OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 25 SEPTEMBER 1975

My Lords,

Your Lordships will remember that, on 14 June 1971, the Council adopted Regulation (EEC) No 1408/71 ‘on the application of social security schemes to employed persons and their families moving within the Community’. That Regulation superseded the old Regulation No 3.

Essentially the question that Your Lordships have to decide in this case is whether a particular provision of Regulation No 1408/71, viz. Article 46 (3), is compatible with Article 51 of the EEC Treaty or is wholly or in part incompatible with it.

It is common ground, I think, that the reasons for the presence in the Regulation of Article 46 (3) are expressed in the seventh and eighth recitals to the Regulation, which read as follows:

‘Whereas the provisions for coordination adopted for the implementation of Article 51 of the Treaty must guarantee to workers who move within the Community their accrued rights and advantages whilst not giving rise to unjustified overlapping of benefits;

Whereas to this end, persons entitled to benefits for invalidity, old age and death (pensions) must be able to enjoy all the benefits which have accrued to them in the various Member States; whereas, however, in order to avoid unjustified overlapping of benefits, which could result in particular from the duplication of insurance periods and other periods treated as such, it is necessary to limit the benefits to the greatest amount which would have been due to a worker from one of these States if he had spent all his working life there.’ (OJ L 149 of 5. 7. 1971, p. 2)

The purpose of Article 46 (3), or at all events, one of its purposes, is to limit the total amount of old age pension receivable by a person who has been subject to the social security legislation of two or more Member States, to the amount he could have claimed if all the insurance periods completed by him under the legislations of those Member States had been completed in the Member State whose legislation would have afforded him the highest pension.

It is also clear from the Minutes of Meetings of the Council extracts from which are annexed to its Observations in this case that, in framing the provisions of Regulation No 1408/71, the Council had well in mind the interpretation that had been placed on Article 51 of the Treaty by the decisions of this Court and that it sought to give effect to that interpretation. So, in a sense, the question at issue is to what extent the Council succeeded in that endeavour.

Your Lordships will remember that, in my Opinion in Case 191/73 Niemann v Bundesversicherungsanstalt [1974] ECR 584 — 585, I collected the main relevant decisions of this Court and summarized what I conceived to be their effect. I do not propose to weary Your Lordships by repeating what I there said. Both the Italian Republic and the Council have, in their Observations in the present case, taken that summary, as supplemented by the Judgment of the Court in the Niemann case, correctly to represent the law. I. am content to do the same, not forgetting of course that those decisions, in so far as they turned on the interpretation of Regulation No 3 rather than on the interpretation of Article 51 are not directly in point. The provisions of Regulation No 1408/71 are in some respects different from those of Regulation No 3.

In what follows, I propose, for the sake of simplicity, to ignore the situation that may arise where a person is or has been subject to the social security legislation of a Member State where the right to an old age pension depends on his being subject to that legislation ‘when the risk materializes’ without regard to the length of insurance periods completed. The present case is not concerned with that situation.

On that basis, one can say that a person who has been subject to the social security legislation of two or more Member States may, as regards his rights to old age pension, find himself, in each of those States, in any one of four possible situations:

1. He may be entitled to a pension in that State without recourse to such aggregation as is envisaged by Article 51 and find that he can get no greater benefit by the application to his case of the processes of aggregation and apportionment; or

2. He may be entitled to a pension in that State without recourse to aggregation, but be entitled to a greater pension there through the processes of aggregation and apportionment; or

3. He may be entitled to a pension in that State only through the processes of aggregation and apportionment; or

4. He may be entitled to no pension in that State even if the processes of aggregation and apportionment are applied to his case.

One can, I think, for present purposes ignore the fourth possible situation.

The relevant provisions of Regulation No 1408/71, in particular Articles 45 and 46, take account of the first three.

Thus Article 45 (1) provides:

‘An institution of a Member State whose legislation makes the acquisition, retention or recovery of the right to benefits conditional upon the completion of insurance periods shall take into account, to the extent necessary, insurance periods completed under the legislation of any Member State as though they had been completed under the legislation which it administers.’ (OJ L 149 of 5. 7. 1971, p. 2)

It is, I believe, common ground that the words ‘to the extent necessary’ in that provision were inserted to exclude aggregation and apportionment in the case of a person finding himself in a particular Member State in the first of the four situations that I have described.

Article 46 deals with the computation of benefits.

Paragraph 1 of that Article relates to a case where a person is entitled to a pension in the Member State concerned without recourse to aggregation, i.e. to a person who finds himself in either the first or the second of the situations I have described. It provides in effect that such a person is prima facie entitled to whichever is the higher of the pension ascertained by reference to the legislation of that Member State alone (the first situation) or the pension ascertained by applying the processes of aggregation and apportionment (the second situation). I say ‘prima facie’, because of the existence of Article 46 (3), to which I shall come.

Paragraph 2 of Article 46 deals with the case of a person who can only obtain a pension in the Member State concerned through the processes of aggregation and apportionment, i.e. a person in the third situation I have described. It provides in effect that, in such a case, those processes shall be applied. In order to render what follows intelligible, I should mention that, in so doing, it provides, by paragraph 2 (a), for the calculation of the ‘amount of benefit that the person concerned could claim if all the insurance periods completed under the legislation of the Member States to which he has been subject had been completed in the State in question’ and that it refers to that amount as ‘the theoretical amount of benefit’.

Article 46 (3) is in these terms: —

‘The person concerned shall be entitled to the total sum of the benefits calculated in accordance with the provisions of paragraphs 1 and 2, within the limit of the highest theoretical amount of benefit calculated according to paragraph 2 (a).

Where the amount referred to in the preceding subparagraph is exceeded, any institution applying paragraph 1 shall adjust its benefit by an amount corresponding to the proportion which the amount of the benefit concerned bears to the total of the benefits determined in accordance with paragraph 1.’ (OJ L 149 of 5. 7.1971, p. 2)

On a straightforward reading of that provision, it is apparent that the second subparagraph may apply to a person who has completed insurance periods in two Member States either —

(i) where paragraph 1 of Article 46 is applicable to him in both those States or

(ii) where paragraph 1 is applicable to him in one of them and paragraph 2 in the other.

As was pointed out during the hearing, the subparagraph does not apply where paragraph 2 is applicable in both Member States, the reason being that, then, the total benefits to which the person concerned is entitled cannot, in any event, exceed ‘the highest theoretical amount of benefit’.

Again on a straightforward reading of the subparagraph, its effect, where paragraph 1 applies to the person concerned in both Member States, is to require each of them proportionately to reduce the amount of his pension if and in so far as the total of the two pensions to which he is prima facie entitled in those States exceeds ‘the highest theoretical amount of benefit’. Its effect, where paragraph 1 applies in one Member State and paragraph 2 in the other, is to require the Member State where paragraph 1 applies to reduce the amount of the pension to which he is prima facie entitled in that State to the extent, if any, that the total of the two pensions exceeds ‘the highest theoretical amount of benefit’; it does not require any reduction to be made in the amount of the pension to which he is entitled in the Member State where paragraph 2 applies.

It is in that straightforward manner that Article 46 (3) has been interpreted by the Belgian and Italian social security institutions concerned in the present case.

The facts of the case are these.

The late Raffaele Petroni, who was Italian, worked as a miner in Belgium from 1949 to 1951, from 1955 to 1959 and from 1964 to 1972. He had worked in Italy during 1937, from 1942 to 1945 and from 1960 to 1961. It seems that, for the rest of his working life, he was unemployed. He reached the age of retirement on 26 December 1972.

In respect of the periods for which he had worked in Belgium Signor Petroni became, by virtue of the relevant Belgian legislation taken by itself, entitled to an old age pension of Bfrs 34358 a year. If aggregation and apportionment had been applied to him in Belgium he would have been entitled there to a pension of only Bfrs 32450. He was thus, in Belgium, in the first of the four possible situations that I described a moment ago. In Italy he was in the third of those possible situations. The periods for which he had worked in Italy were insufficient by themselves to earn him an Italian pension. But by aggregation with them of the periods for which he had worked in Belgium, and apportionment, he became entitled in Italy to a pension of Lit 251420 a year. The aggregate of his Belgian pension of Bfrs 34358 and of that. Italian pension, however, exceeded his ‘highest theoretical amount of benefit’. In application, or purported application, of Article 46 (3), his Belgian pension was accordingly reduced, by the amount of the excess, to Bfrs 26427. There was no reduction of his Italian pension.

Signor Petroni died on 4 January 1974. On 1 March 1974 his widow, claiming in right of his estate, instituted proceedings before the Tribunal de travail of Brussels against the responsible Belgian social security institution, namely the Office national des pensions pour travailleurs salariés (the ‘ONPTS’). In those proceedings she claimed, so far as now relevant, that Article 46 (3) was incompatible with Article 51 of the EEC Treaty and that Signor Petroni was entitled to his Belgian pension of Bfrs 34358 without reduction.

Signora Petroni herself died on 4 September 1974. On 24 February 1975 the Tribunal de travail of Brussels made an order giving leave for the proceedings before it to be carried on against the ONPTS by the daughters of Signor and Signora Petroni and referring to this Court, under Article 177 of the EEC Treaty two questions.

The first question is whether Article 46 (3) is compatible with Article 51 of the Treaty. The second question arises only if the first is answered in the affirmative.

Your Lordships will remember that, at the hearing before this Court, Counsel for the ONPTS submitted that the Tribunal de travail had been wrong to allow the proceedings to be carried on by Signor and Signora Petroni's daughters and also, if I understood the submission correctly, that the proper defendant should have been the Italian social security institution concerned, because it was to that institution that, under Regulation (EEC) No 574/72 of the Council, the task fell of computing Signor Petroni's pensions, both in Belgium and in Italy: the ONPTS had done no more than to give effect to that institution's computations. My Lords, these are points of a kind that, in my opinion, it is not open to this Court to entertain on a reference such as this, and I say no more about them.

I go straight to the essential question.

To this the answer seems to me clear. There is a golden thread woven into the fabric of all the decisions of the Court to which I have referred including the decision in the Niemann case. It is the Principle that, whilst Article 51 of the Treaty empowers and indeed requires the Council ‘to adopt such measures in the field of social security as are necessary to provide freedom of movement for workers’, that Article does not empower the Council (so long at all events as it does not set up a Community social security scheme or, at least, secure the harmonization of the divergent national systems) to legislate for any reduction of the rights that any person has under the social security legislation of a Member State apart from Community law. Putting it shortly, Article 51 empowers and requires the Council to confer rights on migrant workers, but does not, so long as different national systems subsist, empower it to take away rights that those workers have under national laws.

The Council is of course entitled, in so far as it legislates to confer on migrant workers rights that they would not otherwise have had, to include in its legislation provisions to ensure that that legislation does not result in an undue duplication of benefits. In other words, Article 46 (3) is valid in so far as it limits rights conferred by Community law that would not have existed in its absence, but invalid in so far as it purports to reduce rights conferred by national laws which exist independently of Community law.

The upshot, in my opinion, is this:

1. In the first possible situation that I described above, i.e. the situation where a person is entitled to a pension under the legislation of a Member State taken alone and can derive no benefit in that State from the application to him of any provision of Community law (which is the situation in which Signor Petroni found himself in Belgium) Article 46 (3) can have no application;

2. in the second of those possible situations, i.e. the situation where a person is entitled to a pension under the legislation of a Member State taken alone but to an improved pension if the processes of aggregation and apportionment provided for by Community law are applied to his case, Article 46 (3) can be applied quoad the amount by which the improved pension exceeds the amount of the purely national pension; and

3. in the third of those situations, i.e. the situations in which a person is entitled to a pension in a Member State only thanks to the intervention of Community law (which was Signor Petroni's situation in Italy), it was open to the Council to provide that such pension should be reduced in so far as its payment would make that person's total pension rights exceed his highest ‘theretical amount of benefit’. This however (with all respect to an argument put forward by the Council in this Court to which I shall shortly advert) the Council did not, do.

In fairness to the ONPTS and to the Council, they did not take, in argument, a point which might have suggested itself to them, viz. the point that it could not matter to a pensioner whether a reduction of his total pension rights, designed to limit them to the amount of his highest ‘theoretical amount of benefit’, was effected by means of the reduction of his pension rights in one country rather than in another. In a Community that had a single currency, or in which all currencies stayed, like good snakes, in their tunnels, this argument might have had some pertinence. But of course, as things are, the acquisition by virtue of Community law of pension rights in one country is not necessarily compensation for the loss of initially equivalent rights in another.

The main argument put forward on behalf of the ONPTS and of the Council, in an endeavour to persuade the Court that Article 46 (3) was wholly valid, was to the effect that Article 46 taken as a whole created a new set of rights which superseded any rights conferred by the legislation of Member States and which it was therefore open to the Council to limit. In my opinion, my Lords that argument is fallacious. Article 46 does not, in truth, to the extent to which a person is entitled to a pension under national law taken alone, confer any new right upon him. To purport to confer a new right upon him and then to provide for the reduction of that right to something less than he has under national law is nothing else than to purport to legislate for the suppression pro tanto of his national right, which is just what Article 51 of the Treaty does not permit.

The Council put forward an alternative argument going, not to the validity, but to the interpretation of Article 46 (3). It said that, in circumstances such as those of the present case, where Article 46 (1) was applicable in one Member State and Article 46 (2) in the other, Article 46 (3) could not apply in the former because there was then no relevant ‘proportion’ such as is referred to in its second subparagraph. The Council went so far as to suggest that, in those circumstances, the reduction, if any, enjoined by Article 46 (3) should be applied to the pension to which the person concerned was entitled by virtue of Article 46 (2). In answer to a question that I put at the hearing, it was accepted on behalf of the Council that this meant, in terms of the present case, that Signor Petroni's Belgian pension should not have been reduced but that his Italian pension should have been.

In my opinion, my Lords, this argument should be rejected on the simple ground that the words of Article 46 (3) cannot be so twisted as to bear that meaning. Moreover, the argument affords no satisfactory solution to the problem posed by Article 46 (3) in the case of a person who is entitled to pensions under Article 46 (1) in two Member States and to a pension under Article 46 (2) in none.

In the result I am of the opinion that the first question referred to this Court by the Tribunal de travail of Brussels should be answered by a declaration that 46 (3) of Regulation No 1408/71 of the Council is void in so far as it provides for a reduction in the amount of old age pension to which a person is entitled in a Member State independently of Community law.

The second question asked by the Tribunal de travail of Brussels has two limbs. The first is whether there can, in any event, truly be duplication of benefits where, as here, the periods worked by a person in different Member States do not overlap. The second is related to the fact that Signor Petroni, when he worked in Belgium, was subject to the special social security legislation applicable to miners. But, if Your Lordships agree with me as to the answer to the first question, neither limb of the second question calls for an answer.