JUDGMENT OF 9. 7. 1980 — CASE 807/79 GRAVINA v LANDESVERSICHERUNGSANSTALT SCHWABEN
In Case 807/79 REFERENCE to the Court under Article 177 of the EEC Treaty by the Sozialgericht [Social Court] Augsburg for a preliminary ruling in the action pending before that court between
THE COURT composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart and T. Koopmans, Judges, Advocate General: J.-P. Warner Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
I — Facts and procedure
II — Written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A — Observations of the plaintiffs in the main action
(a) First question
(b) Second question
B — Observations of the Italian Government
C — Observations of the Landesversicherungsanstalt Schwaben
(a) First question
(b) Second question
D — Observations of the Commission
1. The interpretation of Article 78 (2) of Regulation No 1408/71
2. The calculation of the benefit
3. The compatibility of Article 78 (2) of Regulation No 1408/71 with Article 51 of the Treaty
4. The compatibility of Article 78 (2) of Regulation No 1408/71 with Article 14 of the Grundgesetz
III — Oral procedure
Decision
Costs
I —. Facts and procedure
(a). Since the plaintiffs are entitled to orphans' pension by virtue of the national legislation alone, the qualifying period of 60 months provided for by Article 1263 (2) of the Reichsversicherungsordnung having been fulfilled, and since that entitlement has not been suspended in accordance with Article 1315 (2) of the Reichsversicherungsordnung, it can only be suspended by virtue of Article 78 (2) of Regulation No 1408/71;
(b). The defendant's contention is questionable in that it would result in depriving a migrant worker or a survivor of a right acquired under the national legislation of a Member State — which would be incompatible with the principles of the Petroni judgment of 21 October 1975 (Petroni v ONPTS [1975] ECR 1149) — and it is based on the judgment in Case 19/76, cited above, which is wrongly relied upon since in that case the plaintiff in the main action did not have any entitlement to benefits under the national legislation. Furthermore, Article 78 (2) of Regulation No 1408/71 does not amount to a special prohibition against overlapping going beyond the general rules set forth in Article 12 of the said regulation;
(c). Finally, the defendant's contention leads to a problem of compatibility between Article 78 as so interpreted and the Grundgesetz [Basic Law] of the Federal Republic of Germany. In effect, the plaintiffs' right to payment may be regarded as a personal property right as against the public authorities and to deprive the plaintiffs of that right would amount to an infringement of Article 14 of the Grundgesetz. This problem, moreover, has already been raised by the Bundessozialgericht in a question submitted to the Court in the Maggio case.
1. In the event of the residence of orphans being transferred to another Member State does Article 78 (2) of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 have the effect of enabling the competent institution of a Member State to withdraw benefits, within the meaning of Article 78 (1) of the regulation, which have already been duly awarded in that Member State if, when the benefits were awarded for the first time pursuant to Article 78 (2) of the regulation, the institution of that other Member State was the competent institution?
2. If such is the case, is withdrawal justified even where entitlement to benefits within the meaning of Article 78 (1) of Regulation No 1408/71 is conferred by national law alone?
II —. Written observations submitted pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC
A —. Observations of the plaintiffs in the main action
(a). First question
1. Such a result would be contrary to the intention of the Community legislature whose aim has been to make the determination of the amount of benefit and the ascertainment of the competent insurance institution simpler, clearer and speedier.
2. That interpretation, which involves the loss of benefits acquired under German law alone, is not in accordance with Article 51 of the EEC Treaty which guarantees the retention of entitlement to benefit acquired by the worker for himself and for his dependants. Given that the Court has already recognized (see judgment of 13 July 1976 in Case 19/76, cited above) that Regulation No 1408/71 must not have the result of depriving the migrant worker of any right which he has acquired under the legislation of the Member State in which he has worked and given that, were the defendant's interpretation to be followed, Article 78 would permit of a restriction upon the rights guaranteed by Article 51 and would amount to a fresh restriction upon rights other than those provided for in Article 12 of the said regulation, the said Article 78 would be contrary to the Treaty.
3. The European legislature has decided that the entitlement to benefit and the competent insurance institution should be determined once and for all on the materialization of the risk. Only that objective can give meaning to the first sentence of Article 78 (2) which states that Orphans' benefits shall be granted... irrespective of the Member State in whose territory the orphan... is resident. That is confirmed by the Council Protocol on Article 78 (2) (b) (ii) which — giving an official interpretation of the regulation — provides that the determination of the competent institution is made once and for all. It is also confirmed by the provision at the end of Article 78 which stipulates that in regard to orphans of an insured person already in receipt of a pension, the legislation of the Member State in which the insured person resided remains applicable after the death of the said pensioner. It is not logical to draw a distinction between the orphans of an insured person who was already entitled to a pension and the orphans of an insured person who was not yet in receipt of a pension.
4. Only the continued payment of accrued benefits is such as to ensure a balance in the financial burdens to be borne by the Member States. It is, indeed, more common for the children of workers to remain in their country of origin or to return there after the death of their father, so it is only exceptionally that the country of immigration is responsible for orphans and it does not accord with the spirit of Regulation No 1408/71, which provides for the maintenance of a balance between Member States, to place responsibility on a single Member State.
5. Orphans must be guaranteed, if possible, a standard of living equivalent to that with which the deceased worker provided them. It is that guarantee which the Community legislature had in mind in providing that orphans' benefits must be granted in accordance with the legislation of the State to which the deceased worker had been subject for the longest period (Article 78 (2) (b) (ii)).
6. Finally, under German legislation, an administrative act must be regarded as binding after the expiry of the time-limit for an appeal unless there has been material change in the facts or the basis upon which the decision was taken. If a transfer of residence were to be sufficient to entail the rescission of a binding decision, the aim of Article 51 of the Treaty would not be entirely achieved.
(b). Second question
B —. Observations of the Italian Government
C —. Observations of the Landesversicherungsanstalt Schwaben
(a). First question
(b). Second question
D —. Observations of the Commission
1. The interpretation of Article 78 (2) of Regulation No 1408/71
2. The calculation of the benefit
3. The compatibility of Article 78 (2) of Regulation No 1408/71 with Article 51 of the Treaty
4. The compatibility of Article 78 (2) of Regulation No 1408/71 with Article 14 of the Grundgesetz
1. Where a deceased worker has been subject to the legislation of several Member States, orphans' benefits within the meaning of Article 78 (1) of Regulation No 1408/71 are provided, pursuant to paragraph (2) (b) (i) of that article, in accordance with the legislation of the State in the territory of which the orphans reside, provided that entitlement to those benefits exists there by virtue of the legislation of that State, regard being had, where appropriate, to the provisions of Article 79 (1) (a) of the regulation. Where the orphans transfer their residence to another Member State following the award of benefits an alteration in the legislation applicable by virtue of Articles 78 (2) (b) may result therefrom.
2. The legal, consequences of Article 78 (2) (b) (i) arise in the event of a transfer of residence to the territory of another Member State, even where an entitlement to benefits within the meaning of Article 78 (1) of Regulation No 1408/71 existed by virtue only of the legislation of the Member State on the territory of which the orphans resided before transferring their residence.
III —. Oral procedure
1. By order of 25 October 1979, which was received at the Court on 28 November 1979, the Sozialgericht Augsburg referred to the Court for a preliminary ruling two questions on the interpretation of Article 78 (2) of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (Official Journal, English Special Edition 1971 (II), p. 416).
2. Those questions have been put in the context of a dispute between the legitimate children of an Italian national, who died on 6 July 1973 in the Federal Republic of Germany where he had completed 141 months of contributions under the German invalidity and old-age insurance schemes after previously completing 42 months under the Italian scheme, and the competent German institution which, on the mother's transferring the family residence to Italy in May 1974, ceased to pay them the orphan's pensions which they had been awarded under German law alone and which had been paid to them in the Federal Republic of Germany whilst they were still resident there after their father's death.
3. The said article, as amended by Regulation (EEC) No 2864/72 of the Council of 19 December 1972 (Official Journal, English Special Edition 1972 (31 December), p. 15 (original reference L 306, p. 1) provides that the said pension shall be granted...
4. In view of this provision and the facts of the case — involving a refusal to continue payment to orphans who have transferred their residence to a Member State where they are in a position to enjoy other benefits of the same kind — the Sozialgericht Augsburg referred to the Court the following questions:
5. Those two questions together raise the issue, in regard to Article 78 (2) (b) (i), of the effect of a transfer of residence from one Member State to another of orphans who are in receipt of benefits derived from a deceased worker who was subject to the legislation of the two Member States of residence.
6. In order to settle the issue, it is important to place the provision of which the interpretation is sought in the context of Article 51 of the Treaty which requires the Council to adopt such measures in the field of social security as are necessary to provide freedom of movement for workers. The aim of Article 51 would not be achieved if, as a result of the exercise of their right to freedom of movement, workers were to lose the social security advantages guaranteed to them, in any event, by the legislation of a single Member State.
7. The regulations on social security for migrant workers did not set up a common scheme of social security, but allowed different schemes to exist, creating different claims on different institutions against which the claimant possesses direct rights by virtue either of national law alone or of national law supplemented, where necessary, by Community law relating, in particular, to the lifting of conditions of residence. In its judgment of 6 March 1979 in Case 100/78 Rossi v Caisse de Compensation pour Allocations Familiales [1979] ECR 831 the Court stated, moreover, that the Community rules could not, in the absence of an express exception consistent with the aims of the Treaty, be applied in such a way as to deprive a migrant worker or his dependants of the benefit of a part of the legislation of a Member State. Nor may those rules bring about a reduction in the benefits awarded by virtue of that legislation. Regulation No 1408/71, in laying down rules for the coordination of the various national laws, is inspired in fact by the fundamental principle that the said rules must guarantee workers moving within the Community the entirety of benefits acquired in the different Member States up to the limit of the greatest amount of those benefits.
8. In accordance with those principles, therefore, the provisions of Article 78 (2) of Regulation No 1408/71 may not be interpreted in such a way that, by the substitution of benefits provided by the new State of residence for the benefits previously acquired under the legislation of another Member State alone, the orphans of a deceased worker who was subject to the legislation of more than one Member State are prevented from receiving the greatest amount of those benefits. Where, therefore, the residence of the orphans is transferred to the territory of a Member State where an entitlement to benefits is acquired by them under the legislation of that State, it is necessary to compare the amount of the benefits actually received with the actual amount of the benefits which they would have continued to receive in the other Member State and, if the amount of the new benefits is less than that of the benefits previously acquired, to acknowledge the orphans to be entitled, as against the competent institution of the other Member State where the entitlement to the greater amount was acquired, to supplementary benefits equal to the difference between the two amounts.
9. That answer allows the issue raised by the two questions submitted by the Sozialgericht Augsburg to be resolved.
10. The costs incurred by the Commission of the European Communities and the Italian Government, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.
On those grounds, THE COURT in answer to the questions referred to it by the Sozialgericht Augsburg by order of 25 October 1979, hereby rules: