Opinion of the Advocate-General
++++
My Lords,
1. In this case the Court is asked by the Tribunal du Travail, Brussels, to give a preliminary ruling on the interpretation of Article 51 of Council Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons and their families moving within the Community (a consolidated version of which is contained in Annex 1 to Council Regulation (EEC) No 2001/83, Official Journal 1983 L 230, p. 6).
2. Mrs Cassamali is an Italian national who worked both in Italy and in Belgium, as did her late husband. Since 1 December 1970 she has received an Italian survivor' s pension. Since 1 October 1976 she has, in addition, been entitled to an Italian old-age pension, two Belgian retirement pensions (one for an employed person and one for a self-employed person) and a Belgian survivor' s pension.
3. For the calculation of the Belgian survivor' s pension, account was taken of a Belgian provision against the overlapping of benefits, according to which a survivor' s pension cannot be combined with one or more retirement pensions or any other benefit "en tenant lieu" paid under Belgian or foreign legislation, beyond a certain limit. That limit was exceeded by the five pensions to which Mrs Cassamali was entitled, and so her survivor' s pension was reduced by the amount of the excess. It should be noted that recourse to the Belgian rule against the overlapping of benefits was permissible by virtue of Article 12(2) of Regulation No 1408/71.
4. On 3 December 1980 the Italian social security institution sent the competent Belgian institution (the predecessor to the Office National des Pensions) information about the subsequent adjustments made to the Italian old-age pension. That pension had increased considerably: on 1 October 1976 it stood at Lit 57 000 a month, whereas by 1 July 1980 it had risen to Lit 240 600 a month. Surprising though it may seem, that increase was due solely to indexation, as was confirmed by the Italian institution in response to a question put to it by the Belgian institution.
5. The Belgian institution thereupon reduced the Belgian survivor' s pension so as to ensure that the upper limit prescribed by the aforesaid Belgian rule against overlapping was not exceeded. Mrs Cassamali challenged that decision on the ground that it was contrary to Article 51 of Regulation No 1408/71. Article 51, it will be recalled, provides as follows:
"1. If, by reason of an increase in the cost of living or changes in the level of wages or salaries or other reasons for adjustment, the benefits of the States concerned are altered by a fixed percentage or amount, such percentage or amount must be applied directly to the benefits determined under the provisions of Article 46, without the need for a recalculation in accordance with the provisions of that Article.
2. On the other hand, if the method of determining or the rules for calculating benefits should be altered, a recalculation shall be carried out in accordance with the provisions of Article 46."
6. According to the observations of the Office National des Pensions (hereafter "the Office National"), Mrs Cassamali' s action was brought before the Tribunal du Travail, Brussels, on 19 March 1981. By judgment of 19 March 1990 the Tribunal du Travail, Brussels, referred the following questions to the Court:
"Does Article 51 of Regulation No 1408/71 enable a Belgian pension to be recalculated as a result of an increase in an Italian pension which is due solely to cost of living increases?
If not, does any other provision of Community law authorize such a recalculation?"
7. The facts of the present case are remarkably similar to those of Case C-85/89 Ravida v Office National des Pensions, in which the Court gave judgment on 21 March 1990. There the Court ruled that Article 51 of Regulation No 1408/71 must be interpreted as meaning that, where by virtue of national rules against the overlapping of benefits a pension is fixed at such an amount that, when added to a benefit of a different kind paid by another Member State, it does not exceed a certain limit, the pension must not be recalculated, so as to avoid exceeding that limit, in the event of subsequent alterations to the other benefit that take place as a result of the general evolution of the economic and social situation.
8. In the Ravida case, as in the present case, the person concerned was in receipt of retirement pensions and survivor' s pensions both in Italy and in Belgium. Her Belgian survivor' s pension was calculated having regard to the same rule against the overlapping of benefits. In her case too the Italian retirement pension was increased as a result of indexation and her Belgian survivor' s pension was reduced by a corresponding amount. There is, so far as I can discern, no material difference between that case and the present case. Moreover, the Ravida judgment was no more than an application of the Court' s previous case-law, in particular the judgments in Case 7/81 Sinatra v FNROM [1982] ECR 137 and Case 104/83 Cinciuolo v Union Nationale des Fédérations Mutualistes Neutres [1984] ECR 1285.
9. The Office National develops in considerable detail an argument that it adumbrated at the oral hearing in Ravida. That argument would, if now accepted by the Court, lead the Court to reverse its decision in Ravida. The argument is as follows. What is prohibited by Article 51(1) of Regulation No 1408/71, in the event of an index-linked adjustment in the level of benefit, is a recalculation in accordance with Article 46 of the regulation. But the Office National did not carry out such a recalculation; it simply continued to deduct from the Belgian survivor' s pension whatever sum it was necessary to deduct in order to bring Mrs Cassamali' s total benefits within the maximum limit fixed by the Belgian rule against overlapping. When the Italian pension rose, the amount of the deduction rose accordingly. It adds that Article 51, far from prohibiting any new calculation, merely permits it to refrain from carrying out the new calculation referred to in Article 46.
10. The answer to the last point is, in my view, that Article 51 cannot be interpreted as merely permitting the social security institutions of the Member States either to carry out a new calculation or to refrain from doing so. That would be contrary both to legal certainty and to the requirement that the legislation should be uniformly interpreted by the social security institutions of all the Member States. In any event, it is clear in my view, for the reasons given below, both from the terms of Article 51(1) and from the structure of the article as a whole that Article 51(1) precludes a recalculation in the circumstances referred to in that provision.
11. The Office National is on stronger ground in contending that what is precluded by Article 51(1) is a recalculation in accordance with the provisions of Article 46, while no such recalculation was called for, or was made, in the present case. Nonetheless that argument also is open to the same objection, namely that it does not take account of the terms of Article 51(1) or of the structure of the article as a whole. Article 51(1) clearly prescribes that where a benefit is altered by a fixed percentage or amount, that percentage or amount must be applied directly to the amount of the benefits in question as determined by the initial calculation made under Article 46.
12. The scheme of Article 51 of Regulation No 1408/71 is to distinguish between two situations: (i) index-linked adjustments and (ii) adjustments due to a change in the method of calculation. In the latter situation a complete recalculation takes place. In the former situation a fixed percentage or amount is added to the benefits hitherto payable and, apart from that adjustment, no recalculation takes place. Article 51 does not envisage a third possibility whereby an index-linked increase in one Member State may be taken into account in another Member State for the purposes of a national rule against the overlapping of benefits. Article 51(1) lays down the principle of the autonomous development of social security benefits. Once benefits have been calculated in accordance with Article 46, they develop autonomously in each of the Member States concerned; an adjustment in one Member State does not affect the benefit paid in the other. Article 51(2) lays down an exception to the principle where there are changes in the method of calculating benefit. That exception is necessary because the effect of such changes might be to put the person concerned in a position where a different formula would be more favourable to him. In this regard, it must be remembered that Article 46 has consistently been interpreted by the Court as entitling the individual to the application of either the whole of national legislation or the whole of Community legislation, including their respective rules against overlapping, whichever is more favourable (see, for example, Case 22/77 FNROM v Mura [1977] ECR 1699). It is unlikely that the circumstances referred to in Article 51(1), i.e. an adjustment of benefits due to an increase in the cost of living or in the level of wages or salaries, would affect the outcome of the comparison between the two alternatives.
13. The present case is anomalous because an exceptionally large increase in benefits followed from indexation alone. It appears from the Cabras case (Case 199/88, judgment of 21 March 1990) that that exceptionally large increase was due to an error in the interpretation of the Italian provisions on indexation. Normally the interpretation which the Court adopted in Ravida is unlikely to have such far-reaching financial consequences as in the present case. Where social security benefits, and any ceiling imposed under rules against overlapping, are increased to take account of increases in prices or wages, differences between Member States in the rate of increase will be due largely to differences in the rate of inflation. Even if the latter differences do not diminish with increasing economic convergence between the Member States they are likely to be largely offset by currency fluctuations. Thus if inflation in Italy is higher than in Belgium, Italian pensions may increase more than Belgian pensions but the gain is likely to be offset by the depreciation of the lira. In normal circumstances, therefore, the interpretation adopted in Ravida is unlikely to lead to anomalous results.
14. The question of currency fluctuations is also indirectly relevant for another reason. Although the present case is concerned with increases in the Italian benefit due to cost-of-living adjustments, exactly the same problems would arise if the value of the Italian benefit, expressed in Belgian currency, rose as a result of monetary developments. A 10% increase in the value of the lira, as against the Belgian franc, has the same effect as a 10% increase in the Italian pension, at least as regards the value of the Italian pension in Belgium. It would be logical therefore for the Belgian institution to apply the same rule whenever the value of the Italian pension changes, irrespective of whether the change is due to an index-linked adjustment or to monetary developments. In this regard, Decision No 99 of 13 March 1975 of the Administrative Commission on Social Security for Migrant Workers (Official Journal 1975 C 150, p. 2) is of interest. That decision deals with the interpretation of Article 107 of Regulation No 574/72, which prescribes a quarterly reference period for determining the rate of conversion into one national currency of amounts shown in another national currency, inter alia for the purpose of implementing Article 12(2) of Regulation No 1408/71. The decision interprets Article 107 as determining the rate of conversion applicable when benefits are fixed or when they are recalculated in accordance with Article 51(2) of Regulation No 1408/71. It goes on to state that, on the other hand, Article 107 "involves no obligation to recalculate current benefits (especially pensions) every three months by applying the rate of conversion specified in Article 107". Thus the decision makes it clear that, if the value of Mrs Cassamali' s Italian pensions were to increase as a result of currency appreciation, the Belgian institution should not take such an increase into account except in the circumstances referred to in Article 51(2) of Regulation No 1408/71 (i.e. when the method of determining or the rules for calculating benefits is altered).
15. For all of the above reasons, I am of the opinion that the Court should confirm the ruling given in the Ravida judgment, and I would answer the questions referred by the Tribunal du Travail, Brussels, as follows:
1) Article 51 of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons, and to members of their families moving within the Community is to be interpreted as meaning that where, under national rules against the overlapping of benefits, the pension paid to a worker by a Member State has been calculated at an amount such that, when added to the amount of a benefit paid by another Member State, it does not exceed a certain ceiling, the pension is not to be recalculated in order to prevent that ceiling from being exceeded, if subsequent adjustments are made to the other benefit on account of the general evolution in the economic and social situation.
2) No other provision of Community law permits such a recalculation to be made in the said circumstances.
(*) Original language: English.
Translation
Full & Egal Universal Law Academy