OPINION OF MR ADVOCATE GENERAL WARNER
DELIVERED ON 18 OCTOBER 1977
My Lords,
Introductory
This case comes before the Court by way of a reference for a preliminary ruling by a Divisional Court of the Queen's Bench Division of the High Court of Justice of England and Wales.
The circumstances in which it does so are these.
Mr John Patrick Kelly, who is a British national, now in his 60s, was insured for social security purposes in the United Kingdom, either as a member of the forces or as an employed person, from 1933 to 1971, save for a period from 1947 to 1951 which he spent in Germany. In 1971 he returned to Germany, where he worked and was insured until June 1973, when he became sick, it seems permanently. He is still resident in Germany. He was paid sickness benefit there from August 1973 to July 1974, since when he has received a small German invalidity pension, calculated by reference to the relatively short period for which he was insured in Germany.
In 1974 an application was made on Mr Kelly's behalf to the Department of Health and Social Security in England for the payment to him of a British invalidity pension. (I say ‘British’ rather than ‘United Kingdom’ because the legislation under which he claimed the pension is applicable only to Great Britain. Northern Ireland has, I understand, its own legislation on social security).
On 19 June 1974 the responsible Insurance Officer decided that no British invalidity pension was payable to Mr Kelly, because he had not been in receipt of British sickness benefit. The scheme of the relevant British legislation is, as was explained to us at the hearing, that a person whose employment is interrupted by reason of incapacity for work becomes entitled in the first instance to sickness benefit. If his incapacity continues for more than 168 days, he then becomes entitled to an invalidity pension (which is at a higher rate) instead. The relevant provisions in force at the time when Mr Kelly made his claim were section 19 of the National Insurance Act 1965 and section 3 of the National Insurance Act 1971. Those provisions are now replaced, without material alteration, by sections 14 and 15 of the Social Security Act 1975, which was a consolidating Act. It is held to be a consequence of the way in which the British legislation is framed that entitlement to sickness benefit for 168 days is a precondition for entitlement to an invalidity pension. Nor is the receipt of German sickness benefit regarded as satisfying that precondition.
Against the decision of the Insurance Officer Mr Kelly appealed to the Local Tribunal at Newcastle-upon-Tyne. On 3 June 1975 that Tribunal dismissed his appeal, upholding the Insurance Officer's reasoning.
Thereupon Mr Kelly further appealed to a National Insurance Commissioner. That appeal was successful. On 11 March 1976 the National Insurance Commissioner delivered a decision reversing that of the Local Tribunal and holding that Mr Kelly was entitled to a British invalidity pension by virtue of the provisions of Article 46 (2) of Council Regulation (EEC) No 1408/71 (OJ L 149 of 5. 7. 1971).
The National Insurance Commissioner accepted that, under the British legislation taken alone, Mr Kelly was not entitled to invalidity benefit because he had not been entitled to sickness benefit. The Commissioner observed that there were, under that legislation, at least two obstacles to Mr Kelly obtaining sickness benefit. First, he did not satisfy the relevant contribution conditions, in that he had not paid British National Insurance contributions in a period sufficiently proximate to the date when he became sick (see, for the details of those contribution conditions, paragraph 1 of Schedule 2 to the National Insurance Act 1965, now replaced by paragraph 1 of Schedule 3 to the Social Security Act 1975). Secondly, a person could not, under the British legislation, receive benefit whilst absent from Great Britain (see section 49 (1) (a) of the National Insurance Act 1965, now replaced by section 82 (5) (a) of the Social Security Act 1975 — there were exceptions to the latter rule, but none that was applicable in Mr Kelly's case). It seems that a further point taken on behalf of the Insurance Officer was that Mr Kelly was precluded from receiving sickness benefit because he had not made a claim therefor in the prescribed manner and within the prescribed time (as to which see section 48 of the National Insurance Act 1965 and the National Insurance (Claims and Payments) Regulations 1971 (S.I. 1971 No 707) now replaced by section 79 of the Social Security Act 1975 and the Social Security (Claims and Payments) Regulations 1975 (S.I. 1975 No 560).
In essence the Commissioner decided that those difficulties as to the receipt by Mr Kelly of an invalidity pension were overcome by the provisions of Regulation No 1408/71.
In the course of reaching that decision, the Commissioner considered the question whether the precondition to title to British invalidity benefit that there should have been previous entitlement to British sickness benefit was compatible with Article 51 of the EEC Treaty or, alternatively, should, by virtue of Community law, be regarded as satisfied in this case by Mr Kelly s receipt of German sickness benefit. The Commissioner referred in that connexion to the Opinion of Mr Advocate General Trabucchi in Case 20/75 D'Amico v LVA Rheinland-Pfalz [1975] ECR at p. 901. In the end, however, the Commissioner found it unnecessary to express a concluded opinion on those questions, having regard to the view he had formed on the interpretation of the relevant provisions of Regulation No 1408/71.
Your Lordships are familiar with the fact that Chapter 2 of Title III of that Regulation, which relates to invalidity, has regard to the circumstance that there exist in the Member States two different types of legislation as to invalidity benefits: that generally known as ‘Type A’, under which the amount of invalidity benefit is independent of insurance periods, and that generally known as ‘Type B’ under which the amount of such benefit depends on the length of insurance periods. The rights of a worker who has been successively or alternately subject to legislations exclusively of Type A are dealt with by Articles 37 to 39, whilst, in the case of a worker who has been successively or alternately subject to legislations of which one at least is of ‘Type B’, Article 40 prescribes that the provisions of Chapter 3, relating to ‘Old Age and Death (Pensions)’ are to be applied by analogy. So far as the present case is concerned, the relevant British legislation is of Type A, but the relevant German legislation is of Type B, so that Article 40 is in point.
Of the provisions of Chapter 3 that are thus rendered relevant, the most important are Article 45 (1) and Article 46. Both of them have been successively amended by the Act of Accession (Annex I, point IX (1)) and by Council Regulation (EEC) No 2864/72 (OJ L 306 of 31. 12. 1976). My references to them will be, as were those of the National Insurance Commissioner, to their texts as so amended.
Article 45 (1) as so amended, reads as follows:
‘An institution of a Member State whose legislation makes the acquisition, retention or recovery of the rights to benefits conditional upon the completion of insurance periods or periods of residence shall take into account, to the extent necessary, insurance periods or periods of residence completed under the legislation of any Member State as though they had been completed under the legislation which it administers.’
The National Insurance Commissioner took the view, as I understand his reasoning, that, to put it shortly, Article 45 (1) overcame two obstacles in the way of Mr Kelly's entitlement to British invalidity benefit. First, that provision enabled the insurance periods completed by him in Germany to be taken into account as if they had been completed in Great Britain, so as to enable him to be deemed to have satisfied the requisite contribution conditions. Secondly, it enabled his period of residence in Germany to be treated as if it had been one of residence in Great Britain, so as to enable his actual absence from Great Britain to be disregarded. The remaining difficulty that the Commissioner felt (and it is, to my mind, the central difficulty in this case) was that Article 45 (1) did not in terms authorize the further or consequential assumption that Mr Kelly had been entitled to British sickness benefit during the necessary 168 days.
At this point the Commissioner's reasoning took a course which, I confess, I find difficult to follow. On the footing that Article 45 (1) did not, alone, enable that further assumption to be made, he turned to Article 46.
Paragraph 1 of that Article prescribes, Your Lordships remember, what benefit is to be awarded to a worker ‘where the conditions for entitlement to benefit have been satisfied without application of the provisions of Article 45 being necessary’. That paragraph could not of course be relevant in such a case as this. Article 46 (2) provides as follows:
‘Where a worker has been subject to the legislation of any Member State and where he does not satisfy the conditions for entitlement to benefits unless account is taken of the provisions of Article 45, the responsible institution of that Member State shall apply the following rules:
(a)
the institution shall calculate the theoretical amount of benefit that the person concerned could claim if all the insurance periods or periods of residence completed under the legislation of the Member States to which the worker has been subject had been completed in the State in question and under the legislation administered by it on the date the benefit is awarded. If, under that legislation, the amount of the benefit does not depend on the length of the periods completed then that amount shall be taken as the theoretical amount referred to in this subparagraph;
(b)
the institution shall then establish the actual amount of the benefit on the basis of the theoretical amount referred to in the preceding subparagraph, pro rata with the length of the periods of insurance or residence completed before the occurrence of the event insured against under the legislation applied by it, as compared with the total length of the periods of insurance and residence completed under the legislations of all the Member States concerned before the occurrence of that event;
(c)
…
(d)
…’
The Commissioner took the view that subparagraphs (a) and (b) of Article 46 (2) were expository of Article 45 (1) and that it was impossible to say whether a person was entitled to anything under Article 45 (1) without making the calculations required by those paragraphs. On the assumptions that fell to be made by virtue of Article 45 (1), i.e. the assumptions of continuous insurance and of continuous residence in Great Britain, Mr Kelly would, subject to his making the appropriate claim, have been entitled to sickness benefit for 168 days and thereafter to invalidity benefit. The calculation under Article 46 (2) (a) did therefore yield a ‘theoretical amount of benefit’. The fact that no actual claim for sickness benefit had been made by Mr. Kelly could not be material, since the calculation was of a ‘theoretical’ amount on a hypothetical basis. From that theoretical amount the ‘actual amount’ of invalidity benefit could be established under Article 46 (2) (b).
The Insurance Officer now applies in the Queen's Bench Division for an order of certiorari quashing the decision of the National Insurance Commissioner on the ground that it is erroneous in law. By Order dated 15 February 1977 the Divisional Court referred to this Court, under Article 177 of the Treaty, the following questions:
‘Where the legislation of a Member State makes the acquisition of a right to invalidity benefit conditional upon the person concerned having been entitled to sickness benefit under that legislation for a total of 168 days in the immediately preceding period, that condition being subject to, so far as material, (a) the completion of insurance periods (b) the making of a claim therefor in a prescribed manner and within a prescribed time —
(i)
do the provisions or Article 51 of the Treaty of Rome preclude the application of such a condition to a case to which Articles 40, 45 or 46 of Regulation (EEC) No 1408/71 relate?
(ii)
do the provisions of
(a)
Article 45 or
(b)
Article 46
relate to such legislation?
(iii)
do all or any of the said Articles 40, 45 or 46 —
(a)
enable such a condition to be treated as wholly or partly satisfied; or
(b)
require such a condition to be
wholly or partly disregarded; and if so to what extent?’
I think it convenient to deal with those questions under two headings;
(1)
the interpretation of the Treaty and in particular Article 51;
(2)
the interpretation of Regulation No 1408/71 and in particular Articles 45 and 46.
The interpretation of the Treaty and in particular Article 51
It is a feature of this case that Mr Kelly did not appear and was not represented before the National Insurance Commissioner, before the Divisional Court or before this Court. As far as this Court is concerned, he contented himself with writing to the Registrar that there was nothing constructive which he could “add to the information already given to the Courts and Insurance Authorities in England”. The Divisional Court, however, had the assistance of an amicus curiae and I imagine, though we do not of course know, that that Court's first question was prompted by an argument put forward by him, and which may very well itself have been suggested by the remarks of the National Insurance Commissioner to which I have referred.
At all events the Insurance Officer and the Commission (on whose behalfs only observations have been submitted to this Court) are at one in saying that Article 51 of the Treaty does not preclude the existence in the legislation of a Member State of a provision making it a precondition to the acquisition of a right to invalidity benefit that the person concerned should have been entitled under that legislation to sickness benefit for a specified number of days in the immediately preceding period.
In support of that proposition they rely to some extent on the decision of the Court in the D'Amico case. I do not, however, for my part think that that decision is in point. It was there held that no provision of Community law precluded the existence in the legislation of a Member State of a provision making it a precondition to the acquisition of a right to an early retirement pension that the person concerned should have been registered as unemployed for a specified period in that State. But the decision turned on the consideration that the relevant Community Regulations themselves were framed on the footing that the right to benefit in respect of unemployment in general presupposed that the person concerned was available for employment where such benefit was claimed. No such consideration is applicable here. Receipt by a person of sickness benefit cannot be regarded as any sort of quid pro quo for his receipt of invalidity benefit later.
What however is, in my opinion, undoubtedly correct is that, as the Insurance Officer and the Commission also both point out, Article 51 does not have direct effect, in the sense of conferring, of itself, on private persons, rights that they can enforce in the Courts of Member States. All that Article 51 does, in terms, is to confer on the Council a power, and a duty, to adopt certain measures. Thus, so far as that Article is concerned, only the adoption of such measures by the Council can confer on a worker a right on which he can rely in a national Court.
Nor do I find in the Opinion of Mr Advocate General Trabucchi in the D'Amico case anything that casts doubt on the correctness of that view. As I read that Opinion, Mr Advocate General Trabucchi deduced from certain earlier decisions of the Court the existence of a general principle that, in certain circumstances, a Member State must, even in the absence of any specific provision to that effect, treat facts occurring on the territory of another Member State as if they had occurred on its own territory, even though its legislation regards such facts as relevant only if occurring on its territory. In accordance with such a principle the United Kingdom might here be required to treat the receipt by Mr Kelly of German sickness benefit as equivalent to the receipt by him of British sickness benefit. If such a principle exists, however, it cannot be derived directly from Article 51, nor indeed did Mr Advocate General Trabucchi suggest that it was. Of the decisions to which he referred, two, namely Case 15/69 Württembergische Milchverwertung — Südmilch AG v Ugliola [1969] ECR 363 and Case 152/73 Sotgiu v Deutsche Bundespost [1974] 1 ECR 153, were based on the principle of nondiscrimination enshrined in Article 48 of the Treaty and in certain Regulations of the Council not here in point, whilst the third, Case 2/72 Murru v Caisse Régionale d'Assurance Maladie de Paris [1972] 1 ECR 333, turned on the interpretation of Article 1 (r) of Regulation No 3, which was the predecessor of Article 1 (s) of Regulation No 1408/71. Therefore, for the general principle suggested by Mr Advocate General Trabucchi to apply it must at least be shown that, without it, there would be discrimination against a migrant worker of a kind prohibited by Article 48. Since, as Your Lordships will see, I have formed on the interpretation of Regulation No 1408/71 a view that accords in its result with the view of the National Insurance Commissioner, and since, moreover, the Divisional Court has not asked any question as to the interpretation of Article 48, I need not, I think, pursue that topic further.
I turn to the questions of interpretation of Regulation No 1408/71.
The interpretation of Regulation No 1408/71 and in particular Articles 45 and 46
It is of course manifest that, if Regulation No 1408/71 is ineffective to render Mr Kelly entitled to a British invalidity pension, it has, in that respect, glaringly failed to achieve its purpose. This is recognized both by the Insurance Officer and by the Commission. Both of them say, however, that the situation results from a lacuna in the Regulation and that that lacuna can only be cured by further legislation. They draw attention to a Proposal for a Council Regulation amending Regulations No 1408/71 and No 574/72, which has been drawn up after consultation with the Administrative Commission on Social Security for Migrant Workers, and which was submitted by the Commission to the Council on 30 June 1977 (OJ C 171/2 of 19. 7. 1977). One effect of that proposed Regulation would be to insert a new paragraph in Article 40 of Regulation No 1408/71, making it possible in a case like the present for (briefly and so far as material) sickness benefit received in one Member State to be treated as having been received in the other. There is provision for that new paragraph to apply retroactively as from 1 July 1976. The fact that new legislation is proposed cannot however be a relevant consideration for this Court in interpreting existing legislation.
Your Lordships will have observed that, of the two main obstacles that the National Insurance Commissioner saw as being in Mr Kelly's way to obtaining British sickness benefit, namely (1) the fact that he did not satisfy the requisite contribution conditions and (2) the fact that he was at the material time absent from Great Britain, only the first, is adverted to by the Divisional Court in its questions to this Court. One infers that, for some reason into which it is not for this Court to enquire, the Divisional Court did not attach importance to the second. Nonetheless arguments were developed before this Court, both on behalf of the Insurance Officer and on behalf of the Commission, designed to show that the references in Article 45 (1) of Regulation No 1408/71 to ‘periods of residence’ could not have the effect that the National Insurance Commissioner attributed to them. Those arguments were based on the fact that those references were introduced by the Act of Accession, as was the definition of ‘periods of residence’ in Article 1 (s) (a) of the Regulation, and on the contrast between the wording of those provisions in the Act of Accession and their wording as substituted by Regulation No 2864/72. If I understood the arguments correctly, they logically led to the conclusion that the Commissioner would have been right if Mr Kelly had gone to Denmark instead of to Germany, but that, because the German social security legislation does not define or recognize ‘periods of residence’, he was wrong. Why the authors of the legislation should have intended that a worker's rights in Great Britain should differ according to whether he migrated thence to Denmark or to Germany was not explained. Despite the temptation that I feel to deal fully with those arguments, I apprehend that it would not be right for me, in the circumstances to take up Your Lordships' time in doing so.
So I turn to those of the arguments put forward on behalf of the Insurance Officer and of the Commission that bore on the questions referred to this Court by the Divisional Court. In essence there were two. First it was said that the provisions of Article 45 (1) requiring an institution of a Member State, whose legislation made the acquisition of a right to invalidity benefit conditional upon the completion of insurance periods, to take into account, to the extent necessary, insurance periods completed under the legislation of another Member State, as though they had been completed under its own legislation, could not be interpreted as requiring it. to take such periods into account for the purpose of ascertaining whether a worker would have been entitled to sickness benefit where prior entitlement to sickness benefit was a precondition to entitlement to invalidity benefit. Secondly it was said that that lacuna in Article 45 (1) could not be filled by Article 46 (2).
I will say at once that, with that second point, I agree; so that, to that extent, I respectfully dissent from the views expressed by the National Insurance Commissioner. The purpose of Article 46 (2) is to specify the consequences of the application of Article 45. There is of course a close nexus between Article 45 and Article 46 (2), and it is no doubt right to interpret them in the light of each other. But Article 46 (2) cannot confer on a worker a right to benefit if his case is such that Article 45 does not apply.
So one comes back to the real question in this case, which I described earlier as the central difficulty in it, namely whether the assumptions that an institution of a Member State (in this case the Department of Health and Social Security) is required to make under Article 45 (1) are limited in the way contented for by the Insurance Officer and the Commission, or whether, on the contrary, that institution is required to take into account any relevant consequences flowing from those assumptions.
I have, after some hesitation, come to the conclusion that the latter is the correct answer. To my mind there is in Article 45 (1) not so much a lacuna as an ambiguity. How far is an institution of a Member State to go in taking into account ‘insurance periods or periods of residence completed under the legislation of any Member State as though they had been completed under the legislation which it administers’? The answer, in so far as it is to be found in the words of Article 45 (1) itself, is ‘to the extent necessary’. That being so, it does not seem to me to do violence to the language of Article 45 (1) to hold that, where, on those assumptions, a worker would have been entitled, in the Member State concerned, first to sickness benefit for a specified period and thereafter to invalidity benefit, the hypothesis enjoined by that provision includes the receipt by him of sickness benefit where that is a precondition to the receipt by him of invalidity benefit. And, if that interpretation, not only does no violence to the language of the provision, but is also (as it manifestly and undisputedly is) the only one consistent with its purpose, it must, so it seems to me, in accordance with the canons of interpretation laid down over and over again by this Court, be the correct interpretation.
On that footing, the other difficulty mentioned by the Divisional Court, arising from the requirement in the British legislation that a claim for sickness benefit should be made in a prescribed manner and within a prescribed time, can clearly be disregarded. As to that I agree entirely with the National Insurance Commissioner. When one is in a world of statutory hypotheses as to substantive rights, the absence of fulfilment of the formalities that would be required to secure those rights in the real world cannot be material.
Conclusions
In the result I am of the opinion that, in answer to the questions referred by the Divisional Court, Your Lordships should rule that:
(1)
Article 51 of the EEC Treaty does not of itself confer on private persons any rights on which it is open to them to rely in the Courts of Member States;
(2)
Where the legislation of a Member State makes the acquisition of a right to invalidity benefit conditional upon the person concerned having been entitled to sickness benefit under that legislation for a specified number of days in the immediately preceding period, entitlement to such sickness benefit being itself subject to (a) the completion of insurance periods and (b) the making of a claim therefor in a prescribed manner and within a prescribed time, the combined effect of Articles 40, 45 and 46 of Regulation (EEC) No 1408/71 (in a case where the person concerned has been successively or alternately subject to the legislation of two or more Member States, of which at least one is not of the type referred to in Article 37 of that Regulation) is to enable such condition to be treated as satisfied to the extent to which it would have been satisfied if insurance periods completed by that person under the legislation of any Member State had been completed under the legislation of the first-mentioned Member State and if the appropriate claim for sickness benefit had been made in the prescribed manner and within the prescribed time.
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