1 This request for a preliminary ruling concerns the interpretation of Article 68(4) of the Euro-Mediterranean Agreement establishing an Association between the European Community and its Member States, of the one part, and the People’s Democratic Republic of Algeria, of the other part (OJ 2005 L 265, p. 2; ‘the EC-Algeria Association Agreement’).
2 The request has been made in proceedings between X and the Raad van bestuur van de Sociale verzekeringsbank (Board of Management of the Social Insurance Bank, Netherlands) (‘the SVB’) concerning the reduction in the amount of the survivors’ benefit paid to X on account of her residence in Algeria.
3 The EC-Algeria Association Agreement was signed in Valencia (Spain) on 22 April 2002 and approved on behalf of the European Community by Council Decision 2005/690/EC of 18 July 2005 (OJ 2005 L 265, p. 1). In accordance with Article 110(1) thereof, it entered into force on 1 September 2005, as notified in the Official Journal of the European Union (OJ 2005 L 292, p. 10). Furthermore, under Article 110(2) thereof, upon its entry into force, it replaced the Cooperation Agreement between the European Economic Community and the People’s Democratic Republic of Algeria, signed in Algiers (Algeria) on 26 April 1976 and approved on behalf of the Community by Council Regulation (EEC) No 2210/78 of 26 September 1978 (OJ 1978 L 263, p. 1; ‘the EEC-Algeria Cooperation Agreement’).
4 Article 1 of the EC-Algeria Association Agreement provides: ‘1. An Association is hereby established between the Community and its Member States of the one part and Algeria of the other part. 2. The aims of this Agreement are to: - provide an appropriate framework for political dialogue between the Parties, allowing the development of close relations and cooperation in all areas they consider relevant to such dialogue, - promote trade and the expansion of harmonious economic and social relations between the Parties and establish the conditions for the gradual liberalisation of trade in goods, services and capital, - facilitate human exchanges, particularly in the context of administrative procedures, - encourage integration of the Maghreb countries by promoting trade and cooperation within the Maghreb group and between it and the Community and its Member States, - promote economic, social, cultural and financial cooperation.’
5 Article 68 of that agreement reads as follows: ‘1. Subject to the provisions of the following paragraphs, workers of Algerian nationality and any members of their families living with them shall enjoy, in the field of social security, treatment free from any discrimination based on nationality relative to nationals of the Member States in which they are employed. The term “social security” shall cover the branches of social security dealing with sickness and maternity benefits, invalidity, old-age and survivors’ benefits, industrial accident and occupational disease benefits and death, unemployment and family benefits. These provisions shall not, however, cause the other coordination rules provided for in Community legislation based on Article [48] of the [FEU Treaty] to apply, except under the conditions set out in Article 70 of this Agreement. … 4. The workers in question shall be able to transfer freely to Algeria, at the rates applied by virtue of the legislation of the debtor Member State or States, any pensions or annuities in respect of old age, survivor status, industrial accident or occupational disease, or of invalidity resulting from industrial accident or occupational disease, except in the case of special non-contributory benefits. …’
6 Article 70 of that agreement provides: ‘1. Before the end of the first year following the entry into force of this Agreement, the Association Council shall adopt provisions to implement the principles set out in Article 68. 2. The Association Council shall adopt detailed rules for administrative cooperation providing the necessary management and monitoring guarantees for the application of the provisions referred to in paragraph 1.’
7 Council Decision 2010/699/EU of 21 October 2010 on the position to be taken by the European Union within the Association Council set up by the Euro-Mediterranean Agreement establishing an Association between the European Community and its Member States, of the one part, and the People’s Democratic Republic of Algeria, of the other part, with regard to the adoption of provisions on the coordination of social security systems (OJ 2010 L 306, p. 14) contains, as an annex, a draft decision of the Association Council (‘the draft Decision of the Association Council’) which is intended to implement Article 70 of that agreement.
8 That draft was adopted by the Council of the European Union on the basis of the draft Decision of the Association Council annexed to the Proposal for a Council Decision presented by the European Commission on 12 December 2007 (COM(2007) 790 final).
9 Article 1(1) of the draft Decision of the Association Council provides: ‘For the purposes of this Decision: … (i) “exportable benefits” means: (i) in relation to the Member States: … - survivors’ pensions, … within the meaning of [Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1, and corrigendum OJ 2004 L 200, p. 1)], with the exception of special non-contributory cash benefits as listed in Annex X to the Regulation; …’
10 Article 2 of that draft, entitled ‘Persons covered’, is worded as follows: ‘This Decision shall apply: (a) to workers who are Algeria nationals and who are or have been legally employed in the territory of a Member State and who are or have been subject to the legislation of one or more Member States, and their survivors; …’
11 Article 4 of that draft, entitled ‘Waiving of Residence Clauses’, provides in paragraph 1: ‘Exportable benefits within the meaning of Article 1(1)(i) to which the persons as referred to in Article 2(a) and (c) are entitled shall not be subject to any reduction, modification, suspension, withdrawal or confiscation by reason of the fact that the beneficiary is residing: (i) for the purpose of a benefit under the legislation of a Member State, within the territory of Algeria; or (ii) for the purpose of a benefit under the legislation of Algeria, within the territory of a Member State.’
12 Article 14(1) of the Algemene nabestaandenwet (General law on survivors’ insurance; ‘the ANW’) is worded as follows: ‘The surviving relative shall be entitled to survivors’ benefit, if he or she: (a) has an unmarried child who is under the age of 18 and is not a member of another person’s household; or (b) is incapacitated for work …’
13 Article 17(1) and (3) of the ANW, as amended by the Wet woonlandbeginsel in de sociale zekerheid (Law on country-of-residence principle in social security), which entered into force on 1 July 2012, provides: ‘(1) The gross survivors’ benefit shall be fixed at such an amount that, after deduction of the wage tax and national insurance contributions that are to be withheld on that amount for a person who has not yet reached retirement age, taking into account only the general tax credit referred to in Article 22 of the Wet op de loonbelasting 1964 (Law of 1964 on wage tax), the net survivors’ benefit is equal to 70% of the net minimum wage. … (3) For a surviving relative who is living outside the Netherlands, one of the other Member States of the European Union, another State party to the Agreement on the [European Economic Area] or Switzerland, the gross survivors’ benefit shall be a percentage fixed by ministerial order of the amount determined pursuant to paragraphs 1, 2 or 5. The percentage shall be determined in such a way as to reflect the relationship between the level of costs of the country in which the survivor is resident and that of the Netherlands. The percentage shall not exceed 100.’
14 Article 1 of the Regeling woonlandbeginsel in de sociale zekerheid 2012 (Regulation of 2012 on the country-of-residence principle in social security; ‘the Regulation on the country-of-residence principle’) provides: ‘The percentage referred to … in Article 17(3) … of the ANW … for a country of residence other than: (a) the Netherlands, (b) one of the other Member States of the European Union, (c) one of the other States parties to the Agreement on the European Economic Area, and (d) Switzerland shall be the percentage set out in the Annex to this Regulation.’
15 In accordance with the annex to that regulation, with regard to Algeria, the country-of-residence factor referred to in Article 1 of the Regulation on the country-of-residence principle is to be 60% from 1 January 2013 and 40% from 1 January 2016.
16 X resides in Algeria. Her husband worked in the Netherlands and was insured under the ANW at the time of his death. As the survivor of her spouse, she has been entitled to a survivors’ benefit under the ANW since 1 January 1999.
17 By decisions of 19 September 2018, first, the SVB, following a judgment of the rechtbank Amsterdam (District Court, Amsterdam, Netherlands) of 10 November 2016, reinstated, with retroactive effect, X’s survivors’ benefit, which it had terminated on 1 November 2012. Second, the SVB informed X that that survivors’ benefit would be reduced with effect from 1 January 2013 on the ground that, from that date, it should have been paid in accordance with the country-of-residence principle, namely on the basis of a percentage reflecting the level of the cost of living in that country in relation to the cost of living in the Netherlands. In accordance with the provisions of the annex to the Regulation on the country-of-residence principle, that percentage was fixed, for Algeria, at 60% of the maximum survivors’ benefit as from 1 January 2013, and at 40% of that maximum amount as from 1 January 2016.
18 X lodged a complaint against that decision, which was declared unfounded by decision of the SVB of 4 December 2018.
19 The rechtbank Amsterdam (District Court, Amsterdam) having declared the action brought against that latter decision unfounded, X lodged an appeal before the Centrale Raad van Beroep (Higher Social Security and Civil Service Court, Netherlands), which is the referring court.
20 The referring court notes that the parties disagree as to whether Article 68(4) of the EC-Algeria Association Agreement precludes a reduction in the amount of X’s survivors’ benefit, based on the country-of-residence principle.
21 In that regard, first, that court has doubts as to whether a person such as X is within the personal scope of that provision. It points out that that provision, unlike Article 68(1) and (3) of the EC-Algeria Association Agreement, refers only to workers and not to members of their families.
22 Furthermore, on the assumption that survivors, as recipients of benefits, are within the scope of Article 68(4) of that agreement, the referring court asks whether only survivors residing in the Netherlands are able to transfer freely the amounts of their benefits to Algeria or whether, as it tends to consider, those residing in Algeria may also rely on that provision.
23 Second, the referring court asks whether Article 68(4) of the EC-Algeria Association Agreement has direct effect. In its view, Article 68 of that agreement lays down a certain number of general principles, but, in accordance with Article 70 of that agreement, the precise substantive content of those principles and the detailed rules for cooperation between the States which are parties to that agreement are governed by a decision of the Association Council. However, that court considers that, by analogy with, inter alia, the judgments of 31 January 1991, Kziber (C‑18/90, EU:C:1991:36), and of 5 April 1995, Krid (C‑103/94, EU:C:1995:97), and the orders of 13 June 2006, Echouikh (C‑336/05, EU:C:2006:394), and of 17 April 2007, El Youssfi (C‑276/06, EU:C:2007:215), the need to adopt such a decision does not prevent certain elements of Article 68, such as the prohibition of discrimination in the field of social security, in paragraph 1 of that article, from having direct effect.
24 As regards, more specifically, Article 68(4) of the EC-Algeria Association Agreement, the referring court considers that neither the wording nor the purpose and nature of that agreement, as set out in Article 1 thereof, preclude that provision from being recognised as having direct effect. Nevertheless, it recognises that the obligation to export benefits for persons residing in Algeria could be made subject, in its implementation, to the adoption of a subsequent measure, namely a measure which adopts detailed rules for administrative cooperation providing the necessary management and monitoring guarantees referred to in Article 70(2) of that agreement.
25 Thirdly and lastly, the referring court asks whether Article 68(4) of the EC-Algeria Association Agreement precludes a reduction in benefits by virtue of the country-of-residence principle. It considers that, even though the draft Decision of the Association Council annexed to the proposal referred to in paragraph 8 of the present judgment has not yet been adopted, Article 4 of that draft decision could provide guidance on the scope of Article 68(4) of the EC-Algeria Association Agreement, suggesting that that provision lays down the principle of the prohibition of residence clauses.
26 In those circumstances, the Centrale Raad van Beroep (Higher Social Security and Civil Service Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Must Article 68(4) of the [EC-Algeria] Association Agreement be interpreted as applying to a survivor of a deceased worker who resides in Algeria and who wishes to export her survivors’ benefit to Algeria? If so, (2) Must Article 68(4) of the [EC-Algeria] Association Agreement, having regard to its wording and to its purpose and nature, be interpreted as having direct effect, so that persons to whom that provision applies are entitled to rely on it directly before the Member States’ courts to have rules of national law which are contrary to it disapplied? If so, (3) Must Article 68(4) of the [EC-Algeria] Association Agreement be interpreted as precluding the application of the country-of-residence principle, as referred to in Article 17(3) of the [ANW], which results in a restriction on the export of the survivors’ benefit to Algeria?’
27 By its second question, which it is appropriate to examine first, the referring court asks, in essence, whether Article 68(4) of the EC-Algeria Association Agreement must be interpreted as having direct effect, so that persons to whom that provision applies are entitled to rely on it directly before the Member States’ courts to have rules of national law which are contrary to it disapplied.
28 It follows from Article 68(4) that workers of Algerian nationality are able to transfer freely to Algeria, at the rates applied by virtue of the legislation of the debtor Member State or States, any pensions or annuities in respect of old age, survivor status, industrial accident or occupational disease, or of invalidity resulting from an industrial accident or occupational disease, except in the case of special non-contributory benefits.
29 Furthermore, it is apparent from Article 70 of the EC-Algeria Association Agreement that, before the end of the first year after the entry into force of that agreement, the Association Council is to adopt (i) the provisions to implement the principles set out in Article 68 and (ii) detailed rules for administrative cooperation providing the necessary management and monitoring guarantees for the application of those provisions. Nevertheless, although the Council adopted Decision 2010/699, referred to in paragraph 7 of the present judgment, containing in an annex a draft decision of the Association Council intended to implement Article 70 of that agreement, those provisions, which should have been adopted by the Association Council before the end of the first year following 1 September 2005, the date on which the EC-Algeria Association Agreement entered into force, have still not been adopted.
30 As regards the possible direct effect of Article 68(4) of the EC-Algeria Association Agreement, it must be borne in mind that, according to the Court’s settled case-law, a provision in an agreement concluded by the European Union with non-Member States must be regarded as being directly applicable when, regard being had to its wording and to the purpose and nature of the agreement itself, the provision contains a clear and precise obligation which is not subject, in its implementation or effects, to the adoption of any subsequent measure (see, to that effect, judgments of 30 September 1987, Demirel, 12/86, EU:C:1987:400, paragraph 14, and of 26 May 2011, Akdasand Others, C‑485/07, EU:C:2011:346, paragraph 67 and the case-law cited).
31 In the present case, it must be held, first, that Article 68(4) of the EC-Algeria Association Agreement establishes in clear, precise and unconditional terms the right to transfer freely to Algeria the pensions and annuities referred to in that provision, at the rates applied by virtue of the legislation of the debtor Member State. Thus, according to its actual wording, that provision imposes on the Member States a clear and precise obligation as to the result to be achieved, consisting of enabling the persons concerned to make such a free transfer, an obligation which is not, as such, subject, in its implementation or effects, to the adoption of any subsequent measure.
32 It is true that the right to transfer freely is not absolute, since its actual effects in each individual case will depend, as Article 68(4) of the EC-Algeria Association Agreement states, on the ‘rates applied by virtue of the legislation of the debtor Member State or States’. However, that wording cannot be interpreted as allowing the Member States to make the right to transfer freely subject to discretionary limitations and thus to render that right meaningless (see, by analogy, judgment of 8 May 2003, Deutscher Handballbund, C‑438/00, EU:C:2003:255, paragraph 29 and the case-law cited).
33 Moreover, the implementation or effects of the right provided for in that provision are not subject to the adoption of another measure, in particular the adoption, by the Association Council, of the provisions referred to in Article 70(1) of the EC-Algeria Association Agreement (see, to that effect, order of 13 June 2006, Echouikh, C‑336/05, EU:C:2006:394, paragraph 41 and the case-law cited). The role assigned to that association council by that latter provision consists in facilitating compliance with the right to transfer freely to Algeria the pensions and annuities referred to in Article 68(4) of that agreement, but may not be regarded as rendering conditional the immediate application of that right (see, by analogy, judgment of 31 January 1991, Kziber, C‑18/90, EU:C:1991:36, paragraph 19).
34 As regards, in the second place, the purpose and nature of the EC-Algeria Association Agreement, the Court has already held (i) that the objectives of that agreement, as provided for in Article 1(2) thereof, directly further those on which the EEC-Algeria Cooperation Agreement was based (see, by analogy, order of 13 June 2006, Echouikh, C‑336/05, EU:C:2006:394, paragraph 40), and (ii) that the object of the latter agreement, consisting in promoting overall cooperation between the Contracting Parties in particular in the field of labour, confirmed that the principle of non-discrimination enshrined in Article 39(1) of that cooperation agreement was capable of governing directly the legal position of individuals, so that that provision had direct effect (see, to that effect, judgment of 15 January 1998, Babahenini, C‑113/97, EU:C:1998:13, paragraphs 17 and 18 and the case-law cited).
35 Thus, the objectives of the EC-Algeria Association Agreement, which show a desire to strengthen and deepen the objectives of the EEC-Algeria Cooperation Agreement, must a fortiori be regarded as confirming the direct effect of the right to transfer freely to Algeria the pensions and annuities referred to in Article 68(4) of the EC-Algeria Association Agreement (see, by analogy, judgment of 14 December 2006, Gattoussi, C‑97/05, EU:C:2006:780, paragraph 27).
36 In the light of the foregoing considerations, the answer to the second question is that Article 68(4) of the EC-Algeria Association Agreement must be interpreted as having direct effect, so that persons to whom that provision applies are entitled to rely on it directly before the Member States’ courts to have rules of national law which are contrary to it disapplied.
37 By its first question, the referring court asks, in essence, whether Article 68(4) of the EC-Algeria Association Agreement must be interpreted as applying to the survivors of a worker who, wishing to transfer their survivors’ benefit to Algeria, are not themselves workers and who reside in Algeria.
38 In that regard, it should be noted, in the first place, that Article 68(4) expressly refers only to ‘the workers in question’, which refers back to ‘workers of Algerian nationality’ mentioned in paragraph 1 of that article. However, it is clear that, in accordance with the wording of that paragraph 4, the benefits which may be transferred freely to Algeria include pensions or annuities in respect of survivor status. By definition, it is not the workers, but their survivors, who are eligible for such benefits. Therefore, and as the Advocate General observed in point 44 of his Opinion, Article 68(4) of the EC-Algeria Association Agreement would be deprived of its useful effect if those survivors were excluded from its personal scope.
39 In its written observations, the SVB relies on the case-law of the Court relating to Article 2 of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (OJ English Special Edition 1971(II), p. 420), according to which the members of a worker’s family have only derived rights, and not their own rights, as regards the provisions of that regulation which apply exclusively to workers (judgments of 30 April 1996, Cabanis-Issarte, C‑308/93, EU:C:1996:169, and of 21 February 2006, Hosse, C‑286/03, EU:C:2006:125).
40 However, it must be borne in mind that the Court has held on several occasions that such case-law cannot be applied in the context of an agreement such as the EC-Algeria Association Agreement (see, to that effect, judgment of 15 January 1998, Babahenini, C‑113/97, EU:C:1998:13, paragraph 24 and the case-law cited, and order of 17 April 2007, El Youssfi, C‑276/06, EU:C:2007:215, paragraph 62 and the case-law cited).
41 In the second place, while there is no doubt that Article 68(4) of the EC-Algeria Association Agreement applies where the survivor resides in the debtor Member State, it should be pointed out that it would run counter to the logic underlying the very principle of the free transfer of benefits to Algeria to require that the recipient be obliged to reside in the debtor Member State, as the Advocate General observed, in essence, in points 46 and 47 of his Opinion.
42 Consequently, the answer to the first question is that Article 68(4) of the EC-Algeria Association Agreement must be interpreted as applying to the survivors of a worker who, wishing to transfer their survivors’ benefit to Algeria, are not themselves workers and who reside in Algeria.
43 By its third question, the referring court asks, in essence, whether Article 68(4) of the EC-Algeria Association Agreement must be interpreted as precluding a reduction in the amount of a survivors’ benefit by reason of the fact that the recipient of that benefit resides in Algeria.
44 It is apparent from the order for reference that the reduction at issue in the main proceedings stems from the Law on country-of-residence principle in social security, which introduced that principle in particular in relation to survivors’ benefits paid under the ANW. Moreover, that principle seeks to ensure that benefits linked to the Netherlands minimum wage and which are paid outside the Netherlands reflect the relationship between the level of the cost of living in the recipient’s country of residence and that of the cost of living in the Netherlands. The survivors’ benefit at issue in the main proceedings is specifically one of the benefits linked to the Netherlands minimum wage, since, in accordance with Article 17(1) of the ANW, its net amount is equivalent to 70% of that net minimum wage.
45 In that regard, at the hearing, the SVB stated that that is a maximum percentage, as the amount of the benefit received by each survivor is calculated on the basis of the survivor’s income. Furthermore, at that hearing, the Netherlands Government stated that the survivors’ benefit is risk insurance and that the amount of the contributions paid in respect of that benefit is the same for all insured persons. It also stated that the minimum wage in the Netherlands is adjusted in line with the cost of living in that Member State.
46 It should be recalled that Article 68(4) of the EC-Algeria Association Agreement provides for the right to transfer freely the benefits referred to therein to Algeria ‘at the rates applied by virtue of the legislation of the debtor Member State or States’.
47 It follows from that clarification that, as the Advocate General observed, in essence, in point 57 of his Opinion, the debtor Member State has a discretion in establishing rules for calculating the amount of the benefits referred to in Article 68(4). More specifically, in so far as that clarification appears in the provision of that agreement concerning the transfer of those benefits to Algeria, it must be interpreted as allowing, in principle, that Member State to lay down rules designed to adjust the amount of those benefits on the occasion of that transfer, such as the rule based on the country-of-residence principle at issue in the main proceedings.
48 However, such rules must respect the substance of the right to transfer freely benefits, without depriving that right of its practical effect (see, by analogy, judgment of 8 May 2003, Deutscher Handballbund, C‑438/00, EU:C:2003:255, paragraph 29 and the case-law cited).
49 It is apparent from the factors characterising the survivors’ benefit at issue in the main proceedings, which are set out in paragraphs 44 and 45 of the present judgment, that the amount of that benefit is fixed on the basis of the cost of living in the Netherlands and that, consequently, that benefit is intended to ensure that survivors have a basic income calculated on the basis of the cost of living in that Member State. Therefore, as regards the transfer of that benefit to Algeria, as provided for in Article 68(4) of the EC-Algeria Association Agreement, the fact of adjusting the amount of that benefit in order to take account of the cost of living in that non-member country does not appear to be liable to render meaningless the right to transfer freely, provided that the determination of the rate used for the purposes of that adjustment is based on objective factors, which it is for the referring court to ascertain.
50 Finally, as regards the fact that Article 4 of the draft Decision of the Association Council provides for the prohibition, inter alia, of any reduction in the amount of such a benefit payable under the legislation of a Member State on account of the fact that the recipient resides in Algeria, it must be pointed out that, since that draft has not yet been adopted by the Association Council, it cannot have effects similar to those which an analogous provision, namely Article 6(1) of Decision No 3/80 of the Association Council of 19 September 1980 on the application of the social security schemes of the Member States of the European Communities to Turkish workers and members of their families (OJ 1983 C 110, p. 60), was recognised as having in the judgment of 26 May 2011, Akdas and Others (C‑485/07, EU:C:2011:346).
51 In the light of the foregoing considerations, the answer to the third question is that Article 68(4) of the EC-Algeria Association Agreement must be interpreted as not precluding a reduction in the amount of a survivors’ benefit by reason of the fact that the recipient of that benefit resides in Algeria, where that benefit is intended to guarantee a basic income calculated on the basis of the cost of living in the debtor Member State and the reduction thus effected respects the substance of the right to transfer freely such a benefit.
52 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.