OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 2 MAY 1974

My Lords,

In this case the Court is once again concerned with Regulations No 3 and No 4 of the Council, relating to the social security of migrant workers. Those Regulations, Your Lordships remember, were adopted on 25 September and 3 December 1958 respectively, pursuant to Article 51 of the EEC Treaty, and were in force from 1959 to 1972, when they were replaced by Regulations (EEC) No 1408/71 and No 574/72.

The case comes to the Court by way or a reference for a preliminary ruling by the Sozialgericht of Freiburg. It is about the method of computation of the old age pension to which the plaintiff, Herr Rudolf Niemann, is entitled in the Federal Republic. The Defendant is the Bundesversicherungsanstalt für Angestellte, which is the Federal social security institution concerned.

The facts are briefly these.

The plaintiff was born in May 1905 and is a German national, resident in the Federal Republic. He worked all his life in Germany except for two periods, totalling 111/2 years (138 months) when he was employed in France as a ‘frontier worker’. Those periods were from July 1947 to December 1948 and from January 1950 to December 1959. During those periods he was compulsorily insured in France but, in order to render himself entitled to as much pension as possible, he continued paying contributions, voluntarily, in Germany. From information supplied to him, he understood that, by making these voluntary contributions, he would acquire the same rights as if he had remained wholly insured in Germany during the periods in question. It is not suggested that that information, so far as German law is concerned, was incorrect.

Shortly before attaining the age of 65, the plaintiff applied to the defendant, as he was entitled to do, for a computation of his pension on the basis of his rights in France and in Germany respectively.

My Lords, I leave aside for the moment the question of his rights in France. I will revert to it. What is important for present purposes in the question of his rights in Germany.

It is, as I understand, common ground between the parties that, under German law alone — that is applying that law without regard to Regulations No 3 and No 4 — the plaintiff was entitled to an old age pension of 1142·77 DM a month, computed on the footing that he had completed 437 months of reckonable employment, including therein the 138 months when he was employed in France but keeping up his social security insurance in Germany by means of voluntary contributions.

Nonetheless, the Defendant awarded him a pension of only 1001·11 DM a month.

In order to understand how this came about it is necessary to analyse the provisions of Regulations No 3 and No 4 on which the Defendant relied, and still relies.

Your Lordships remember that Article 51 of the Treaty provided that the Council should ‘adopt such measures in the field of social security as are necessary to provide freedom of movement for workers’ and that ‘to this end’ it should ‘make arrangements to secure for migrant workers and their dependants:

(a) aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries;

(b) payment of benefits to persons resident in the territories of Member States.’

Provision for such aggregation was made, in the case of old age pensions, by Article 27 of Regulation No 3, paragraph (1), of which (the only one relevant here) read, in the authentic French text, as follows. (I read the French, because, as Your Lordships know, there is no authentic English text of Regulation No 3).

‘En vue de l'acquisition, du maintien ou du recouvrement du droit aux prestations, lorsqu'un assuré a été soumis successivement ou alternativement à la legislation de deux ou plusieurs États membres, les periodes d'assurance et les periodes assimilées accomplies en vertu de la legislation de chacun des États membres sont totalisées pour autant qu'elles ne se superposent pas.’ (OJ No 30, 16 December 1958).

Consequently, Article 28 (1) of Regulation No 3 provided for what has come to be known as ‘apportionment’. Under this a person entitled to the benefit of the process of aggregation is to receive from the relevant social security institution of any Member State a proportion of the pension to which he would be entitled in that State if he had completed all his qualifying periods of employment in that State. The proportion corresponds to the fraction of which the numerator is the periods of qualifying employment completed in that State and the denominator is the periods of qualifying employment completed in all Member States.

Of central importance in the present case is paragraph (3) of Article 28 and in particular the first sentence of that paragraph. This was in the following terms:

‘Si le montant de la prestation à laquelle l'intéressé peut pretendre sans application des dispositions de l'article 27, pour les seules periodes d'assurance et periodes assimilées accomplies en vertu de la legislation d'un État membre, est supérieur au total des prestations resultant de l'applications des paragraphes precedents du present article, il a droit, de la part de l'institution de cet État, à un complement égal à la différence.’

Of less importance, but also relied upon by the Defendant, are paragraphs (1) (b) and (5) of Article 13 of Regulation No 4. These were, so far as relevant, in the following terms. (The reference therein to the ‘règlement’ is, I should mention, by virtue of a definition contained in Article 1 of Regulation No 4, a reference to Regulation No 3):

‘1. La totalisation des périodes d'assurance et périodes assimilées visée aux articles … 27 … du règlement s'effectue conformement aux règies suivantes:

a) …

(b) lorsqu'une période d'assurance accomplie au titre d'une assurance obligatoire en vertu de la legislation d'un État membre coincide avec une période d'assurance accomplie au titre d'une assurance volontaire ou facultative continuée en vertu de la legislation d'un autre État membre, seule la premiere est prise en compte.

…

5. Si, en vertu de l'alinéa (b) du paragraphe (1) du present article, des périodes d'assurance accomplies au titre d'une assurance volontaire ou facultative continuée conformement à la legislation d'un État membre en matière d'assurance invalidité-vieillesse-décès (pensions) ne sont pas prises en compte, les cotisations afférentes à ces périodes sont considérées comme destinées à majorer les prestations dues en vertu de ladite legislation. Si cette legislation prévoit une assurance complémentaire, lesdites cotisations sont prises en compte pour le calcul de prestations dues au titre d'une telle assurance.’

What the defendant did, in computing the Plaintiff's German pension, was to aggregrate, in purported pursuance of Article 27 (1), his qualifying periods of employment in Germany and in France, leaving, out of account, in purported pursuance of Article 13 (1) (b), his voluntary contributions in Germany; then, by the process of apportionment, to award him a fraction of the pension to which he would otherwise have been entitled in Germany; to add to this, in purported pursuance of Article 13 (5), a supplement designed to reflect his voluntary contributions; and, finally, having found that the resultant total of his French and German pensions amounted to less than he would have been entitled to in Germany alone had the provisions of Regulations No 3 and No 4 not been applied, to add, in purported pursuance of Article 28 (3), an amount equal to the difference. The net effect was to reduce the defendant's liability to the plaintiff by the amount of his French pension.

I think, my Lords, that it is crucial at this stage to recall how this Court, in a long line of decisions, has interpreted Article 51 of the Treaty and, in the light of that, Articles 27 and 28 of Regulation No 3.

That line of authority begins with Case 100/63 Van der Veen v Bestuur der Sociale Verzekeringsbank (Rec. 1964 p. 1108, particularly at pp. 1123-1124). It includes Case 4/66 Hagenbeek v Raad van Arbeid, Arnhem (Rec. 1966 p. 618, particularly at p. 625), Case 1/67 Ciechelski v Caisse Régionale de Sécurité Sociale du Centre d'Orléans (Rec. 1967 p. 235), Case 2/67 De Moor v Caisse de Pension des Employés Privés (Ibid. p. 255), Case 9/67 Colditz v Caisse d'Assurance Vieillesse des Travailleurs Salaries de Paris (Ibid, p. 298), Case 11/67 Office National des Pensions pour Ouvriers v Couture (Ibid. p. 487), Case 12/67 Guissart v Etat Beige (Ibid. p. 551), Cases 26, 27 & 28/71 Gross v Caisse Régionale d'Assurance Vieillesse des Travailleurs Salaries de Strasbourg, Keller v Same, Höhn v Same (Rec. 1971 p. 871) and ends, at present, with Case 140/73 Direction Régionale de la Sécurité Sociale de la Region Parisienne v Mancuso (not yet reported).

As I understand those authorities, they establish the following principles:

1. Article 51 has as its purpose to eliminate deterrents to the free movement of workers within the Community; its rationale is that there would be such a deterrent if a person who worked successively or alternately in different Member States were thereby to be deprived of social security benefits that he would have secured had he always worked in the same Member State; hence the concept of “aggregation” of qualifying periods which is enshrined in Article 51 and was picked up by Article 27 of Regulation No 3.

2. The process of “apportionment” prescribed by Article 28 of that Regulation was but consequential machinery designed to work out the rights in a particular Member State of a worker who, without aggregation, would have had no rights, or would have had lesser rights, in that Member State; the processes of “aggregation” and of “apportionment” are thus inseparable: there is no occasion for apportionment unless there is occasion for aggregation.

3. There is no occasion for aggregation, and therefore no occasion for apportionment, in the case of a worker who, by reason of his qualifying periods of worker or of insurance in a particular Member State, is entitled to full benefit under the law of that State without recourse to aggregation; and this is so even if recourse must be had to aggregation in order to qualify him for benefit in another Member State. (The latter proposition, which was already foreshadowed by earlier authorities, was put beyond doubt by the decision in the Mancuso case).

4. It is open to a Member State to enact specific provisions designed to prevent the application of the foregoing principles from resulting in undue duplication of benefits, particularly if, under its own legislation, a worker may be credited with notional qualifying periods which in fact coincide with periods worked in another Member State (see in particular as to this the Guissart case) but, in general, the circumstances that the application of those principles may lead to a duplication of benefits is no reason for not applying them: that circumstance is merely a result of the fact that Regulations No 3 and No 4 did not attempt to establish a Community social security scheme but only to coordinate, without harmonizing them, divergent national systems.

My Lords, there can be no doubt that, if those principles are to be applied in this case. the Plaintiff, being entitled under German law, without recourse to aggregation, to the full pension I have mentioned, cannot be made to suffer a reduction in that pension by the application of any provision of Community law. It could not be suggested that the adoption of this view would result, in his case, in an undue duplication of benefits, for there can be nothing “undue” in a . duplication of benefits arising from the fact that a worker continued to contribute voluntarily in one country while being compulsorily insured in another.

Nor can the matter be affected by the Plaintiff's position in France, as to which there is some uncertainty. He himself claims that, in France too, he was entitled to a pension without recourse to aggregation and he produces a letter dated 12 April 1971 from the Caisse Régionale to which he was affiliated when working in France which seems W substantiate that claim. On the other hand there are indications in the papers that he may be entitled, by virtue of aggregation, to a higher French pension than he would have received on the basis of French law alone. This would be consistent with the application to the facts of his case of the relevant French law as expounded by Mr Advocate-General Dutheillet de Lamothe in his Opinion in the Gross, Keller and Höhn cases (Rec. 1971 at p. 881) together with the principle established by the decisions of the Court in the first and third of those cases. But, be that as it may, it is to my mind, for the reasons I have already indicated, immaterial to the ascertainment of the pension to which he is entitled from the Defendant.

The real and only difficulty is caused by Article 28 (3) of Regulation No 3, the first (and governing) sentence of which I have read. This unquestionably suggests that, in a case like the present, the processes of aggregation and apportionment may be applicable and may result in a reduction of the pension to which the person concerned would otherwise be entitled. So it is not surprising to find the Sozialgericht of Freiburg asking this Court whether that provision is compatible with Article 51 of the Treaty and not surprising either to find the Commission submitting, in closely reasoned and very persuasive Observations, that the answer to the question is “No”.

My Lords, I have read and re-read the Observations of the defendant without being able to discern in them any convincing argument to the contrary. As I understand it, what the defendant really says, on this crucial point, is that the relevant decisions of the Court are wrong. In so saying, it relies in particular on the fact that those decisions have been criticized by some writers. So they have been. But there are three reasons why I decline to invite Your Lordship to depart from them.

The first is that the field of social security law, because it involves the rights of humble people, is one where it is especially desirable that the law should be as certain as possible. For the Court to produce inconsistent decisions would conduce to uncertainty.

Secondly, it would, to my mind, be particularly inappropriate for Your Lordships to depart from those decisions to the detriment of the Plaintiff in the present case, who, essentially, is claiming that for which he has paid.

Thirdly I think that much of the criticism that has been levelled against the Court's decisions is based on a misconception. That misconception consists in regarding Regulations No 3 and No 4 as designed to harmonize the social security systems of Member States. In fact, as the Court has more than once pointed out, those Regulations leave the distinct national systems unaffected, except in so far as they may confer on a migrant worker a right that he would not otherwise have had to benefit under this or that national system. It is objected that this “negative” interpretation may result in a migrant worker receiving more in total than he would have received had he worked all his life in one Member State. That is so. But, on the other hand, if only because the levels of benefits are not the same in all Member States, he may receive less, whatever interpretation is given to the Regulations. That being so there is in my opinion no warrant for holding that the Regulations may be interpreted as authorizing a reduction in the benefits to which he would otherwise be entitled under a particular national system. Such anomalies as exist in this field exist, not because of the interpretation of the Regulations adopted by the Court, but because of the divergencies between the national systems.

My Lords, this is not the first time that a social security institution of a Member State has submitted to the Court that its decisions on this matter were wrong. In the Gross, Keller and Höhn cases a similar submission was made by the Caisse d'Assurance Vieillesse of Strasbourg. Mr Advocate-General Dutheillet de Lamothe expressed himself in his Opinion (Rec. 1971 at p. 880) as being tempted to dismiss the submission without doing more than quoting that familiar French saying: “Le curé perd son temps à dire deux fois la messe pour les sourds”. He resisted that temptation as I have done. But I do not think that it would be right for me to take up more of ‘Your Lordships’ time on the question.

The conclusion seems to me inevitable that Article 28 (3) must be held to have been incompatible with Article 51 of the Treaty, as the latter has (in my respectful opinion rightly) been interpreted by the Court.

The Sozialgericht of Freiburg also raises the question of the validity of paragraphs (1) (b) and (5) of Article 13 of Regulation No 4.

My Lords, I think that the short answer, and here again I agree with the Commission, is that that question does not arise in the present case. Regulation No 4 was an implementing regulation and therefore, by their very nature, its provisions could have effect only in a case where those of the regulation that it was designed to implement — namely Regulation No 3 — themselves applied. For the reasons I have given, I do not think that the Plaintiff's pension rights, at all events in Germany, were affected by Regulation No 3. It follows, in my opinion, that they could not be affected by Regulation No 4 either. Indeed this is very clear if one looks at the actual language of Article 13; for it prescribes detailed rules for carrying out the process of aggregation.

I am therefore of the opinion that the question referred to the Court by the Socialgericht of Freiburg should be answered as follows:

1. The provisions of Article 28 (3) of Regulation No 3 of the Council of the European Economic Community were incompatible with Article 51 of the Treaty establishing that Community and accordingly void;