C-124/99

3. Under the same law, where retroactive The Community legislation payments are to be made in Germany, the minimum amount payable is set at one tenth of the current value of the pension. 5. Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within 4. The action brought by Mr Borawitz the Community,1 as amended by Council against the decision to deny him the retro- Regulation (EEC) No 1945/93 of 30 June active payment in question has resulted in 1993 2 ('the Regulation'), is intended to co- the Sozialgericht (Social Court), Münster, ordinate national social security legislation asking the Court to rule on the scope of the in order to permit freedom of movement Community principle of equal treatment for workers who are nationals of Member with regard to national legislation, such as States. 3 that in this case, which establishes different legal arrangements depending on whether 1 — OJ, English Special Edition 1971 (II), p. 416. 2 — OJ 1993 L 181, p. 1. * Original language: French. 3 — Fifth recital in the preamble.

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8. Article 3(1) of the Regulation sets out the principle of non-discrimination as it applies to the field covered by that regula- tion. It provides that '[s]ubject to the special provisions of this regulation, per- sons resident in the territory of one of the Member States to whom this regulation The German legislation applies shall be subject to the same obliga- tions and enjoy the same benefits under the legislation of any Member State as the nationals of that State'. 11. It is apparent from Paragraph 118(2a) of the Sechstes Buch des Sozialgestetz-

4 — Fifth and sixth recitals in the preamble. 5 — Seventh recital in the preamble. 6 — OJ 1972 L 74, p. 1; 'the implementing Regulation'.

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buches— SGB VI— (Book VI of the active payment of DEM 6.62. It added, German Code of Social Law, 'the SGB however, that under Paragraph 118(2a) of VI') that, if a retroactive pension payment SGB VI that sum could not be paid because is to be made, its amount at the relevant it did not exceed three tenths of the value of date must exceed one tenth of the current the disability pension. value of the pension in the case of payments made in Germany, or three tenths of that value in the case of payments made abroad.

15. Mr Borawitz lodged an objection with the defendant in the main proceedings 12. According to the order for reference, claiming that the distinction under German that paragraph was introduced with effect legislation between payments made in Ger- from 1 July 1993 to ensure that adminis- many and those made in other Member trative and accounting expenses did not States was in breach of the principle of exceed the amount of the retroactive pay- equal treatment in Article 3 of the Regula- ments. tion. The applicant in the main proceedings added that the 'clearing' system used for payments between Germany and the Neth- erlands ensured that the expenses of pay- ments made abroad were, in practice, no higher than those of payments made in Germany. 7 I I— Facts and main proceedings

'Is Paragraph 118(2a) of the Sozialgestetz- buch (Code of Social Law, "SGB VI") compatible with European Community law, in particular the principle of equal 21. In order to answer this question in the treatment, in so far as it limits retroactive context of the main proceedings, it is pension payments to a greater extent when necessary to establish at the outset that the payment is made abroad than when the Mr Borawitz in fact falls within the mate- payment is made in Germany?' rial and personal scope of the Regulation, as provided for in Article 3(1) of the Regulation.

IV — The question 22. According to Article 2(1) thereof, the Regulation is to apply 'to employed or self- employed persons who are or have been 19. First of all, it must be borne in mind subject to the legislation of one or more that, according to settled case-law, within Member States and who are nationals of the framework of proceedings bought one of the Member States or who are under Article 177 of the EC Treaty (now stateless persons or refugees residing within Article 234 EC), the Court does not have the territory of one of the Member States'. jurisdiction to give a ruling on the compat- ibility of a national measure with Commu- nity law. However, it does have jurisdiction 8 — See, for example, Joined Cases C-37/96 and C-38/96 Sodiprem and Others v Direction Generale des Douanes to supply the national court with a ruling [1998] ECR I-2039, paragraph 22.

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23. As the Commission has rightly pointed that point, in accordance with Arti- out, no information has been provided cle 4(1)(b) thereof. 10 which makes it possible to ascertain whe- ther Mr Borawitz satisfies the condition of having Community national status — or the status which can stand in its stead — as required by that provision. 9 25. Subject to the foregoing, a situation such as that described by the referring court is therefore covered by the Regulation.

Since the Sozialgericht, Münster, has impli- citly assumed that that requirement is satisfied, in order to give a useful answer to the question raised it will be taken here 27. National legislation such as that in this that that is so. However, it will fall to the case does not distinguish according to referring court to ensure that this is really whether the recipient is German or not. the case before applying the relevant provi- Rather, it sets a higher minimum amount sions of the Regulation. for a retroactive pension payment made from one Member State to another Mem- ber State than for such a payment within the same Member State. A non-German residing in Germany is subject to the one tenth minimum amount condition, which 24. As regards the subject-matter of the gives him a greater chance than an expatri- main proceedings, which determines the ate German of receiving the retroactive material application of the Regulation, it is payment at issue. The same is true of a sufficient to note that the payment at issue is a retroactive disability pension payment. The Regulation is therefore applicable on 10 — Under this article, the Regulation 'shall apply to all legislation concerning the following branches of social security:... invalidity benefits, including those intended for the maintenance or improvement of earning capacity'. 9 — Case C-308/93 Bestuur van de Sociale Verzekeringsbank v 11 — Case C-131/96 Mora Romero v Landesversicherungsan- Cabanis-Issarte [1996) ECR I-2097, paragraph 21. stalt Rheinprovinz [1997] ECR I-3659, paragraph 29.

31. The particulars of the case in the main proceedings submitted to the Court do not enable a final opinion to be given one way or the other. At most, it can be pointed out 28. However, it will be remembered that by way of guidance and subject to other Article 3(1) of the Regulation prohibits not particulars available to the referring court only overt discrimination based on the that, according to the Commission, most of nationality of the beneficiaries of social the people residing outside Germany who security schemes but also all covert forms are affected by the German legislation are of discrimination which, through the appli- Germans. 13 It is clear that Article 3(1) of cation of other distinguishing criteria, lead the Regulation would not preclude legisla- in fact to the same result. 12 tion with those characteristics on grounds relating to the application of a nationality criterion, since, in such a case, the national legislation would operate to the detriment of its own nationals.

terms of the particular features of Commu- munity legislation adopted in implementa- nity social security law than according to tion thereof, in particular Regulation the principle of equal treatment in its most No 1408/71, are intended to prevent a general sense. worker who, by exercising his right of free movement, has been employed in more than one Member State from being placed in a worse position than one who has completed his entire career in only one Member State'. 16 33. One of the notable features of this branch of Community law is the aim expressed in the relevant provisions of the primary law, namely Article 51 of the Treaty on which the Regulation is based, to contribute to freedom of movement for 36. The Court pointed out that it had workers by securing certain specific rights accepted 'that the aim of Articles 48 to 51 for migrant workers. 14 of the Treaty would not be attained if, as a consequence of the exercise of their right to freedom of movement, migrant workers were to lose the advantages in the field of social security guaranteed to them by the laws of a single Member State.... Such a consequence could deter Community work- 34. The Court has logically inferred from ers from exercising their right to freedom of this that the provisions of Article 3(1) of movement and would therefore constitute the Regulation... 'must be interpreted in the an obstacle to that freedom'. 17 light of their objective, namely to contri- bute, particularly in the field of social security, to the establishment of the greatest possible freedom of movement for migrant workers, which is one of the foundations of the Community...'. 15 37. Contrary to what the Commission maintains, 18 a provision of the type at issue before the national court, although it applies regardless of the nationality of the workers concerned, is capable of disadvan- 35. In accordance with this principle, unre- taging, in matters of social security, migrant lated to any concept of nationality, 'Arti- workers by comparison with workers who cles 48 to 51 of the Treaty and the Com- have worked in only one Member State.

42. It has been accepted in the main proceedings that payment transactions with the Netherlands are carried out under a 'clearing' system. By virtue of that process, 39. Therefore, although they enjoy the the pension is paid by the liaison office of same right to receive a retroactive pension the recipient's country of residence by payment of a given amount, Community means of a domestic payment. By the nationals who have worked in Germany are Commission's own acknowledgment, the not in the same position as those who have 'clearing' procedure does not generate any exercised their right to free movement in additional expenses since no payment the Community and have taken up resi- abroad is in fact made. 19 dence in another Member State.

43. In other words, the contested retro- active pension payment would not, in this case, give rise to any additional expenses by 40. According to the Commission, if the comparison with an equivalent payment conditions of indirect discrimination were made within the territory where the body fulfilled, such discrimination could never- responsible for payment is situated. If that theless be justified by objective differences. is true, it can be inferred that the expenses The distinction between domestic payment are not likely to exceed the amount of the and payment abroad is made on the basis retroactive payment. that higher expenses are associated with payments abroad. It takes into account the cost of transfers and seeks to ensure that 19 — Paragraph 25 of the Commission's written observations.

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45. It will be remembered that the Regula- 48. On the other hand, the Commission tion is based, in particular, on Article 51(b) considers that the first subparagraph of of the Treaty which entrusts the Council Article 10(1) of the Regulation does not with the task of securing for migrant apply in this case, since the applicant in the workers and their dependants payment of main proceedings is not subject to any benefits to persons resident in the territories reduction or withdrawal of the benefit by of Member States. Article 51 represents the virtue of the fact that the retroactive application in the field of social security of payment was not made. According to the the fundamental principle of freedom of Commission, the defendant in the main movement for workers, set out in Arti- proceedings has confirmed the pension cle 48 of the Treaty, and exceptions to the increase, but has simply set the retroactive principle of Article 5 1 , like exceptions to payment against the transfer expenses. the principle of Article 4 8 , must be Article 10 of the Regulation is not intended accepted to only a limited extent. to govern the question whether expenses are charged, but only that of whether the benefit is reduced or withdrawn.

46. Article 10(1) of the Regulation, which requires the waiving of residence clauses, 49. The Commission adds that the national confirms this approach. Neither the acqui- legislature did not intend to distinguish sition nor the retention of entitlement to between pension recipients residing abroad the benefits covered by that provision may according to whether the a m o u n t of be denied on the sole ground that the expenses actually incurred in paying the person concerned does not reside in the pension is higher than the amount of the territory of the Member State in which the pension. This concept of a threshold is institution responsible for payment is situ- based not only on the higher level of ated. 2 0 general expenses and bank charges required by this type of payment, but also on the solidarity i n h e r e n t in social security 20 — Case C-356/89 Newton [1991] ECR I-3017, paragraph 2 3 . schemes.

55. It is difficult to say in what respect the refusal to make a retroactive pension payment where the expenses involved are no higher than those normally involved in this type of transaction contributes to the 52. First, a Community national who for- protection of other social security benefit feits part of his pension, on the ground that recipients. this part is lower than or equal to the expenses necessary for its transfer, is obviously entitled to rely on Article 3(1) of the Regulation where there is no factual evidence of those expenses. His position is, in those circumstances, no different from that of the recipients of the same benefits who are subject to the legislation of the Member State where they reside. According 56. Thus, in this case, the differentials to a strictly identical analysis, there can be between the minimum amounts are evi- no recovery of expenses relating to the dently not justified by reference to any payment of benefits, provided for in Arti- objective consideration, subject to the cle 58 of the implementing Regulation, referring court's satisfying itself that a where no expenses of this kind are in- 'clearing' procedure exists and that this curred. has an impact on the level of expenses.

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Conclusion

57. Having regard to those considerations, I propose that the Court give the following answer to the question referred for a preliminary ruling by the Sozialgericht, Münster: