OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 8 MARCH 1977

My Lords

This case, like Case 87/76 Bozzone v Office de Sécurité Sociale d'Outre-Mer, on which Your Lordships are to hear the opinion of Mr Advocate-General Capotorti tomorrow, raises important questions of interpretation of Council Regulation No 3, concerning social security for migrant workers, and of Council Regulation No 1408/71, which replaced it, particularly as regards the territorial scope of those Regulations.

The case comes before the Court by way of a reference for a preliminary ruling by the Bundessozialgericht.

The appellant in the proceedings before that Court, Signor Fossi, is an Italian. He was born in Florence in 1908 and still resides there. He has spent all his working life in Italy except that, for the period from 1 June 1942 to 1 July 1943, he was employed as a mineworker in the area then known as the Sudetenland. By virtue of that employment he was, during that period, subject to the social security legislation of the German Reich, and so compulsorily insured with the ‘Sudetendeutsche Knappschaft’, the Sudeten German mineworkers' association. As I understand it, this was but one of many such local mineworkers' associations which existed all over the Reich, and which were referred to as ‘Reichsknappschaften’. They were governed by a statute called the ‘Reichsknappschaftsgesetz’ or ‘RKG’.

Since 1958, the appellant has been in receipt of an Italian invalidity pension. In January 1970, he claimed a pension from the Bundesknappschaft, which institution succeeded, by virtue of a statute of the Federal Republic of Germany dated 28 July 1969(BGBl. I 974), to the obligations of the mineworkers' associations formerly existing in the territory of the Federal Republic itself. The Bundesknappschaft is the respondent in the proceedings before the Bundessozialgericht.

It appears that since the inception of the Federal Republic, one of its preoccupations has been to provide for the payment of pensions to refugees in its territory from other parts of the former German Reich, particularly in cases where the social security institutions to which they had been affiliated outside the territory of the Federal Republic have ceased to exist or been unlikely, for other reasons, to make such payments. At the same time the Federal Republic has wished to make provision for those who left Germany during the Nazi epoch for political reasons and who were unlikely, because of their personal experiences, to wish to return to reside in the Federal Republic.

Thus 1953 saw the enactment by the Federal Republic of the ‘Fremdrenten- und Auslandsrentengesetz’(BGBl. 1953 I 848), the ‘FAG’. By virtue of Paragraph 1 (2) (1) of that statute, its provisions were applicable to anybody who had been compulsorily insured with an institution which no longer existed, had ceased its activities, or was situated outside the territory of the Federal Republic. By virtue of Paragraph 1 (1) receipt of benefit under the statute was conditional on the person concerned being permanently resident in the Federal Republic, and on his not being in receipt of benefit from the institution with which he had been insured. To the first of those conditions there were limited exceptions. Under Paragraph 8 (3), a non-German who, between 30 January 1933 and 8 May 1945, had had to leave Germany because of his political views, his beliefs, his race or for similar reasons, was, in certain circumstances, to be treated as if he were resident in the Federal Republic. Under Paragraph 9, the relevant insurance insitution in the Federal Republic was given a discretionary power to make payments to German citizens resident abroad even if they had not left Germany for such reasons.

A feature of the FAG was that, by virtue of Paragraph 4 (1), periods of insurance with one of the institutions defined in Paragraph 1 were to be treated as periods of insurance with an institution in the Federal Republic.

In 1960, the legislation was modified by the ‘Fremdrenten- und Auslandsrenten- Neuregelungsgesetz’ of 25 February 1960(BGBl. 1960 I 93). An important change that that statute made was to bring most of the provisions of the legislation in question within the framework of the general social security legislation of the Federal Republic.

One effect of this was to introduce a more generous method of calculation of pensions, but what is relevant in this case is that, so far as former mineworkers were concerned, the substance of Paragraph 4 (1) of the FAG was incorporated into Paragraph 50 (2) of the RKG, so that this now provides that the periods of insurance to be taken into account in computing a mineworker's pension are those for which mine-workers' contributions have been paid either under the law of the Federal Republic or under previous German legislation governing social security for mineworkers. A result of incorporating that provision into the RKG was that entitlement to benefit was no longer subject to the conditions as to residence laid down in the FAG, but that actual payment of any benefit to which a person was prima facie entitled became subject to the general rule laid down in Paragraph 105 of the RKG, under which such payment is ‘suspended’ in the case of a non-German who is not resident in the territory covered by the RKG. The Government of the Federal Republic stated in its observations that such persons are in fact informed of the benefits which would be paid to them if they were to reside in the Federal Republic.

Under Paragraph 107 of the RKG, payment of benefits is also ‘suspended’ in the case of German citizens who do not reside within the territory to which the RKG applies. The effect of this was mitigated, however, by the insertion of provisions corresponding to those of Paragraph 9 of the FAG into Paragraph 108 (c) of the RKG. It is common ground that the effect of that insertion is that the social security institution concerned has a discretionary power to pay benefit to a German citizen resident abroad. Such discretionary payments are declared by subparagraph (4) of Paragraph 108 (c) not to be social security benefits. Under subparagraph (5) non-Germans who had to leave the territory of the Reich between 30 January 1933 and 8 May 1945 for political reasons are to be treated in effect as if they were German citizens for the purposes of Paragraph 108 (c).

I return to the facts of the present case.

In response to the appellant's application for a pension, the respondent, on 31 August 1972, quantified the pension to which he would be entitled under the RKG if he were resident in the Federal Republic, but ‘suspended’ payment of it on the ground that his case fell within Paragraph 105. That decision was upheld by the Sozialgericht of Dortmund and, on appeal, by the Landessozialgericht of North-Rhine-Westphalia. It is from the Judgment of the latter Court that the appellant now appeals to the Bundessozialgericht.

It seems that, at all events before the Landessozialgericht, the argument centred on Article 10 of Regulation No 3 and the corresponding Article of Regulation No 1408/71.

Your Lordships are familiar with the fact that there is no authentic English text of Regulation No 3 (JO 30 of 16. 12. 1958). The French text of Article 10 (1) of that Regulation provides as follows:

‘Les pensions ou rentes … acquises en vertu des législations de l'un ou de plusieurs des Etats membres ne peuvent subir aucune réduction, ni modification, ni suspension, ni suppression, ni confiscation du fait que le bénéficiaire réside sur le territoire d'un Etat membre autre que celui ou se trouve l'institution debitrice.’

Article 10 (1) of Regulation No 1408/71 is to the same effect.

Annex G I A 2 to Regulation No 3, as amended by Council Regulation No 130/63/EEC of 18 December 1963, and Annex V C 1 (b) to Regulation No 1408/71, as its text results from the Act of Accession, expressly exclude, however, from the scope of Article 10 of Regulation No 3 and from that of Article 10 of Regulation No 1408/71, respectively, the German legislation here in question in so far as it provides that insurance periods completed outside the territory of the Federal Republic do not give rise to payment of benefits so long as those entitled to them reside outside that territory. It was mainly on that ground that the Landessozialgericht rejected the appellant's claim.

One might have thought that that would be the end of the case. But the Bundessozialgericht has doubts about that, not because of anything to do with Articles 10 of Regulation No 3 or of Regulation No 1408/71 respectively, but because of the terms of Article 8 of Regulation No 3 and of Article 3 (1) of Regulation No 1408/71. Article 8 of Regulation No 3 reads:

‘Les personnes qui résident sur le territoire de l'un des Etats membres et auxquelles les dispositions du présent règlement sont applicables, sont soumises aux obligations et sont admises au bénéfice de la législation de sécurité sociale de tout autre Etat membre dans les mêmes conditions que les ressortissants de celui-ci.’

Article 3 (1) of Regulation No 1408/71 is to the same effect.

What troubles the Bundessozialgericht, in view of those provisions, is not the suspension of the appellant's pension under Paragraph 105 of the RKG, for, if he were German, it would be similarly suspended under Paragraph 107, but the circumstance that, if the appellant were German, the respondent would have power to pay him a pension under Paragraph 108 (c) whereas, because he is Italian, it has, on the face of the RKG, no such power in his case.

Hence the terms of the question referred by the Bundessozialgericht to this Court:

‘Is an Italian living in Italy who at no time has lived or worked in the territory of the Federal Republic of Germany or of West Berlin, to be treated, by virtue of Article 8 of Regulation No 3 and Article 3 (1) of Regulation No 1408/71 of the European Economic Community, on the same footing as a German national when applying Paragraph 108 c of the Reichsknappschaftsgesetz, so far as concerns insurance periods which were completed before 1945 with the Reichsknappschaft under the law of the Reich outside the territory of the Federal Republic of Germany or West Berlin?’

Before this Court two main points were argued.

The first was whether a person in the position of the appellant was within the scope of Regulation No 3 or of Regulation No 1408/71 at all, having regard to the fact that he had never worked anywhere else in Community territory than in Italy. The second was whether a discretionary payment of the kind at issue here was a ‘social security’ benefit within the meaning of those Regulations or was something to which they did not apply.

As regards the first point, one must start, I think, from this, that, as the Court has many times said, the Community Regulations on social security for workers have as ‘their basis, their framework and their bounds’ Articles 48 to 51 of the Treaty.

Paragraph 1 of Article 48 requires freedom of movement for workers to be secured ‘within the Community’. The abolition of discrimination based on nationality called for by Article 48 (2) is expressed to flow from ‘such freedom of movement’ and, in any event, is a particular application of the general principle laid down in Article 7 prohibiting discrimination on grounds of nationality ‘within the scope of application of this Treaty’. It follows, I think, that Article 51, requiring the adoption by the Council of ‘such measures in the field of social security as are necessary to provide freedom of movement for workers’, is limited to measures necessary to provide such freedom of movement within the Community.

That was clearly the view of Mr Advocate-General Mayras in Case 16/72 Ortskrankenkasse Hamburg v Landesversicherungsanstalt Schleswig-Holstein (Rec. 1972 (2) at pp. 1124-1125). It was also the view put forward by the Commission in the present case, though, curiously, in the Bozzone case (on which, as I have mentioned, Your Lordships are to hear the Opinion of Mr Advocate-General Capotorti tomorrow) the Commission has argued for the opposite view.

Certain decisions of the Court were cited in argument on this aspect of the case.

The earliest of those decisions, which is particularly relied upon by the Commission in the Bozzone case, is that in Case 80/71 Merluzzi v CPAM Paris (Rec. 1972 (1) p. 175). That case was about a claim by an Italian citizen, resident in Morocco, who had worked in Morocco but not in Italy or in France, to be allowed to contribute to a French voluntary old-age insurance scheme. Under Annex G IV B to Regulation No 3 (added to that Regulation by Article 4 of Council Regulation No 419/68 of 5 April 1968) a French statute enacted in 1965 granting French nationals engaged in occupations abroad the option of joining a voluntary old-age insurance scheme was applied to nationals of the other Member States, subject to conditions, one of which was that the worker must have been either resident in France for at least ten years or subject to French legislation on a compulsory or optional continued basis during a like period. The Court in fact confined itself to declaring that Annex G IV B meant what it said, and expressed no opinion as to whether Morocco could for the purpose of that provision be assimilated to France: that was a matter for the French Courts to decide. Mr Advocate-General Roemer, for his part, had taken the more robust course of expressing the view that Morocco was assuredly not part of France, that it was therefore not part of the Community, and that accordingly to have worked there could not make a person a ‘migrant worker’ to which Regulation No 3 applied (see Rec. 1972 (1) at p. 184).

The second case, chronologically, is that to which I have already referred in which Mr Advocate-General Mayras also expressed an opinion coinciding with mine, namely Ortskrankenkasse Hamburg v Landesversicherungsanstalt Schleswig-Holstein (Rec. 1972, p. 1141). The Judgment in that case is relied upon by the Commission in the present case.

The case concerned a claim for reimbursement of expenses incurred as a result of hospital treatment required by the daughter of an Italian migrant worker in Germany when she contracted tuberculosis. The worker had at one stage been employed in Switzerland, and the Court was asked, inter alia, whether an insurance organization in one Member State (Germany) had to take into account periods of contribution which an insurance organization in another Member State (Italy) was bound to take into account under a Convention on social security concluded between the latter Member State and a third country (Switzerland). The Court, after referring to the provisions of Article 51, held, so far as material, that ‘for the purposes of acquiring a right to social security benefits, social security organizations in the Member States are not bound to take into account affiliation periods completed in third countries’.

Then came the three ‘Algerian cases’.

Of those, the first two, namely Case 110/73 Fiege v Caisse régionale d'assurance maladie de Strasbourg [1973] 2 ECR, 1001 and Case 6/75 Horst v Bundesknappschaft [1975] ECR 823 were decided on the simple ground that, by virtue of express provisions of the relevant Community legislation, i.e. Regulation No 3 and Council Regulation No 109/65/EEC, Algeria, although it in fact became independent in July 1962, was deemed for the purposes of Regulation No 3 to have been and remained part of France until 19 January 1965, and that rights acquired by a worker as the result of insurance periods completed in Algeria before that date were expressly preserved by Regulation No 109/65. The Judgments in those cases therefore afford assistance on the present point only in two respects. First they show that it is open to the Council to legislate so as to assimilate the territory of a third country to that of a Member State. Within what limits, if any, that power is confined, need not, I think, be considered here, because quite certainly the Council has never legislated so as to assimilate the Sudetenland to the territory of any Member State. Secondly, it is, or so it seems to me, implicit in those Judgments that the completion by a worker of insurance periods in Algeria after 19 January 1965 could not give rise to rights enforceable under Community law.

The Judgment of the Court in the third ‘Algerian case’, Case 112/75 Sécurité Sociale de Nancy v Hirardin [1976] ECR 553, is less clear, but it affords no ground for thinking that a person may acquire rights under the provisions of Community law relating to social security by completing insurance periods outside the territory (actual or deemed) of the Community. The facts there were that M. Hirardin, a Belgian national, had been employed in metropolitan France for over 20 years and in Algeria for some four years, from 1957 to 1961. He claimed that in the computation of his French old-age pension, account should be taken of the period for which he had worked in Algeria. His claim was resisted by the competent French social security institution on the ground that, under the relevant French legislation, that could be done only for French nationals or for foreigners who had rendered exceptional service to France. The Court, not unnaturally, held that such discrimination was incompatible with Community law. In so doing it pointed out that, by the combined effect of Regulation No 3 and Regulation No 109/65, Algeria formed part of the territory of France until 19 January 1965 and that the latter Regulation expressly safeguarded rights acquired in Algeria before that date.

In that state of the authorities, it seems to me that the law may be summarized as follows:

(1) Articles 48 to 51 of the Treaty are not concerned with the freedom of movement of workers except within the territory of the Community.

(2) It follows that the scope of Regulation No 3 and that of Regulation No 1408/71 are similarly limited. (Indeed the very title of the latter Regulation states it to be ‘on the application of social security schemes to employed persons and their families moving within the Community’).

(3) The Council nonetheless has power to legislate, in appropriate circumstances, so as to deem territories that are in fact outside the Community to be within it for the purposes of those Regulations.

(4) Where however the Council has not exercised that power, the completion of insurance periods outside the territory of the Community cannot give rise to rights under Regulation No 3 or under Regulation No 1408/71.

I would therefore answer the question referred to the Court by the Bundessozialgericht by declaring that, in the absence of specific legislation of the Council to the contrary, the completion of insurance periods outside the territory of the Community does not give rise to any rights under the Community Regulations relating to social security, whatever its effect may be under the law of a particular Member State.

On that view it is unnecessary to consider the more difficult question whether discretionary payments made under Paragraph 108 (c) of the RKG are ‘social security benefits’. As to that I agree of course with the Bundessozialgericht that the declaration in subparagraph (4) of Paragraph 108 (c) cannot be regarded as conclusive. The matter is really one of interpretation of Article 2 of Regulation No 3 and of Article 4 of Regulation No 1408/71, each of which defines the kinds of social security legislation to which the Regulation applies and excludes from its scope ‘social and medical assistance’ and ‘benefit schemes for victims of war or its consequences’. The Bundessozialgericht, as I understand the Order for Reference, has in mind three points.

The first is whether payments made under Paragraph 108 (c) can be regarded as social security benefits having regard to the fact that they are financed out of Government funds and not out of social security contributions. As to that the answer is I think clear: the source of finance is irrelevant — see Case 1/72 Frilli v Belgium (Rec. 1972 (1), p. 457).

The second is whether Paragraph 108 (c) should not be regarded as part of a benefit scheme for victims of war, having regard to its origin in the FAG. If that point stood alone I should be inclined to say that it raised a question of fact that it was for the Bundessozialgericht itself to determine, but that it would seem difficult to sustain in view of the incorporation of the other provisions of the FAG in the social security legislation of the Federal Republic. I do not think, however, that that point can be divorced from the third, which is whether payments under Paragraph 108 (c) can be regarded as social security benefits despite their discretionary nature. As to that the authorities in this Court show I think that, whilst the distinction between ‘social security benefits’ and other kinds of ‘assistance’ is not always easy to draw, and that indeed the two concepts can overlap, a characteristic of a social security benefit is that it is something to which the beneficiary has a definite legal right, whereas a benefit the grant of which depends on a consideration of each individual case on its merits partakes of the nature of ‘assistance’ — see in particular Case 24/74 CRAM de Paris v Biason [1974] 2 ECR 999 (particularly paragraph 10 of the Judgment) and Case 39/74 Costa v Belgium, ibid, p. 1251 (particularly paragraph 7 of the Judgment).