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OPINION OF MRS STIX-HACKL — CASE C-311/01

Article 1 states: (q) "competent State" means the Member State in whose territory the competent institution is situated'.

'Definitions Article 69(1) and (2) of the Regulation states:

'Conditions and limits for the retention of the right to benefits

(o) "competent institution" means: 1. A worker who is wholly unemployed and who satisfies the conditions of the legislation of a Member State for entitle- ment to benefits and who goes to one or more other Member States in order to seek employment there shall retain his entitle- ment to such benefits under the conditions and within the limits hereinafter indicated:

(a) before his departure, he must have been registered with the employment ser- (ii) the institution from which the vices of the competent State as a person person concerned is entitled or seeking work and must have remained would be entitled to benefits if he available for at least four weeks after or a member or members of his becoming unemployed. However, the family were resident in the terri- competent services or institutions may tory of the Member State in which authorise his departure before such the institution is situated,... time has expired;

' 1 . An unemployed person who, during his last employment, was residing in the terri- tory of a Member State other than the 2. If the person concerned returns to the competent State shall receive benefits in competent State before the expiry of the accordance with the following provisions: period during which he is entitled to benefits under paragraph 1(c), he shall continue to be entitled to benefits under the legislation of that State; he shall lose all entitlement to benefits under the legislation (a) ...

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(1) declare that, by refusing to allow 5. As the Commission formed the view that wholly unemployed frontier workers the Regulation was not being properly to make use of the possibility under applied in the Netherlands, it sent the A r t i c l e 69 of R e g u l a t i o n (EEC) Netherlands Government formal notice on N o 1408/71 of the Council of 14 June 29 May 1998, requiring a response within 1971 on the application of social two months. security schemes to employed persons,

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to self-employed p e r s o n s a n d to an original entitlement ('een originaire members of their families moving aanspraak') to benefits in that Member within the Community of seeking State. The only competent institution employment in one or more other within the meaning of Article 1(o)(ii) of Member States while retaining entitle- the Regulation is thus that of the State of ment to unemployment benefit under residence. The same can also be said for the the conditions laid down in that article, application of Article 69. the Kingdom of the Netherlands has failed to fulfil its obligations under Articles 69 and 71 of the Regulation;

11. The Commission relies further on the wording of Article 69, which refers in (2) order the Kingdom of the Netherlands paragraph (1)(a) to a 'competent State' to pay the costs of the proceedings. and in paragraph 1(b) and (c) to 'the State [which] he left'. Since the State from which a wholly unemployed frontier worker has departed is the State of residence, the latter is also the competent State for the grant of rights under Article 69.

Court in Miethe, De Laat, and Grisvard 15. In so far as the Netherlands Govern- and Kreitz, 5that, as far as wholly unem- ment argues that the institution of the State ployed frontier workers are concerned, of residence thus ends up bearing the entire only the State of residence is in principle burden of payment of the benefits, without responsible for providing these benefits. receiving any contributions, the Commis- sion refers to the decision in Van Gestel. 7It was found in that case that the Community legislature had deliberately structured the allocation of the burden in this way, in an effort to give the unemployed the best chance of finding employment in the State 13. In the opinion of the Commission, of residence. Article 71(1)(a)(ii) creates a legal fiction as to the conditions for receipt of benefits. A similar fiction is also contained in Article 67 of the Regulation, which requires periods of insurance or employ- ment in other Member States to be taken 16. As to the Commission's proposal in into account. An unemployed person who 1980 for the amendment of Article 69, receives benefits only on the basis of this upon which the Netherlands Government fiction can, however, undoubtedly rely relies, the Commission states that this upon the application of Article 69. So proposal was made more than 20 years Article 69 must also apply to benefits ago, and the Court had not ruled auth- granted pursuant to Article 71(1)(a)(ii). o r i t a t i v e l y on t h e i n t e r p r e t a t i o n of Article 71(1)(a)(ii) at the time of the pro- posal. Furthermore, the proposals made at that time were withdrawn in their entirety, and the proposal to amend Article 69 to which the Netherlands Government alludes was not included in the most recent pro- 14. The Commission also relies on the 25th posal for the amendment of the Regu- recital in the preamble to the Regulation lation. 8 and on the settled case-law 6 of the Court. In particular, the Commission argues, it follows therefrom that the Regulation pro- hibits interference with frontier workers' job-seeking, or their taking up of employ- ment, on the basis of their special situation, 17. The Netherlands Government is of the or the application of the Regulation in such view that wholly unemployed frontier a way that frontier workers are disadvan- workers who receive benefits in the State taged. of residence pursuant to Article 71(1)(a)(ii) cannot simultaneously invoke Article 69 in order to continue to receive benefits while 5 — Case 1/85 Miethe [1986] ECR 1837, Case C-444/98 De seeking employment in another Member Laat [2001] ECR I-2229 and Case C-201/91 Grisvard and Kreitz [1992] ECR I-5009. State. 6 — C a s e 39/76 Mouthaan [1976] ECR 1901, Case 227/81 Aubin [1982] ECR 1991, Case 92/63 Nonnenmacher [1964] ECR 2 8 1 , Case 58/87 Rebmann [1988] ECR 3467, Case C-215/00 Rydergård [2002] ECR I-1817, Miethe (cited in footnote 5), De Laat (cited in footnote 5) and 7 — Case C-454/93 [1995] ECR I-1707. Grisvard and Kreitz (cited in footnote 5). 8 — CNS 96/0004 (OJ 1996 C 68, p. 11).

2 1 . The 25th recital in the preamble to the Regulation also indicates that wholly u n e m p l o y e d frontier w o r k e r s c a n n o t export benefits from the State of residence when seeking employment. There is express reference to benefits which an unemployed 19. The entitlement to benefits is not an person receives in accordance with the original entitlement in the State of resi- legislation of the Member State 'to which dence. Rather, benefits are merely calcu- he was last subject', thus to benefits from lated according to the legislation of the the State of employment. State of residence and provided at its expense. Such a situation is not alien to the terms of the Regulation. As the Court has already determined in its judgment in Rebmann, 12 it is entirely conceivable that a wholly unemployed frontier worker receiv- ing benefits pursuant to Article 71(1)(a)(ii) 22. Further, there is express reference in the should be simultaneously subject to the heading of Section 2 of Chapter 6, which legislation of the State of residence and to includes Article 69, to unemployed persons that of the State of employment. going to a Member State other than t h e ' c o m p e t e n t S t a t e ' . Cochet and Huijbrechts 13 established, however, that the competent State is the State of employ- ment.

20. The principle of legal certainty also favours the argument that the competent State for the purposes of Article 69 is the 23. Besides, the term 'competent State' is State of employment alone. Otherwise the defined in Article 1(q) of the Regulation in term 'competent State' would have differ- such a way as to mean whichever Member ent meanings within the same regulation, State the competent institutions are situated in. What is a competent institution is determined not by Regulation N o 1408/71 9 — Cited in footnotes 3 and 4. 10 — Case 27/75 [1975] ECR 9 7 1 . 11 — Joined Cases 41/79, 121/79 and 796/79 [1980] ECR 1979. 12 — Cited in footnote 6. 13 — Cited in footnotes 3 and 4.

25. It may, moreover, be inferred from Bastos Moriana and Others 18 t h a t Article 69 can be applied only in the case of unemployed persons who can claim 28. In addition, those concerned would not forfeit any social security entitlement which 14 — Regulation (EEC) N o 574/72 of the Council of 21 March they would have had if they had not 1972 fixing the procedure for implementing Regulation exercised their right to freedom of move- (EEC) N o 1408/71 on the application of social security schemes to employed persons and their families moving ment. The Court determined in Petroni 19 within the Community (OJ, English Special Edition 1972 (I), p. 159). that only the loss of benefits to which 15 — Article 19a(2), the second paragraph of Article 2 3 , unemployed persons would be entitled Article 31(2) and Article 93(2). 16 — Cited in footnote 11. 17 — Cited in footnote 10. 18 — Case C-59/95 [1997] ECR I-1071. 19 — Case 24/75 [1975] ECR 1149.

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1. The question of the interpretation of 35. The competence of a Member State is Article 71(1)(a)(ii) of the Regulation established purely through Titles II and III of the Regulation itself. These include first the general rules, followed by special provisions for the different types of social security benefit. Competence for certain special cases, such as frontier workers, is (a) General points on the competence of a determined by the special provisions. Member State in respect of benefits for wholly unemployed frontier workers

36. The general rule determining compet- e n c e for w o r k e r s is c o n t a i n e d in 32. The parties have debated the question Article 13(2)(a) of the Regulation. This of the interpretation of Article 71(1)(a)(ii) provides that the State of employment is first of all as a problem concerning the generally competent. competence of the State of residence.

42. Under the change of law theory, the legislation of the State of residence alone would apply, but would be incompatible 39. The Commission is clearly of the view with Article 69 which is directly applicable that the entitlement of wholly unemployed and takes precedence. 20 frontier workers to benefits on the basis of Article 71(1)(a)(ii) derives directly from the legislation of the State of residence. According to this view, there is thus a change of governing law and the legislation of the State of residence forms the legal basis for benefits and the means of deter- mining them (hereinafter 'change of law 4 3 . Under the exportation theory, on theory'). applying Article 71(1)(a)(ii) a wholly unemployed frontier worker would be simultaneously subject to the legislation of the State of residence and to that of the State of employment. The legislation of the State of residence would, therefore, take precedence over the legislation of the State of employment merely for the purpose of granting benefits. The legislation of the State of residence would be applied only in so far as it assists the search for employ- ment in the State of residence. If employ- 40. The Netherlands Government, on the ment is sought in a Member State other other hand, is of the view that wholly than the State of residence, the reason for unemployed frontier workers are subject, in exportation of benefits would cease, and t h e c o n t e x t of t h e a p p l i c a t i o n of only the legislation of the State of employ- Article 71(1)(a)(ii), to the legislation of ment would apply. Viewed thus, the ques- both the State of residence and the State of tion of applying Article 69 would no longer employment. According to this view, it is a arise as far as the State of residence is case of benefits exportation, whereby the concerned. entitlement to benefits rests on the legis- lation of the State of employment, and the legislation of the State of residence is only a 20 — This is the case, however, only if it cannot be concluded means of determining the benefits (here- from Article 69 itself that that provision is not to apply to wholly unemployed frontier workers — see point 73 et inafter 'exportation theory'). seq.

45. The Netherlands Government relies also on the wording of the second subpara- graph of Article 70(1), which places the financial burden of applying Article 69 on The wording of Article 71(1)(a)(ii) the 'competent institution of the Member State to whose legislation a worker was subject at the time of his last employment'. This wording appears to confirm the exportation theory put forward by the Netherlands Government in so far as it provides for the legislation of the State of employment to be applied when employ- ment is being sought in another Member State, and thus also in the case of wholly unemployed frontier workers. 44. Both parties refer first to the wording of Article 71(1)(a)(ii) in support of their respective legal views. However, the phrase 'receive benefits in accordance with the legislation of the Member State in whose territory he resides as though' 21 constitutes only a very vague statement about the function of the legislation of the State of residence. This formulation does not show 4 6 . T h e s e c o n d s u b p a r a g r a p h of sufficiently clearly that the legislation of the Article 70(1), however, only determines State of residence provides the legal basis which Member State's institution should for the benefits, or that it is intended to be ultimately bear the cost of benefits during only a means of determining the benefits. the search for work in another Member Language versions of Article 71(1)(a)(ii) State. 22 It is not possible to draw from that other than the German version, such as, for provision general conclusions about the example, the version in the language of the function of the legislation of the State of proceedings — Dutch — as well as the r e s i d e n c e in c o n n e c t i o n with English, French and Spanish versions, do Article 71(1)(a)(ii). not provide a clear conclusion of one sort or another. 22 — The provision does not, however, govern the obligations of Member States under Article 69 towards unemployed persons (e.g. the issue of the necessary E303/0 — E303/5 certificates in accordance with Article 83 of the Imple- 21 — Emphasis added. menting Regulation).

49. In so far as the Netherlands Govern- ment relies, in relation to Article 71(1)(a)(ii) and in support of its exportation theory, on the history of the Regulation, on the amendment proposal of the Commission 48. To support the exportation theory, the in 1980 which is no longer applicable and Netherlands Government refers finally to on the last amendment proposal of 1996, 24 the wording of the 25th recital in the the following must be stated by way of preamble to the Regulation, which explains response. The introduction of Article 69 the purpose of Article 69. However, this may indeed have been contentious as recital too does not indicate a solution to between Member States. However, given the question of what Article 71(1)(a)(ii) the broad wording of the 25th recital states with regard to the function of the referred to above, it appears that it cannot legislation of the State of residence. For the be concluded that the Community legis- 25th recital refers only in general terms to lature proceeded on the basis that Article 69 the grant to unemployed persons of benefits of the Regulation was not to be applied to 'provided for by the legislation of the benefits for wholly unemployed frontier Member State to which [the unemployed workers. worker] was last subject'. This could, however, mean the legislation of the State of employment which applied during the last period of employment and the legis- lation of the State of residence which applied after the unemployment began — 5 0 . The provision expressly applying immediately before the search for work in a Article 69 to benefits for wholly unem- Member State other than the State of ployed frontier w o r k e r s , w h i c h w a s residence. Thus, it is impossible to conclude included in the amendment proposal in from the 25th recital that the Community 1980, but not in the latest amendment legislature would have considered — in p r o p o s a l , c o u l d p e r h a p s h a v e been

51. The focal point of the legal dispute is 5 3 . Those wholly unemployed frontier the interpretation of the judgments of the workers whose rights are in issue in the Court in Cochet and Huijbrechts. 25 Both present infringement proceedings, however, cases concerned wholly unemployed fron- remain resident in the State of residence, tier workers who moved to what had whose legislation is thus undoubtedly previously been the State of employment a p p l i c a b l e in a c c o r d a n c e with after starting to receive benefits in the State Article 71(1)(a)(ii). Thus the question of residence. In these cases, the Court remains open whether the function of the determined that it was only the legislation legislation of the State of residence under of the State of employment that applied to Article 71(1)(a)(ii) is to be interpreted in the continued receipt of benefits, because accordance with the change of law theory 'Article 71(1)(a)(ii)... does not relieve the or the exportation theory, notwithstanding State where [the person concerned] was last the judgments given in the cases referred to employed... of its competence in prin- above. ciple' 2 6 and that 'those provisions of Article 71 do not affect the principle that the competent State is the State where that person was last employed'. 27

25 — Cited in footnotes 3 and 4. 26 — Cited in footnote 4, paragraph 26. 54. Similar considerations apply in so far as 27 — Cited in footnote 3, paragraph 15. the Netherlands Government relies on the

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judgments of the Court in Bonaffini and neously; they are not, however, comparable Testa. 28 Neither case concerned frontier with the legal situation in issue here. 3 0 workers, so that the interpretation of Article 71(1)(a)(ii), in so far as it is in issue in this case, was not the subject of those proceedings.

59. Grisvard and Kreitz concerned the 56. That case concerned the question of c a l c u l a t i o n of benefits p u r s u a n t to whether the legislation of the State of Article 68 of the Regulation. Here the employment in relation to old-age benefits C o u r t found: 32 'Under the terms of is o v e r r i d d e n by the a p p l i c a t i o n of Article 71(1)(a)(ii)... that article clearly Article 71(1)(a)(ii), which, however, relates requires the legislation of the Member State exclusively to unemployment benefits. The of residence alone to be applied and not, Court answered in the negative, on the therefore, the legislation of the State of basis that it is not possible to extend the employment, including any rules it lays special rules for frontier workers regarding unemployment benefits to the rules relating to benefits in other areas of social security, 30 — Furthermore, it is apparent from the Regulation itself that in that case to old-age benefits. In such it fundamentally allows for the possibility of exportation of benefits, resulting in the simultaneous application of cases, the national legislation of two two national legal orders. One example of this is how Member States therefore applies simulta- Article 69 normally applies. The legislation of the State which the worker leaves provides the legal basis for benefits, while the legislation of the Member State in which the worker seeks employment governs, to a certain extent, their determination. 28 — Cited in footnotes 10 and 11. 31 — All cited in footnote 5. 29 — Cited in footnote 6. 32 — Cited in footnote 5, paragraph 16.

61. Both parties recognise that the Regu- lation serves generally to facilitate the exercise by workers of the right to freedom of movement and cannot, therefore, be interpreted in such a way as to make the receipt of social security benefits more Interim conclusion difficult or to result even in the loss of entitlement which workers would have but for application of provisions of the Regu- lation. 3 5 The main issue in these proceed- ings does not, in my view, require any detailed discussion of the parties' sub- missions in this regard. The interpretation of Article 71(1)(a)(ii) with regard to the function of the legislation of the State of 60. Since neither the wording of the rel- residence cannot be resolved simply by evant provisions of the Regulation, nor the reference to the avoidance of prejudice or Commission's amendment proposals, nor the facilitation of freedom of movement. the case-law of the Court to which refer- ence has been made provide sufficient c l a r i t y as t o t h e i n t e r p r e t a t i o n of Article 71(1)(a)(ii) with regard to the function of the legislation of the State of residence, both interpretation theories must 62. Article 71(1)(a)(ii) thus cannot gen- erally be seen simply as a provision of a 33 — Case 67/79 [1980] ECR 535. In its judgment, the Court social nature. Rather, the provision reflects determined that for wholly unemployed frontier workers the balancing by the Community legislature whose entitlement is ascertained by aggregating periods of insurance or of employment in accordance with Article 67 of the Regulation the assessment of benefits is to be based, in derogation from Article 68 of the Regulation, on the last salary paid in the State of employment. 35 — Petroni (cited in footnote 19) and Bastos Moriana (cited in 34 — Grisvard and Kreitz cited in footnote 5, paragraph 16. footnote 18).

67. It is obvious that the advantage of the 36 — Mouthaan (cited in footnote 6). change of law theory is clarity of legal 37 — Unlike the 'genuine' frontier workers in this case, wholly unemployed 'non-genuine' frontier workers have a right of election in this respect (Article 71(1)(b)(ii) of the Regu- lation and Miethe (cited in footnote 5)). 39 — Van Gestel (cited in footnote 7), paragraph 26: 'However, 38 — It is assumed that, as a rule, workers become frontier that is a consequence intended by the Community legis- workers when the overseas employment market generally lature which meant to ensure that workers were given the seems more attractive. best chance of finding new employment.'

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interpretation, which would benefit both not be justified in my view, if only because wholly unemployed frontier workers and of the balance of interests referred to. the institutions responsible for payment.

69. Thus, there appear to be no grounds clearly supporting the exportation theory advocated by the Netherlands Government. The change of law theory advocated by the Commission, on the other hand, has the benefits of simplicity and legal certainty.

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2. The applicability of Article 69 of the interests of employees, of employment Regulation to wholly unemployed frontier markets of the Member States affected workers and of the respective national institutions which provide unemployment benefits: 41 this balance of interests supports the appli- cation of Article 69 to wholly unemployed frontier workers.

72. If the legislation of the State of resi- dence as a matter of principle remains applicable to wholly unemployed frontier workers even during the search for work in another Member State, the question still 76. First, the exercise of rights under appears to remain as to whether Article 69 Article 69 serves to help wholly unem- of the Regulation should be interpreted as ployed frontier workers in their search for applying also to the search for work by work, because it opens up additional wholly unemployed frontier workers. employment o p p o r t u n i t i e s , namely in another Member State. At the same time, the application of Article 69 to wholly unemployed frontier workers also serves to balance the interests of the various national employment markets. It is true that this 73. In this regard, it must first be examined balance may mean the loss of the advantage whether Article 69 itself could contain ('first go') under Article 71(1)(a)(ii) for the possible indications of its inapplicability employment market of the State of resi- to wholly unemployed frontier workers. dence as against other Member States, but, However, neither the wording of the head- on the other hand, Article 69(1)(a) requires, ing of Section 2 of Chapter 6 nor the as a precondition for searching for work in wording of Article 69(1) itself is incon- another Member State, that efforts to sistent with the applicability of this article arrange employment should have been to wholly unemployed frontier workers. made for at least four weeks without success.

persons remain, however, in the State of legal basis for, and the means of determin- residence, benefits must continue to be ing, unemployment benefits for wholly provided by the relevant institutions of unemployed frontier workers. The legis- the State of residence on the basis of the lation of the State of residence is thus also general competence under applicable where wholly unemployed fron- Article 71(1)(a)(ii). This means that not tier workers are temporarily resident in applying Article 69 to wholly unemployed another Member State in order to seek frontier workers would hardly affect the work. allocation of the burden that is unfavour- able to the institutions in the State of residence. On the other hand, it is precisely within the spirit of Article 69 that the duration of receipt of benefits in the competent Member State is reduced overall by extending the options for seeking work in other Member States. 42

80. Article 69 applies to wholly unem- ployed frontier workers, and a Member 78. To summarise, therefore, it must be State must support the search for work in concluded that there appear to be no another Member State in accordance with grounds precluding the application of this provision if its preconditions are satis- Article 69 to wholly unemployed frontier fied. workers.

V — Summary

81. A Member State which refuses to pay 79. Overall, it may be concluded, there- unemployment benefits to wholly unem- f o r e , t h a t o n a p p l i c a t i o n of A r t i - ployed frontier workers who go to another cle 71(1)(a)(ii) of the Regulation there is a Member State, in compliance with the change of governing law and the legislation conditions of Article 69 of the Regulation, of the State of residence alone forms the in order to seek employment there, or whose institutions fail to take the measures necessary for the exercise of rights under 42 — It should also be noted that under Article 69(2) those affected lose their entire remaining entitlement to benefits Article 69 of the Regulation, is thus in if they do not make themselves available again to the breach of Article 71(1)(a)(ii) and Article 69 employment service of the State of residence within three months. of the Regulation.

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