99/80 · GlobalLawDB

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In Case 99/80REFERENCE to the Court under Article 177 of the EEC Treaty by the National Insurance Commissioner, London, for a preliminary ruling in the proceedings pending before him betweenMaurice GalinskyandInsurance OfficerTHE COURTcomposed of: J. Mertens de Wilmars, President, P. Pescatore, Lord Mackenzie Stuart and T. Koopmans (Presidents of Chambers), A. O'Keeffe, G. Bosco, A. Touffait, O. Due and U. Everling, Judges,Advocate General: J.-P. WarnerRegistrar: A. Van Houttegives the following

Judgment

Facts

The facts of the case, the course of the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I —Facts and procedure

1.According to the reference from the National Insurance Commissioner, Mr Galinsky, the claimant in the main proceedings, is a British national born in England on 19 June 1905. He worked in Great Britain as a self-employed person until 1964, and was compulsorily insured as such under the British national insurance system since its inception in 1948. He moved to the Netherlands in 1964 where he took up employment and was compulsorily insured under the Netherlands scheme as an employed person. He has ever since been resident in the Netherlands with his wife and four children born on 17 May 1955, 15 July 1956, 28 June 1958 and 22 March 1961.In 1970 he was awarded a pension in the Netherlands under the Algemene Ouderdomswet [General Law on Old Age]. The pension was revised in 1975 in accordance with Annex V, Part H, paragraph 2 (f), of Regulation No 1408/71, but no supplement in respect of the children still belonging to the household was allowed. However, the claimant has been in receipt in the Netherlands of children's allowances, which constitute “benefits” within the meaning of Article 77 (1) of Regulation No 1408/71.

2.After his arrival in the Netherlands in 1964 Mr Galinsky continued to pay voluntary contributions to the British scheme as a non-employed person in order to improve his contribution record in relation to retirement pension. At the age of 65 he became entitled to a British pension at the full rate, but as he remained in regular employment he was not treated as having retired until in 1975, by virtue of Section 27 (5) of the Social Security Act 1975, which replaced Section 30 (4) of the National Insurance Act 1965, he was deemed to have retired at the age of 70.Shortly before he attained the age of 65 in 1970, that is to say before the accession of the United Kingdom to the Community, the applicant was informed by the Department of Health and Social Security that when the time came he might be entitled to an increase of pension for his wife and children. However, the Insurance Officer rejected the claim for an increase in respect of the children because those benefits were payable under the Netherlands legislation. His appeal to the local tribunal against the refusal was dismissed and the claimant thereupon appealed to the National Insurance Commissioner.

3.According to the reference from the National Insurance Commissioner, the Insurance Officer's decision was expressly based on Article 77 of Regulation No 1408/71. That article provides in particular:“Article 77(1) The term ‘benefits’, for the purposes of this article, shall mean family allowances for persons receiving pensions for old age, invalidity or an accident at work or occupational disease, and increases or supplements to such pensions in respect of the children of such pensioners, with the exception of supplements granted under insurance schemes for accidents at work and occupational diseases.(2)Benefits shall be granted in accordance with the following rules, irrespective of the Member State in whose territory the pensioner or the children are residing:(a) to a pensioner who draws a pension under the legislation of one Member State only, in accordance with the legislation of the Member State responsible for the pension;(b) to a pensioner who draws pensions under the legislation of more than one Member State:(i) in accordance with the legislation of whichever of these States he resides in provided that, taking into account where appropriate the provisions of Article 79 (1) (a), a right to one of the benefits referred to in paragraph (1) is acquired under the legislation of that State;(ii) in other cases ...”.The Commissioner's reference states that both the children's allowances paid in the Netherlands and the increases of retirement pension provided for by the British legislation are benefits within the meaning of Article 77 (1) of Regulation No 1408/71.Moreover, it was an underlying basis of the Insurance Officer's decision that such an increase of the British pension in respect of children was not regarded as payable apart from Regulation No 1408/71 under the domestic law of the United Kingdom alone.In this regard the relevant British legislation requires that the dependent children in respect of whom the increase is claimed should be resident in Great Britain. However, on this issue it is necessary to take account of Article 35 of the reciprocal Convention between the United Kingdom and the Netherlands, which was incorporated into British law by the National Insurance and Industrial Injuries (Netherlands) Order 1955 [SI 1955 No 874]. That article provides that:“In all cases where, under the legislation of one contracting party, any cash benefit would have been paid in respect of a dependant if the dependant had been in the territory of that party, such benefit shall be paid if the dependant is in the territory of the other party.”None the less, the Insurance Officer and the local tribunal dismissed the claim for an increase on the ground that at the time when the claimant attained pensionable age Article 35 of the Convention had ceased to be applicable by virtue of the fact that with effect from 1 April 1973 Regulation No 1408/71 had come into operation in relation to the United Kingdom. In fact, Article 6 of that regulation provides :“... this regulation shall, as regards persons and matters which it covers, replace the provisions of any social security convention binding either:(a) two or more Member States exclusively; or(b) ...”.The position was not altered by the fact that the provisions of Regulation No 1408/71 are less advantageous to the claimant than those of the Convention. In this regard the Insurance Officer referred to the judgment of 7 June 1973 (Walder v Sociale Verzekeringsbank [1973] ECR 599), where the Court held that:“Regulations Nos 3 and 1408/71 of the Council replace, in respect of persons covered by them, the social security conventions concluded between Member States which are not mentioned in Articles 6 and 7 or in Annexes D and II to the said regulations respectively, even if the application of the conventions is more advantageous to persons entitled to benefits than the said regulations.”The claimant contests that conclusion on the ground that he is not a person covered by Regulation No 1408/71 or that this is not a matter which it covers. In fact, it was as a self-employed person that the claimant was compulsorily insured in the United Kingdom. For that reason it is said that he is not in relation to United Kingdom benefit a “worker” within the meaning of the regulation.Moreover, the validity of Regulation No 1408/71 is in question in so far as the effect of Article 6 is to deprive a worker of benefits derived from British national law, of which the reciprocity convention forms part.

4.In the reference of 14 March 1980 the National Insurance Commissioner requested the Court to rule on the following questions :I — Whether in relation to social security benefits provided under the legislation of a Member State a person who has been compulsorily insured as a self-employed person (but not as an employed person) in that Member State should be regarded as a worker within the meaning of Article 1 (a) of Regulation (EEC) No 1408/71 of the Council in that Member State by reason either:(a) that he is a worker under the legislation of some other Member State; or(b) (if the answer to (a) is negative) that he has been so insured as self-employed under a social security scheme for one or more of the contingencies covered by a social security scheme for employed, self-employed and non-employed persons.II — (If the answer to either Question I (a) or I (b) is affirmative) whether a person who has been insured as a self-employed person (but not as an employed person) in a Member State should in relation to a pension payable under the legislation of that Member State be regarded as a pensioner for purposes of Article 77 of the said regulation by reason that he is or has been a worker for purposes of that regulation and/or by reason of the fact that his pension (though unaffected in the competent State by the provisions of that regulation) has been subject to revision in another Member State under that regulation.III — (If the answers to Question I (a) or (b) and to Question II are affirmative) whether Article 6 of the said regulation is valid in so far as it operates to deprive a person of any right to benefit derived from a provision of national law of a Member State giving effect to a reciprocal convention with one or more other Member States.”In stating the reasons on which the reference was based the National Insurance Commissioner explains that Question I (a) concerns the issue of whether the claimant must be treated as a “worker” within the meaning of Regulation No 1408/71 in every Member State once he has acquired that status in one of the Member States, in this case the Netherlands.He considers that alternatively it might be argued that since he is insured as a self-employed person under the British scheme in the same way as employed persons and against the same contingencies the applicant must be treated as a worker within the meaning of Article 1 (a) (i) of Regulation No 1408/71. It is for that reason that Question I (b) returns to a question raised, but not ruled on, by the Court in Case 17/76 Brack v Insurance Officer [1976] ECR 1429.As regards the second question, the Commissioner explains that there is a different but similar argument to the effect that even if the claimant is a person covered by Regulation No 1408/71 for the purpose of Article 6 of that regulation this case does not concern a matter to which the regulation relates because the claimant is not a pensioner within the meaning of Article 77.The Commissioner observes that he would probably have determined these questions himself if the issue of the validity of Article 6 of Regulation No 1408/71 had not been raised. He states that he would have treated Article 6 as wholly valid if it were not for the fact that its validity was questioned by Mr Advocate General Warner in his opinion in Case 32/77 Giuliani v Landesversicherungsanstalt Schwaben [1977] ECR 1857, in which, whilst acknowledging the conflict with the Court's decision in Case 82/72 (Walder, cited above), he stated that the reasoning followed by the Court in the judgment of 21 October 1975 in Case 24/75 Petroni [1975] ECR 1149, namely that Article 51 of the Treaty does not empower the Council to legislate to the detriment of workers who exercise their right to freedom of movement, must be applied in that case irrespective of “whether the advantage of which the legislation of the Council purports to deprive a worker is derived from national law alone or from national law incorporating an international convention” [1977] ECR at p. 1669).The Commissioner adds that the question whether Article 6 is effective to take away rights conferred by a reciprocal convention has arisen on a number of occasions, in which it has proved possible to determine the matter without its being necessary to raise the issue of the validity of Article 6. However, in the present case its validity would seem to be crucial for the whole case. The Commissioner states that in addition it is desirable that uncertainty created by the doubts expressed by the Advocate General should be ended.

5.The order making the reference was lodged at the Court Registry on 17 March 1980.In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were submitted by the defendant in the main proceedings, represented for that purpose by G. S. Kerrigan, Senior Legal Assistant at the Solicitor's Office, Department of Health and Social Security, by the Government of the United Kingdom, represented by its Agent, G. Dagtoglou of the Treasury Solicitor's Department, by the Council of the European Communities, represented by J. Carbery, Adviser in the Legal Department of its General Secretariat, acting as Agent, and by the Commission of the European Communities, represented by J. Forman, a member of its Legal Department, acting as Agent.On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preliminary inquiry.

II —Summary of the written observations submitted to the Court

Observations of the defendant in the main proceedings

With regard to Question I (a), the Insurance Officer points out that according to the case-law of the Court on Regulation No 3 the concept of “wage-earner” has a Community meaning, referring to all those who as such, and under whatever description, are covered by the different national systems of social security (judgment of 19 March 1964 in Case 75/63 Hoekstra (née Unger) [1964] ECR 177). Consequently, a person who is a “worker” in one Member State must be a worker throughout the entire Community.Having regard to the object of the regulation, namely to encourage free movement of workers between Member States by preserving for a worker rights acquired in the field of social security, the Insurance Officer considers that a person who has been successively subject to the legislation of two Member States, albeit as a self-employed person in one and an employed person in another, is on becoming subject to the legislation of the latter, a worker within the scope of the regulation.According to the judgments of the Court of 27 October 1971 in Case 23/71 Janssen [1971] ECR 859 and 29 September 1976 in Case 17/76 Brack [1976] ECR 1429, a person who “has been” subject to the legislation of a Member State as an employed person is entitled to rely on the regulation to aggregate periods previously completed as an employed person with periods later completed as a self-employed person for the purposes of the acquisition of a right to benefit. In the same way a person who “is” at the material time subject to the legislation of a Member State as an employed person should be able to take advantage of provisions of the regulation to aggregate periods of insurance previously completed as a self-employed person. The fact that the claimant did not in this case derive any additional benefit in the United Kingdom from the aggregation of insurance periods completed in another Member State is, it is submitted, irrelevant to the question whether he is a “worker” for the purposes of the application of the regulation in the United Kingdom.Moreover, if the Netherlands authorities were right to regard Mr Galinsky as a “worker” within the meaning of Regulation No 1408/71, it is submitted that it would be absurd to have a situation where one Member State applies the regulation to his case and another Member State applies only its national legislation.The Insurance Officer therefore submits that the answer to Question I (a) should be in the affirmative. Accordingly, a reply to Question I (b) is unnecessary.With regard to the second question, the Insurance Officer observes that if Mr Galinsky must be regarded as a “worker” in the United Kingdom within the meaning of Regulation No 1408/71, he is a pensioner to whom Article 77 (2) (b) applies.As a worker who has been subject to the legislation of two Member States, Mr Galinsky's entitlement to a pension in the United Kingdom falls to be determined in accordance with the provisions of Chapter 3 of Title III of the regulation and therefore necessarily comes within the scope of Article 77. That is so, it is submitted, even though the amount of his United Kingdom pension is based wholly on insurance periods completed in the United Kingdom as a self-employed person.Referring to the opinion of Mr Advocate General Warner in Case 19/76 Triches [1976] ECR 1243 on the interpretation of Article 42 (2) of Regulation No 3, the predecessor to Article 77 (2) of Regulation No 1408/71, the Insurance Officer stresses that the essential object of Article 77 is to simplify the system for the payment of family benefits and to make it workable in practice, by selecting the legislation of a particular Member State as being applicable in the case of any particular pensioner. In this regard it does not matter whether the pension was acquired by virtue of the regulation or independently under the domestic legislation of a Member State. That is evident, it is submitted, from the provisions of Article 77 (2) (b) (i) under which the State of residence is responsible for the payment of family benefits even though no pension may be payable by that Member State.Therefore the Insurance Officer submits that the reply to the second question should be that a worker who has acquired a pension under the legislation of a Member State solely by virtue of insurance periods completed as a self-employed person in that Member State is in relation to that pension to be regarded as a pensioner for the purposes of Article 77 of Regulation No 1408/71.With regard to the third question, the Insurance Officer observes first that it would not arise if the effect of Article 77 (2) (b) (i) is to determine once and for all which is the competent State for payment of family benefits without recourse to the legislation of another Member State which might enable another benefit to be paid.In support of this argument he points out that the object of Article 77 (2) is to prevent the unjustified overlapping of two or more family benefits and that the provision therefore constitutes an exception to the principle that Community rules may not be applied in such a way as to deprive a migrant worker or his dependants of the benefit of a part of the legislation of a Member State, an exception similar to that recognized by the Court in the judgment of 6 March 1979 in Case 100/78 Rossi [1979] ECR 831 with regard to Article 79 (3) of Regulation No 1408/71. By providing which is the competent State, Article 77 compensates the worker for any rights which he might otherwise have had under another Member State's legislation, particularly as the competent State must provide the family benefits even where there is no entitlement under that State's domestic legislation to family benefits (cf. judgment of 10 December 1969 in Case 34/69 Duffy [1969] ECR 597, paragraphs 7 to 9). Moreover, regard should not be had to the narrow issue of family benefits but to the position of pensioners generally in determining whether the regulation is more favourable than national legislation. If this wider approach is adopted it would be perfectly in order for the regulation to provide for the payment of one set of family benefits as a counter-balance for enabling workers to acquire pensions through the process of aggregation in one or more Member States.Finally, the Insurance Officer submits that such arguments may not be justified if the benefit in question is an increase of a pension acquired under the national legislation of a Member State alone, since according to the principle established in the judgment of 21 October 1975 in Case 24/75 Petroni [1975] ECR 1149 those rights cannot be reduced or suspended. Viewing the case from this angle he submits in the alternative that Article 6 of Regulation No 1408/71 supersedes the provisions of a reciprocal convention even where the effect would be to diminish rights or to deprive a person of a right to benefit which he would otherwise have under that convention.

Observations of the Government of the United Kingdom

In order to illustrate the scope of the problems raised in this case the Government of the United Kingdom starts with a summary of the classes of person to which the British social security system applies. From that account it may be seen that this system, which began by covering only narrowly defined classes of workers, was later extended to other classes of workers without drawing a distinction between wage-earning workers and those of other classes, but rather in such a way as to cater progressively for the needs of the general working population. Thus, as regards title to retirement pension and supplements to such pension in respect of pensioners' children, the system does not draw any distinction between the different categories, but provides assimilation which protects contributors against any loss of rights which might result from a change of status as respects work.The Government of the United Kingdom then draws attention to the wide interpretation which the Court gave to the term “wage-earning workers or persons treated as such”, which determined the scope of Regulation No 3, in particular in the judgment of 19 March 1964 in Case 75/63 Hoekstra (née Unger) [1964] ECR 177 and, with regard to the treatment of self-employed persons as wage-earners, in the judgment of 19 December 1968 in Case 19/68 De Cicco [1968] ECR 473 and the judgment of 27 October 1971 in Case 23/71 Janssen [1971] ECR 859.Although Article 1 of Regulation No 1408/71 provided an entirely new definition of the expression “worker”, it appears from the judgment of the Court of 29 September 1976 in Case 17/76 Brack [1976] ECR 1429 that the principles established by the case-law concerning the former Regulation No 3 remain valid. The effect of that case-law is that a person who has, however many years earlier, been insured as an employed person under a social security scheme such as to affect his rights to benefit in the country concerned is to be treated as a worker whenever he moves to another Member State. Consequently, it must be assumed that all insurance as a self-employed person under a scheme which extends to the self-employed cover comparable to that provided for the employed falls within the scope of Article 51 and regulations made under it.The British Government considers that on this view a Member State in which a person is an employed person and which is obliged to take into account insurance periods completed in another Member State as a self-employed person ought to be able to take into account a pension awarded by virtue of such insurance by the other Member State. Moreover, if such a pension is within the scope of Article 51 of the Treaty and Regulation No 1408/71 for that purpose, then it should be treated as within the scope of those provisions for all purposes.For these reasons the Government of the United Kingdom considers that an affirmative answer should be given to Question I (a). It points out that neither the regulations nor the case-law of the Court contemplate the possibility of a person's being regarded at one and the same time as a worker within the meaning of Regulation No 1408/71 in one Member State and not as a worker in another.With regard to Question I (b) the Government of the United Kingdom suggests that the reply should be to the effect that if a social security scheme under which employed persons are insured against one or more contingencies provides comparable cover to self-employed persons compulsorily insured under it, such self-employed persons should be regarded as “workers” for the purposes of Article 1 (a) of Regulation No 1408/71. It states that the establishment of such a principle would greatly facilitate the administration of the social security schemes of Member States in relation to persons moving within the Community, in particular with regard to their eligibility for medical benefits under the scheme of another Member State in accordance with Article 22 (1) (a) of Regulation No 1408/71.As regards the second question, the United Kingdom Government observes that it amounts to asking whether Article 77 of Regulation No 1408/71 applies to a person in the position of the claimant having regard to the fact that his pension under the United Kingdom scheme was earned by contributions as a self-employed person. In its submission there is no reason why Article 77 should not apply if it is accepted that Question I (a) and Question I (b) are both answered in the affirmative.With regard to the validity of Article 6 of Regulation No 1408/71, which is at issue in the third question, the United Kingdom Government draws attention in the first place to the uncertainty of the case-law, of which mention was made in the reference. Then it deals with the concept of “compensating advantage”, which had made it possible to admit an exception to the rule laid down in the Petroni judgment in the case of overlapping of family benefits (cf. judgment of 6 March 1979 in Case 100/78 Rossi [1979] ECR 838). Such an approach is also evident in the judgment of 22 May 1980 (Case 143/79 Walsh [1980] ECR), where it was said that the deprivation of rights to benefit under the legislation of a Member State “would arise only where the other provisions of Regulation No 1408/71 would have led ... to clearly unjustified overlapping of benefits” (paragraph 19).In this case the government considers that the correct application of the Petroni doctrine discloses no factor of such a kind as to affect the validity of Article 6 even if that doctrine must also be applied to advantages derived from an international convention incorporated into national law. In this regard, it refers to the benefits, essential for the attainment of the aims of the Treaty, which derive from the replacement of the confusing and haphazard network of reciprocal conventions between the Member States by a consistent and properly constructed system of uniform Community law. In addition it points out the administrative difficulties caused by having to distinguish between cases in which a reciprocal convention is applicable and is also more favourable to the person concerned and cases where no such convention applies or is less favourable.

Observations of the Council

The Council confines its observations to the third question. It points out that in proceedings under Article 177 the question of the validity of Article 6 of Regulation No 1408/71 should be examined in abstracto irrespective of whether the reciprocal convention between the United Kingdom and the Netherlands would have been more favourable to the claimant.After giving a brief account of the history and rationale of the Community regulations in the field of social security, the Council puts forward three arguments in support of the validity of Article 6.In the first place, to maintain rules derived from bilateral conventions would have been in breach of the system of the Treaty, for on the one hand it presupposes the unique character of Community law throughout the whole territory of the Community and on the other hand it excludes the idea of reciprocity as being the basis for granting rights.Secondly, to maintain the rules adopted by those bilateral conventions would have been contrary to the very principle of Article 51 of the Treaty. Indeed, the existence of preferential treatment between some Member States and of differences between the various conventions would have been contrary to the principle of the free movement of workers.Thirdly, the Council possessed a wide discretion in assessing to what extent the continuance of provisions of bilateral conventions would be compatible with the objectives of Article 51 of the Treaty and with the principles of the regulation. While defining certain exceptions to the principle of Article 6, it was in any case entitled to limit the scope of those exceptions, as it did in Annex II to the regulation.Further, the Council observes that according to the judgment of the Court of 7 June 1973 in Case 82/72 Walder [1973] ECR 599 the application of the regulation seems to take precedence over bilateral conventions even where those conventions are more advantageous to a particular worker.Whilst acknowledging that the Court has held that the regulation must not have the effect of depriving a worker of benefits to which he would be entitled under national legislation alone, the Council maintains that different considerations apply to bilateral conventions. In this context it refers in particular to the equal and more comprehensive protection afforded by the regulation in comparison with the piecemeal arrangements made between some Member States on a bilateral basis.

Observations of the Commission

According to the Commission, the reply to Question I (a) must be negative. Indeed, an affirmative reply would go beyond the nature of Regulation No 1408/71, which is an exercise in coordination, and would lead to a harmonization of the legislation of the Member States. The Commission believes that it is for the legislation of the Member State under which periods of insurance have been completed to decide whether a particular person is insurable in the scheme operated under its legislation and may be entitled to the benefits provided. In support of its propositon it refers to similar solutions adopted by the Court in the judgment of 23 April 1980 in Case 110/79 Coonan ([1980] ECR 1445) with regard to the laying-down of the conditions for affiliation to a social security scheme, and in the judgment of 6 June 1972 in Case 2/72 Murru [1972] ECR 333 with regard to the expression “assimilated periods” used in Regulation No 3.With regard to Question I (b) the Commission observes first that the United Kingdom scheme of social security falls within Article 1 (a) (ii) of the regulation. The scope of that provision as regards United Kingdom legislation is defined by paragraph 1 of Annex V, Part I (United Kingdom) and was the subject of detailed consideration in the judgment of 29 September 1976 in Case 17/76 Brack [1976] ECR 1429. It goes on to point out that this case is different from the case cited inasmuch as Mr Galinsky was self-employed or non-employed throughout his period of insurance in Britain. Besides, the Court did not adopt the argument of the British Government in the Brack case to the effect that Regulation No 1408/71 includes all those to whom the legislation of a Member State has extended the provisions of a general scheme of social security, to the extent to which they are considered to be subject to the same risks and contingencies as the generality of workers and are accorded the same protection. Consequently the Commission submits that Question I (b) should be answered in the negative.In view of the negative replies to both branches of Question I the Commission considers that with regard to the second question it is sufficient to observe that Article 77 of Regulation No 1408/71 applies to the claimant in respect of the pension paid in the Netherlands. On the other hand, as regards the pension paid in the United Kingdom he is not a person covered by the regulation.With regard to the third question the Commission largely follows the line of argument developed by the Council and suggests that the validity of Article 6 of Regulation No 1408/71 should be upheld even if such a decision would have the effect of depriving a worker of an advantage which he might otherwise obtain under a bilateral convention incorporated into national legislation. In particular, in accordance with the judgment of 13 July 1976 in Case 19/76 Triches [1976] ECR 1243, it stresses “the freedom conferred on the Council by Article 51 to choose any means which, viewed objectively, are justified” (paragraph 18 of the judgment) as well as the general objective advantages, resulting from Article 6, which act as a counterbalance to the specific limitations which that provision might impose (cf. judgment of 10 December 1969 in Case 34/69 Duffy [1969] ECR 597).Moreover, having regard to the negative replies to Question I, the Commission expresses the opinion that it is for the United Kingdom authorities to consider whether the convention between the United Kingdom and the Netherlands remains applicable in so far as it extends to categories of persons other than employed persons, for example the self-employed. According to the judgment of the Court of 7 May 1969 in Case 28/68 Torrekens [1969] ECR 125, Article 177 of the Treaty does not permit the Court to interpret such a bilateral convention itself.

III —Oral procedure

At the hearing on 17 December 1980 the defendant in the main action, represented by G. S. Kerrigan, Senior Legal Assistant in the Solicitor's Office, Department of Health and Social Security, the Government of the United Kingdom, represented for the purposes of the oral procedure by H. Knorpel, Barrister, of the Inner Temple, Legal Adviser, Department of Health and Social Security, the Council of the European Communities, represented by John Carbery, Adviser in the Legal Department of its General Secretariat, acting as Agent, and the Commission of the European Communities, represented by J. Forman, a member of its Legal Department, acting as Agent, presented oral argument.The Advocate General delivered his opinion at the sitting on 11 February 1981.

Decision

1By an order of 14 March 1980 which was received at the Court on 17 March 1980 the National Insurance Commissioner referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions as to the interpretation of Articles 1 and 77 of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (Official Journal, English Special Edition 1971 (II), p. 416) on the one hand and, on the other, as to the validity of Article 6 thereof.

2The case before the National Insurance Commissioner concerns the refusal of the competent British social security institution to grant to a recipient of an old-age pension, the appellant in the main proceedings, increases in that pension in respect of his dependent children.

3The old-age pension in question is at the full rate and the recipient is entitled to it under British legislation alone. The recipient worked in the United Kingdom as a self-employed person until 1964 and was covered by compulsory insurance from 1948 to 1964 under the British national insurance scheme applicable to self-employed persons. After emigrating to the Netherlands in 1964 he continued to pay contributions to the British scheme on a voluntary basis as a non-employed person.

4From 1964 he was compulsorily insured as an employed person under the Netherlands social security scheme. When he attained the age of 65 he qualified for an old-age pension in the Netherlands under the General Law on Old Age (Algemene Ouderdomswet) together with the family allowances granted to the recipients of that pension. After the accession of the United Kingdom to the Communities the pension in question was supplemented under Regulation No 1408/71 since the competent Netherlands institution took into consideration notional insurance periods which, under Netherlands legislation alone, affect only Netherlands nationals residing in the Netherlands.

5In support of his claim before the British authorities Mr Galinsky argued that the applicable British legislation makes provision for increases in the retirement pension in respect of dependent children; in that respect it lays down the condition that the children in question should be within United Kingdom territory; however, that condition of residence was abolished by a reciprocal convention on social security concluded between the United Kingdom and the Kingdom of the Netherlands.

6The competent British institution and the local tribunal, however, considered that the appellant was covered by Regulation No 1408/71 and that Article 77 thereof meant that in this case the family allowances provided for the recipient of an old-age pension and the increases to that pension in respect of the recipient's dependent children were governed by Netherlands legislation. According to Article 6 of the regulation, the provisions of Article 77 replace the provisions of the bilateral convention relied upon by Mr Galinsky.

7In order to resolve this problem the National Insurance Commissioner submitted the following preliminary questions :I — Whether in relation to social security benefits provided under the legislation of a Member State a person who has been compulsorily insured as a self-employed person (but not as an employed person) in that Member State should be regarded as a worker within the meaning in Article 1 (a) of Regulation (EEC) No 1408/71 of the Council in that Member State by reason either:(a) that he is a worker under the legislation of some other Member State; or(b) (if the answer to (a) is negative) that he has been so insured as self-employed under a social security scheme for one or more of the contingencies covered by a social security scheme for employed, self-employed and non-employed persons.II — (If the answer to either Question I (a) or I (b) is affirmative) whether a person who has been insured as a self-employed person (but not as an employed person) in a Member State should in relation to a pension payable under the legislation of that Member State be regarded as a pensioner for purposes of Article 77 of the said regulation by reason that he is or has been a worker for purposes of that regulation and/or by reason of the fact that his pension (though unaffected in the competent State by the provisions of that regulation) has been subject to revision in another Member State under that legislation.III — (If the answers to Question I (a) or (b) and to Question II are affirmative) whether Article 6 of the said regulation is valid in so far as it operates to deprive a person of any right to benefit derived from a provision of national law of a Member State giving effect to a reciprocal convention with one or more other Member States.”

8The first questions concern the persons covered by Regulation No 1408/71 whilst the second question relates to the matters covered.

9With regard to the persons covered by the regulation it must be observed that a person who has been compulsorily insured as a self-employed worker in one Member State but who is compulsorily insured as an employed person in another Member State must be considered as a worker within the meaning of Articles 1 (a) and 2 (1) of Regulation No 1408/71 throughout the Community. Nevertheless that circumstance does not necessarily imply that the benefits granted in the first Member State come within the matters covered by that regulation and that the competent institutions of that Member State are thereby required to apply Article 77.

10The benefits referred to by Article 77 are in particular family allowances for persons receiving pensions for old age and increases or supplements to such pensions in respect of the children of such pensioners.

11In those circumstances the second question raises the problem whether the expression “pensions for old age” employed in Article 77 covers an old-age benefit granted in a Member State to a person who was insured there under a social security scheme applicable to self-employed persons under the legislation of that Member State alone and without reference to the provisions of Regulation No 1408/71.

12It should be observed first of all that Regulation No 1408/71 applies, according to the recitals in the preamble thereto, to nationals of Member States insured under social security schemes for employed persons. It follows in addition from the provisions of that regulation as a whole, and in particular from the General Provisions, that the rules on the coordination of national legislative systems relating to social security for which it makes provision do not cover benefits granted under compulsory insurance schemes applicable to self-employed persons as such.

13The appellant in the main proceedings claimed that the Court, in its previous case-law, has accepted that insurance periods completed under the social security scheme applicable to employed persons in one Member State may be taken into consideration for the acquisition of a right to benefits to be granted to self-employed persons in another Member State. In fact the Court has held, in particular in its judgment of 27 October 1971 (Case 23/71 Janssen [1971] ECR 859), that the object of Articles 48 to 51 would not be achieved but would be disregarded if the insurance periods completed by a worker in accordance with the legislation of one Member State were, as far as he was concerned, to be lost if, in taking advantage of the freedom of movement secured for him, he changed his place of work and thus became subject to the social security system of another Member State.

14Such a situation does not, however, correspond to the position in this case. This case concerns a worker who has exercised his right to freedom of movement and has acquired, as an employed person in the Member State in which he has established himself and his family, an old-age pension together with family allowances under the legislation of that Member State, and then claims in another Member State the rights which he had previously acquired as a compulsorily insured self-employed person.

15In such a case the rights claimed as family allowances relate to old-age benefits which are available under a social security scheme applicable to self-employed persons and not to the employed persons referred to in Regulation No 1408/71, and which may be awarded on the basis of the legislation of the relevant Member State alone without the need to have recourse to the machinery provided for by that regulation. Accordingly the objectives of Articles 48 to 51 of the Treaty are in no way jeopardized when any rights to an increase in such benefits for dependent children are determined in accordance with the national law of the Member State in question and not in accordance with the provisions of Article 77 of the regulation.

16It follows that it is not appropriate in a case such as this to extend the concept of “pensions for old age” which appears in Article 77 in such a way that it includes pensions acquired on the basis of the legislation of one Member State alone, which is applicable to self-employed persons.

17The reply to the second question must accordingly be that since Article 77 of Regulation No 1408/71 governs family allowances for old-age pensioners and increases in or supplements to such pensions in respect of dependent children it must be interpreted to mean that the expression “pensions for old age” does not cover old-age benefits granted in a Member State to a person who was insured there under a social security scheme applicable to self-employed persons if such benefits are based on the legislation of that Member State alone without the application of the provisions of the said regulation.

18The third question, which calls in issue the validity of Article 6 of Regulation No 1408/71, was submitted only in case the Court should rule that Article 77 of the regulation must be applied to a situation like that in the present case. It is thus no longer necessary to reply to it.

Costs

19The costs incurred by the Government of the United Kingdom, by the Council of the European Communities and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable; as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,THE COURT,in answer to the questions referred to it by the National Insurance Commissioner by an order of 14 March 1980, hereby rules: Since Article 77 of Regulation No 1408/71 governs family allowances for old-age pensioners and increases in or supplements to such pensions in respect of dependent children it must be interpreted to mean that the expression “pensions for old age” does not cover old-age benefits granted in a Member State to a person who was insured there under a social security scheme applicable to self-employed persons if such benefits are based on the legislation of that Member State alone without the application of the provisions of the said regulation.

Delivered in open court in Luxembourg on 31 March 1981.