C-31/96

1. This reference for a preliminary ruling Lázaro, all of whom are of Spanish national- from the Tribunal Superior de Justicia (High ity, having been employed in the territory of Court of Justice) de la Comunidad de the Kingdom of Spain for several years exer- Extremadura (Sala de lo Social (Chamber for cised their fundamental freedom of move- Labour Matters)) (hereinafter: 'the Tribunal ment and went to work in the territory of Superior') concerns the interpretation of the Federal Republic of Germany in the Article 47(1 )(e) (now (g)) of Council Regu- same capacity and there remained. lation (EEC) N o 1408/71 ' (hereinafter 'the regulation') in relation to the same national legislation as, and facts similar to, those referred to in the judgment in Lafuente Nieto2 which was delivered by the Court More specifically, Mr Naranjo Arjona had after the closure of the written procedure in paid compulsory insurance contributions these cases. under Spanish law from April 1951 to June 1968 and on the basis of German law from January 1966 until March 1991; Mr Vicente Mateos had paid those contributions (but not continuously) in Spain (under the earlier I — Subject-matter of the dispute in the SOVI social security scheme and later under main actions the Régimen General de L· Seguridad Social (General Social Security Scheme)) between April 1942 and February 1962, and in Ger- many between January 1963 and January 1989; finally, Mrs García Lázaro had also paid social security contributions (also not 2. Like Mr Lafuente Nieto, Messrs Naranjo continuously) under Spanish law between Arjona and Vicente Mateos and Mrs Garcia February 1961 and December 1964 and under German law between January 1961 and July 1987. * Original language: Italian. 1 — Council Regulation (EEC) N o 1408/71 of 14 June 1971 on the application of social security schemes to employed per- sons, to self-employed persons and to members of tiieir families moving within the Community (OJ, English Special Edition 1971 (II), p. 416), as subsequently amended, updated and adapted inter alia by: Council Regulation (EEC) N o 3. It appears from the order for reference 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6); Annei I, Part VH1, of the Act concerning the Conditions of Accession of that in 1994 the Instituto Nacional de Ia the Kingdom of Spain and the Portuguese Republic and the Seguridad Social ('the INSS') awarded adjustments to the Treaties (hereinafter 'the Act of Acces- sion'; OJ 1985 L 302, p. 23, especially p. 170); Council Regu- Mr Naranjo Arjona, with effect from 1 April lation (EEC) N o 1248/92 of 30 April 1992 (OJ 1992 L 136, p. 7), whereby subparagraph (e) of Article 47 became sub- 1991, a retirement pension calculated accord- paragraph (g) of that article. The regulation has been further amended, even following the publication of a Consolidated ing to the average of his contribution bases version in December 1992 (OJ 1992 L 325, p. 1). for the period 1960-1968 (that is, for the last 2 — Case C-251/94 Lafuente Nieto v INSS [1996] ECR 1-4187. eight years of contributing to the Spanish

Mr Naranjo Arjona contested the INSS decision before the Juzgado de lo Social (Social Court), Badajoz ('the Juzgado'). He did not dispute the method of calculation used by the social security institution but maintained inter alia that it should be applied to his contribution bases for the last eight years of his working Ufe (1982-1991), even though he had only paid social security 5. As far as Mrs García Lázaro is concerned, contributions in Germany during that after the competent German institution had period. awarded her a pension (which I believe was also paid only in respect of insurance contri- bution periods completed in Germany), on account of her total incapacity for work as from July 1987, the Juzgado finally recog- nized her entitlement to a pension from the Spanish social security institutions in 1995. 4. Mr Vicente Mateos, for his part, having become permanently and totally incapaci- tated for work in Germany in 1989, obtained a pension from the competent German social security institution (apparently only in respect of insurance contribution periods completed in Germany) and then in 1990 was awarded a pension by the INSS under the SOVI scheme, at a permanently fixed amount, based solely on his contributions paid at the relevant time in Spain. The judgment of the Juzgado, against which an appeal (by the INSS) is also pending before the referring court, had based the amount of the pension payable to Mrs Gar- cia Lázaro on the maximum contribution bases provided for in Spanish legislation, for He argued in court that the pension should the period 1979-1987, for workers in her be calculated according to the average of the occupational category, revalorizing the ben- maximum contribution bases laid down in efit payable on the basis of the monthly fluc- Spanish law for the period 1981-1988 tuations in the general consumer price index.

8. Article 46 of the regulation lays down the method for calculating the amount of benefit As can be seen from the fifth recital, the to be awarded which is to be applied by the regulation seeks to ensure effective freedom competent institution of each Member State of movement for Community workers: the at the request of the worker concerned. scheme aims to secure equal treatment for the latter under the various national legisla­ tions and social security benefits for workers 5 — Only for workers affected by invalidity who have been sub­ ject at various umes to the legislation of two or more Mem­ ber States, at least one of which is based on a distributive type of insurance scheme (in other words one based on risk), under which (as in the Spanish social security system) the amount of invalidity benefits is independent of the length of 3 — Sec the Opinion of Advocate Generai Cosmas in Case the insurance periods completed. In fact, Article 40(1) of the C-475/93 Thévenon [1995] E C R 1-3813, especially at regulation provides that the provisions of Chapter 3 of Title p. 1-3828. III of the regulation containing specific provisions on retire­ 4 — Case 313/86 Lenoir v Caisse d'Allocations Familiales des ment and old-age pensions shall apply to such workers by Alžes-Maritimes [1988] ECR 5391, paragraph 13. analogy.

I - 5505

O P I N I O N O F MR LA P E R G O L A — J O I N E D CASES C-31/96, C-32/96 A N D C-33/96

10. Finally, under Article 46(3) of the regu- lation, 8 each institution responsible for pay- ment is to determine the amount of benefit actually payable in accordance with its own legislation, this being the highest amount as between the independent benefit and the pro rata benefit. 9 In other words, a migrant 9. Furthermore, as I said, Article 46(2) pro- worker will be entitled to receive a total pay- vides that in Member States where entitle- ment from the various competent national ment to benefit is acquired only by applying institutions which is equal to the sum of the the aggregation mechanism, each institution highest individual benefits (payable by the responsible for payment is to calculate the Member States in which aggregation was not so-called proportional benefit payable by it, necessary) and the actual pro rata amounts in other words the theoretical amount of (payable by States in which it was necessary). benefit and the actual pro rata amount for which it is liable. 7 — Case 793/79 M cm ¡es [1980] ECR 2085, paragraph 9. 8 — As amended by Article 2(2) of Council Regulation (EEC) N o 1248/92, cited in footnote 1. 6 — The regulation also allows the competent institutions not to 9 — Without prejudice to any rules to prevent overlappine apply the aggregation and pro rata method where the result (reduction, suspension or withdrawal) which may be laid of that calculation is equal to or lower than the result calcu- down by the national legislation pursuant to which benefit is lated according to national legislation alone (all cases where payable, in which case the comparison is to be made between the two calculations would lead to that result are indicated, the amount of the autonomous benefit and the amount of for each Member State, in Annex IV, Part C, of the regu- the pro rata benefit as calculated after applying those rules lation). (Arnele 46(3) of the regulation).

In particular, Article 47(1) provides in sub- III — The question referred paragraph (e) (now (g)) — a provision which was introduced on the Kingdom of Spain's accession to the C o m m u n i t y , 0 — that where, under the legislation of a Member State, benefit is to be calculated by the com- petent institution in that State on the basis of average contributions, that average is to be 13. The Tribunal Superior asks the Court to determined by reference only to those peri- clarify whether the reference in Article ods of insurance completed under the legisla- 47(l)(e) (now (g)) of the regulation — for the tion of the said State. purpose of calculating the theoretical amount of benefit — to an average contribution basis, to be determined by reference only to insurance periods completed under the national legislation of the country paying the benefit, is to be construed as referring to: (i) the theoretical (maximum, minimum or average) contribution bases for the time being laid down by that legislation, or 12. Spanish social security legislation, which (ii) the average of the contribution bases centres on a risk-based insurance scheme, corresponding to payments actually made by does in fact provide that where the condi- the individual worker concerned, regardless tions governing entitlement to benefit are of what he would have had to contribute for met, the amount of invalidity and old-age pensions for employed persons is to be cal- culated, in principle, on the basis of the sum of the contribution bases of the person con- 1 1 — See Ley 26/1985, Je 31 Je julio, Je mejidas urgentes para la racionalización Je la estructura y Je la acción protectora Je cerned during the 96 months prior to mate- la SeguriJaJ Social, Article 3 (BOE of 1 August 1985, N o rialization of the risk, divided by a pre- 183, p. 1907); that provision was reproduced later, with slight changes to its form, in Article 140 of the Texto determined figure (112). RefunJido Je la Ley General Je ¿s SeguriJad Social (Real Decreto Legislativo 1/1994, Je 20 Je junio; BOE of 29 June 1994, N o 154, p. 5453). For a more detailed description of the aspects of the Span- ish social security scheme which are relevant for the pur- pose of this case, I refer to my Opinion of 20 June 1996 in 10 — Article 26 and Annex I, Chapter VIII, of the Act of Acces- Case C-251/94 Lafuente Nieto [1996] ECR 1-4190, espe- sion, cited in footnote 1. cially points 4 and 11 to 18.

12 — See, most recently, the judgment of 27 March 1995 in G/, B-105, July-August 1995, p. 59. 13 — Council Regulation (EEC) N o 1248/92 of 30 April 1992 amending Regulation (EEC) N o 1408/71 on the application of social security schemes to employed persons, to self- 15. With specific reference to calculation of employed persons and to members of their families moving within the Community and Regulation (EEC) N o 574/72 the theoretical amount of invalidity and old- laying down the procedure for implementing Regulation (EEC) N o 1408/71 (OJ 1992 L 136, p. 7, especially p. 24). age benefits for Spanish workers who have Under point 4(b) of heading D of Annex VI of the regu- worked in Germany, the Spanish Tribunal lation, cited below in the text, the theoretical amount of the benefit obtained by applying the calculation described in Supremo (Supreme Court) has recently inter- the text is to be subject to the increases and revalorizations calculated for each year after and up to the year preceding preted Article 47(1 )(e) (now (g)) of the regu- the materialization of the risk for pensions of the same lation as follows: the contribution basis to be kind. 14 — As I pointed out in points 53 and 54 of my Opinion in taken into account for periods when com- Lafuente Nieto, cited in footnote 11, the provisions added pulsory insurance contributions were paid in 1992 to Annex VI of the regulation with regard to the detailed rules for applying Article 47 in Spain merely on the basis of German legislation is the expounded, with particular reference to that country, one of the underlying principles of the regulation, namely the 'theoretical' average of the maximum and principle of the effectiveness of social security benefits, to minimum bases laid down by the Spanish which the obvious corollary is the rule on updating the amount of contributions actually paid by a worker as laid legislation applicable, to workers in the same down in point 4(b) cited above (sec above, footnote 13).

19. In that judgment the Court clearly estab- lished that Article 47(1 )(e) (now (g)) of the 21. In that judgment, the Court accepted my regulation relies on a system for calculating conclusion, which I would like to reiterate old-age and invalidity benefits according to here, that Article 47(1 )(e) (now (g)) of the an average contribution basis, similar to that regulation, interpreted in the light of Article laid down in Spanish legislation. 15 The 51 of the Treaty, requires a social security Court held that the provision in question institution, such as the Spanish institution in should be interpreted in the light of the aims the main proceedings, on the one hand to set out in Article 51 of the Treaty, especially calculate the average contribution basis, tak- with reference to the protection of migrant ing into account only those contributions workers from possible reductions in the actually paid to the migrant worker under amount of social security benefits to which national legislation and, on the other hand,

15 — See the judgment cited in footnote 2, paragraphs 16 to 29. 16 — Ibidem, paragraph 39.

I - 5509

O P I N I O N O F MR LA P E R G O L A — J O I N E D CASES C-31/96, C-32/96 A N D C-33/96

to apply the appropnate increases and were the case migrant workers would have revalorizations to the theoretical amount of an advantage over non-migrant workers. the benefit thus obtained as if the person concerned had continued to work under the same conditions in the Member State in question. u

I-5510

NARANJO ARJONA AND OTHERS v INSS

25. The argument put forward by the Com- question referred for a preliminary ruling by mission at the hearing to the effect that the order of the Tribunal Superior. principles laid down in Lafuente Nieto should be seen in the light of the judgment in Rònfeldt 22 is more worthy of consider- ation. The Commission points out in this regard that in no circumstances can Article 47(l)(e) (now (g)) of the regulation — inter- preted in the light of Articles 48(2) and 51 of The Court has consistently held, however, the Treaty — result in the loss of social secu- that when giving a ruling under Article 177 rity advantages to which a migrant worker is of the Treaty it may also take into consider- already entitled under existing social security ation provisions of Community law which conventions between two or more Member the questions from the referring court have not raised but which appear to be relevant for the purpose of the decision in the main 20 — Order of 5 Mirch 1986 in Case 69/85 Wünsche v Germany proceedings. 23 [1986] ECR 947, paragraphs 10 to 16, in which the Court held that the right of a referring court to refer further ques- tions to the Court could not be used to contest the validity of the judgment delivered previously, as this would call in question the allocation of jurisdiction as between national courts and the Court of Justice under Article 177 of the 23 — See, among many others, Joined Cases 73/63 and 74/63

I-5511

O P I N I O N O F MR LA P E R G O L A — J O I N E D CASES C-31/96, C-32/96 A N D C-33/96

27. Having said this, let us now examine the reference to Article 26(1), invalidity pen- Commission's argument more closely. Pur- sions) by the competent Spanish institutions. suant to Article 6, the regulation replaces as a matter of principle, 24 purely in terms of the persons and matters which it covers, any pre-existing social security convention bind- ing two or more Member States exclusively.

29. In the Commission's view, the solution provided for in Article 25(1 )(b) makes it pos- sible to take appropriate account of the level of the contribution basis — which depends 28. The Commission refers in particular to on the pay which a worker received or was Article 25(1 )(b) of the Convention, which entitled to — which a worker reaches at the concerns the calculation of the amount of end of his working life, even in another old-age pensions (and also, by virtue of the Member State, without conflicting with the Spanish social security system (since for the purpose of calculating benefits reference is 24 — With the exception — as far as this Opinion is concerned — of the 'international provisions not affected by this Regulation' referred to in Article 7 of the regulation, including the specific provisions of social security conven- tions which 'the provisions of Article 6 notwithstanding ... 27 — My translation. The original provision is worded as follows: shall continue to apply' inasmuch as they are specifically 'Cuando todo o parte del período de cotización elegido por excepted under Annex m of the regulation (see Article el solicitante para el cálculo de su base reguladora de presta- 7(2)(c)). ciones se hubiera cumplido en L· República federal el Organismo competente español determinará dicha base 25 — See Case 82/72 Wälder [1973] ECR 599, paragraphs 6 and 7. reguladora sobre las bases de cotización vigentes en España, 26 — See BOE N o 258 of 28 October 1977, p. 2295, and Bundes- durante dicho período o fracción, para los trabajadores de la gestezblatt 1977 1 1p. 687. misma categoría profeñonal que L· persona interesada'.

always made to the contribution bases appli- between the Member States which have been cable in Spain for the relevant occupational incorporated in their national law, 29 pro- category). vided that the worker concerned has exer- cised his right to freedom of movement before the date on which, notably as a result of later accessions to the Community, the Community legislation took effect in all the signatory States to the relevant conven- tion. 30 30. Again in the Commission's view, apply- ing Article 25(l)(b) of the Convention to the legal situation of Messrs Naranjo Arjona and Vicente Mateos and Mrs García Lázaro actu- ally gives them more advantageous treatment overall than they receive under the mecha- nism in Article 47(l)(e) (now (g)) of the regulation. The entry into force of the regu- 32. The three Spanish workers involved in lation in Spain on 1 January 1986 therefore the main actions exercised their right to free- reduced the social security advantages to dom of movement before 1 January 1986, which they were formerly entitled under the and hence at a time when the regulation had, Convention. as a result of the accession of the Kingdom of Spain to the Community, taken effect in Spanish law thus replacing the provisions of the Convention. There is no doubt, therefore — and here I support the Commission's view — that theoretically the principles of Rònfeldt, 31 cited above, could apply to them since the obstacle identified by the Court in 31. According to the case-law cited by the Thévenon is not present. 32 Commission, the Community social security rules cannot be applied in such a way as to reduce the benefits awarded to a migrant worker by virtue of the legislation of a Member State because that would be con- trary to the Treaty rules on freedom of movement for workers. 2S 33. However, the Commission's conclusions do not entirely convince me inasmuch as it claims that the entry into force of the regu- lation in Spain on 1 January 1986 clearly resulted in a reduction of the social security benefits to which the three workers involved As the Court has held, this case-law also applies with respect to any benefits payable under bilateral or multilateral conventions 29 — Rönfeldt, cited above in footnote 22, paragraphs 21 to 29. 30 — See Case C-475/93 Thévenon [1995] ECR 1-3813, para- graphs 18 to 28. 31 — See above, footnote 29 and the relevant part of the text. 28 — Case 807/79 Cravina [1980] ECR 2205, paragraph 7. 32 — See above, footnote 30 and the relevant part of the text.

35. The case which concerns us here is dif- ferent. The procedure provided for in the Convention and advocated by the Commis-

In my view, the conflicting positions of the Commission and the Spanish Government 33 — Judgment cited in footnote 22, parigraphs 13 to 20. Like- wise, in Thévenon it was accepted by the parties to the dis- on this question reflect two different inter- pute that, since calculation of the amount of the invalidity pretations of the phrase 'contribution bases pension on the basis of the provisions of the Franco- German social security convention also took account of in force in Spain for workers in the same insurance periods completed in France, the amount of ben- efit payable to Mr Thévenon by the German social security occupational category as the person con- institution (as the competent institution of the State in which the claimant was registered at the time the risk mate- cerned' by reference to which the Spanish rialized) was higher than the amount awarded, pursuant to social security institution is required, pursu- the regulation, on the basis of the principle of pro rata allo- cation (judgment cited in footnote 30, paragraph 9). ant to Article 25(l)(b) of the Convention, to

I - 5514

NARANJO ARJONA AND OTHERS v INSS

determine the basis for assessing benefits for take account of the level of the contribution insurance and contribution periods com- basis which a worker has reached at the end pleted by a migrant worker in Germany. of his working life.

This unquestionably involves extra work for 34 — See above, footnote 11 and relevant part of the text. the competent social security institutions and 35 — See above, point 12. for the national court but it is the only

I-5515

OPINION OF MR LA PERGOLA — JOINED CASES C-31/96, C-32/96 AND C-33/96

possible way to ensure respect for the cised his right to freedom of movement to be Court's rulings to the effect that Articles placed in a situation which is less favourable 48(2) and 51 of the Treaty do not under any than that which he would have enjoyed if he circumstances permit a worker who has exer- had not availed himself of that right.

V — Conclusion

In the light of the foregoing observations I propose that the Court answer as fol- lows the question referred by the Tribunal Superior:

However, where as a result of applying Article 47(1 )(e) (now (g)) of Council Regu- lation N o 1408/71, a migrant worker suffers, upon calculation of the theoretical amount of his benefits, a reduction in the social security benefits to which he would have been entitled, prior to the entry into force of the regulation, under the provisions of a bilateral or multilateral convention between the Member States which has been incorporated into the national law of the debtor State, the latter provisions will remain applicable. Where there is no prima facie evidence of loss of social security benefits on the part of a worker where a convention which has been transposed into the domestic law of the debtor State is inapplicable, the referring court shall be required to calculate separately the theoretical amount of the social security benefits at issue, on the basis of the convention in question and on the basis of Community legislation, and to make a comparative assessment of the two results.

I - 5516