the following preliminary questions :

"I — Whether in relation to social security benefits provided under the legislation of a Member State a person who has been compulsorily insured as a self-employed person (but not as an employed person) in that Member State should be regarded as a worker within the meaning in Article 1 (a) of Regulation (EEC) N o 1408/71 of the Council in that Member State by reason either: (a) that he is a worker under the legislation of some other Member State; or (b) (if the answer to (a) is negative) that he has been so insured as self-employed under a social security scheme for one or more of the contingencies covered by a social security scheme for employed, self-employed and non-employed persons.

10 The benefits referred to by Article 77 are in particular family allowances for persons receiving pensions for old age and increases or supplements to such pensions in respect of the children of such pensioners.

1 1 In those circumstances the second question raises the problem whether the expression "pensions for old age" employed in Article 77 covers an old-age benefit granted in a Member State to a person who was insured there under a social security scheme applicable to self-employed persons under the legislation of that Member State alone and without reference to the provisions of Regulation No 1408/71.

12 It should be observed first of all that Regulation No 1408/71 applies, according to the recitals in the preamble thereto, to nationals of Member States insured under social security schemes for employed persons. It follows in addition from the provisions of that regulation as a whole, and in particular from the General Provisions, that the rules on the coordination of national legislative systems relating to social security for which it makes provision do not cover benefits granted under compulsory insurance schemes applicable to self-employed persons as such.

1 3 The appellant in the main proceedings claimed that the Court, in its previous case-law, has accepted that insurance periods completed under the social security scheme applicable to employed persons in one Member State may be

GALINSKY v INSURANCE OFFICER

taken into consideration for the acquisition of a right to benefits to be granted to self-employed persons in another Member State. In fact the Court has held, in particular in its judgment of 27 October 1971 (Case 23/71 Janssen [1971] ECR 859), that the object of Articles 48 to 51 would not be achieved but would be disregarded if the insurance periods completed by a worker in accordance with the legislation of one Member State were, as far as he was concerned, to be lost if, in taking advantage of the freedom of movement secured for him, he changed his place of work and thus became subject to the social security system of another Member State.

JUDGMENT OF 31. 3. 1981 — CASE 99/80

and increases in or supplements to such pensions in respect of dependent children it must be interpreted to mean that the expression "pensions for old age" does not cover old-age benefits granted in a Member State to a person who was insured there under a social security scheme applicable to self- employed persons if such benefits are based on the legislation of that Member State alone without the application of the provisions of the said regulation.

18 The third question, which calls in issue the validity of Article 6 of Regulation No 1408/71, was submitted only in case the Court should rule that Article 77 of the regulation must be applied to a situation like that in the present case. It is thus no longer necessary to reply to it.

Costs

19 The costs incurred by the Government of the United Kingdom, by the Council of the European Communities and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable; as 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,

Bosco Touffait Due Everling

Delivered in open court in Luxembourg on 31 March 1981.

A. Van Houtte J. Mertens de Wilmars Registrar President

O P I N I O N OF MR ADVOCATE GENERAL WARNER DELIVERED O N 11 FEBRUARY 1981

My Lords, respondent is the Insurance Officer. The dispute between them is about a claim by Mr Galinsky for an increase in his British retirement pension in respect of his This case comes before the Court by way dependent children. of a reference for a preliminary ruling by a Social Security Commissioner, sitting in London. "Social Security Commissioner" is, so we are told, the The facts of the case are these. new name of what was until recently called a National Insurance Commissioner. I shall refer to him simply as "the Commissioner". Mr Galinsky was born in England on 29 June 1905. He married in 1953 and has four children born in 1955, 1956, The appellant in the proceedings before 1958 and 1961 respectively. Until 1964 the Commissioner is Mr Maurice he worked in Great Britain as a self- Galinsky, a United Kingdom national employed person and was compulsorily living in the Netherlands. The insured as such under the British national