CELEX: 61988CJ0199
Social security
Invalidity benefits
Community rules on over-lappping benefits
Recovery of undue payments

Grounds
1 By judgment dated 30 June 1988, which was received at the Court on 21 July 1988, the tribunal du travail de Bruxelles referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Article 51 of the EEC Treaty, Article 46(3 ) of Council Regulation ( EEC ) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community ( as codified by Council Regulation ( EEC ) No 2001/83 of 2 June 1983, Official Journal L 230, p . 6 ) and Article 112 of Council Regulation ( EEC ) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation No 1408/71 ( as codified by Council Regulation No 2001/83 of 2 June 1983, Official Journal L 230, p . 86 ).
2 Those questions arose in the context of a dispute between the plaintiff in the main proceedings, Mr Giovanni Cabras, and the Institut national d' assurance maladie-invalidité ( hereinafter referred to as the "Institut national "), which is the Belgian institution having competence in matters concerning invalidity benefits .
3 It appears from the documents before the Court that Mr Cabras, an Italian national, worked as an employed person in Italy and Belgium . After becoming incapacitated for work, he was awarded an invalidity benefit in both States as from 1 October 1973 .
4 Unlike Belgian legislation ( known as "Type A legislation "), Italian legislation (" Type B legislation ") makes the amount of invalidity benefits dependent on the duration of insurance periods . In accordance with Article 40(1 ) of Regulation No 1408/71, Article 46 thereof applied by analogy to the award of benefits payable to Mr Cabras .
5 The Italian invalidity benefit was calculated in accordance with the system of aggregation and apportionment laid down by Article 46(2 ).
6 The Belgian invalidity benefit was determined by applying the provisions of Belgian legislation alone . On account of the rules against overlapping benefits contained in that legislation, the benefit paid to Mr Cabras by the competent Belgian institution was set at an amount equal to the full Belgian benefit, less the amount of the apportioned Italian benefit . Owing to the rule against overlapping benefits laid down in Article 46(3 ) of Regulation No 1408/71, the application of the Community rules would not have been more favourable to Mr Cabras .
7 Both benefits subsequently underwent separate adjustments pursuant to the pension indexation rules specific to the two States concerned . In particular, the Italian benefit underwent a number of very large increases, although over a period of years . By virtue of Article 51(1 ) of Regulation No 1408/71, the adjustments did not give rise to any recalculation of benefits under Article 46 .
8 On 23 March and 17 June 1982 two Belgian Royal Decrees, amending as from 1 July 1982 the conditions for defining dependants for the purpose of determining the amount of invalidity benefits, were introduced . Under the new rules, Mr Cabras was in future no longer to be considered a person with dependants ( avec charges de famille ) but a person with no dependants . The consequence was a reduction of the invalidity benefit payable to him under Belgian legislation alone .
9 In addition, by virtue of Article 51(2 ) of Regulation No 1408/71, the benefits were recalculated in accordance with the provisions of Article 46 .
10 In carrying out that calculation, the Institut national took the view that, for the purpose of applying Article 46(3 ), the benefit arising under Belgian law alone had to be reduced by the amount of the apportioned Italian benefit as it stood on the date of the new determination of benefit entitlements - that is to say, taking account of the large increases mentioned above . The Institut national concluded that, as a result, the application of Community law was not more favourable to Mr Cabras than the application of Belgian law, including its provisions against overlapping benefits . As it had done in its original award of 1 October 1973, it therefore calculated the new benefit due to Mr Cabras in accordance with national legislation alone, deducting from the full Belgian benefit the increased amount of the Italian benefit .
11 However, owing to the time required for the recalculation of the benefits, Mr Cabras continued to receive after 1 July 1982 benefits of the same amount as those paid previously . The decision of the Institut national fixing the new ( lower ) amount of benefit was notified to Mr Cabras on 23 February 1984 . He was then requested to repay the excess benefits received by him between 1 July 1982 and 30 June 1983, the date on which he could once again be regarded as having "charges de famille" for the purposes of the Belgian provisions . A new decision fixing his entitlement as at 30 June 1983 was notified to him on 19 October 1984 .
12 In proceedings before the tribunal du travail de Bruxelles Mr Cabras challenged the decisions by which his invalidity benefit had been recalculated and reduced . He also contested their retroactive effect and the repayment demand .
13 Mr Cabras argued before the tribunal du travail that the reduction of the benefit payable under the legislation of one State by the full amount of the benefit granted under the legislation of another State was not in accordance with Article 51 of the Treaty, since the migrant worker derived no advantage from the period of insurance completed in the territory of that other State . He further maintained that Article 112 of Regulation No 574/72 precluded a migrant worker from having to bear the burden of an overpayment emerging upon a recalculation of benefits made on the basis of Article 51(2 ) of Regulation No 1408/71 when only one institution recalculated the benefit, the benefit granted by another institution affected that benefit and that other institution held no arrears to make available to the first institution .
14 In those circumstances, the tribunal du travail de Bruxelles decided to stay the proceedings until the Court of Justice had given a preliminary ruling on the following questions :
"( 1 ) Does the theoretical amount referred to in Article 46(3 ) of Regulation ( EEC ) No 1408/71 constitute an absolute limit which may not be exceeded even where as a result of the application of Type A legislation the theoretical pension corresponds to the national pension?
If so, is it compatible with Article 51 of the Treaty that the claim conferred in one State by Community law should be fully absorbed by the claim conferred in another State by national law alone?
If not, how is the corrective factor to be determined where only one of the benefits paid is determined in accordance with the provisions of Article 46(1 )?
( 2 ) Where the institution of a Member State reviews the situation of a migrant worker on the basis of Article 51(2 ) of Regulation ( EEC ) No 1408/71 and the recalculation leads to a reduction of the worker' s entitlement after taking into account the benefit paid by another State where the recalculation does not apply, is the first institution entitled to recover retroactively the overpayment which has arisen as a result of the application of Community law ( Articles 46 and 51 of Regulation No 1408/71 ) or must it waive recovery pursuant to Article 112 of Regulation No 574/71 when the institution of the other State paying the benefit which is not subject to review holds no arrears due which might be retained for the benefit of the first institution?"
15 Reference is made to the Report for the Hearing for a fuller account of the facts of the case before the national court, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
First question
16 In the first part of this question, the tribunal du travail asks whether the provisions of Article 46(3 ) of Regulation No 1408/71 must be interpreted as meaning that the highest theoretical amount of benefits, calculated according to subparagraph 2(a ), constitutes the limit on the benefits which a migrant worker may claim under Community legislation, even where that theoretical amount is equal to the full benefit payable under the legislation of one Member State alone .
17 As the Court reiterated in its judgment of 17 December 1987 in Case 323/86 Collini v ONPTS (( 1987 )) ECR 5489, it is apparent from Article 40(1 ) of Regulation No 1408/71 that the provisions of Article 46, including the anti-overlapping rule contained in paragraph 3 thereof, are applicable by analogy to invalidity benefits where a worker has been subject to the legislation of two or more Member States and the legislation of at least one of those States makes the amount of the benefits dependent on the length of the insurance periods .
18 In the same judgment, the Court also ruled that the anti-overlapping rule in Article 46(3 ) applied in all cases in which the total sum of the benefits calculated in accordance with Article 46(1 ) and ( 2 ) exceeded the limit of the highest theoretical amount of benefit, calculated in accordance with subparagraph 2(a ).
19 When, by virtue of national legislation of Type A, the amount of a benefit is unrelated to the length of the insurance periods completed and the worker satisfies the conditions laid down by that legislation for entitlement to the benefit, the theoretical amount of that benefit is equal to the amount referred to in the first subparagraph of Article 46(1 ), namely the amount of the full benefit to which that worker would be entitled under national legislation if he were not in receipt of a benefit under the legislation of another Member State .
20 It follows that, in such a case, provided at least that the theoretical amount of benefit calculated by the institution of another Member State is not higher, the anti-overlapping rule laid down by Article 46(3 ) limits the cumulative amount of the benefits, calculated according to paragraphs 1 and 2, to the amount of the full benefit which the worker may enjoy under the national Type A legislation alone .
21 The answer to be given to the first part of the first preliminary question must therefore be in the affirmative .
22 Consequently, it is necessary to give an answer to the second part of that question, which seeks to establish whether, as so interpreted, the provisions of Article 46(3 ) are compatible with Article 51 of the Treaty .
23 The provisions of Article 51 of the Treaty are intended to eliminate the disadvantages which migrant workers might suffer as a result of having acquired their social security rights under different national legislative systems .
24 That intended purpose would not be achieved if, as a result of the exercise of their right of freedom of movement, migrant workers were to lose social security advantages which they are guaranteed at all events by the legislation of one Member State alone or find themselves in a position less favourable than if they had worked all the time in one Member State .
25 That is why, as the case-law makes clear, the rules laid down in Article 46 of Regulation No 1408/71 can be applied to a migrant worker only if they do not have the effect of depriving the person concerned of part of the benefit accruing solely under the legislation of one Member State or of preventing him from receiving at least the most favourable full benefit payable under that legislation alone .
26 The Community provisions cannot therefore be applied unless their application proves to be at least as favourable to the migrant worker as the full application of the national legislation alone, including its anti-overlapping rules .
27 In that event, however, the Community rules must be applied in their entirety . The restrictions which those rules may impose on migrant workers must be accepted, because they are then the quid pro quo for the social security advantages which those workers derive from the Community rules and which they cannot obtain without them .
28 In the light of the foregoing considerations, the rule against overlapping benefits which Article 46(3 ) of Regulation No 1408/71 lays down cannot be regarded as incompatible with Article 51 of the Treaty on the ground that, in circumstances such as those forming the subject-matter of the case before the national court, it has the effect of limiting the aggregated amount of the benefits paid to the migrant worker to an amount equal to that of the full benefit payable by the institution of the State applying Type A legislation and consequently of preventing that upper limit from varying according to the insurance periods completed under Type B legislation .
29 In the first place, that rule may be applied only if it does not have the effect of curtailing the rights derived by the migrant worker from the application of the provisions of Type A legislation alone; in the second place, it does not place the worker in a position less favourable than if he had completed all his insurance periods in the State applying legislation of that type .
30 That conclusion cannot be altered by the fact set out by the plaintiff in the main proceedings in his observations to the Court, namely that the migrant worker nevertheless finds himself in a less favourable position than the national worker because he has to bear the disadvantages of the splitting of benefits and the legal uncertainty entailed by the possibility that they may be adjusted .
31 It should be noted that those disadvantages, which are in any case limited as far as possible by certain provisions of Regulations Nos 1408/71 and 574/72, are inherent in the fact that Article 51 of the Treaty is not designed to organize a common social security system but merely to lay down rules for the coordination of the social security schemes of the Member States .
32 The answer to the first question referred to the Court must therefore be that the provisions of Article 46(3 ) of Council Regulation No 1408/71 must be interpreted as meaning that the highest theoretical amount of benefits, calculated according to Article 46(2)(a ), constitutes the limit on the benefits which a migrant worker may claim under Community legislation, even where that theoretical amount is equal to the full benefit payable under the legislation of one Member State alone, and that, as so interpreted, the provisions in question are not incompatible with Article 51 of the EEC Treaty, since Article 46 may be applied only if it allows a migrant worker to be granted a benefit at least as high as that payable under the legislation of one State alone .
Second question
33 By its second question the tribunal du travail asks whether, when a recalculation of benefits pursuant to Article 51(2 ) of Regulation No 1408/71 leads to a reduction of the benefit paid by the institution of one Member State, without any adjustment to the benefit paid by the institution of another Member State, and the second institution thus holds no pension arrears due to the recipient of the benefits, Article 112 of Regulation No 574/72 obliges the first institution to bear the expense of the benefits which it overpaid during the period needed for recalculating the benefits .
34 Article 112 of Regulation No 574/72 provides that : "When an institution has made payments which are not due, either directly or through another institution, and when their recovery has become impossible, the amounts in question shall remain finally chargeable to the first institution, save where the payment which was not due is the result of fraud ".
35 It should be recalled at the outset that, according to Article 51(2 ) of Regulation No 1408/71, "if the method of determining or the rules for calculating benefits should be altered, a recalculation shall be carried out in accordance with the provisions of Article 46 ".
36 For that purpose, account must be taken inter alia of the adjustments made to the benefits since their original calculation which were due to general changes in the economic and social situation and which, pursuant to Article 51(1 ), did not entail a new determination under Article 46 of the benefit entitlements of the person concerned vis-à-vis each of the Member States .
37 The new calculation takes the form of a revised award of the benefits payable by the institutions of each of the Member States to whose legislation the migrant worker has been subject .
38 It may be that the benefit to be paid by one of the institutions must be reduced, whilst the benefit payable by the other institution remains unchanged . In that event, if the worker concerned continues, during the period needed for recalculating the amount and making the revised award, to receive from the first institution the amount of benefit from the previous award, then that institution will have paid sums in excess whilst the other institution will not hold arrears payable to the worker .
39 In their observations to the Court, the plaintiff in the main proceedings and the Italian Government submit that, in such circumstances, the provisions of Article 111 of Regulation No 574/72 providing for the sums overpaid by an institution to be set against the pension arrears by the other institution cannot be applied . The recovery of those sums must therefore be regarded as having become impossible and they must remain chargeable to the first institution, pursuant to Article 112 of that regulation .
40 Such an interpretation of the relevant Community provisions cannot be accepted .
41 In the first place, the provisions of Article 111(1 ) themselves show that the lack or insufficiency of arrears of pension would not be sufficient in any case to warrant the view that recovery of the overpaid sums, in whole or in part, is impossible . The third sentence of Article 111 provides for the application, in such a case, of the provisions of paragraph 2, which authorize the deduction of those sums from any benefit paid by an institution of any other Member State .
42 In the second place, from its very wording it is clear that Article 111 does not compel the institution which has made overpayments to turn to other institutions for their recovery . That is merely an option, which it may choose not to exercise and which does not prohibit it from recovering the sums in question directly from the recipient .
43 It follows that the phrase "when ... recovery (( of payments which are not due )) has become impossible" in Article 112 of Regulation No 574/72 cannot be interpreted as being restricted to cases in which such payments cannot be deducted from arrears of pension or from any other benefit payable by an institution of another Member State .
44 The answer to be given to the second question submitted to the Court must therefore be that, when a recalculation of benefits pursuant to Article 51(2 ) of Regulation No 1408/71 leads to a reduction of the benefit paid by the institution of one Member State, without any adjustment to the benefit paid by the institution of another Member State, and the second institution thus holds no pension arrears due to the recipient of the benefits, Article 112 of Regulation No 574/72 does not oblige the first institution to bear the expense of the benefits which it overpaid during the period needed for recalculating the benefits .
Decision on costs
Costs
45 The costs incurred by the Government of the Italian Republic and 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 proceedings 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 ( Third Chamber ),
in answer to the questions referred to it by the tribunal du travail de Bruxelles, by judgment of 30 June 1988, hereby rules as follows :
( 1 ) The provisions of Article 46(3 ) of Council Regulation ( EEC ) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community must be interpreted as meaning that the highest theoretical amount of benefits, calculated according to Article 46(2)(a ), constitutes the limit on the benefits which a migrant worker may claim under Community legislation, even where that theoretical amount is equal to the full benefit payable under the legislation of one Member State alone . As so interpreted, the provisions in question are not incompatible with Article 51 of the EEC Treaty, since Article 46 may be applied only if it allows a migrant worker to be granted a benefit at least as high as that payable under the legislation of one State alone .
( 2 ) When a recalculation of benefits pursuant to Article 51(2 ) of Council Regulation ( EEC ) No 1408/71 leads to a reduction of the benefit paid by the institution of one Member State, without any adjustment to the benefit paid by the institution of another Member State, and the second institution thus holds no pension arrears due to the recipient of the benefits, Article 112 of Council Regulation ( EEC ) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation No 1408/71 does not oblige the first institution to bear the expense of the benefits which it overpaid during the period needed for recalculating the benefits .