C-327/92

3. Van Breugel later became insolvent with­ Van Breugel Isolatie BV was a Dutch com­ out settling its debt to the Bedrijfsvereniging pany which in 1983 and 1984 carried out which subsequently decided that the unpaid insulation work for Rheinhold en Mahla. contributions in respect of the work carried The work was carried out on a subcontrac- out in Belgium for Rheinhold en Mahla (a tual basis in Belgium. In the order for refer­ total of some HFL 50 000) were to be paid by the latter undertaking. The Bedrijfsve­ reniging took that decision pursuant to the * Original language: Danish. Coördinatiewet Sociale Verzekering (Coor­ 1 — The version of Regulation (EEC) No 1408/71 relevant in these proceedings is that annexed to Regulation (EEC) dinating Law on Social Insurance, hereinafter No 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6). Pursuant 'the CwSV). Under Article 16a to Article to Article 3 of Regulation No 2001/83 that version is appli­ cable from 1 July 1982. 16e of the CwSV a third party may under

I - 1225

OPINION OF MR GULMANN — CASE C-327/92

certain circumstances be held liable for pay­ According to the order for reference the ment of social security contributions. Under Raad van Beroep's doubts in that regard Article 16b of the CwSV a main contractor is stem from the fact that the special rules on liable for the contributions which a subcon­ liability may 'go further than the coordina­ tractor should have paid for his employees. tion of the Netherlands system of social security aimed at by the CwSV' and that it is not certain that 'the scope of the regulation in question is so wide that [a third party], who is not a person covered by the regula­ tion, may also be held liable thereunder'.

6. In these proceedings it may be presumed that it is the law of the Netherlands which is applicable as regards the existence, calcula­ tion and collection of the social security con­ tributions payable by the subcontractor inter alia for the work which it had performed for Rheinhold en Mahla. The Raad van Beroep found that the employees who performed work for the subcontractor in Belgium were workers posted to another State within the 8. As I understand the order for reference, meaning of Article 14(1)(a) of Regulation the Raad van Beroep proceeded on the basis 2 No 1408/71, that is to say that the employ­ that it was the intention of the Netherlands ees were in one of the special situations for legislature that the relevant rules on the lia­ which the regulation derogates from the bility of third parties should also apply to basic rule that employees are subject to the foreign undertakings in connection with social security legislation in the State in work performed in other countries. That was which they are employed (see Article 13 of confirmed in the observations of the Nether­ Regulation No 1408/71). lands Government. In view of the fact that the rules in question are thus intended to have extra-territorial effect, irrespective of whether or not the rules are covered by Reg­ ulation No 1408/71, it is appropriate to con­ sider what is the background to the national court's questions. It may be that the Raad van Beroep merely wishes to ensure that the result which is envisaged by the Netherlands 7. The question in these proceedings is legislature but not expressly apparent from whether the fact that Netherlands legislation the rules in question is also the result flow­ is applicable as regards the legal relationship ing from Regulation No 1408/71. Another between the employee, the employer and the possibility is that the questions were asked competent institution signifies that the rules because the Raad van Beroep may have in the Netherlands legislation on the liability doubts as to whether the result envisaged under the Netherlands legislation might be incompatible with Community law. More­ over, there might be an interest in obtaining 2 — Article 14(1)(a) provides that: 'A person employed in the ter­ ritory of a Member State by an undertaking to which he is a ruling on whether Regulation No 1408/71 normally attached who is posted by that undertaking to the territory of another Member State to perform work there for is applicable in the present context since that undertaking shall continue to be subject to the legisla­ Article 92 of that regulation lays a basis for tion of the first Member State, provided that the anticipated duration of that work does not exceed 12 months and that he the collection of contributions payable in the is not sent to replace another person who has completed his term of posting'. territory of another Member State.

9. What is more doubtful is whether the Court of Justice should give a ruling on the first of the questions referred to it, that is whether the CwSV as such is covered by Regulation No 1408/71. 11. But it cannot necessarily be concluded therefrom that the rule directly in point in this case, Article 16b, is necessarily also cov­ ered by Regulation No 1408/71. Just because a rule is contained in a law which is for the rest covered by the regulation, that does not mean that that rule must necessarily also be 3 The background to that question may be the so covered. Nor, by the same token, can it view — possibly contended for by the Bed­ be concluded that because a rule is contained rijfsvereniging before the Raad van Beroep in a law which is clearly otherwise not cov­ — that if the major part of certain legislation ered by the regulation, it must for that is undoubtedly within the scope of applica­ reason fall outside the scope of application of 4 tion of the regulation, it may be concluded the regulation. The decisive factor must be that the legislation in its entirety is so cov­ whether the rule in question can be regarded ered. as having a sufficiently relevant link for the purposes of the regulation with one of the branches of social security mentioned in Article 4(1) of Regulation No 1408/71.

10. It is apparent from the information given in these proceedings that the CwSV came 12. On the basis of the information supplied into force in 1954 and is designed in partic­ regarding the content of the CwSV, the ular, as is apparent from its name, to create common rules on the scope of a number of concepts which are relevant for the applica­ tion of the various social security laws, 3 — See for example the judgment of the Court of Justice in Case including, for example, what is meant by the 39/76 MoHthaan [1976] ECR 1901, paragraphs 17 to 21. 4 — See for example the judgment of the Court of Justice in Case term 'pay'. C-45/90 Paletta [1992] ECR 3423, paragraphs 13 to 17.

Is a rule such as Article 16b of the CwSV covered by Regulation No 1408/71? 14. It has been stated that the special rules on liability were prompted by the wish to combat problems arising in conjunction with actual, serious misuse of 'the hiring-out of manpower' and 'subcontracting' with a view to avoiding payment of social security con­ tributions. It is not disputed that the rules are appropriate means for combating such 13. The Court has been told that the current misuse and rules with the same object are rules in Article 16a to Article 16e were intro­ said to exist in Belgium and Germany in any duced in 1981 by the Wet Ketenaanspra­ event, albeit with more limited or different kelijkheid (Law on ultimate responsibility scope. for certain payments), which fundamentally altered the earlier rules on who is liable to pay social security contributions. Article 16a introduced liability for undertakings which make use of 'hired' manpower in cases where the undertaking which hired out the man­ power does not pay social security contribu­ 15. Rheinhold en Mahla claim that a rule tions. As mentioned above, Article 16b such as Article 16b of the CwSV is not introduced corresponding liability for main within the scope of Regulation No 1408/71 contractors in the event of non-payment by whereas everyone else who has submitted a subcontractor. Articles 16c, 16d and 16e observations in these proceedings, namely

I -1229

OPINION OF MR GULMANN — CASE C-327/92

the Bedrijfsvereniging, the Netherlands, Ger­ entirety (see the judgment in Jansen in which man and Greek Governments, and the Com­ the Court held that the German rules on the mission, submits that such a rule is covered reimbursement of social security contribu­ by that regulation. tions were within the ambit of the earlier 6 regulation, No 3).

18. It is also true that the Court of Justice has avoided a restrictive interpretation of the 20. Apart from Rheinhold en Mahla, every­ scope of Article 4(1) and that it proceeds on one who has submitted observations in these the basis that the regulation applies to the social security schemes concerned in their 6 — Case 104/76 Jansen [1977] ECR 829, paragraph 6, fourth subparagraph. 7 — Case 8/75 Caisse Primaire d'Assurance Maladie de Sélestat v 5 — See Case 70/80 Vigier [1981] ECR 229. Foot-Ball Club d'Andlau [1975] ECR 739, paragraph 17.

I -1230

RHEINHOLD & MAHLA

proceedings concludes that the same must tion is applicable to the rules on the liability apply to rules under which, in the event of of third parties for payment of social secu­ non-payment by the employer, payment may rity contributions. be demanded from persons other than the direct employer that is to say persons who are not party to the relationship between the employee, the employer and the competent institution.

22. It must be assumed in my view that an answer to the question cannot be derived with any certainty from any of the express rules in the regulation or from the case-law.

They consider it immaterial that the obliga­ tion to pay extends to third parties, not just to the employer. The question must be resolved on the basis of an assessment of whether it may be con­ cluded from the aims of the regulation that its provisions, including primarily the provi­ sions on the applicable legislation in Article 14(l)(a), also apply to rules under which the competent institution may, pursuant to national law, demand payment of social secu­ 21. However the question arises whether rity contributions from third parties. that view is necessarily correct. The Raad van Beroep, rightly in my view, stated that a third party such as Rheinhold en Mahla does not directly fall within the persons covered by the regulation.

Article 16b is thus primarily designed to protect the financial basis by reducing the If the rule on liability in question is extended risks that would otherwise flow from the to apply to foreign undertakings, they will bankruptcy of an employer. In my view that necessarily be obliged to acquaint themselves risk is different from those that are covered with Netherlands legislation. It may perhaps by the legislation listed in Article 4(1). be asserted that that requirement is not unreasonable if they make use of Dutch sub­ contractors. In addition, under the Nether­ lands rules it is possible for main contractors to lodge the proportion of the contract sum which corresponds to the social security contributions payable in a blocked bank account and thus to limit the risk which 24. Other factors that may be cited as mili­ application of the CwSV would entail for tating against holding the regulation applica­ them. ble to the rule at issue are: (a) account must also be taken of the interests of third parties in other countries; (b) it is possible that lia­ bility for a foreign undertaking might inhibit the free movement of services; and (c) there should be requirements as to the clarity of provisions leading to the application of national rules which impose on foreign undertakings obligations in connection with action carried out in other countries.

But that does not rule out the possibility that application of the Netherlands rules on lia­ bility to foreign undertakings might have far- reaching and unpredictable consequences for the latter and that those consequences will have a more burdensome effect for foreign 25. The interests of the foreign third parties undertakings than for Dutch undertakings in concerned should in my view be taken into so far as the foreign undertalangs will be

Everyone else who has submitted observa­ tions in this case questions to a greater or lesser extent whether that view is correct and contends in any event that any such restric­ tions cannot signify that Regulation No 1408/71 is not to apply to a rule such as that contained in Article 16b of the CwSV. 28. It is in my view not altogether easy on the basis of those considerations to rule on the national court's question. There are nor­ mally good grounds for extending the scope of application of the regulation where, as here, that may be said to a certain, albeit lim­ 27. It can hardly be disputed that the appli­ ited, extent to protect the interests of cation of the Netherlands rule to foreign employees and to obviate disadvantages they might face by virtue of working in another Member State. In addition, there may also be 9 — As I understand the Netherlands rules, they involve — as the argued to be good substantive reasons for name of the 1981 amending law indicates — a 'chain of lia­ the Netherlands rule at issue to have extra­ bility', that is to say that the person ultimately liable for pay­ ment may be an undertaking which, as a main contractor, territorial effect. perhaps at two, three or four removes, has made use of ser­ vices from a subcontractor which in the implementation of its subcontract has accepted services from other subcontrac­ tors and so on. If my understanding of the Netherlands rules and their consequences in such situations is correct, the result may be that for example a French main contractor 10 — The Court has of course stressed on a number of occasions which has used a Belgian undertaking as a subcontractor that Community legislation must be unequivocal and its which in turn has made use of a Dutch subcontractor to per­ application must be predictable for those who arc subject to form part of its subcontract may be liable for payment of it (see inter alia the judgments in Case 70/83 Kloppenburg any social security contributions which the Dutch subcon­ [19841 ECR 1075, paragraph 11, and in Case 169/80 Gon- tractor fails to pay. drand Frères [1981] ECR 1931, paragraph 17).

A provision such as Article 16b of the Coördinatiewet Sociale Verzekering does not fall within the scope of application of Regulation No 1408/71.

I -1234