2012/01/31 - Pl. ÚS 5/12: Slovak Pensions

31 January 2012

Slovak Pensions XVII – application of the Agreement between the CR and the SR on Social Security, obligations in international and EU law

CZECH REPUBLIC

CONSTITUTIONAL COURT

JUDGMENT

 

IN THE NAME OF THE REPUBLIC

 

 

The

Plenum of the Constitutional Court, composed of Vlasta Formánková,

Vojen Güttler, Pavel Holländer, Ivana Janů, Vladimír Kůrka, Jiří Mucha,

Jan Musil, Jiří Nykodým, Pavel Rychetský, Miloslav Výborný, Eliška

Wagnerová and Michaela Židlická, ruled on the constitutional complaint

of K. H., represented by JUDr. Barbora Frydrychová, attorney, with her

office at 110 00 Prague 1, Senovážné nám. 23, against the decision of

the Supreme Administrative Court of 31 August 2011, ref. no.

6 Ads 52/2009-88, and the decision of the Regional Court in Hradec

Králové, Pardubice branch, of 29 January 2009, ref. no. 52 Cad

35/2008-40, setting his old age pension, with the participation of the

Czech Social Security Administration, with its office at 225 08 Prague

5, Křížová 25, as a secondary party to the proceeding, as follows:

 

The

judgment of the Supreme Administrative Court of 31 August 2011, ref.

no. 6 Ads 52/2009-88, and the judgment of the Regional Court in Hradec

Králové, Pardubice branch, of 29 January 2009, ref. no. 52 Cad

35/2008-40, and the decision of the Czech Social Security Administration

of 8 February 2008, ref. no. 450 811 075/428, are annulled.

 

 

REASONING

 

I.

Outline of the case according to the constitutional complaint

 

In

the petition submitted for delivery to the Constitutional Court on 25

November 2011, i.e., by the deadline specified in § 72 par. 3 of Act

no. 182/1993 Coll., on the Constitutional Court, as amended by later

regulations, the complainant seeks the annulment of the judgment of the

Supreme Administrative Court of 31 August 2011, file no. 3 Ads 52/2009,

and the judgment of the Regional Court in Hradec Králové, Pardubice

branch, of 29 January 2009, ref. no. 52 Cad 35/2008-40, setting his old

age pension. He believes that these decisions of  the

ordinary courts infringe his fundamental right to adequate material

security in old age under Art. 30 of the Charter of Fundamental Rights

and Freedoms (the “Charter”), his fundamental right arising from the

principles of equality and the prohibition of discrimination under

Art. 1 and Art. 3 par. 1 of the Charter and his fundamental right to

judicial and other legal protection under Art. 36 of the Charter.

 

 

II.

Overview of the case in proceedings before the ordinary courts

 

The

complainant, a citizen of the Czech Republic with permanent residence

in its territory, was an employee of the Czechoslovak National Railways

(the “CNR”) from 20 July 1964; his employment relationship was agreed in

an employment agreement with the CNR – Northwest Rail Administration in

Prague , which was a branch of the CNR. On the basis of that agreement

he worked as an engineer in the locomotive depot in Nymburk. From 4

November 1969 he was transferred to CNR – Eastern Rail Administration,

which was renamed CNR – Bratislava region, as of 1989, and which was

also a branch of the CNR. He worked in the Bratislava locomotive depot

from that date, also as an engineer, until 31 May 1993, when his

employment relationship was dissolved by agreement. On 1 June 1993, on

the basis of an employment agreement, he became an employee of the Czech

Railways, again as an engineer.

In

its decision of 8 February 2008, ref. no. 450 811 075/428, the Czech

Social Security Administration, pursuant to § 29 let. a) of Act no.

155/1995 Coll., on Pension Insurance, and Art. 46 par. 2 of Regulation

(EEC) No. 1408/71 of the Council 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 (the

“Regulation”) granted the complainant, as of 11 July 2007, an old age

pension of CZK 3,409 per month, with the provision that, under

government decree no. 256/2007 Coll., as of January 2008 he was entitled

to an old age pension of CZK 3,537 per month. In the reasoning of the

decision, it stated that an insurance period of 5,062 days completed in

the Czech pension insurance system, and an insurance period of 11,961

days completed in the Slovak pension insurance system were included when

setting the amount of the pension. According to the secondary party in

the proceeding before the Constitutional Court, the complainant’s

entitlement to an old age pension arose only taking into account the

period of insurance acquired in the Slovak pension insurance system, and

under Art. 46 par. 2 of the Regulation the basic and percent components

of a pension are set at an amount corresponding to the proportion of

the length of insurance periods completed under Czech legal regulations

to the total period of insurance in all member states.

 

The Regional Court in Hradec Králové, Pardubice branch, in its decision of 29 January 2009. ref. no. 52 Cad 35/2008-40,

denied the complainant’s complaint regarding the cited decision by the

secondary party. It reasoned primarily on the basis that the fact that,

during the relevant period of the applicable legal framework, the

company branches acted in the name of the company and lacked legal

capacity, does not, as a consequence, mean that their registered office

cannot be considered the registered office of an employer under Art. 20

par. 1 of the Agreement between the Czech Republic and the Slovak

Republic on Social Security, published as no. 228/1993 Coll. (the

“Agreement”), and Art. 15 of the Administrative Agreement on

implementing the Agreement, published as no. 117/2002 Coll. of

International Treaties (the “Administrative Agreement”). Under the

cited provision of the Administrative Agreement, the registered office

of the employer means the address that is registered in the Commercial

Register, and if the employer has registered a separate workplace or

other branch in the Commercial Register, the registered office means the

address of that separate workplace or branch. Regarding the

Constitutional Court’s case law (in particular, judgments file no. II.

ÚS 405/02, Pl. ÚS 4/06), to which the complainant referred in the

administrative complaint, the court stated that it applies to legally

and factually different cases, where a pension was granted before the

Czech Republic joined the European Union, so its subject matter was not

to review the relationship of national regulations to secondary European

law. However, according to the Regional Court, in the present matter,

the complainant was granted a pension only after the Czech Republic

joined the European Union, wherefore it is necessary, when evaluating

the grant, to begin with Annex III to the Regulation, which, according

to the Court, contains Art. 20 of the Agreement. This provision is part

of the directly applicable norms of European Union law, and therefore,

according to the Regional Court in Hradec Králové, this procedure cannot

be seen to violate the Constitution or the Charter; on the contrary, in

its opinion, a different procedure would be inconsistent with Art. 2

par. 2 of the Charter.

 

The

Supreme Administrative Court denied the complainant’s cassation

complaint concerning the judgment of the Regional Court, by decision of

31 August 2011, file no. 6 Ads 52/2009. In the reasoning, it first

recapitulated the relevant case law of the Constitutional Court

concerning analogous cases (in particular, judgments file no. III. ÚS

252/04, Pl. ÚS 4/06, IV. ÚS 301/05, I. ÚS 1375/07. It also pointed to

the decision of 23 September 2009, ref. no. 3 Ads 130/2008-107, where,

in a factually analogous case, it referred questions concerning its

subordination under the framework of European law to the Court of

Justice of the European Union (the “ECJ”) for a preliminary ruling.

 

In

the case which it referred to the ECJ for a preliminary ruling, the

Supreme Administrative Court then ruled, by judgment of 25 August 2011,

ref. no. 3 Ads 130/2008-204, in which it concluded that, in order to

review entitlements for benefit payments arising after 30 April 2004,

taking into account Constitutional Court judgment file no. II. ÚS

1009/08, and in consequence of the ECJ decision of 22 June 2011,  C-399/09,

there is no national legislation that could be considered binding and

on the basis of which the insurer would have an obligation to include

periods of employment completed by persons in the pension insurance

system of the former CSFR until 31 December 1992 in pension calculations

in the Czech pension insurance system in a greater scope than is

determined by Art. 20 of the Agreement, on the basis of the pension

applicant’s citizenship and permanent residence. In other words, the

Supreme Administrative Court, in that decision, concluded that at the

given moment the national rule constituted by the Constitutional Court

will not be applied, a rule which permits, when reviewing the

entitlement to an old age benefit and setting the amount thereof above

the framework of Art. 20 par. 1 of the Agreement, fully including a

period of employment in the pension insurance system of the former CSFR

until 31 December 1992, on the basis of Czech citizenship and permanent

residence in the Czech Republic. This decision also referred to

Constitutional Court judgments file no. Pl. ÚS 50/04 and Pl. ÚS 19/08,

in which the Constitutional Court agreed with the doctrine supported by

the German Constitutional Court (Solange), and on the basis thereof

concluded that it can intervene in a matter that was addressed as part

of the exercise of powers transferred to the European Union. In the

Constitutional Court’s opinion, delegation of the powers of national

bodies cannot continue in a case where they exercise them beyond the

scope of the powers of the European Union. In these cases, community

acts would be inapplicable in the Czech Republic, and the Czech national

bodies would again take over the relevant powers. Therefore, in the

opinion of the Supreme Administrative Court, the Constitutional Court’s

authority, in a proceeding on a constitutional complaint, to review

again a disputed legal issue, which was the subject matter of a ruling

on preliminary issues, and to insist on applying its rule, is not

affected in any way. That, according to the Supreme Administrative

Court, is its undoubted authority, not questioned by anyone at the

national level, arising from its role as the guardian of the

constitutionality and the sovereignty of the Czech Republic. Such a

judgment would be directly binding as a precedent both for the Czech

pension insurer, and for all ordinary courts.

 

In

the present case of complainant K. H., the Supreme Administrative Court

concludes from the foregoing that a conclusion that the ECJ judgment of

22 June 2011, C-399/09, according to the cited judgments file no. Pl.

ÚS 50/04 and file no. Pl. ÚS 19/08, is inapplicable, can be made only by

the Constitutional Court. Therefore, as in the case file no. 3 Ads

130/2008, in the present case the Supreme Administrative Court must take

this EU act as a starting point; even an expanded panel could not

deviate from it, if the legal issue in dispute were passed on to it for a

decision under § 17 of the Administrative Procedure Code. In the given

situation, when evaluating the entitlement to an old age benefit and

setting the amount thereof above the framework of Art. 20 par. 1 of the

Agreement it was possible to fully include the period of employment

completed until the dissolution of the Czechoslovak federation only if

the rule were applied not only to Czech citizens with permanent

residence in the Czech Republic, but also to Czech citizens with

permanent residence outside the Czech Republic, and especially to

citizens of other member states of the European Union. This rule too

would correspond to the conclusions stated in the Court of Justice of

the European Union decision of 22 June 2011,  C-399/09.

However, such a procedure would go even further beyond the framework of

Art. 20 par. 1 of the Agreement than the national rule constituted by

the Constitutional Court, and therefore, in the adjudicated matter, the

Supreme Administrative Court did not find any arguments for applying it.

On the contrary, in the given situation it agreed with the conclusion

of the judgment of 25 August 2011, ref. no. 3 Ads 130/2008-204, under

which the rule created by the Constitutional Court is not applied at the

given moment. According to the Supreme Administrative Court, for the

foregoing reasons, when reviewing the complainant’s entitlement to an

old age pension and the amount thereof from the Czech social security

system, periods of employment until 31 December 1992 could not be

considered Czech periods of employment solely on the basis of the

complainant’s Czech citizenship and his permanent residence in the Czech

Republic.

 

 

III.

Overview of objections and the proposed verdict of the constitutional complaint

 

The

complainant first objects that in the decisions contested by the

constitutional complaint the Supreme Administrative Court, as well as

the Regional Court in Hradec Králové, reached the incorrect conclusion,

based on Art. 15 par. 1 of the Administrative Agreement, that his

employer in the period in question had its registered office in the

Slovak Republic. In his opinion, the cited provision was no longer

valid, under Annex III to the Regulation; he considers the

interpretation that it is applicable, with the exception of expressly

designated articles, to be inconsistent with the text of the Regulation

and with its intentions. In this regard he refers to judgment file no.

III. ÚS 939/10 of 3 August 2010 (N 153/58 SbNU 295), in which the

Constitutional Court considered in detail the interpretation of Art. 15

of the Administrative Agreement in relation to Art. 20 of the Agreement

and to § 61 of Act no. 155/1995 Coll., and concluded, in agreement with

the opinion of the public Defender of Rights, that the organizational

unit Czechoslovak National Railways, Transportation Revenue

Administration, with its registered office in Bratislava, lacked legal

capacity, and thus was also not an entity authorized to enter into

employment agreements. In this regard he argues with the opinion of the

Supreme Administrative Court, that it is not possible to conclude,

solely on the basis of Art. 20 of the Agreement, that the registered

office of the complainant’s employer was not located, as of the day when

the federation was dissolved at “the address of the CNR central office

in Prague,” because he did not perform his work at the CNR central

office in Prague, nor did he ever claim to do so – as a locomotive

engineer he performed his work ordinarily and regularly in the Czech

Republic, where he conducted trains, in particular on the routes Komárno

– Bratislava – Brno – Praha – Ústí nad Labem and back, or the route

Košice – Praha and back. He is of the opinion that the argument based on

his de facto performing his work activity in the entire territory of

the then Czechoslovakia permits breaking through the rule that arises

from Art. 20 par. 1 of the Agreement and Art. 15 par. 1 of the

Administrative Agreement.

 

The

complainant also refers to the Constitutional Court’s settled case law

(in particular, judgments file no. IV. ÚS 228/06, II. ÚS 405/02, III. ÚS

252/04 and Pl. ÚS 4/06) in analogous cases. In connection with the

different review of the entitlements of citizens of the Czech Republic

to social security benefits, in view of recognition of insurance periods

based on employment relationships until 31 December 1992 with an

employer that had its registered office in what is now the Slovak

Republic, exercised before and after the Czech Republic’s entry into the

European Union, the complainant refers to Constitutional Court judgment

file no. I. ÚS 1375/07 – he believes that the legal conclusions

following from it also apply to entitlements exercised after the Czech

Republic’s entry into the European Union.

 

As

regards the ECJ opinion stated in its judgment of 22 June 2011,

 C-399/09, the complainant states that he meets the conditions that

ensue from it for a supplementary payment to an old age pension.

 

Due

to the foregoing, i.e. for violation of his fundamental right to

adequate material security in old age under Art. 30 of the Charter, his

fundamental right arising from the principle of equality and the

prohibition of discrimination under Art. 1 and Art. 3 par. 1 of the

Charter, and his fundamental right to judicial and other protection

under Art. 36 of the Charter, the complainant seeks annulment of the

judgment of the Supreme Administrative Court of 31 August 2011, file no.

6 Ads 52/2009, and the judgment of the Regional Court in Hradec

Králové, Pardubice branch, of 29 January 2009, ref. no. 52 Cad

35/2008-40.

 

 

IV.

Overview of the essential parts of the statements from the parties and the secondary party

 

In

response to the Constitutional Court’s request, under § 42 par. 4 and

§ 76 par. l of Act no. 182/1993 Coll., as amended by later regulations,

the party to the proceedings submitted a statement on the constitutional

complaint. The statement was delivered to the Constitutional Court on

20 December 2011. It states that in the present case the Supreme

Administrative Court concluded that the employment periods completed by

the complainant until 31 December 1992 cannot be considered as Czech

periods of pension insurance. In this regard, the panel ruling in the

matter, 6 Ads, took as its starting point the decision of the Supreme

Administrative Court of 25 August 2011, ref. no. 3 Ads 130/2008-204,

which was issued in the case in which questions were submitted to the

ECJ for a preliminary ruling. In its process, it also took into account

the fact that even an expanded panel of the Supreme Administrative Court

could not deviate from the decision by the ECJ if the disputed issue

were passed on to it for a ruling. In this situation, the statement

expresses the opinion that the complainant’s fundamental rights provided

in Art. 30 and 36 of the Charter were not violated in the proceedings

before the courts.

 

The party to the proceeding agrees with the complainant that, according to the ECJ judgment “where

discrimination contrary to EU law has been established, as long as

measures reinstating equal treatment have not been adopted, observance

of the principle of equality can be ensured only by granting to persons

within the disadvantaged category the same advantages as those enjoyed

by persons within the favored category, the latter arrangements, for

want of the correct application of EU law, being the only valid point of

reference remaining.” However, according to statement,  in

the decision contested by the constitutional complaint, the Supreme

Administrative Court took as its starting point the position that, for

purposes of reviewing an entitlement to benefits arising after 30 April

2004, as a consequence of the ECJ judgment there is no national rule

that could be considered binding, and on the basis of which the insurer

would have an obligation to include period of employment completed by

participants in the social security system of the former CSFR until 31

December 1992 in the Czech pension insurance system in a scope greater

than that determined by Art. 20 of the Agreement, on the basis of the

pension applicant’s citizenship and permanent residence. As a result of

the non-application of the rule to entitlements recognized as of 1 May

2004, there is also no administrative practice that could have aroused a

legitimate expectation among pension applicants that their applications

to have period of employment served in the pension insurance system of

the former CSFR until 31 December 1992 included beyond the scope of

Art. 20 par. 1 of the Agreement would be guaranteed and that

supplementary benefits would be granted. According to the party to the

proceeding, the specific case of former CNR employees does not represent

settled administrative practice, in terms of the definition provided in

the decision by the expanded panel of the Supreme Administrative Court,

ref. no. 6 Ads 88/2006-132, of 21 July 2009, because the employment

periods were included for them in a negligible number of cases, and the

practice has been in place for a relatively short time since the

issuance of Constitutional Court judgment file no. III. ÚS 939/10. In

view of the conclusions in the ECJ judgment, which the ruling panel

applied in accordance with the Supreme Administrative Court’s decision

in the case file no. 3 Ads 130/2008, the statement expresses the belief

that the issued decisions likewise did not violate the fundamental

rights arising from the principle of equality and the prohibition of

discrimination under Art. 1 a Art. 3 par. 1 of the Charter.

 

In

a situation where, in the Supreme Administrative Court’s opinion, the

ECJ judgment described the rule arising from the Constitutional Court’s

judgments to be discriminatory (point 50 of the judgment), it was not

possible to grant the complainant’s claim to provide a supplementary

benefit. Although it would be possible to object, for example, that the

ECJ did not have at its disposal all the decisive circumstances (point

47 of the judgment states that the ECJ was not presented with any facts

that could justify discriminatory treatment), the party to the

proceeding believes that the ECJ’s conclusions are clear that, in the

framework of the relevant provisions of the Regulation, the criterion of

citizenship and the criterion of residence are indirectly

discriminatory.

 

Based

on the grounds thus laid out, the Supreme Administrative Court proposes

that the Constitutional Court dismiss the present constitutional

complaint.

 

In

response to the Constitutional Court’s request under § 42 par. 4 and

§ 76 par. 2 of Act no. 182/1993 Coll., as amended by later regulations,

the secondary party, the Czech Social Security Administration, in its

statement, delivered to the Constitutional Court on 25 January 2012,

after repeating the conduct of the case, in particular its facts, refers

to the relevance of Art. 20 of the Agreement and Art. 15 par. 1 of the

Administrative Agreement for evaluation of the case. It states that “the

purpose of Art. 20 of the Agreement was to create a criterion for

evaluating period of pension insurance completed during the existence of

the Czechoslovak federation so that expenses for payment of pensions

would be divided between the successor states.” According to the

secondary party, Art. 15 par. 1 of the Administrative Agreement is a

reaction to the existence of companies active nationwide, and to the

need, in these cases, to set the company’s registered office as a factor

for distributing the expenses. From this viewpoint, it objects to the

consequences which it believes arise from the legal opinion contained in

judgment file no. III. ÚS 939/10, as a result of which, in such cases

the full expenses for payment of pensions would be borne by the

successor state where the registered office of a company active

nationwide was located. It fully agrees with the conclusions reached on

this issue by the party to the proceeding (in particular in decisions

ref. no. 6 Ads 14/2009-41, 3 Ads 37/2009-62, 4 Ads 80/2009-198, 6 Ads

25/2010-146, and 3 Ads 130/2008-204).

 

Regarding

the complainant’s objection that he should be granted a supplementary

benefit to his old age pension, the secondary party states that no

conditions for an entitlement to the requested supplementary benefit to

the old age pension are provided in any legislation, and at present

granting a supplementary benefit, or granting analogous benefits, is on

the contrary disqualified by § 106a of Act no. 155/1995 Coll., as

amended by Act no. 428/2011 Coll., which provides that a pension from

Czech pension insurance cannot be granted or increased for periods of

pension insurance completed under Czechoslovak legislation before the

date of dissolution of the CSFR, i.e. before 1 January 1993, which,

under Art. 20 of the Agreement are considered to be periods of pension

insurance of the Slovak Republic, nor can balancing, settlements,

supplemental payments or similar amounts related to a pension or part

thereof, or provided instead of a pension or part thereof, be granted on

the basis of these periods. Further, in the opinion of the Czech Social

Security Administration, the Constitutional Court’s existing case law

does not apply to cases in which a pension was granted after the Czech

Republic entered the European Union, because “it does not

comprehensively consider the relationship of national legislation and

coordinating Regulations, especially a conflict between the fundamental

constitutional values in the form of unilateral protection of citizens

of the Czech Republic with the principle of equal treatment also

enshrined in the primary law of the European Communities.”

 

In

conclusion, the statement expresses the belief that the secondary

party, in reviewing the complainant’s pension entitlements, acted with

respect for the “unquestioned purpose of Art. 15 par. 1 of the

Administrative Agreement” and acted in accordance with Czech legal

regulations.

 

 

V.

Assumption of the matter by the Plenum of the Constitutional Court

 

Under

Art. 1 par. 1 let. j) of the decision of the Plenum of the

Constitutional Court of 9 August 2011, ref. no. Org. 40/11, on assuming

competence, the Plenum of the Constitutional Court, pursuant to § 11

par. 2 let. k) of Act no. 182/1993 Coll., on the Constitutional Court,

as amended by later regulations, shall decide to assume a matter upon

the petition of any judge on the panel assigned to review and rule in

the matter, based on its exceptional gravity, with the consent of all

judges of the relevant panel and of the parties to the proceeding.

 

In

response to the request of the Constitutional Court, both the

complainant, in a filing delivered to the Constitutional Court on 11

January 2012, and the party to the proceeding, in a filing delivered to

the Constitutional Court on the same day, gave consent to the

assumption. In response to a petition from all the judges of panel III,

assigned to review and rule on the matter file no. III. ÚS 3536/11 in

the work schedule for 2012 (Org. 1/12), the Plenum of the Constitutional

Court decided to assume the matter, by resolution of 24 January 2012

ref. no. Pl. ÚS 5/12-1.

 

 

VI.

Waiver of a hearing

 

Under

§ 44 par. 2 of Act no. 182/1993 Coll., on the Constitutional Court, the

Constitutional Court can, with the consent of the parties, waive a

hearing, if it cannot be expected to clarify a matter  in

greater detail. In view of the fact that the parties, i.e. the

complainant impliedly to the express request of the Constitutional

Court, and the Supreme Administrative Court, in a filing delivered to

the Constitutional Court on 18 January 2012, stated their consent to

waive a hearing, and in view of the fact that the Constitutional Court

believes that a hearing cannot be expected to clarify the matter in

greater detail, a hearing in this matter was waived.

 

VII.

Review of the case under European law

 

In

the decision contested by the constitutional complaint, the Supreme

Administrative Court took as its starting point the legal conclusions

stated in case file no. 3 Ads 130/2008. Primarily, it referred to its

decision of 23 September 2009, ref. no. 3 Ads 130/2008-107, in which, in

a factually analogous case, it submitted the following questions to the

Court of Justice of the European Union for a preliminary ruling:

 

1.

Must point 6 of Annex III(A) to Council Regulation (EC) No 1408/71 …

read in conjunction with Article 7(2)(c) [thereof], according to which

the criterion for determining the successor state competent to determine

the value of periods of insurance completed by employed persons before

31 December 1992 under the social security scheme of the Czech and

Slovak Federal Republic is to remain applicable, be interpreted as

precluding the application of a rule of national law which provides that

the Czech social security institution is to take into account, with

regard to entitlement to a benefit and setting the amount thereof, the

entire period of insurance completed in the territory of the Czech and

Slovak Federal Republic before 31 December 1992, even though, according

to the abovementioned criterion, it is the social security institution

of the Slovak Republic which is competent to determine the value of that

period of insurance?

 

2. If

the first question is answered in the negative, must Article 12 EC in

conjunction with Articles 3(1), 10 and 46 of Regulation (EC) No 1408/71 …

be interpreted as meaning that the period of insurance completed under

the social security scheme of the Czech and Slovak Federal Republic

before 31 December 1992, which has already been taken into account once

to the same extent for benefit purposes under the social security scheme

of the Slovak Republic, cannot, pursuant to the abovementioned national

rule, be taken into account in its entirety only in respect of

nationals of the Czech Republic resident in the territory of the Czech

Republic for the purposes of entitlement to old age benefit and setting

the amount thereof ?

 

In its judgment of 22 June 2011, C-399/09, the ECJ stated that by the first question, the referring court sought in

essence to ascertain whether the provisions of point 6 of Annex III(A)

to Regulation No 1408/71, read in conjunction with Article 7(2)(c)

thereof, preclude a national rule, such as that at issue in the main

proceedings, which provides for the payment of a supplement to old age

benefit where the amount of such benefit, awarded under Article 20 of

the Agreement, is lower than that which would have been received if the

retirement pension had been calculated in accordance with the legal

rules of the Czech Republic. It noted that the

effect of the abovementioned provisions of Regulation No 1408/71 is to

preserve Article 20 of the Agreement, which establishes that the

criterion for the identification of the applicable scheme and the

authority with competence to grant social security benefits is the

country in which the employer was resident at the time of the

dissolution of the Czech and Slovak Federal Republic. According to the ECJ, it

is clear from the case–law of the Constitutional Court in analogous

matters that the rule on the allocation of competence, as between the

Czech and Slovak social security institutions for the purpose of taking

into account periods of insurance completed before the date of the

dissolution of the Czech and Slovak Federal Republic, a rule introduced

by Article 20 of the Agreement, is neither called into question nor

affected, since the objective of the case-law of the Constitutional

Court is simply to increase the amount of the Czech old age benefit

awarded under the Agreement in order to bring it to the level which

would have been awarded under national law alone. Accordingly,

what is at issue is not the award of a parallel Czech old age benefit,

nor one and the same period of insurance being taken into account twice,

but merely the elimination of an objectively established difference

between benefits from different sources. The ECJ stated that such an approach avoids ‘the overlapping  of

national legislations applicable’, in accordance with the objective set

out in the eighth recital of the preamble to Regulation No 1408/71, and

does not run counter to the criterion for the allocation of competence

established in Article 20 of the Agreement, which is maintained under

Article 7(2)(c) of Regulation No 1408/71, read in conjunction with point

6 of Annex III(A) to that regulation. In the light of the foregoing,

its answer to the first question referred was that the provisions of

point 6 of Annex III(A) to Regulation No 1408/71, read in conjunction

with Article 7(2)(c) thereof, do not preclude a national rule, such as

that at issue in the main proceedings, which provides for payment of a

supplement to old age benefit where the amount of such benefit, awarded

under Article 20 of the Agreement, is lower than that which would have

been received if the retirement pension had been calculated in

accordance with the legal rules of the Czech Republic.

 

According to the ECJ, by the second question the referring court sought, in

essence, to ascertain whether the Constitutional Court judgment, which

allows payment of a supplement to old age benefit solely to individuals

of Czech nationality residing in the territory of the Czech Republic,

constitutes discrimination which is prohibited under Article 12 EC and

the combined provisions of Articles 3(1) and 10 of Regulation No

1408/71. In this regard the ECJ notes that

the purpose of Article 3(1) of Regulation No 1408/71 is to ensure, in

accordance with Article 39 EC, equality of treatment in matters of

social security, without distinction based on nationality, for the

persons to whom that regulation applies by abolishing all discrimination

in that regard deriving from the national legislation of the member

states (Case C-332/05 Celozzi [2007] ECR I-563, paragraph 22). According to the ECJ, the

documents before the Court show undoubtedly that the Constitutional

Court judgment discriminates, on the ground of nationality, between

Czech nationals and the nationals of other member states. As regards the

requirement of residence in the territory of the Czech Republic, it

also notes that the principle of equality of treatment, as referred to

in Article 3(1) of Regulation No 1408/71, prohibits not only overt

discrimination based on the nationality of the beneficiaries of social

security schemes but also all covert forms of discrimination which,

through the application of other distinguishing criteria, lead in fact

to the same result (Celozzi, paragraph 23). Therefore,

it considers that conditions imposed by national law must be regarded

as indirectly discriminatory where, although applicable irrespective of

nationality, they affect essentially migrant workers or the great

majority of those affected are migrant workers, where they are

applicable without distinction but can more easily be satisfied by

national workers than by migrant workers, or where there is a risk that

they may operate to the particular detriment of the latter (see Celozzi, paragraph 24). That

applies to a condition of residence, such as that at issue in the main

proceedings, which essentially affects migrant workers who reside in the

territory of member states other than their state of origin. Moreover, the ECJ notes that Article

10(1) of Regulation No 1408/71 establishes the principle that residence

clauses are to be waived by protecting the persons concerned from any

negative effect which might be caused by the transfer of their residence

from one member state to another. From the foregoing, the ECJ concludes that [49] the

Ústavní soud judgment involves a direct discrimination based on

nationality and indirect discrimination based on nationality, as a

result of the residence test, against those who have made use of their

freedom of movement. As

regards the consequences of failure to observe the principle of equal

treatment in a situation such as that in the main proceeding, the ECJ

states that where discrimination

contrary to EU law has been established, as long as measures reinstating

equal treatment have not been adopted, observance of the principle of

equality can be ensured only by granting to persons within the

disadvantaged category the same advantages as those enjoyed by persons

within the favoured category, the latter arrangements, for want of the

correct application of EU law, being the only valid point of reference

remaining (Case of 26 January 1999, Terhoeve, C-18/95, [1999] ECR I-345, paragraph 57, and the case law cited).

 

As regards the possible retroactive effects of its decision, the ECJ states that, as

regards the implications, for persons, such as Ms Landtová, belonging

to the category of those who have benefited from the rule deriving from

the Constitutional Court judgment, of the finding that that judgment is

discriminatory, while, as Czech law currently stands, the competent

authority for the purpose of granting the pension cannot lawfully refuse

to extend entitlement to the supplement to those who are placed at a

disadvantage, nothing precludes that authority from maintaining that

right for the category of persons who already benefit from it under the

national rule. EU

law does not, provided that the general principles of EU law are

respected, preclude measures to re-establish equal treatment by reducing

the advantages of the persons previously favoured (see Case C-200/91 Coloroll Pension Trustees [1994]

ECR I-4389, paragraph 33). However, before such measures are adopted,

there is no provision of EU law which requires that a category of

persons who already benefit from supplementary social protection, such

as that at issue in the main proceedings, should be deprived of it. In

the light of the foregoing, the ECJ’s

answer to the second question referred was that the combined provisions

of Articles 3(1) and 10 of Regulation No 1408/71 preclude a national

rule, such as that at issue in the main proceedings, which allows

payment of a supplement to old age benefit solely to Czech nationals

residing in the territory of the Czech Republic, but it does not

necessarily follow, under EU law, that an individual who satisfies those

two requirements should be deprived of such a payment.

 

On the basis of these considerations, the European Court of Justice, in its judgment of 22 June 2011,  C-399/09 answered the referred questions as follows:

 

1. The

provisions of point 6 of Annex III(A) to Council Regulation (EC) 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 amended and updated by Council

Regulation (EC) No 118/97 of 2 December 1996 and as amended by

Regulation (EC) No 629/2006 of the European Parliament and of the

Council of 5 April 2006, read in conjunction with Article 7(2)(c)

thereof, do not preclude a national rule, such as that at issue in the

main proceedings, which provides for payment of a supplement to old age

benefit where the amount of that benefit, granted pursuant to Article 20

of the bilateral agreement between the Czech Republic and the Slovak

Republic signed on 29 October 1992 as a measure to regulate matters

after the dissolution of the Czech and Slovak Federal Republic, is lower

than that which would have been received if the retirement pension had

been calculated in accordance with the legal rules of the Czech

Republic.

 

2. The

combined provisions of Article 3(1) and Article 10 of Regulation No

1408/71, as amended by Regulation No 629/2006, preclude a national rule,

such as that at issue in the main proceedings, which allows payment of a

supplement to old age benefit solely to Czech nationals residing in the

territory of the Czech Republic, but it does not necessarily follow,

under European Union law, that an individual who satisfies those two

requirements should be deprived of such a payment.

 

In

a number of its decisions the Constitutional Court defined the

constitutional context for evaluating the relationship between the Czech

Republic and the European Union, particularly by interpreting Art. 10

and 10a, as well as Art. 1 par. 1 and 2 and Art. 9 par. 2 of the

Constitution. The key judgments in this regard are file no. Pl. ÚS

50/04, Pl. ÚS 66/04, Pl. ÚS 19/08, and Pl. ÚS 29/09.

 

The

Constitutional Court determined the following principles for evaluating

the relationship between the laws of the Czech Republic and European

law:

 

The

Constitutional Court stated the principle of Euro-conformity in

judgment file no. Pl. ÚS 66/04 regarding the constitutionality of the

legal institution of a European arrest warrant: “A

constitutional principle can be derived from Article 1 par. 2 of the

Constitution, in conjunction with the principle of cooperation laid down

in Art. 10 of the EC Treaty, according to which domestic legal

enactments, including the constitution, should be interpreted in

conformity with the principles of European integration and the

cooperation between Community and Member State organs.  If the

Constitution, of which the Charter of Fundamental Rights and Basic

Freedoms forms a part, can be interpreted in several manners, only

certain of which lead to the attainment of an obligation which the Czech

Republic undertook in connection with its membership in the EU, then an

interpretation must be selected with supports the carrying out of that

obligation, and not an interpretation which precludes its.“ 

 

In

judgment file no. Pl. ÚS 50/04 the Constitutional Court formulated the

principle of double binding subordination of transferred European law,

i.e. it must be consistent both with European law and with the

constitutional order. Thus, although the frame of reference for review

by the Constitutional Court are still the norms of the constitutional

order, the Constitutional Court cannot completely overlook the effect of

Community law on the creation, application, and interpretation of

national law, in an area of legal regulation whose creation,

functioning, and object are directly connected to Community law.

 

A

certain parallel to the decisions by the German Constitutional Court,

“Solange I,” “Solange II,” and “Maastricht-Urteil” can be found in

judgment file no. Pl. ÚS 50/04, defining the fundamental viewpoints for

evaluation of the relationship between the Constitution of the Czech

Republic and European law:  “There

is no doubt that, as a result of the Czech Republic’s accession to the

EC, or EU, a fundamental change occurred within the Czech legal order,

as at that moment the Czech Republic took over into its national law the

entire mass of European law.  Without doubt, then, just such a shift

occurred in the legal environment formed by sub-constitutional legal

norms, which necessarily must influence the examination of the entire

existing legal order, constitutional principles and maxims included,

naturally on the condition that the factors which influence the national

legal environment are not, in and of themselves, in conflict with the

principle of the democratic law-based state or that the interpretation

of these factors may not lead to a threat to the democratic law-based

state.  Such a shift would come into conflict with Art. 9 par. 2, or

Art. 9 par. 3 of the Constitution of the Czech Republic… “The

current standard within the Community for the protection of fundamental

rights cannot give rise to the assumption that this standard for the

protection of fundamental rights through the assertion of principles

arising therefrom, such as otherwise follows from the above-cited

case-law of the ECJ, is of a lower quality than the protection accorded

in the Czech Republic, or that the standard of protection markedly

diverges from the standard up till now provided in the domestic setting

by the Constitutional Court.“ The

principle of protection in Art. 1 par. 1 and Art. 9 par. 2 of the

Constitution is also contained in judgment file no. Pl. ÚS 66/04: The

constitutional principle that national law shall be interpreted in

conformity with the Czech Republic’s obligations resulting from its

membership in the European Union is limited by the possible significance

of the constitutional text.  Article 1 par. 2 of the Constitution is

thus not a provision capable of arbitrarily modifying the significance

of any other express constitutional provision whatsoever.  If the

national methodology for the interpretation of constitutional law does

not enable a relevant norm to be interpreted in harmony with European

Law, it is solely within the Constituent Assembly’s prerogative to amend

the Constitution.  Naturally, the Constituent Assembly may exercise

this authority only under the condition that it preserves the essential

attributes of a democratic law-based state (Art. 9 par. 2 of the

Constitution), which are not within its power to change, and not even a

treaty pursuant to Art. 10a of the Constitution can assign the authority

to modify these attributes.“ The

Constitutional Court also accentuated this principle in judgment file

no. Pl. ÚS 19/08 and subsequently in judgment file no. Pl. ÚS 29/09: “The

Constitutional Court remains the supreme protector of Czech

constitutionality, including against possible excesses by Union bodies

or European law, which also clearly answers the contested issue of the

sovereignty of the Czech Republic; if the Constitutional Court is the

supreme interpreter of the constitutional regulations of the Czech

Republic, which have the highest legal force on Czech territory, it is

obvious that Art. 1 par. 1 of the Constitution can not be violated. if

European bodies interpreted or developed EU law in a manner that would

jeopardize the foundations of materially understood constitutionality

and the essential requirements of a democratic, law-based state that

are, under the Constitution of the Czech Republic, seen as inviolable

(Art. 9 par. 2 of the Constitution), such legal acts could not be

binding in the Czech Republic. In accordance with this, the Czech

Constitutional Court also intends to review, as ultima ratio, whether

the legal acts of European bodies remain within the bounds of the powers

that were provided to them. In this regard the Constitutional Court

basically agreed with certain conclusions of the German Federal

Constitutional Court, stated in its Maastricht decision (see above),

under which the majority principle, per the imperative of mutual regard,

arising from loyalty to the Community, has its limits in the

constitutional principles and elementary interests of the member states;

the exercise of sovereign power by an association of states, the

European Union, is based on authorization from the states, which remain

sovereign, and which, through their governments, regularly act in the

inter-state area, and thus guide the integration process. In

judgment file no. Pl. ÚS 19/08 it emphasized, from a procedural

viewpoint, the thesis that its intervention is conceivable, particularly

with the application of European law in particular cases, which may

come to the Constitutional Court through individual constitutional

complaints tied to possible (exceptional) interference by EU bodies and

EU law into the fundamental rights and freedoms. It defined the context

for its review of the exercise of transferred competences by European

Union bodies by three areas: the non-functioning of its institutions,

the protection of the material core of the Constitution, not only in

relation to European law but also to the particular application thereof,

and, finally, the functioning as ultima ratio, i.e. the authority to

review whether an act by European Union bodies exceeded the powers that

the Czech Republic transferred to the European Union under Art. 10a of

the Constitution; these could be, in particular, abandoning a value

identity and exceeding the scope of the entrusted competences.

 

In

the present case, it is the task of the Constitutional Court to

evaluate, in terms of the safeguards thus outlined, the effects of ECJ

judgment of 22 June 2011, C-399/09 on the present case.

 

The

core of the arguments in the matter is application of Council

Regulation (EEC) 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, to the legal

relationships governed by the Agreement, the object of which is

regulating the exercise of entitlements arising from the social security

system until the dissolution of the Czech and Slovak Federal Republic

between the successor states, the Czech Republic and the Slovak

Republic.

 

According

to the consolidated version of the Regulation, its purpose, stated in

the preamble, is to coordinate the effects of the social security

schemes of European Union member states, in view of the principle of

free movement of workers who are nationals of member states. Under

Art. 2 par. 1, the Regulation applies to persons (in particular,

employed persons or self-employed persons and students) who are or have

been subject to the legislation of one or more member states and who are

nationals of one of the member states. According to Annex III point

A/9, Art. 12, 20 and 33 of the Agreement remain applicable,

notwithstanding Art. 6 and Art. 7 par. 2 let. c) of the Regulation. This

provision of Annex III was introduced into the Regulation by European

Parliament and Council Regulation (EC) No 629/2006 of 5 April 2006.

Under Art. 6 of the Regulation, with the exception of Articles 7, 8 and

Art. 46 par. 4, the Regulation replaces, as regards personal and

material jurisdiction which it covers the provisions of any social

security convention binding either a) two or more member states

exclusively, or b) at least two member states and one or more other

states, where settlement of the cases concerned does not involve any

institution of one of the latter states. Under Art. 7 par. 2 let. c) of

the Regulation, Art. 6 notwithstanding, certain provisions in social

security conventions concluded by member states before the date of

applicability of the Regulation remain applicable, if they are more

advantageous for the benefit recipients or if they arose on the basis of

special historical circumstances, their effect is for a limited period

of time, and they are listed in Annex III. It must be noted here that

the decisions of the administrative courts contested by the

constitutional complaint are based precisely on Art. 20 of the

Agreement, which, under Annex III of the Regulation, is applicable,

notwithstanding Art. 6 and Art. 7 par. 2 let. c) of the Regulation. Its

applicability is defined – notwithstanding the Regulation – by the

relevant case law of the Constitutional Court. In terms of European

Union law, the provisions of Annex III are of a declaratory, not

constitutive nature: the key factor for applying the Regulation is its

object and the nature of the reviewed legal relationships, which must

contain a “foreign” element.

 

Under

Art. 12 of the Agreement, survivor pensions are granted and paid by the

insurer of the state party to which the pensions from which the

survivor pensions are calculated are considered to belong, or would be

considered to belong. Art. 20 par. 1 of the Agreement provides that

insurance periods served before the date of dissolution of the Czech and

Slovak Federal Republic are considered to be insurance periods of the

state party in whose territory the citizen’s employer had its registered

office as of the date of dissolution of the Czech and Slovak Federal

Republic, or on the last date before that date. Paragraph 2 provides

that if a citizen did not, as of the date of dissolution of the Czech

and Slovak Federal Republic, or on the last date before that date, have

an employer with its registered office in the Czech and Slovak Federal

Republic, insurance periods served before that date are considered to be

insurance periods of the state party in which the citizen had permanent

residence as of the date of dissolution of the Czech and Slovak Federal

Republic, or on the last date before that date. Finally, under Art. 33

of the Agreement, pensions granted as of a date that falls into the

period before the dissolution of the Czech and Slovak Federal Republic

by the insurers of the Czech Republic or the Slovak Republic will

continue to be considered pensions of that state party whose insurer

was, or would be, responsible for payment of those pensions as of the

date of dissolution o the Czech and Slovak Federal Republic.

 

Art. 30

par. 1 of the Charter, i.e. the right to adequate material security in

old age, is a fundamental right tied to citizenship of the Czech

Republic; that is, only citizens of the Czech Republic, and not other

persons, can be a differential group when testing for potential

differing treatment under Art. 3 par. 1 of the Charter. The tenor of the

Constitutional Court’s case law applicable in this regard to Art. 30

par. 1 of the Charter (see file no. II. ÚS 405/02, III. ÚS 252/04, IV.

ÚS 158/04, IV. ÚS 301/05, IV. ÚS 298/06, I. ÚS 365/05, II. ÚS 156/06,

IV. ÚS 228/06, I. ÚS 366/05, I. ÚS 257/06, I. ÚS 1375/07, III. ÚS 939/10

and Pl. ÚS 4/06) is respecting the constitutional principle of

equality, i.e. ruling out unjustified inequality, in this case between

citizens of the Czech Republic. The Constitutional Court expressly

addressed the purpose of the Agreement in judgment file no. I. ÚS

1375/07. It stated that “the object of concluding an international

treaty cannot be to reduce the pension entitlements of one’s own

citizens, whose entitlement to a higher pension arises independently of

such a treaty, under national legislation.” It described as

constitutionally impermissible discrimination of one versus other groups

of citizens of the Czech Republic an inequality established “only as a

result of a particular circumstance that originates in the dissolution

of the then-existing Czechoslovak federation.”

 

In

the Constitutional Court’s opinion, a period of employment with an

employer with its registered office in the present-day Slovak Republic

during the existence of the Czechoslovak state cannot be retroactively

considered to be a period of employment abroad. All citizens of the

Czech Republic have a right to equal treatment in the area of social

security with regard to years worked until 31 December 1992 (i.e. to the

date of dissolution of the Czech and Slovak Federal Republic)

regardless of the place where the work was performed and the employer’s

registered office being in the then-Czechoslovakia. Therefore, neither

the place where work was performed, nor the employer’s registered office

in the subsequent Slovak Republic can be considered as being in the

territory of a foreign state. Moreover, during the entire time of

existence of the Czechoslovak federation, social security fell within

federal jurisdiction, and Constitutional Act no. 4/1993 Coll., on

Measures related to the Dissolution of the Czech and Slovak Federal

Republic, enshrined the continuity of the Czech and Czechoslovak legal

order. The territory of the present-day Slovak Republic until 31

December 1992, as either a place where work was performed or the

location of an employer’s registered office cannot, for purposes of

social security for Czech citizens, be considered as the territory of a

foreign state. It follows from this maxim that the relationships of

social security and entitlements arising from them in this context do

not contain a foreign element, which is a condition for applying the

Regulation.

 

For

the cited reasons, citizens of the Czech Republic who were employed by

an employer with its registered office in the territory of the

present-day Slovak Republic in the period until 31 December 1992, are

entitled to a supplementary payment to the aggregate of their (partial)

old age pension granted by the Czech insurer and their (partial) old age

pension granted by the Slovak insurer, up to the amount of the expected

(theoretical) pension that would have been granted if all the insurance

periods from the time of the joint state were considered to be Czech

periods. This solution is the result of the international agreement

between the Czech Republic and the Slovak Republic, governing the

allocation of expenses for social security between the successor states

in relation to entitlements established by employment periods until 31

December 1992.

 

This

entire issue is not comparable to evaluating entitlements for social

security in view of the inclusion of periods served in various

countries; it is an issue of the consequences of the dissolution of

Czechoslovakia and evaluating the entitlements of citizens of the Czech

Republic with regard to the allocation of expenses for social security

between the successor countries (as the secondary party also says in its

statement). Insofar as, as previously stated, Art. 2 par. 1 of the

Regulation states that it shall apply to persons (in particular employed

persons or self-employed persons and students) who are or were subject

to the legislation of one or more member states and who are nationals of

one of the member states, then within the indicated case law of the

Constitutional Court, in the case of citizens of the Czech Republic all

the effects arising from their social security until 31 December 1992

must be considered to be subject to the legal regulation of the state of

which they are citizens. Failure to distinguish the legal relationships

arising from the dissolution of a state with a uniform social security

system from the legal relationships arising for social security from the

free movement of persons in the European Communities, or the European

Union, is a failure to respect European history, it is comparing things

that are not comparable.

 

Due

to the foregoing, European law, i.e. Regulation (EEC) No 1408/71 of the

Council of 14 June 1971 on the application of social security schemes

to employed persons, self-employed persons, and members of their

families moving with the Community, cannot be applied to entitlements of

citizens of the Czech Republic arising from social security until 31

December 1992; and, based on the principles explicitly stated by the

Constitutional Court in judgment file no. Pl. ÚS 18/09, we cannot do

otherwise than state, in connection with the effects of ECJ judgment of

22 June 2011, C-399/09 on analogous cases, that in that case there were

excesses on the part of a European Union body, that a situation occurred

in which an act by a European body exceeded the powers that the Czech

Republic transferred to the European Union under Art. 10a of the

Constitution; this exceeded the scope of the transferred powers, and was

ultra vires.

 

Moreover,

the Constitutional Court also points to deficiencies concerning the

safeguards of a fair trial in the proceeding before the ECJ in case

C-399/09. Although the Constitutional Court, as the judicial body for

protection of the constitutionality of the Czech Republic, was not a

party to the proceeding on the preliminary question before the ECJ, and

although it was not even asked by the ECJ to submit a statement, it did

provide supplementary information and arguments for the proceeding in

case C-399/09 on the preliminary questions referred by the Supreme

Administrative Court in the case Marie Landtová versus the Czech Social

Security Administration. It submitted its statement of 8 March 2011 file

no. Př. 31/11 with the knowledge that the Czech government, as a party

to the proceeding on the preliminary question, unprecedentedly stated in

its statement that the case law of the Constitutional Court violates

European Union law (See also the position of Advocate General Pedro

Cruz-Villalón of 3 March 2011, the “Advocate General’s statement,” point

3). It pointed out that this position of the Czech government is

inconsistent with Art. 89 par. 2 of the Constitution of the Czech

Republic, under which the enforceable decisions of the Constitutional

Court are binding for all bodies and persons, i.e. including the

government of the Czech Republic and its agent. It pointed out that,

under § 4 par. 1 let. b) of Act no. 582/1991 Coll., on the Organization

and Implementation of Social Security, as amended by later regulations,

the government, or the member thereof at the head of the Ministry of

Labor and Social Affairs, directly governs the Czech Social Security

Administration, which was a party to the proceedings before the

administrative courts of the Czech Republic and which, on that basis,

was also a (unsuccessful) secondary party to the proceeding before the

Constitutional Court. If the Czech government had no hesitation to

appear at all as a party to the proceeding on a preliminary question

before the ECJ against its own Constitutional Court, the Constitutional

Court in its statement expressed the expectation that, at least in order

to preserve the appearance of objectivity, the ECJ would familiarize

itself with the arguments that respected the case law of the

Constitutional Court and the constitutional identity of the Czech

Republic, which it draws from the common constitutional tradition with

the Slovak Republic, that is from the over seventy years of the common

state and its peaceful dissolution, i.e. from a completely idiosyncratic

and historically created situation that has no parallel in Europe. The

absence of explanatory arguments, which made it more difficult for the

ECJ to orient itself in the merits of the matter, was also reflected in

the statement of the “Advocate General,” who noted this fact several

times (points 45, 47, 51, 52). In addition to the foregoing, the

statement also declares that the government’s position contains data

that are inconsistent with reality. In the Constitutional Court’s case

law, provision of a supplementary benefit was tied only to the

applicant’s being a Czech citizen, not to the condition of permanent

residence in the Czech Republic as well, as reference order of the

Supreme Administrative Court confusingly and incorrectly states in point

8 i. f. and in point 18, and as the Czech government also claims (the

foregoing is adopted in the Advocate General’s statement – see points

18, 39, 43, 48-52). In the judgment cited there, file no. III. ÚS 252/04

the Constitutional Court merely stated that “[i]nsofar as Act no.

155/1995 Coll., as amended by later regulations, permits exercising

claims arising from it regardless of nationality, i.e. in connection to

permanent residence, in terms of constitutional protection the

Constitutional Court considers inequality to be unjustified only in

connection with distinguishing citizens of the Czech Republic in their

entitlements arising from social security, but not in relation to other

categories of persons.”

 

In

the submission of 25 March 2011 the head of the judicial office of the

ECJ, based on an instruction from the chairperson of the fourth chamber

of the ECJ returned the statement in question to the Constitutional

Court with the justification that “pursuant to established customs,

members of the ECJ do not correspond with third persons regarding cases

that have been submitted to the ECJ.”

 

In

this regard, the Constitutional Court notes that the ECJ regularly

makes use of the institution of amici curiae in proceedings on

preliminary questions, especially in relation to the European

Commission. In a situation where the ECJ was aware that the Czech

Republic, as a party to the proceeding, in whose name the government

acted, expressed in its statement a negative position on the legal

opinion of the Constitutional Court, which was the subject matter for

evaluation, the ECJ’ statement that the Constitutional Court was a

“third party” in the case at hand cannot be seen otherwise than as

abandoning the principle audiatur et altera pars.

 

 

VIII.

Review of the constitutionality of the interpretation

and application of the ordinary law relevant in the case

 

Reviewing

the constitutionality of interference by a public authority into the

fundamental rights and freedoms involves several components (file no.

III. ÚS 102/94, III. ÚS 114/94, III. ÚS 84/94, III. ÚS 142/98, III. ÚS

224/98 and others). The first is evaluating the constitutionality of the

applied legislative provision (which follows from § 78 par. 2 of Act

no. 182/1993 Coll., as amended by later regulations). Further components

are reviewing the observance of constitutional procedural rights, and

finally reviewing the constitutional conformity of the interpretation

and application of substantive law.

 

In

terms of the ordinary law relevant in constitutional law review, the

legislation applicable to the present matter is § 61 of Act no. 155/1995

Coll., Art. 20 of the Agreement, and Art. 15 par. 1 of the

Administrative Agreement.

 

In

the present matter, the Constitutional Court found no grounds for

proceeding according to § 78 par. 2 of Act no. 182/1993 Coll., as

amended by later regulations, with § 61 of Act no. 155/1995 Coll.; it is

not endowed with the authority to evaluate the constitutionality of

directly applicable provisions of international treaties.

 

The

Constitutional Court has spoken regarding the issue of the

constitutionality of the relationship of § 61 of Act no. 155/1995 Coll.

to Art. 20 of the Agreement in a number of its decisions (see judgments

file no. II. ÚS 405/02, III. ÚS 252/04, IV. ÚS 158/04, IV. ÚS 301/05,

IV. ÚS 298/06, I. ÚS 365/05, II. ÚS 156/06, IV. ÚS 228/06, I. ÚS 366/05,

I. ÚS 257/06, I. ÚS 1375/07, Pl. ÚS 4/06, III. ÚS 939/10 and III. ÚS

1012/10).

 

The

Constitutional Court only points out and repeats that the tenor of

these decisions is respecting the constitutional principle of equality,

i.e. ruling out unjustified inequality, in this case between citizens of

the Czech Republic. As early as judgment file no. Pl. ÚS 31/94 the

Constitutional Court declared the acceptance of the internationally

recognized principle that ratification of international treaties does

not affect more advantageous rights, protection, and conditions provided

and guaranteed by national legislation. In a case where a special

incorporative norm, contained in § 61 of Act no. 155/1995 Coll.,

establishes the priority of an international treaty over national law,

where application of the law is controlled by the rule of interpretation

lex specialis derogat legi generali, as the Constitutional Court is not

endowed with the authority to review the constitutionality of ratified

international treaties, this principle of interpretation, that specific

legislation takes priority over general legislation, must give way to

the constitutional principle applicable to the application and

interpretation or relevant ordinary law, the principle of

constitutionally conforming interpretation and application. In the

present case, this constitutional principle is the fundamental right

arising from the constitutional principle of the equality of citizens

and the ruling out of unjustified differentiation in their rights. As

already stated, the Constitutional Court explicitly addressed the

purpose of the Agreement in judgment file no. I. ÚS 1375/07. It stated

that “the object of concluding an international treaty cannot be to

reduce the pension entitlements of one’s own citizens, whose entitlement

to a higher pension arises independently of such a treaty, under

national legislation.” It described as constitutionally impermissible

discrimination of one versus other groups of citizens of the Czech

Republic an inequality established “only as a result of a particular

circumstance that originates in the dissolution of the then-existing

Czechoslovak federation.” Under judgment file no. IV. ÚS 228/06, the

fact that the Czech Republic concluded a treaty with the Slovak Republic

on implementation of social security (the Agreement between the Czech

Republic and the Slovak Republic on Social Security, published as no.

228/1993 Coll.) cannot operate to the detriment of a Czech citizen as

regards the amount of his pension entitlements, even if he was employed

in Slovakia as of the date of dissolution of the CSFR. In judgment file

no. I. ÚS 1375/07 the Constitutional Court summarized its previous

deliberations thus: “The Constitutional Court has already considered the

issue of application of the Agreement in its decisions file no.

II. ÚS 405/02 and III. ÚS 252/04. It spoke in detail on these

conclusions, and especially interpretation thereof, in the judgment of

the Plenum of 20 March 2007, file no. Pl. ÚS 4/06. In these decisions it

stated that ‘the Czech Republic and the Slovak Republic were created as

of 1 January 1993 by the dissolution of the joint Czechoslovak state.

The joint state had a unified pension insurance system. In terms of the

laws in effect at the time, it was legally irrelevant which part of the

Czechoslovak state a citizen was employed in, or where his employer had

its registered office.’”

 

From

this point of view, the Constitutional Court’s deliberations on the

interpretation of Art. 15 par. 1 of the Administrative Agreement,

contained in judgment file no. III. ÚS 939/10, apply to

sub-constitutional law, and in terms of the arguments concerning the

relationship between the law of the Czech Republic and European law, and

interpretation of Art. 30 par. 1 of the Charter in terms of the

constitutional principle of equality they appear to have only a

supporting role.

 

On

the periphery of the secondary party’s arguments, according to which,

in the case of the complainant and other analogous cases, the full costs

of paying pensions would be borne by the successor state on whose

territory the registered office of a company operating nationwide was

located, the Constitutional Court emphatically points out and reiterates

the legal opinion that it stated in judgment file no. III. ÚS 939/10:

“The Constitutional Court also emphasizes that allocating a pension in

this matter under the Agreement and § 4 par. 3 of Act no. 582/1991

Coll., on the Organization and Implementation of Social Security, as

amended by later regulations, can be accepted, in accordance with

constitutionally conforming interpretation of Art. 20 of the Agreement,

Art. 15 par. 1 of the Administrative Agreement and § 61 of Act

no. 155/1995 Coll., only in the sense of an entitlement to an arranged

payment of a benefit provided by the Social Insurance Company in

Bratislava, adjusted up to the amount of pension to which the entitled

person would be entitled if the Czech Social Security Administration

were competent to assess all the periods of insurance (employment),

including replacement periods, which the person completed, i.e.,

including periods before the dissolution of the joint state. In these

circumstances the legislation in question only regulates the allocation

of the shares of both successor states in payment of a pension, but it

does not affect the protected position of a citizen of the Czech

Republic, which follows from the Constitutional Court’s case law (see

judgments file no. II. ÚS 405/02, III. ÚS 252/04, IV. ÚS 158/04, IV. ÚS

301/05, IV. ÚS 298/06, I. ÚS 365/05, II. ÚS 156/06, IV. ÚS 228/06, I. ÚS

366/05, I. ÚS 257/06, I. ÚS 1375/07 and Pl. ÚS 4/06).”

 

Due

to the foregoing, i.e. violation of Art. 30 par. 1 in conjunction with

Art. 4 par. 4 a Art. 3 par. 1 of the Charter, the Constitutional Court

annulled the judgment of the Supreme Administrative Court of 31 August

2011, file no. 3 Ads 52/2009, the judgment of the Regional Court in

Hradec Králové, Pardubice branch, of 29 January 2009, ref. no. 52 Cad

35/2008-40, and the decision of the Czech Social Security Administration

of 8 February 2008, ref. no. 450 811 075/428 [see § 82 par. 1 and par. 3

let. a) of Act no. 182/1993 Coll., on the Constitutional Court]. The

Constitutional Court also applied the grounds for cassation to the

decision by the secondary party, for reasons of procedural efficiency,

as well as the fact that the unconstitutional interference in the

complainant’s fundamental rights and freedoms was already established by

its decision.

 

 

IX.

Obiter dictum

 

Article

XII, point 18 of Act no. 428/2011 Coll. of 6 November 2011, which

Amends Certain Acts in Connection with the Adoption of the Act on

Pension Savings and of the Act on Supplementary Pension savings, amends

and supplements Act no. 155/1995 Coll., on Pension Insurance, as amended

by later regulations, by inserting after § 106 a new § 106a, which

reads (including the heading):

 

“§ 106a

Evaluation of certain periods during the period before 1993

 

Pensions

from Czech pension insurance (security) cannot be granted or increased

for periods of pension insurance completed before 1 January 1993 under

Czechoslovak legislation, which, under the Agreement between the Czech

Republic and the Slovak Republic on Social Security of 29 October 1992

are considered to be periods of pension security or insurance of the

Slovak Republic, nor can adjustments, balancing, supplements or

analogous payments for a pension or part thereof, or amounts provided

instead of a pension or part thereof, be provided by taking these

periods into account; these periods can be taken into account, in

accordance with Art. 4 of Constitutional Act no. 4/1993 Coll., on

Measures Related to the Dissolution of the Czech and Slovak Federal

Republic, only under the conditions and in the scope provided by that

treaty or that Act (§ 61).”

 

Under

the transitional provision Art. XIII of that Act: “Applications for the

provision of adjustments, settlements, supplements, and analogous

payments set forth in § 106a of Act no. 155/1995 Coll., in the wording

in effect from the day this Act goes into effect, shall be set aside,

and proceedings shall not be conducted on them; if these applications

were filed before the day this Act went into effect, proceedings on them

shall be stopped. Measures taken before the day this Act went into

effect on the basis of these applications shall remain unaffected, with

the provision that the relevant payment, after accounting for advance

payments during 2011, shall remain in the resulting amount without

change, if, under the legislation of the Czech Republic and the Slovak

Republic, there is a continuing entitlement to a pension that was the

grounds for granting the payment; upon termination of an entitlement for

a pension under the legislation of one of these states the entitlement

to the relevant payment also terminates permanently.”

 

Under

Art. XXVI of Act no. 428/2011 Coll., the provisions of Art. XII point

18 and Art. XIII go into effect on the day it is promulgated, that day

being 28 December 2011, when part 149/2011 of the Collection of Laws, in

which Act no. 428/2011 Coll. was published, was distributed.

 

The

background report to the government bill adopted as Act no. 428/2011

Coll. does not contain any justification for Art. XII and XIII. That is

because these provisions were proposed in the second reading of the

Chamber of Deputies discussion of the government bill (publication 414)

on 30 August 2011 by Deputy Gabriela Pecková, as a reaction to the ECJ

judgment in the Landtová case: “Provision of a supplementary benefit is

based on the previous case law of the Constitutional Court of the Czech

Republic. The Court of Justice of the European Union decided that

adjusting Slovak pensions through a supplementary benefit cannot be

limited by the condition of Czech citizenship and residence in the Czech

Republic, because such a limitation is discrimination contrary to

European Union law. In connection with this judgment, I propose adopting

legislation that would generally rule out supplements to Slovak

pensions.”

(See http://www.psp.cz/eknih/2010ps/stenprot/022schuz/s022029.htm .)

 

As

the secondary party correctly states in its statement, the conditions

for entitlement to the requested supplementary benefit to the old age

benefit are not governed by any legislation. Thus, § 106a of Act no.

155/1995 Coll., as amended by Act no. 428/2011 Coll., enshrines a

prohibition on payment of social benefits that is not governed by law.

This is undoubtedly contradictio in adiecto, it is certainly a statutory

provision which makes no sense in and of itself. It is necessary to

answer the question of whether a supplementary benefit, that is tied to

application of the Agreement, really is not established on any other

legally relevant grounds and whether the interference by the legislature

regarding it is relevant.

 

The

transcript of the Chamber of Deputies discussion of the bill of the Act

in question indicates that the proponent of the amending proposal, and

thus the entire Chamber, were aware that “provision of a supplementary

benefit is based on the previous case law of the Constitutional Court of

the Czech Republic.”

 

If

the purpose of adopting § 106a of Act no. 155/1995 Coll., as amended by

Act no. 428/2011 Coll., and Art. XIII of Act no. 428/2011 Coll., was a

reaction to the consequences of the ECJ judgment of 22 June 2011,

 C-399/09 with “derogative” consequences for the case law of the

Constitutional Court, then we cannot do otherwise than conclude that the

essential grounds for this Constitutional Court judgment, which

declares that the ECJ’s actions in the case at hand were ultra vires,

makes  the cited statutory

provisions obsolete (§ 106a of Act no. 155/1995 Coll., as amended by Act

no. 428/2011 Coll., and Art. XIII of Act no. 428/2011 Coll.), based on

the legal principle cessante ratione legis cessat lex ipsa (if the

reason for the law ceases to exist, the law itself ceases to exist).

 

The

Constitutional Court did not open a proceeding on review of norms

concerning § 106a of Act no. 155/1995 Coll., as amended by Act no.

428/2011 Coll., and Art. XIII of Act no. 428/2011 Coll., because the

present case did not meet the requirements for proceeding under § 78

par. 2 of Act no. 182/1993 Coll., on the Constitutional Court, i.e. the

legislative provisions in question were not applied in proceedings from

which the decisions contested by the constitutional complaint arose.

Instruction: This judgment cannot be appealed.

 

Brno, 31 January 2012

 

 

 

Dissenting opinion of Judge Jiří Nykodým to judgment of the Plenum file no. Pl. ÚS 5/12

 

I

disagree with the majority opinion of the Plenum, annulling the

decision of the Supreme Administrative Court due to violation of the

constitutional principle of the equality of citizens and ruling out

unjustified differences in their rights when providing adequate material

security under Art. 30 par. 1 of the Charter of Fundamental Rights and

Freedoms. The reasons for my disagreement relate to the arguments

applied in the dissenting opinion filed to Constitutional Court judgment

file no. Pl. ÚS 4/06, the relevant points of which I summarize and to

which I refer in full.

 

First.

I do not consider correct the conclusion that European law, i.e.

Regulation (EEC) of the Council 1408/71 of 14 June 1971, on application

of social security schemes to employed persons and their families moving

within the Community cannot be applied to entitlements of citizens of

the Czech Republic arising from social security until 31 December 1993,

and that therefore the ECJ judgment of 22 June 2011, C-399/09, affecting

cases analogous to the complainant’s is an overreaching by an EU body.

 

The

CR joined the European Union on 1 May 2004. The EU coordinates national

social security schemes through the abovementioned regulation so that

it will be possible to ensure, among other things, one of the four

fundamental freedoms – the free movement of persons. The purpose of the

legislation is to ensure that a person employed in several countries

will not lose his entitlement to social benefits on the grounds of

different citizenship or residence, or because he has not completed in

any country the necessary insurance period set forth by the legislation

of that country. Coordination has four fundamental principles: it

prohibits all discrimination based on nationality (Art. 7), the legal

order of one state is applied – that of the state where the employed

person works, regardless of place of residence (Art. 13), insurance

periods in all member states are aggregated (Art. 45 for pensions),

entitlements to benefits can be exercised regardless of place of

residence, and benefits are paid abroad. Under Art. 6, Regulation

1408/71 replaces the provisions of any agreement on social security

between two member states; Art. 7 partially limits Art. 6, to the effect

that, notwithstanding Art. 6, agreements on social security listed in

Annex III remain applicable [Art. 7 par. 2 let. c)]. The content of Art.

20 of the Agreement on transfer of obligations by the Czech and Slovak

Republics in the field of pension security for the period until the

dissolution of the CSFR was, in connection with the Czech and Slovak

Republics’ accession to the European Union, included in Annex III to

Regulation 1408/71 (by the Agreement on Accession to the EU); thus, it

became EU law, and is a provision that is binding for all member states.

In its current case law regarding Art. 7, the ECJ has so far not

deviated from its respect for the will of mMember states to preserve by

treaty certain individual features existing since the time before

accession to the EU, set forth in Annex III to Regulation 1408/71. In my

dissenting opinion to judgment file no. Pl. 4/06 I already pointed to

the exemplary decision in this regard, ECJ decision 305/92, Hoorn, of 28

April 1994. Thus, as of 1 May 2004, Art. 20 of the Agreement is a

component of EU law, and as such it is applied by the executive branch

and will be applied, including to incomplete cases that were begun

before the entry to the EU and have not yet been completed (Art. 118 of

Regulation 574/72).

 

This

involves a rule for settling obligations from pension security between

two member states; therefore, the ECJ had the authority to address the

issue and interpret the rule. In its judgment, in view of the text of

the Regulation, it did not rule out the possibility that the Czech

Republic could introduce a rule on the basis of which a supplementary

benefit would be paid, provided of course, that it would not

discriminate against nationals of other member states.

 

Second.

I also do not agree that the annulled decisions by the administrative

courts failed to respect the constitutional principle of equality, or

did not, in relation to the complainant, arrange to rule out unjustified

inequality between citizens of the Czech Republic. The right to

security in old age is a fundamental human right, but it can be

exercised only within the bounds of the law. Inequality in the amount of

benefit cannot be understood at a constitutional level, because no one

is guaranteed to have the same pension as another citizen. The essence

of the constitutional complaint from which the present judgment arose is

dissatisfaction with the amount of the granted pension. The difference

in the amount of benefit calculated according to the Act on Pension

Insurance and the Czech regulation compared to the amount to which one

is entitled in accordance with Art. 20 of the Agreement on assumption of

obligations by the Czech and Slovak Republics in pension insurance for

the period until the dissolution of the CSFR, is a consequence of the

dissolution of the CSFR, allocation of its obligations between the

successor states, and the subsequent different legal and economic

history of these states. In this regard I must note that the amounts of

pensions are approaching each other, and it is not impossible that in

future the Slovak pension will be more advantageous, for example, for

certain groups of insured persons; does that mean that persons who are

now affected by the rule will then, in contrast, receive a

constitutionally unacceptable advantage? The Agreement on assumption of

obligations by the Czech and Slovak Republics in pension insurance for

the period until the dissolution of the CSFR had to observe certain

constitutional limits provided by Constitutional Act no. 4/1993 Coll. I

consider it reasonable to try to allocate the burden of obligations so

that the obligated subject is not primarily only the Czech Republic,

where most employers active in the entire territory of the then

Czechoslovakia had their registered offices. Perhaps it would have been

more suitable to choose as a criterion the place where work was

performed, but at this point this is merely an academic question. In

individual cases – and the complainant’s case is obviously one of them –

this provision, or the system of allocation of the obligations of the

dissolved state could have harsh effects. However, that is not

sufficient to conclude that it is unconstitutional. The principles of

certainty and predictability of the law are unquestionable elements of a

law-based state. These principles were generally observed by acceptance

of legal continuity, specifically in the field of pension insurance, by

preserving the entitlement as such, and aggregating completed insurance

periods. This is important from the viewpoint of constitutional

guarantees. I do not agree that citizens of the CR could not have

different pension rights based on where they worked. The existence of

Czechoslovakia as a joint state and its dissolution do not, from the

viewpoint of constitutional principles, justify a need for every citizen

of the Czech Republic to receive a so-called “Czech pension” for

periods completed through 1992.

 

The

judgment argues that citizens of the Czech Republic employed until 31

December 1992 by an employer with its registered office in the territory

of the present-day Slovak Republic are entitled to a supplementary

benefit to the aggregate of partial pensions granted by the Czech and

Slovak insurer. However, the Act on Pension Insurance does not contain

any a supplementary benefit. It does not regulate the manner of

calculating such a supplementary benefit. Moreover, the Act on Pension

Insurance, as amended by the “small pension reform” expressly prohibits

supplementary adjustment. Thus, a body ruling on pension matters

receives contradictory instructions, which is it bound to observe.

 

Third.

I disagree with the overall concept of the Constitutional Court’s

approach to the issue of so-called “Slovak pensions.” It is evident from

the previous decisions concerning this issue that it involves a wide

and diverse range of factual situations: from the case of the

complainant, where some sort of general sense of justice leads to a

belief that a “Czech pension” would be adequate, to cases where the

insured person completed the substantial part of his employment in the

Slovak part of the joint republic, lived in Slovakia during the entire

time, and had Slovak citizenship at the time of dissolution of the joint

state. In other words, cases that would not even require a special

regime under an international agreement, and could be resolved according

to the basic principle that the Czech Republic, in the area of public

subjective rights, assumed only obligations vis-à-vis those persons who

had permanent residence in its territory as of the date of dissolution

of the joint state. By adopting a general interpretation in a matter

with a completely specific factual context, the Constitutional Court is

attempting to replace the legislature, or the governments of the Czech

Republic and the Slovak Republic, who would be competent to make any

amendments to the regime agreed upon at the time of dissolution of the

joint state in the cited Agreement. Only future complaints and

constitutional complaints will reveal the risks that these actions

bring.

 

Brno 31 January 2012