C-111/80

The facts of the case, the course of residing in Belgium, completed 12 years the procedure and the observations of insurance in Belgium, three years in submitted pursuant to Article 20 of the Italy and six months in Germany. He Protocol on the Statute of the Court of became incapacitated from work from Justice of the EEC may be summarized 7 October 1975 and his invalidity was as follows: recognized from 7 October 1976.

Mr Fanara fulfilled the conditions I — Facts and written procedure required to enable him to claim the award of invalidity benefits. From 1 November 1976 to 28 February 1979 The facts of the case and the question put he received full Belgian invalidity to the Court allowances which were awarded to him on a provisional basis pending a co- Mr Fanara, the plaintiff in the main ordinated award of the benefits payable action, who is an Italian national under the scheme of Regulations (EEC)

FANARA v INAMI

Nos 1408/71 and 574/72. Germany The Belgian Institution refused to pay decided to refuse any payment on the over the difference to the plaintiff, first ground that Mr Fanara had completed on the ground that Italy had not less than one year of insurance on its remitted to Belgium the whole of the territory (Article 48 of Regulation No arrears for the period during which 1408/71). Italy awarded Mr Fanara an Belgium had made payments on a pro- apportioned invalidity pension from 1 visional basis and, secondly, in reliance November 1976. The decision was upon Article 241 (2) of the Royal Decree notified to him on 16 March 1979. of 4 November 1963 (as supplemented by Article 2 of Royal Decree No 19 of 14 December 1978) which provides:

As regards the allowances paid on a provisional basis to Mr Fanara, the Institut National d'Assurance Maladie- Invalidité (hereinafter referred to as “the Mr Fanara contested the Belgian Belgian Institution”) calculated that an Institution's refusal before the Tribunal undue payment of BFR 19 627 had been du Travail, Mons, which decided to refer made. That amount had to be recovered the following question to the Court for a from the arrears of the Italian pension preliminary ruling: pursuant to the provisions of Article 111 of Regulation N o 574/72. In December 1978 the Istituto Nazionale della Previ- denza Sociale [National Social Welfare Institution] (hereinafter referred to as “ D o the provisions of Community law, “the Italian Institution”) remitted to the and especially Article 51 of the Treaty of Belgian Institution the sum of LIT Rome, Articles 46 and 51 of Regulation 846 865 representing the invalidity No 1408/71, and Articles 107 and 111 of pension payable to Mr Fanara for Regulation N o 574/72 allow Member the period from 1 November 1976 to States to retain the power, and if so to 31 December 1978. On conversion into what extent, to decide by means of Belgian francs the sum yielded BFR domestic rules not to pay over in matters 29 538. There remained therefore a of this kind the balance arising from the balance of BFR 9 911 over and above the fact that arrears received from a foreign sum to be recovered. institution, when converted into national

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currency, exceed the amount of advance — The rates of currency conversion payments or benefits paid on a pro- under Article 107 of Regulation visional basis, if the difference is due No 574/72; either to a difference in the respective exchange rates used to calculate the — The compatibility of Article 241 of amount of the sums due from the foreign the Royal Decree of 4 November institution and to arrive at the figure 1963 with the Community rules for expressed in foreign currency, or to the the calculation and award of adjustment of the allowances to the cost pensions. of living?"

Upon hearing the report of the Judge- Article 51 governs the stabilization of Rapporteur and the views of the benefits awarded pursuant to Article 46. Advocate General, the Court decided to Article 46 covers benefits awarded under open the oral procedure without any independent rules without the inter- preparatory inquiry and to assign the vention of Community law and benefits case to the First Chamber. to which entitlement is acquired by Community law. Mr Fanara satisfies the conditions laid down by the Belgian legislation for the award of a full pension under national law alone without aggre- II — W r i t t e n observations sub- gation. That pension was reduced by the mitted p u r s u a n t to Article amount of the Italian pension following 20 of the P r o t o c o l on the the application of the national rules S t a t u t e of the C o u r t of against overlapping benefits. Justice The Belgian benefit, which was calculated on the above basis as at 1 Mr Fanara sets out his disagreement with November 1976, must be determined the Belgian Institution, which raises a independently of the Italian pension. problem comprising three parts: Consequently, out of the arrears of the Italian pension the Belgian Institution was entitled to retain only the sum which — The application of Article 51 (1) of corresponded to the days included in the Regulation No 1408/71; period for which it made advance

FANARA v INAMI

The Community regulations were instead of BFR 25.27. adopted in order to confer certain benefits on migrant workers and not to Under the terms of Decision N o 101 of permit the competent institutions to 29 May 1975 adopted by the appropriate sums which do not belong to Administrative Commission on Secial them. Security for Migrant Workers, the date to be taken into consideration for the Mr Fanara submits that since entitlement purpose of determining the rate of to a benefit is acquired by virtue of conversion is to be that from which the national legislation alone, there can be provisions must be applied in respect of no question of allowing persons who are the person concerned. socially insured to suffer the adverse consequences of the fall in value of

arrears. Such a system would allow a Regulation N o 574/72 and Annex 6 correct application of the rules against thereto, particularly in Belgo-Italian overlapping benefits and the deduction relations, the exchange value in Belgian from the pension subject to reduction of francs of the Italian arrears paid to the the amount of the benefit actually paid Belgian Institution is very frequently less by another institution. That solution than the amount of the "recoverable would also avoid an undue payment at advances" granted, with the result that the expense of the person concerned the procedure for reimbursement laid

The effect therefore of Article 51 of In the calculation of the benefit actually Regulation No 1408/71 is that there is payable by Belgium under Article 46 of great diversity in the development of the Regulation N o 1408/71, the amount of benefits paid by each of the Member the Italian benefit which affects the States since changes in the economic amount payable by Belgium is converted situation occur at different times, by into Belgian francs in accordance with different rhythms and according to Article 107 (1) and (5) of Regulation N o dissimilar economic trends. 574/72 and with Decision N o 101 of the Administrative Commission of the European Communities on Social The consequences of Article 51 find Security for Migrant Workers, that is to expression in various ways : say at the rates of exchange prevailing for the quarter during which the award becomes effective for the worker, which — If the foreign benefit increases less corresponds to the date on which he rapidly than the Belgian benefit, the becomes entitled to the invalidity benefit. arrears are less than the advances;

— In the converse case, the arrears are On the other hand, when the Italian greater than the advances. Institution pays its arrears to the Belgian Institution, the provisions of the various regulations which prevail in the matter of currency conversion are those of Article Article 51 (1) of Regulation N o 1408/71 107 (6) of Regulation No 574/72, so is not necessarily sufficient to offset that the Belgian Institution therefore entirely the fall in value of currencies; on receives exchange value in Belgian francs the contrary, owing to the lack of of the Italian arrears converted at the harmony of the national laws relating to rates of exchange applicable on the date changes in the economic situation, it may of payment. have the opposite effect to that desired.

The Belgian Institution claims that no The limits resulting from Community solution is to be found to the problems at provisions concern the determination of issue in this case, arising from the the undue payment which may be disparities in monetary and economic recovered. Article 45 (1) of Regulation trends in Member States, in the co-ordi- N o 574/72 provides as follows: nating rules laid down by the regu- lations, and that no action has been taken at Community level in order to resolve them. Consequently, measures "If the investigating institution estab- adopted by a national legislature to lishes that the claimant is entitled to govern the recovery of provisional benefits under the legislation which it payments infringe neither the regulations administers without having recourse to nor the Treaty of Rome. periods of insurance or residence completed under the legislation of other Member States, it shall pay such benefits immediately on a provisional basis." The Commission, in its observations, submits that the Community rules leave to the national legislation of the Member States the matter of determining the In a case such as the present where the conditions and detailed rules for the person concerned was entitled to the recovery by social security institutions of grant of invalidity pensions under the undue payments. The only Community legislation of two Member States, provisions which exist on this matter are namely Belgium and Italy, the undue those of Article 111 of Regulation payment is made up of the difference No 574/72 concerning the assistance between the full Belgian invalidity which the social security institutions of allowances which the Belgian Institution the various Member States may expect paid to him from the time of the for the purpose of such recovery. acquisition of his right to a pension pending the definitive award of his rights and the benefits determined to be payable by the Belgian Institution on the co-ordinated award of his rights in Clearly there is a limit to this power of accordance with Articles 45 and 46 of the Member States to enact rules on the Regulation No 1408/71. recovery of overpayments. A social security institution may not, on the pretext of recovering payments not due, deprive the person concerned of his As regards the rate of exchange applied enjoyment of rights to benefits which he to the benefits, the Commission submits has acquired under the legislation of that it is clear from Decision No 101 of another Member State or which must be the Administrative Commission of the

European Communities on Social Secur- set out above, is the full extent of the ity for Migrant Workers and from sums which may be recovered. Article 51 of Regulation N o 1408/71 that, except in cases where the method of determining or the rules for calcu- lating benefits are altered, the benefits due to a person concerned by the Where it is established that the institutions of various Member States in institution of a Member State has paid to accordance with the rules of Article 46 a recipient of benefits a sum in excess of are to be determined once and for all. that to which he is entitled and where Once awarded in pursuance of that the amount overpaid has been calculated, article, each of the national benefits is there are several conceivable ways in governed by its own scheme as far as which recovery may be effected. concerns the adjustments to the economic situation provided for by the legislation under which it is paid. Cost of living increases in benefits payable under First of all, the institution may claim the legislation of one Member State repayment of the overpayment directly cannot therefore affect the amount of from the person concerned where he the benefits due from the institutions of receives directly from the institution other Member States. responsible for payment in another Member State payment of the benefits due from that institution. The Commission observes that in so far as the person concerned in this case benefited, when the full Belgian invalidity allowances were paid on a The institution may also have recourse to provisional basis, from the cost of living the machinery for assistance set up by adjustments applicable to those allow- Article 111 of Regulation No 574/72. ances under the Belgian rules from the When that provision is applied, the date on which the right to benefits was recipient is not directly involved in the acquired, the Belgian Institution may, for arrangements for the recovery of the the purpose of determining the amount undue payment. The arrangements are overpaid to the recipient, take account of made exclusively between the creditor those adjustments, and also of those institution and the institution responsible which must be applied to that part of the for payment. benefit which is determined as remaining chargeable to the institution under Article 46 of Regulation N o 1408/71. On the other hand, any cost of living increases which may have been applied In Mr Fanara's case, the Italian to the apportioned Italian pension from Institution paid to the Belgian Institution the decisive date for calculation purposes the whole of the invalidity pension can have no bearing on the determi- arrears due to Mr Fanara for the period nation of the undue payment. They may from 1 November 1976 to 31 December not be deducted from the amount of the 1978. The Belgian Institution is not Belgian allowances. entitled to retain that sum even though it came to a higher amount than had been calculated. The balance cannot be explained solely by fluctuations in the The amount overpaid by an institution, exchange rates but is also composed of determined in accordance with the rules cost or living increases in the Italian

— secondly, he is deprived of the cost The Belgian Institution, represented by of living increases in the Italian A. Wattier of the Mons Bar, pension. accompanied by Mr De Craene, an official of the said institution, and the Commission of the European Communities, represented by its Legal Such provisions are clearly in conflict Adviser, J. Amphoux, acting as Agent, with the provisions of the Community presented oral argument at the sitting on rules on the award of invalidity pensions. 20 November 1980.

The Advocate General delivered his For the above reasons the Commission opinion at the sitting on 15 January takes the view that the questions put by 1981.

JUDGMENT OF 14. 5. 1981 — CASE 111/80

Decision

1 By a judgment of 3 April 1980, which reached the Court on 18 April 1980, The Tribunal du Travail, Mons, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the interpretation of Article 51 of the Treaty, of Articles 46 and 51 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) and of Articles 107 and 111 of Regulation No 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation No 1408/71 cited above (Official Journal, English Special Edition 1972 (I), p. 159).

2 The question was raised in the course of proceedings between Pietro Fanara, the plaintiff in the main action, and the Institut National d'Assurance Maladie-Invalidité, a Belgian social security institution and the defendant in the main action (hereinafter referred to as “the Belgian Institution”), and concerned the compatibility with Community law of Article 241 ter of the Royal Decree of 4 November 1963 implementing the Belgian Law of 9 August 1963 instituting and organizing a compulsory sickness insurance scheme.

6 The action before the national court is concerned with the plaintiff's right to the payment of that sum by the Belgian Institution. Relying upon Article 241 ter of the above-mentioned Royal Decree of 4 November 1963 implementing the Belgian Law of 9 August 1963, as inserted in that Royal Decree by Article 2 of Royal Decree No 19 of 14 December 1978, the Belgian Institution refused to pay over the balance to the plaintiff in the main action.

7 The provisions of that article are as follows :

"(1) Where the arrears received from a foreign institution, when converted into Belgian currency, do not cover the amount of the advance payments or allowances paid on a provisional basis, the balance shall not be recovered if the difference is due either to the difference in the respective exchange rates used to calculate the amount of the sums due from the foreign institution and to arrive at the figure expressed in foreign currency, or to the adjustment of the allowances to the cost of living.

(2) Where the arrears received from a foreign institution, when converted into Belgian currency, exceed the amount of the advance payments or allowances paid on a provisional basis, the balance shall not be paid over if the difference is due either to the difference in the respective exchange rates used to calculate the amount of the sums due from the

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foreign institution and to arrive at the figure expressed in foreign currency, or to the adjustment of the allowances to the cost of living.

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10 The Belgian Institution takes the view that it is in accordance with Community law to apply the above-mentioned provisions of national legislation relating to the recovery of undue payments where it has paid on a provisional basis a sum in excess of the definitive amount due.

11 The payment of benefits on a provisional basis is provided for by Article 45 of Regulation N o 574/72. Article 111 of the same regulation lays down the rules to be applied for the recovery of payments not due if, when awarding benefits in respect of invalidity pursuant to Chapter 3 of Title III of Regu- lation No 1408/71, the institution of a Member State has paid to a recipient of benefits a sum in excess of that to which he is entitled.

12 The case-law of the Court cited above is not concerned with settlement of the payment of benefits on a provisional basis and the recovery of sums in excess of those to which the persons concerned are entitled. In a case such as the present it is therefore the provisions of Regulations Nos 1408/71 and 574/72 which apply.

13 Article 111 of Regulation No 574/72 allows an institution which has paid benefits on a provisional basis to request the institution of any other Member State responsible for the payment of corresponding benefits to the recipient to deduct the amount overpaid out of any arrears payable by the latter institution to the recipient. The amount thus deducted is to be transferred to the creditor institution.

1 4 That provision deals exhaustively with the question of the recovery of the amount overpaid as regards social security benefits due to a worker to whom benefits have been paid on a provisional basis pursuant to Article 45 (1) of Regulation N o 574/72. It leaves the Member States no freedom to legislate on the matter, or in particular to provide that where the arrears received from a foreign institution, when converted into national currency, exceed the amount of the advance payments or allowances paid on a provisional basis, the balance is not to be paid over if the difference is due either to the dfference in the exchange rates used to calculate the amount of the sums due from the foreign institution and to arrive at the figure expressed in foreign

THE COURT (First Chamber),

in answer to the question referred to it by the Tribunal du Travail, Mons, by a judgment of 3 April 1980, hereby rules:

A provision of national law which, in the case of social security benefits due to a worker to whom benefits have been paid on a provisional basis pursuant to Article 45 (1) of Regulation No 574/72 of the Council of 21 March 1972, provides that where the arrears received from a foreign

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institution, when converted into national currency, exceed the amount of the advance payments or allowances paid on a provisional basis, the balance is not to be paid over if the difference is due either to the difference in the exchange rates used to calculate the amount of the sums due from the foreign institution and to arrive at the value expressed in foreign currency, or to the adjustment of the allowances to the cost of living, is incompatible with Regulation No 574/72.

Koopmans O'Keeffe Bosco