C-118/00

3. According to that institution, the restric- tive approach it adopted when awarding

1 — Original language: French. 2. All insurance periods or periods of 2 — Council Regulation of 14 June 1971 on the application of residence completed under the legislation social security schemes to employed persons, to self- employed persons and to members of their families moving of a Member State before 1 June 1992 shall within the Community (OJ, English Special Edition 1971 be taken into consideration for the deter- (II), p. 416), as amended and updated by Council Regula- tion (EEC) No 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6), as amended by Council Regulation (EEC) No 1248/92 of 30 April 1992 (OJ 1992 L 136, p. 7), hereinafter 'the Regulation'. 3 — Hereinafter 'the amending Regulation'.

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mination of rights to benefits pursuant to II — Facts and procedure in the main Regulation (EEC) No 1248/92. proceedings

3. Subject to paragraph 1, a right shall be 5. Gervais Larsy is a Belgian national acquired under Regulation (EEC) established in Belgium, near the French No 1248/92 even though relating to a border. He worked as a self-employed contingency which materialised prior to nursery gardener in Belgium and France. 1 June 1992.

9. Accordingly, on 21 December 1988, Regulation, provisions concerning the over- Inasti adopted a further decision, reducing, lapping of benefits and their payment by with effect from 1 March 1987, the pro- the competent institutions of the Member portion of the retirement pension entitle- States. ment to 31/45ths, in implementation of the principle that work records are unseverable contained in Article 19 of Royal Decree No 72 of 10 November 1967. 5

5 — Moniteur Belge of 14 November 1967, p. 11845. 6 — Case C-31/92 [1993] ECR I-4543, paragraph 23.

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Article 95a(5), asked him to make a fresh 21. Since the appellant also claimed pension application in order to have his damages of BEF 1 for non-material damage entitlement reviewed. and of BEF 100 000 for additional material damage, the Cour du Travail, Mons, con- sidering that it did not have sufficient information at its disposal, addressed a question to the parties concerning, in particular, whether Inasti should be regar- ded as having committed a wrongful act in 17. Following that application, Inasti took adopting a new decision granting Mr Larsy a fresh decision, on 26 April 1995, granting a full pension, but with effect only from Mr Larsy a full retirement pension with 1 January 1994, when in fact the initial effect from 1 July 1994. application was made in 1985 and the pension entitlement in question had been reduced by Inasti as from 1987.

authorise it to take, on its own initiative, a being applicable to the situation of a new decision with effect from 1 March person covered by social insurance, as a 1987. An application for review had been self-employed worker, who has institu- lodged outside the time-limit set by Arti- ted legal proceedings against an admin- cle 95a(5) of the Regulation and, therefore, istrative decision of the institution the review had to take effect on 1 July responsible for the social security of 1994. Inasti also pointed out that Gervais self-employed workers of a Member Larsy did not appeal against the judgment State of the EU applying an anti-over- of 24 April 1990 until 8 December 1997 lapping rule of the European Regula- and that it was the delay in bringing the tion (Articles 12 and 46 [of Regula- appeal which caused the damage for which tion] (EEC) No 1408/71), that decision he was seeking compensation. having been confirmed by the national court hearing the case in that Member State and the judgment not having been notified by the parties and therefore remaining subject to appeal, even 24. Mr Larsy claimed that Inasti had though a decision given by the [Court disregarded the moral authority of the of Justice] after that judgment, in a judgment in Larsy and that the judgment similar case, interpreting Articles 12 of the Cour du Travail, Mons, of 10 Feb- and 46 of that regulation, held that a ruary 1999 proves that the breach of Community anti-overlapping rule Community law continued after the pre- should not be applied in those circum- liminary ruling in that case. stances in so far as such application of Article 95a(5) by the national institu- tion responsible for the social security of self-employed workers to the above- mentioned insured person, following the judgment of the [Court of Justice], to ensure that the rights of that insured person are reviewed, and Arti- III — The questions referred for a preli- cle 95a(5) limit the effects of the minary ruling abovementioned judgment of the [Court of Justice], it being necessary, in order, in the event of proceedings being brought, to give effect to the said 25. The Cour du Travail, Mons, consider- Article 95a(5), for a new application to ing that the pleadings of the parties did not be made by the insured with respect to suffice to enable it to give judgment as to his rights and for a new decision to be whether Inasti had committed a sufficiently adopted thereafter? serious breach of Community law, decided to stay proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

A — The subject-matter of the question

29. At this stage in the main proceedings, the national court has given a judgment on IV — The applicability of Article 95a of the main points of the case before it. It has the Regulation (Question 1) upheld Gervais Larsy's claim that he should receive a pension in the proportion of 45/45ths, to take effect from 1 March 1987. The interest sought by Mr Larsy on the sums owing has also been awarded. 9

26. Article 95a(4) of the Regulation estab- 7 — Article 95a(5) of the Regulation. lishes the principle of the right to review, 8 — Article 95a(6) or the Regulation. under certain conditions, of pensions paid 9 — Judgment of the Cour du Travail, Mons, of 10 February 1999, as described in the national court's judgment making before 1 June 1992. the reference, p. 8, paragraph 10.

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30. It remains for the Cour du Travail, that the retroactive effect of Mr Larsy's Mons, to rule on the claim for BEF 1 revised pension was reduced, Inasti has compensation for non-material damage limited the scope of the judgment in Larsy. and for BEF 100 000 in respect of addi- tional material damage. 10 For that purpose it seeks to ascertain whether Inasti may be regarded as having committed a serious breach of Community law.

35. The Cour du Travail, Mons, accounts for this by pointing out that Inasti cited that provision and stated that Gervais Larsy had not complied with it. Conse- 32. The questions raised do not, therefore, quently, Inasti had to apply national law, concern Inasti's initial reticence to grant the which fixed the effective date of the recipient his full pension entitlement. It is, application for review as 1 July 1994. 13 on the contrary, that institutions's refusal to allow his entitlement to be retroactive which gives rise to the questions submitted and which has prompted the Belgian court's request for a preliminary ruling as to whether there was wrongful conduct. 36. However, the facts and procedure in the main proceedings reveal that the ques- tion posed by the national court relates more generally to the applicability of that part of Article 95a of the Regulation which 33. That is why Article 95a of the Regula- directly concerns the right to review of tion is the main provision on which the pensions paid before the adoption of the outcome of the main proceedings depends. amending regulation. In those circum- By applying the provision in such a way stances, only Article 95a(4) is involved. 14

10 —Judgment making the refetence, p. 10, paragtaph 12. 13 — Ibidem, p. 14, third paragraph. 11 — Ibidem, pp. 11 and 14, third paragraph. 14 — Case C-307/96 Baldone [1997] ECR I-5123, paragraphs 12 — Ibidem, p. 14, second paragraph. 11 and 12.

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37. The fact that the application was 40. It should be understood as seeking to submitted before or after 1 June 1992 has ascertain, in essence, whether the review of no bearing on whether or not Arti- rights for which provision is made in cle 95a(4) of the Regulation is applicable Article 95a(4) of the Regulation applies to in a case such as that in the main proceed- an application for review of an old-age ings. pension the amount which has been lim- ited, pursuant to a national anti-overlap- ping rule, on the ground that its recipient also receives an old-age pension paid by the competent institution of another Member State.

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43. In this instance, we know that Arti- 47. As the Court of Justice has clearly cle 95a(4) of the Regulation is at issue stated, '[t]he purpose of Article 95a(4) is to because the old-age pension was paid enable the person concerned to ask for the before the amending Regulation came into benefits awarded under the unamended force. Regulation to be reviewed where it appears that the rules of the amending Regulation are more favourable to him, and to benefit from the benefits awarded in accordance with the provisions of the unamended Regulation being maintained where they appear more advantageous than those 44. For the right to review established in resulting from the amending Regulation.' 18 the provision to be applicable, the applica- tion must be based on the new rules introduced by the amending Regulation. Any application for review of rights relat- ing to a pension paid before 1 June 1992 is therefore not subject to the provisions of Article 95a(4) to (6) of the Regulation.

48. It is necessary to determine whether the application for review of a pension the amount of which has been limited pursuant to a national rule against overlapping, but in breach of the Regulation, seeks to allow 45. In other words, the right to review — the person concerned to benefit from the as well as the conditions, established by more favourable rules of the amending Article 95a(5) and (6) of the Regulation, Regulation. In the light of the information for implementing that right — is granted at my disposal and subject to the findings only to the recipient of social benefits who of the national court, I believe that it does believes that they may be reviewed in order not. to take account of the amending Regula- tion.

50. Inasti, however, relies on Article 95a. V — The existence of a serious breach of The institution was confronted with a rule Community law (Question 2) of national law which prevented it, follow- ing a legal decision endowed with the authority of res judicata dismissing an action brought against an administrative 52. By this question, the national court decision, from amending its own decision. asks, in essence, whether the application, It therefore decided that the adoption of a by the competent authority of a Member new decision had to be conditional on the State, of Article 95a(4) to (6) of the Reg- submission of a fresh application from the ulation to an application for review of an person concerned, pursuant to Arti- old-age pension, thus limiting the retro- cle 95a(4) of the Regulation. Its interpreta- active effect of the review to the detriment tion of that provision led it to believe that of the person concerned, constitutes a any decision reviewing a pension paid serious breach of Community law, since, before the amending Regulation came into on the one hand, Article 95a(4) to (6) of force had to follow that procedure. This, as the Regulation is not applicable to the we have seen, is not in accordance with the application in question and, on the other, objective of the Article. the effect of a judgment delivered by the Court of Justice before the competent authority took its decision is that the application for review must be accepted, and it is impossible to infer from that judgment that the retroactive effect of the review may be limited.

55. It is apparent from the judgment refer- ring questions to the Court and from the wording of this question that it relates only to the second condition established by the Court's case-law. 57. However, the national courts are helped in their task by the Court of Justice which, when consulted on the liability of Member States by virtue of their Commu- nity obligations, indicates certain guide- lines for the national courts to take into The other two conditions have not given account in their evaluation.23 rise to a question from the Cour du Travail, Mons. It points out that Inasti acknowl- edged that the condition that the legislation 21 — See, for exampie, Case C-J/94 Hedley Lomas [1996] ECR infringed must have been intended to I-2553, paragraph 30. confer rights on individuals was satisfied.20 22 —See, for example, Case C-302/97 Konie [1999] ECR I-3099, paragraph 59, and Case C-150/99 Stockholm Nor has that court asked the Court of Lindepark [2001] ECR I-493, paragraph 38. 23 — See, for example, Brasserie du pêcheur and Factortame, cited above, paragraphs 56 and 58; Case C-392/93 British Telecommunications [1996] ECR I-1631, paragraph 41; Joined Cases C-283/94, C-291/94 and C-292/94 Denkavit 19—Joined Cases C-46/93 and C-48/93 Brasserie du pêcheur and Others [1996] ECR I-5063, paragraph 49; Konle, and Factortame [1996] ECR I-1029, paragraph 51. cited above, paragraph 58; and Stockholm Liyidöpark, 20 — National court's judgment, p. 12, paragraph 13. cited above, paragraph 38.

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B — The criteria to be applied in deter­ 60. The relevant judgments delivered by mining the existence of a sufficiently ser­ the Court may be distinguished according ious breach of Community law to the subject-matter of the infringement of Community law which the Member State is alleged to have committed.

24 — Sec, in particular. Joined Cases C-178/94, C-179/94 and C-188/94 to C-190/94 Dillenkofer and Others [ 1996| F.CR 62. A second category of judgments covers 1-4845, paragraph 25; Case C-140/97 Reebberger and Otbers [1999] LCR 1-3499, paragraph 50; in Case cases of breach of Community law in which C-424/97 Hann [2000] ECR 1-5123, paragraph 38; and Stockholm Lindepark, cited ahove, paragraph 39. The links between Inasti and the Belgian Government seem to he hierarchical in national law, as the national court gives 26 — See British Telecommunications, cited above; Dcnkavit us to understand (see the notion of 'minister with and Otbers, cited above; Case C-319/96 Brinkmann responsibility [for the respondent)', p. 7 of the nationai 119981 ECR 1-5255; Rechberger and Otbers, cited above, court's judgment). It is therefore likely that, under that law, and Stockholm Lmdöpark, cited above. the liability of the State is indissociable from that of its administrative divisions. The fact that this characteristic is 27 — The reasoning is the same as in the context of the non­ not absolutely certain has no bearing on the observance of contractual liability of the European Community (sec Community law since, even if certain legislative or Watljelet, M. and Van Racpenbuscii, S., 'La responsabilité administrative tasks are devolved to a public-law body des États membres en cas de violation du droit commu­ legally distinct from the State, reparation for loss and nautaire. Vers un alignement de la responsabilité de l'État damage caused to individuals by national measures taken sur celle de la Communauté ou l'inverse?', Cahiers de droit m breach of Community law need not necessarily be européen, 1997, p. 13). Following the example of this provided by the Member State itself in order for its body of rules, the condition under which Member States obligations under Community law to be fulfilled (judg­ incur liability for a serious and manifest disregard of ment in Hann, cited above, paragraphs 29 to 31). Community law applies where the exercise of legislative activities involves choices of economic policy (sec the 25 — See, for example, Dillenkofer and Otbers, cited above, aforementioned article and the judgment in Brasserie du paragraph 25, and Hann, cited above, paragraph 38. pėcbeur and ľ-actiirtame, cited above).

64. The institution in question, in circum- stances such as those in this case, did not face any legislative choice, in that it did not On the one hand, it follows from the have to enact any new legal provision. Its Court's interpretation of Articles 12 and task was merely to respond to an applica- 46 of the Regulation in Larsy that Gervais tion for review of pension rights by apply- Larsy should have his entitlement to a full ing the existing rules, resulting primarily pension restored. On the other hand, Inasti from the relevant area of Community law, interpreted Article 95a of the Regulation as which it did not do. meaning that the application of those articles could be subject to temporal limits, if the interested party submitted his appli- 28 — See Joined Cases C-6/90 and C-9/90 Francovich and cation for review out of time. Others [1991] ECR I-5357, and in Dillenkofer and Others, cited above. 29 — Hedley Lomas, cited above. 30 — Hahn, cited above. 31 — Ibidem, paragraph 41.

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68. Although this question relates to Arti- 71. I shall now examine to what extent the cle 95a of the Regulation, the interpreta- applicable Community rules could have led tion of that provision is closely linked, in Inasti to be mistaken about the meaning the present case, to that of Articles 12 and they should be given. 46 of the Regulation. The Court's inter- pretation of Articles 12 and 46 has not been followed, and Article 95a of the Regulation has been applied inappropri- ately. 72. It is worth noting the following cir- cumstances, which the national court could take into account.

32 — Ibidem, paragraphs 42 and 43. 33 — Ibidem, paragrapli 44. 34 — National court's judgment, pp. 5 and 6, paragraph 5.

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know that it did not spontaneously amend Community case-law constitutes a serious Gervais Larsy's pension rights in accor- breach of Community law. The judgment in dance with that recent case-law. Brasserie du pêcheur and Factortame refers, in particular, to the existence of a preliminary ruling or settled case-law from which it is clear that the conduct in question constituted an infringement. 37 75. Inasti maintains that the judgment in question was binding only on the court which had referred the question for a preliminary ruling in the Larsy case, and that Inasti was required only to observe any moral authority deriving from it.

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rules, gave a clear reply to a question raised 82. The above factors can only in part be in similar terms. helpful to the Cour du Travail, Mons, in determining whether the application of Article 95a of the Regulation constitutes a sufficiently serious breach of Community law. Article 95a had not yet been inserted into the Regulation when the Court of Justice was asked to give a preliminary 80. Amongst the other circumstances ruling by the national court hearing the which the national court might take into Larsy case. account is the Commission's letter of 21 February 1997, communicated to Inasti by the authority with responsibility for the respondent, giving the impression that Treaty-infringement proceedings might be commenced against the Kingdom of Bel- gium if the relevant provisions of the Regulation, as interpreted in the Larsy 83. In order to deal fully with Gervais judgment, were not applied. 39 It is within Larsy's claim that Inasti committed a the discretion of the national court to take breach of Community law, the national that purely factual point into consideration. court will have to be satisfied that the interpretation of the Regulation given in the Larsy judgment could not be affected as a result of a new legal rule such as Article 95a of the Regulation.

The same is true of the request from the authority with responsibility for Inasti asking it to regularise Gervais Larsy's situation in the light of the Larsy judg- ment. 40 84. We have seen that that provision does not apply in a situation such as that in the main proceedings. 41 It is for the national court to give judgment in accordance with the criterion referred to in this Opinion that the clarity and precision of the rule infringed must be taken into account. 42 81. The national court could hardly be The point is to establish whether there unaware that a higher authority had drawn could be reasonable doubt that the provi- the institution's attention to the existence of sion was applicable to the case before the a breach of Community law and the court, having regard to its objective and the possibility of proceedings against the Bel- scope which it may be acknowledged to gian Government. have.

86. On the other hand, the points noted above, relating to the interpretation of Article 95a of the Regulation, must be taken into consideration by the national court in evaluating the clarity and precision of that provision. 45 I believe that the nature of a transitional provision which 88. Consequently, when Gervais Larsy's must be ascribed to Article 95a largely case was submitted to Inasti, the Court of determines its scope of application and Justice had already given a precise inter- the interpretation which it may be given. pretation of the provision. According to The transitional character of a legal rule that interpretation, there was no doubt confers on it the function of preparing for about the transitional character of Arti- the entry into force of new legislation in cle 94(5) of the Regulation. Its aim was to relation to the legislation which it is determine precisely and restrictively the intended to replace. It must therefore be possible retroactive effect of new legal rules interpreted taking into account the legisla- on situations covered by the legal rules tion in which it has its origin. established by the text it was to replace. Nor was there any indication that the provision could apply to all applications for pension review.

87. I should add that, as the Commission has pointed out, Article 95a(4) to (6) of the Regulation is similar to Article 94(5) to (7) of the same Regulation, as amended by 89. Finally, we must turn our attention to the argument put forward by Inasti to justify having applied Article 95a of the 43 — Baldone, cited above, and Joined Cases C-52/99 and C-53/99 Camarotto and Vigtmne [2001] ECR I-1395. Regulation to Gervais Larsy's application. 44 — For a similar example of national legislation adopted in breach of the applicable Community law, but prior to a judgment of the Court of Justice interpreting that law, see Haim, cited above, paragraph 46. 46 — Case 32/76 Saieva [1976] ECR 1523, paragraphs 14 to 17, 45 — See points 41 to 51 of this Opinion. and Case 83/87 Viva [1988] ECR 2521, paragraph 10.

According to Inasti, the applicable law did 92. The primacy of Community law not authorise it to review, on its own requires all the authorities of the State to initiative, an administrative decision whose give effect to the Community rule. 48 compliance with Community law was uncertain, since a judgment had been delivered dismissing the appeal brought against that decision. Since it was bound by the judgment and had no legal author- isation, Inasti was compelled to ask the person concerned to submit a fresh pension 93. Furthermore, although it is true that, application, in accordance with national by virtue of the principle of procedural law and Article 95a of the Regulation. autonomy, the Member States are free to However, having had recourse to this latter establish the procedural rules designed to provision, it had to limit the retroactive safeguard the rights acquired by individuals effect of the revised rights because the time- directly from Community law, those rules limits set by the provision in question had are still required to satisfy the two condi- been exceeded. 47 tions of equivalence and effectiveness. On the one hand the procedural rules in question must not be less favourable than those applying to similar claims based on domestic law. On the other, they must not 90. All in all, according to Inasti, the be framed in such a way as to make it disregard for Community law which it is impossible or excessively difficult in prac- alleged to have shown arises from the fact tice to exercise the rights which the that no procedural rule under national law national courts have a duty to protect. 49 allowed it, in those circumstances, to grant Gervais Larsy's application in full, on a mere request that his pension be reviewed. The lesser of two evils was to use Arti- cle 95a of the Regulation and the applic- able national law, with the inevitable consequence of limiting the scope of the 94. The Cour du Travail, Mons, might find judgment in Larsy. it necessary to examine the procedural inadequacies mentioned by Inasti in the light of the abovementioned principles. It is therefore conceivable that, in addition to an infringement of the Regulation on the 91. The fact that the unjustified application part of Inasti for which it may incur of Article 95a of the Regulation — and, liability, the matters should be raised of consequently, misapplication of Articles 12 an infringement by the authority responsi- and 46 of the Regulation — is attributable ble, under national law, for establishing the to the competent authority's intention to procedural rules governing the application mitigate the alleged inadequacies of of Community law. national law provides no justification what- soever for a breach of Community law. 48 — C a s e 48/71 Commission v Italy [1972] ECR 529, para- graph 7. 49 — See, as a recent example of settled case-law, Camarotto 4 7 — Inasti's written observations, points 13 et seq. ami Vignone, cited above, paragraph 21.

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(2) A breach of Community law is sufficiently serious where, in the exercise of its legislative powers, a Member State has manifestly and gravely disregarded the limits on the exercise of its powers. If, at the time when it committed the infringement, the Member State in question did not have legislative choices and had only considerably reduced, or even no, discretion, a mere infringement of Community law may be sufficient to establish the existence of a sufficiently serious breach.

It is for the national courts to determine whether a breach of Community law is sufficiently serious for a Member State to incur non-contractual liability vis-à-vis individuals.

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