C-199/88

CABRAS

OPINION OF MR ADVOCATE GENERAL JACOBS delivered on 8 February 1990 *

My Lords, of Mr Cabras's benefits. The Italian benefit was calculated in accordance with the rules on aggregation and apportionment laid down in Article 46(2). The Belgian benefit was calculated solely on the basis of national legislation, under which Mr Cabras 1. This case comes to the Court by way of was entitled to a full pension. The Belgian a request for a preliminary ruling social security institution, the Institut concerning the rules on the overlapping of national d'assurance maladie-invalidité ('the social security benefits and on the effects of Institut national'), then applied a national recalculation of benefit. rule against the overlapping of benefits and reduced the full Belgian pension by the amount of the Italian benefit.

2. Mr Cabras worked for 635 weeks in Italy and 506 weeks in Belgium. Incapacitated for work since 19 September 1972, he has been receiving invalidity benefits in both 5. Mr Cabras does not appear to have chal­ countries since 1 October 1973. lenged the original calculation of his benefit or the application of the Belgian rule against overlapping. What he is challenging is a subsequent decision recalculating the Belgian benefit and the retroactive application of that decision. The circum­ 3. The Belgian legislation is of Type A (i.e. stances in which the Belgian benefit came to the amount of benefit does not depend on be recalculated are as follows. the length of insurance periods completed), whereas the Italian legislation is of Type B (i.e. the amount of benefit does depend on the length of insurance periods completed).

1 October 1973, it had risen by 1 August for the purpose of applying their rule 1981 to the equivalent of BFR 377. During against overlapping, for a number of years, this period the Belgian benefit was also but then became entitled to take those index-linked but no account was taken, in increases into account simply because their applying the rule against overlapping, of the own legislation was amended. That, increases in the Italian benefit. The Institut however, appears to be the effect of national continued to deduct the same Article 51(1) and (2) of Regulation amount as it had deducted in October 1973, No 1408/71, and is consistent with the way even though the Italian benefit, in respect of in which those provisions were interpreted which the deduction was made, had risen by the Court in Case 7/81 Sinatra v sevenfold. In fact, the Institut national was FNROM [1982] ECR 137 and in prevented from taking into account the Case 104/83 Cinciuolo v Inami [1984] increases in the Italian benefit by ECR 1285. Anicie 51(1) of Regulation No 1408/71, which provides that, when benefits are adjusted by a fixed percentage or amount in accordance with the cost of living, 'such percentage or amount must be applied directly to the benefits determined under the provisions of Article 46, without the need for a recalculation in accordance with the 8. The net result for Mr Cabras was that his provisions of that article'. Belgian benefit underwent a twofold reduction. First, it was reduced because he had ceased to be a claimant with dependants; secondly, it was reduced because the Institut national was able to deduct from it the full amount of the increased Italian benefit. To make matters worse for Mr Cabras, the Institut national 7. With effect from 1 July 1982, the wished to give effect to the recalculation as relevant Belgian legislation was amended from 1 July 1982, the date on which the with the result that Mr Cabras was, because amendment to the Belgian legislation took of his wife's earnings, no longer considered effect. However, the decision recalculating a person with dependants. This led to a his benefit was not notified to him until reduction in his Belgian benefit. It also had 23 February 1984. As a result, the Institut the unfortunate result, from Mr Cabras's national seeks to recover the excess point of view, of entitling the Institut payments made in the intervening period. A national to recalculate his benefit in sum of over BFR 60 000 is involved. accordance with Article 46 and to take into account, for the purpose of applying the Belgian rule against overlapping, the increases that had taken place in the Italian benefit. The Institut national was able to do this because the amendment of the Belgian legislation constituted an alteration in the 'method of determining or the rules for 9. Mr Cabras applied to the tribunal du calculating benefits' within the meaning of travail, Brussels, contesting the decision Article 51(2) of Regulation No 1408/71. It recalculating his benefit and the decision to may seem strange that the Belgian auth­ reclaim the undue payments. The tribunal orities were prevented from taking into du travail referred the following questions account the increases in the Italian benefit, to the Court:

If so, is it compatible with Article 51 of the Treaty that the claim conferred in one State by Community law should be 11. Where a person's entitlement to benefit fully absorbed by the claim conferred in arises without its being necessary to have another State by national law alone? recourse to insurance periods completed in other Member States, Article 46(1) applies. The institution of the Member State concerned must calculate, pursuant to the first subparagraph, the benefit on the basis If not, how is the corrective factor to be of the insurance periods completed under its determined where only one of the legislation. It must also, pursuant to the benefits paid is determined in second subparagraph, calculate the benefit accordance with the provisions of that would be due under the system of Article 46(1)? aggregation and apportionment laid down in Article 46(2)(a) and (b). Only the higher of the two amounts is to be taken into consideration.

States (Article 46(2)(b)). Thus if X worked Where the amount referred to in the in Member State A for 10 years and in preceding subparagraph is exceeded any Member State B for 20 years, then even if institution applying paragraph 1 shall adjust under the legislation of Member State A he its benefit by an amount corresponding to would not be entitled to a pension for an the proportion which the amount of the insurance period of 10 years, he will be benefit concerned bears to the total of the entitled in Member State A to one third of benefits determined in accordance with the the benefit that he could claim if he had provisions of paragraph 1.' worked there for 30 years. The procedure thus described is known as aggregation and apportionment.

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CABRAS

ECR 5489. And that is what the Institut 18. Similar arguments are put forward by national did in Mr Cabras's case. In fact, the Italian Government, which submits the complexity of the formula laid down in furthermore that, by reducing the Belgian the second subparagraph of Article 46(3) is benefit by the entire amount of the Italian due to the fact that it is designed to provide benefit, the Institut national has disregarded also for the more complicated situation that the 'principle of proportionality' underlying arises when more than one institution is the method of calculation prescribed by paying benefits determined under the first Article 46(3). The Italian Government also subparagraph of Article 46(1). Its function proposes a special formula, which, though in such a case is to apportion the deduction superficially different from that of between those institutions. When there is Mr Cabras, gives the same result. It only one institution paying benefits of that contends that the Belgian benefit should be kind, there is of course no need for any reduced by a coefficient resulting from a such apportionment. fraction in which the numerator is the 'highest theoretical amount' and the denominator is the sum of the two benefits.

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OPINION OF MR JACOBS —CASE C-199/88

periods had been completed in any one of 21. This provision cannot be understood the Member States in which he has worked. unless it is examined in its context. It The fact that in Mr Cabras's case the limit belongs to Title VI of Regulation established by Article 46(3) is equal to the No 574/72, which is headed 'Miscellaneous pension payable under Belgian law, with the provisions'. Articles 111 and 112 form a result that he does not receive any section entitled 'Recovery by social security additional benefit in respect of his insurance institutions of payments not due and claims periods completed in Italy, is immaterial. by assistance bodies'. Paragraphs 1 and 2 That circumstance could only be relevant if of Article 111 provide in substance that, one were to accept Mr Cabras's premiss where a social security institution has paid that a person who has worked in more than benefit in excess of the amount due, it may one Member State must receive additional request the institution of another Member benefit in respect of the insurance periods State paying benefit to the person concerned completed in each Member State. However, to deduct the amount overpaid from the that basic premiss is misconceived. It is amounts that it pays to the recipient and to founded on the notion that under Article 51 transfer the amount deducted to the first of the Treaty a person who has worked in institution. more than one Member State must be better off, in terms of social security, than a person who has spent his entire working life in one Member State. That view is surely mistaken: Article 51 merely requires that the former should not be worse off than the 22. Mr Cabras infers from the wording of latter. Article 112 and from its proximity to Article 111 that in the circumstances of the present case the Institut national is precluded from recovering from him the excess payments made between 1 July 1982 The second question and 23 February 1984.

coordination. The regulations have not that it may be recovered if it turns out not introduced a common system of social to have been due. security and considerable differences continue to exist between the national 27. Fourthly, the interpretation advocated systems, as regards both substance and on behalf of Mr Cabras is based on a procedure. In such a context it would be misunderstanding of the scope and purpose illogical for the Community legislature to of Article HI of Regulation No 574/72. purport to introduce a rule determining in Paragraphs 1 and 2 of Article 111 what circumstances the competent authorize an institution which has made institutions in the Member States are excess payments to request the institution of precluded from recovering undue payments. another Member State to deduct the Such matters are in principle left for amount overpaid, first, from arrears that it national law to determine. pays to the person concerned and then from any other amounts that it pays him. It would be unreasonable to suggest that that is the only way of recovering excess payments from a person subject to the Community regulations and that an institution is prevented from recovering excess payments by a more direct method, for example, by withholding benefit for which it is itself responsible or by instituting proceedings in the appropriate national court. That view is confirmed — if confir­ mation is necessary — by the use of the verb 25. Secondly, if the legislature had wished 'may' in Article 111(1) and (2). The to adopt such a provision, I doubt whether purpose of Article 111 is simply to facilitate it would have located it among the 'Miscel­ cooperation between the institutions of laneous provisions' in Regulation different Member States in relation to the No 574/72, which merely lays down the recovery of excess payments. It does not procedure for implementing Regulation seek to lay down exhaustively the procedure No 1408/71. Such an important provision for recovering such payments. I say that of substantive law would surely have been notwithstanding the Court's dictum in located in Regulation No 1408/71 itself. Case 111/80 Fanara v Inami [1981] ECR 1269 to the effect that Article 111 '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 No 574/72' (paragraph 14, at p. 1281). The Court's use of the word 'exhaustively' in that passage must be understood in the context of that particular case. All that it meant, I think, is that 26. Thirdly, Article 45(1) of Regulation national legislation may not provide that, No 574/72, which was applicable by virtue where the arrears received from a foreign of Article 49(1) thereof, required the institution exceed the amount of the undue Institut national to pay the benefits on a payment, the balance is in certain circum­ provisional basis. Inherent in the very notion stances not to be paid over to the person of a provisional payment is the possibility concerned.

28. Fifthly, even on a literal reading, possession of any travaux préparatoires that Article 112 cannot be of much assistance to might shed some light on the intentions of Mr Cabras because it comes into operation the authors of the regulation. only when 'recovery [of the undue payments] has become impossible'. There are at least four ways in which an institution might recover undue payments: (a) by requesting a foreign institution, under Article 111(1) of Regulation No 574/72, to deduct the amount from arrears that it pays to the person concerned; (b) by requesting a foreign institution, under Article 111(2), to

That to be impossible. It might of course be does not come as a great surprise and it may argued on behalf of Mr Cabras that the well explain why Article 112 does not seem word 'impossible' in Article 112 does to fit smoothly into the scheme of the regu indeed refer to the impossibility of lation. It also appears that the proposal to recovering the undue payment by that first insert Article 112 into the regulation first method. I think, however, that, if that had originated within the Audit Board, a body been the intention of the authors of Regu whose principal task, under Article 78 of lation No 574/72, that is what they would Regulation No 4 (Journal officiel, 1958, have said, rather than use the vague formula p. 597), was to assist the Administrative 'when their recovery has become Commission on Social Security for Migrant impossible'. Workers in preparing the annual accounts in connection with various provisions of Regu lation No 3 (Journal officiel, 1958, p. 561) concerning the reimbursement, by the institution of one Member State, of sums paid out by the institution of another Member State.

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CABRAS

expiry of the relevant limitation period. 32. First, Article 49(2) of Regulation That is in substance the interpretation No 574/72 provides that 'in the event of suggested by the Commission in its replies recalculation . . . the institution which has to the questions put by the Court and it is, I taken such a decision shall forthwith notify think, the correct interpretation. Admittedly, the fact to the person concerned . . . '. It that does not remove all the doubts seems to me that if an institution delayed surrounding the interpretation of Ar­ unduly in carrying out a recalculation or in ticle 112: the relevance of the proviso notifying the result to the person concerned, relating to fraud remains obscure. But I am who had meanwhile continued to receive satisfied that the provision cannot have the benefit at a higher rate in good faith, then meaning attributed to it by Mr Cabras and circumstances might arise in which the that it was not intended to cover the kind of decision could not take effect before the situation at issue in this case. date on which it was notified to the person concerned. Secondly, under Article 49(1) of Regulation No 574/72 the provisions of Article 45 thereof apply by analogy whenever benefits are recalculated under 31. Before concluding, I would add one Article 51(2) of Regulation No 1408/71. final comment. While Article 112 of Regu­ Under Article 45(1) of Regulation lation No 574/72 cannot, on the view I No 574/72, an institution may therefore be take, assist Mr Cabras in this case, I think required to pay benefit on a provisional that circumstances might arise in which an basis; and under Article 45(4) it must then institution would be precluded, by the 'forthwith inform the claimant of the fact, principle of respect for legitimate expec­ drawing his attention explicitly to the tations, from recovering benefit unduly provisional nature of the measure paid. I take two examples which are hypo­ taken ... '. Again, if those provisions were thetical, since the provisions in question not to be complied with, one can see that an have not been invoked in this case. issue of legitimate expectations might arise.

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