«JUDGMENT OF THE COURT 14 December 2007 (Failure by a Contracting Party to fulfil its obligations – Article 4(1) and (2a) of Regulation EEC 1408/71 ...»
54 As to whether the helplessness allowance constitutes a benefit in cash or in kind, the Defendant draws attention to the fact that the allowance is not only granted to persons living in their own home but also to persons residing in special homes for the elderly or the disabled. If a person resides in such a home, a certain daily or monthly fee has to be paid. In case of the recipient of a helplessness allowance, an additional charge is added to the normal fee. The amount of this extra charge is the exact equivalent to the amount granted as helplessness allowance. In this instance, the allowance is clearly a benefit in kind, since it covers the exact costs met by the recipient.
55 The Defendant considers it important that elderly and handicapped persons should be enabled to remain in familiar surroundings (preferably their own home) and be looked after by persons whom they are close to (normally family members). Therefore, it is found to be only just and fair when the same charge – 14 – that a special home can put on its bill is awarded as a benefit to those who stay at home with their family. The amounts of the helplessness allowance are small and cover only basically or partially the burden encountered by the carer or the carers. In a situation like this, the carer (often a family member) is not asked to provide the administration with a bill for his or her services. The administration has to show a certain level of respect and trust towards the recipient and the carer, and leave it to the discretion of the recipient to use the benefit awarded in the way it was intended, i.e. to reward or to compensate the carer or the carers for their help.
56 The United Kingdom asserts, inter alia, that in Snares and Partridge, the ECJ did consider the nature of the benefits at stake in light of the criteria for hybrid (or “special”) benefits set out in the case law. It is argued that the ECJ concluded that the allowances were in substance such hybrid benefits, and thus that those judgments did not depend on any possible constitutive effect of a listing in Annex IIa to Regulation 1408/71.
57 For the reasons set out in paragraph 45 above, the Defendant invites the Court to decide whether it is necessary to deal with ESA’s application. The Court notes that the application, which has been brought under Article 31 SCA, raises the Liechtenstein residence requirement for helplessness allowance as a general issue. It is thus irrelevant whether, in the individual case which may have prompted ESA’s interest in the matter, it has turned out that granting such allowances would fall under the competence of another EEA State.
The relationship between Article 10a and Annex IIa of Regulation 1408/71
58 The Defendant alleges that even though Annex IIa of Regulation 1408/71 is not considered to have constitutive effect in recent case law by the ECJ, Liechtenstein’s listing of the helplessness allowance in that Annex must nevertheless have such effect. The arguments for this position are set out in paragraphs 46–48 above.
59 Under Article 10a of Regulation 1408/71, persons to whom the Regulation applies shall be granted “the special non-contributory cash benefits referred to in Article 4(2a)” exclusively in the territory of the EEA State in which they reside, “provided that such benefits are listed in Annex IIa”.
60 Article 28(1) EEA provides that free movement for workers shall be secured within the European Economic Area. Self-employed persons are to be granted free movement according to Article 31(1) EEA. The aim of Regulation 1408/71 is to facilitate the exercise of this freedom, cf. Article 29 EEA. If Annex IIa were to have constitutive effect where the criteria under Article 4(2a) are not fulfilled, a situation could arise in which the coordination of social security benefits sought – 15 – by Regulation 1408/71 would not be achieved, to the detriment of the individual concerned. For instance, in a person’s State of residence a certain type of allowance may be considered as falling under Article 4(1) and therefore as an exportable benefit which the person would have to claim from another State.
Where that other State has had the same type of allowance listed in Annex IIa contrary to Articles 4(2a) and 10a, the person concerned then loses his or her right to the allowance if the listing is deemed to have constitutive effect. Thus, in order to safeguard the interests of individuals who have availed themselves of the right to free movement under the EEA Agreement, it is necessary to interpret Articles 4(2a), 10a and Annex IIa of the Regulation to the effect that listing in the Annex is only a necessary, but not a sufficient, precondition for considering a certain benefit as non-exportable under Article 10a.
61 This is in conformity with recent case law of the ECJ which has clarified that entries in Annex IIa do not have constitutive effect. Particular reference is made to Jauch, Skalka and Hosse, respectively at paragraphs 21−22, 19−21 and 25.
62 Under the system of Regulation 1408/71, as amended by Regulation 1247/92, the entries in Annex IIa are not a matter only for the State concerned. In the EC, the Annex was adopted as an integral part of Regulation 1247/92 under the relevant decision-making procedure laid down in the EC Treaty. In the EEA, the content of the Annex is a matter to be agreed upon by all Contracting Parties under the decision-making procedure of that Agreement. Thus, the fact that Liechtenstein gained the acceptance of the other Contracting Parties for its entries in Annex IIa does not in itself put that State in a position different from that of any other Contracting Party to the EEA Agreement.
63 Moreover, in its interpretation of the EEA Agreement, the Court cannot be bound by mere expectations of the Contracting Parties as to the exact content of the obligations the Parties enter into. Neither Decision 1/95 of the EEA Council, invoked by the Defendant, nor the Declarations annexed to that Decision, contain anything which could lead to the understanding that Liechtenstein’s obligations under Articles 4, 10a and Annex IIa of Regulation 1408/71 are different from those of the other Contracting Parties.
64 The Court concludes from this that Liechtenstein’s listing of the helplessness allowance in Annex IIa of Regulation 1408/71 does not suffice to make this allowance a non-exportable benefit under Article 10a of the Regulation.
The helplessness allowance and Article 4 of Regulation 1408/71 65 ESA argues that the helplessness allowance constitutes a sickness benefit under Article 4(1)(a) of Regulation 1408/71 and therefore cannot be considered a “special non-contributory benefit” falling under Article 4(2a) of the Regulation.
The Defendant, on the other hand, argues that the allowance is solely intended as a specific protection for the disabled and rightly listed in Annex IIa as a “special non-contributory benefit” covered by Article 4(2a)(b) of the Regulation.
– 16 – 66 It follows from the scheme of Regulation 1408/71 that the concept of ‘social security benefit’ under Article 4(1) and the concept of ‘special non-contributory benefit’ within the meaning of Article 4(2a) are mutually exclusive (see for comparison Hosse, at paragraph 36).
67 Article 4(2a) was introduced into Regulation 1408/71 by Regulation 1247/92. It follows from recital 8 of the preamble to Regulation 1247/92 that the new paragraph 2a of Article 4 applies to non-contributory benefits which are “special” in the sense that they exhibit features both of social security and of social assistance.
68 In order to qualify under Article 4(2a) of Regulation 1408/71, a benefit not only has to be “special” in the particular meaning explained above. It also has to fulfil the more detailed requirements of either litra a or litra b of Article 4(2a).
69 The Defendant has only invoked Article 4(2a)(b) which covers special noncontributory benefits intended “solely as specific protection for the disabled”.
The allowance in question does not fulfil that requirement. It is awarded to all those who permanently require a degree of help in order to carry out certain daily tasks without any qualification as to why they are helpless, including inter alia those who are helpless due to old age. Consequently, the helplessness allowance is not solely intended for the disabled.
70 Thus, the helplessness allowance does not meet the criteria under Article 4(2a)(b).
71 As concerns Article 4(1) of Regulation 1408/71, the ECJ has consistently held that a benefit is to be regarded as a social security benefit where it is granted, without any individual and discretionary assessment of personal needs, to the recipients on the basis of a statutorily defined position and relates to one of the risks expressly listed in Article 4(1) of Regulation 1408/71 (see, inter alia, Hosse, at paragraph 37, Moleenar, at paragraph 20, Jauch, at paragraph 25, and Case C-299/05 Commission v European Parliament and Council, judgment of 18 October 2007, not yet reported, at paragraph 56).
72 ESA submits that the allowance fulfils these criteria with regard to the risk of sickness, as listed in Article 4(1)(a) of the Regulation. This is contested by the Defendant, arguing that providing care cannot be compared to medical assistance.
73 As already noted, the allowance in question is granted to all who fulfil legally defined criteria as to their need for personal assistance in their daily lives.
Therefore, it is granted without any individual and discretionary assessment of personal need and on the basis of a statutorily defined position.
to inter alia invalidity and old-age. The ECJ has consistently held that benefits which aim to improve the state of health and the quality of life of persons reliant on care are essentially intended to supplement sickness insurance benefits and must be regarded as ‘sickness benefits’ (see, with regard to care allowances largely similar to the one in question, Molenaar and Jauch, both at paragraphs 24–25). If the helplessness allowance were to be considered a different type of benefit where the recipient’s need for care does not result from sickness in the strict sense of the word, the export of the allowance would have to follow several different sets of rules. That would make the legal situation less transparent for all parties involved. This would go against the aim of Regulation 1408/71, which is to facilitate the free movement of persons. On these grounds, benefits such as the Liechtenstein helplessness allowance must be characterised as “sickness benefits” within the meaning of Article 4(1)(a) of Regulation 1408/71.
The helplessness allowance as a ‘cash benefit’
75 In case the Court should come to the conclusion that the helplessness allowance falls outside the scope of Article 4(2a) and inside the scope of Article 4(1), then the Defendant argues that the allowance must be regarded not as a ‘cash benefit’ but as a benefit ‘in kind’, cf. paragraphs 54 and 55 above. Consequently, it would be for the person’s State of residence to award such a benefit under Articles 19(1)(a), 25(1)(a) and 28(1)(a) of Regulation 1408/71.
76 The Court notes that the allowance is awarded based on fixed rates depending on the degree of helplessness and that these rates determine the additional charge mentioned in paragraphs 54 and 55 above. It is thus questionable whether that charge can be said to be a cost brought about by the person’s condition and in turn covered by the helplessness allowance. Moreover, where the allowance is paid to recipients still living at home, it is in any event difficult to see how the fixed amounts could provide exact cover for costs brought about by the recipients’ condition. In addition, it is clear from the written observations made by the Defendant that it is left to the recipients’ discretion to use the allowance as intended. Under these circumstances, the helplessness allowance cannot be considered a benefit in kind, see for comparison Molenaar, at paragraphs 31–34.
Rather, it must be considered a ‘cash benefit’ under Articles 19(1)(b), 25(1)(b) and 28(1)(b) of Regulation 1408/71.
77 In light of the above, the Court holds that the Principality of Liechtenstein, by applying a requirement of residence for entitlement to the helplessness allowance, has failed to fulfil its obligations pursuant to Articles 19(1) and (2), 25(1) and 28(1) of the Act referred to at point 1 of Annex VI to the EEA Agreement, i.e. 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, as adapted to the EEA Agreement by Protocol 1 thereto.
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78 Under Article 66(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the EFTA Surveillance Authority has requested that the Principality of Liechtenstein be ordered to pay the costs and the latter has been unsuccessful, it must be ordered to pay the costs. The costs incurred by the United Kingdom and by the Commission of the European Communities are not recoverable.