JUDGMENT OF THE COURT (Fifth Chamber)

29 October 1998 (1)

(Failure of a Member State to fulfil its obligations — Benefits for large families —Discrimination)

In Case C-185/96,

Commission of the European Communities, represented by Maria Patakia, of itsLegal Service, acting as Agent, with an address for service in Luxembourg at theoffice of Carlos Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

applicant,

v

Hellenic Republic, represented by Ioanna Galani-Maragkoudaki, Special DeputyLegal Adviser to the Special Department for Community Legal Matters of theMinistry of Foreign Affairs, and Stamatina Vodina, Special Assistant in the sameDepartment, acting as Agents, with an address for service in Luxembourg at theGreek Embassy, 117 Val Sainte-Croix,

defendant,

APPLICATION for a declaration that, by precluding by regulation oradministrative practice on the grounds of their nationality employed or self-employed workers from other Member States and the members of their familiesfrom being attributed large-family status for the purpose of the award of special

benefits for such families and from being awarded family allowances, the HellenicRepublic has failed to fulfil its obligations under Articles 48 and 52 of the ECTreaty, Article 7 of Council Regulation (EEC) No 1612/68 of 15 October 1968 onfreedom of movement for workers within the Community (OJ, English SpecialEdition 1968(II), p. 475), Article 7 of Commission Regulation (EEC) No 1251/70of 29 June 1970 on the right of workers to remain in the territory of a MemberState after having been employed in that State (OJ, English Special Edition1970(II), p.402), Article 7 of Council Directive 75/34/EEC of 17 December 1974concerning the right of nationals of a Member State to remain in the territory ofanother Member State after having pursued therein an activity in a self-employedcapacity (OJ 1975 L 14, p. 10) and Article 3 of Council Regulation (EEC) No1408/71 of 14 June 1971 on the application of social security schemes to employedpersons, to self-employed persons and to members of their families moving withinthe Community (consolidated version, OJ 1992 C 325, p. 1),

THE COURT (Fifth Chamber),

composed of: J.-P. Puissochet, President of the Chamber, P. Jann (Rapporteur),J.C. Moitinho de Almeida, C. Gulmann and M. Wathelet, Judges,

Advocate General: S. Alber,

Registrar: L. Hewlett, Administrator,

having regard to the Report for the Hearing,

after hearing oral argument from the parties at the hearing on 12 March 1998,

after hearing the Opinion of the Advocate General at the sitting on 30 April 1998,

gives the following

Judgment

1.

    By application lodged at the Court Registry on 31 May 1996, the Commission ofthe European Communities brought an action under Article 169 of the EC Treatyfor a declaration that, by precluding by regulation or administrative practice on thegrounds of their nationality employed or self-employed workers from otherMember States and the members of their families from being attributed large-family status for the purpose of the award of special benefits for such families andfrom being awarded family allowances, the Hellenic Republic has failed to fulfil itsobligations under Articles 48 and 52 of the EC Treaty, Article 7 of CouncilRegulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for

workers within the Community (OJ, English Special Edition 1968(II), p. 475),Article 7 of Commission Regulation (EEC) No 1251/70 of 29 June 1970 on theright of workers to remain in the territory of a Member State after having beenemployed in that State (OJ, English Special Edition 1970(II), p.402), Article 7 ofCouncil Directive 75/34/EEC of 17 December 1974 concerning the right ofnationals of a Member State to remain in the territory of another Member Stateafter having pursued therein an activity in a self-employed capacity (OJ 1975 L 14,p. 10) and Article 3 of Council Regulation (EEC) No 1408/71 of 14 June 1971 onthe application of social security schemes to employed persons, to self-employedpersons and to members of their families moving within the Community(consolidated version, OJ 1992 C 325, p. 1).

The legal background

The Community legislation

2.

    Article 7(1) and (2) of Regulation No 1612/68 provides:

'1.    A worker who is a national of a Member State may not, in the territory ofanother Member State, be treated differently from national workers by reason ofhis nationality in respect of any conditions of employment and work, in particularas regards remuneration, dismissal, and should he become unemployed,reinstatement or re-employment;

2.    He shall enjoy the same social and tax advantages as national workers‘.

3.

    Article 7 of Regulation No 1251/70 provides:

'The right to equality of treatment, established by Council Regulation (EEC) No1612/68, shall apply also to persons coming under the provisions of thisRegulation‘.

4.

    Article 7 of Directive 75/34 provides:

'Member States shall apply to persons having the right to remain in their territorythe right of equality of treatment recognised by the Council directives on theabolition of restrictions on freedom of establishment pursuant to Title III of thegeneral programme which provides for such abolition‘.

5.

    Article 3(1) of Regulation No 1408/71 provides:

'1.    Subject to the special provisions of this Regulation, persons resident in theterritory of one of the Member States to whom this Regulation applies shall be

subject to the same obligations and enjoy the same benefits under the legislationof any Member State as the nationals of that State‘.

The Greek legislation

6.

    Articles 1 and 2 of Law No 1910/1944, consolidating the legislation on theprotection of large families, lay down the requirements which families must meetin order to be accorded large-family status. Articles 3 to 12 of that Law set out thevarious advantages to which such status affords entitlement. These may consist inthe reduction or waiving of charges, or the grant of assistance, or preferentialtreatment in such areas as education, health, housing, legal matters, access toemployment in the public service, and transport.

7.

    Decree-Law No 1153/1972 on the protection of large families provides for the grantof cash benefits to large families whose habitual residence is in Greece. The grantof those benefits is subject to certain conditions concerning in particular the Greeknationality or Greek origins of family members.

8.

    Pursuant to Article 63(1) and (2) of Law No 1892/1990 of 31 July 1990 concerningmeasures to combat population problems, a mother receives a monthly cashbenefit, payable for three years, on the birth of her third child. Article 63(3)provides that, in the case of large families, a monthly cash benefit for each childunder 25 years of age is to be granted to the mother who, pursuant to Law No1910/1944, is deemed to be head of the household in such cases. Under Article63(4), a mother who is no longer entitled to the last-mentioned benefit receives apension for life. Pursuant to the implementing decree of 7 and 21 February 1991,the grant of those benefits is subject to certain conditions concerning the Greeknationality or Greek origins of family members.

The pre-litigation procedure

9.

    On learning through complaints submitted by Community nationals working inGreece that only Greek nationals were granted large-family status and the relatedadvantages, the Commission wrote to the Greek authorities on 2 March and 11June 1992 asking for an explanation. By letter of 23 June 1992, the Greekauthorities replied essentially that the legislation at issue was composed of varioussets of provisions essentially of a social character, all of which were intended toassist large families resident in Greece, whether or not the persons concerned wereworkers. As regards, more specifically, Law No 1892/1990, the Greek authoritiesemphasised that, given its demographic policy aims, the benefits for which it madeprovision fell outside the scope of the principle of non-discrimination laid down bythe Treaty.

10.

    The Commission took the view that the provisions at issue and the relatedadministrative practice entailed discrimination contrary to Community law anddecided to initiate the infringement procedure laid down by Article 169 of theTreaty. It therefore sent the Hellenic Republic a letter of formal notice on 20 July1993 asking it to submit its observations within two months.

11.

    Since the Hellenic Republic did not reply to that letter, the Commission delivereda reasoned opinion by letter of 18 May 1995, calling upon it to take the necessarymeasures to comply with the opinion within two months of its notification.

12.

    In response to the reasoned opinion, the Greek Government, after stating in aletter of 3 August 1995 that the provisions at issue were to be amended, sent theCommission a copy of the relevant draft legislation under cover of a letter of 19December 1995.

13.

    By letter of 24 April 1996 addressed to the Greek Government, the Commissionpointed out that the draft legislation was only in the first stage of the adoptionprocess, that no indication had been given as to the possible date of its adoptionand that, moreover, the draft legislation did not appear to meet all the objectionsset out in the reasoned opinion. The Commission therefore brought the presentproceedings.

14.

    After the present proceedings had been brought, the Hellenic Republic informedthe Court of the adoption of Law No 2459/1997, published in the Official Journalof the Hellenic Republic of 18 February 1997, Article 39 of which lays down thatCommunity nationals are also to be eligible for the benefits provided for by LawNo 1910/1944 and by Article 63(1) to (3) of Law No 1892/1990.

Substance

15.

    In the Commission's submission, all the advantages provided for by the Greeklegislation at issue, with the exception of exemption from military service underArticle 5 of Law No 1910/1944 which concerns only Greek nationals, constitutesocial advantages within the meaning of Article 7(2) of Regulation No 1612/68. The health-care benefits provided for by Law No 1910/1944 and the cash benefitsprovided for by Decree-Law No 1153/1972 and by Article 63(1) to (3) of Law No1892/1990 also constitute social security benefits within the meaning of Article 4(1)of Regulation No 1408/71.

16.

    The Commission concludes that the legislation at issue, in so far as it gives rise todiscrimination directly based on grounds of nationality, or in so far as the mannerof its implementation leads to the same result, is contrary to the principle of thefree movement of persons laid down in Articles 48 and 52 of the Treaty and, more

specifically, to the principle of equal treatment for workers, implemented by Article7(2) of Regulation No 1612/68 and by Article 3(1) of Regulation No 1408/71.

17.

    The Hellenic Republic contends that, even though it was made clear in the courseof the pre-litigation procedure that it intended to amend the legislation at issue —an intention which, after the proceedings had been initiated, was carried outthrough the adoption of Law No 2459/1997 — the Commission failed to take thisinto account.

18.

    On that point, it must be borne in mind that the Court has consistently held thatthe question whether a Member State has failed to fulfil its obligations must bedetermined by reference to the situation in the Member State as it stood at the endof the period laid down in the reasoned opinion, and that the Court cannot takeaccount of any subsequent changes (see, inter alia, Case C-361/95 Commission vSpain [1997] ECR I-7351, paragraph 13).

19.

    Since the present action calls for consideration of the application of the principleof equal treatment in relation to both social advantages and social security benefits(as to the joint application of Regulations Nos 1612/68 and 1408/71, see CaseC-85/96 Martínez Sala [1998] ECR I-2691, paragraph 27), the meaning of thoseconcepts must be re-examined.

20.

    First, as regards social advantages, it is settled law that this concept embraces allthe advantages which, whether or not linked to a contract of employment, aregenerally granted to national workers primarily because of their objective status asworkers or by virtue of the mere fact of their residence on the national territoryand whose extension to workers who are nationals of other Member Statestherefore seems likely to facilitate the mobility of such workers within theCommunity (Martínez Sala, paragraph 25).

21.

    As the Commission has argued, it follows from that definition that all theadvantages for which the Greek legislation at issue provides in relation to largefamilies constitute social advantages within the meaning of Article 7(2) ofRegulation No 1612/68. Pursuant to that provision, therefore, workers who arenationals of other Member States must be eligible for those advantages on thesame terms as national workers. Equal treatment in that sense must also extendto dependent members of their families (Case C-3/90 Bernini [1992] ECR I-1071,paragraph 28).

22.

    The Commission has submitted that, although Law No 1910/1944 is silent as tonationality, administrative practice has nevertheless established Greek nationalityas one of the criteria for attribution of large-family status and, in consequence, therelated advantages are granted solely to Greek nationals. The Hellenic Republichas not challenged that assertion, which is moreover substantiated by the fact thatArticle 39 of Law No 2459/1997 extended the scope of Law No 1910/1944 to coverCommunity nationals.

23.

    Furthermore, both Decree-Law No 1153/1972 and the combined provisions of LawNo 1892/1990 and the implementing decree of 7 and 21 February 1991 expresslymake the award of the benefits for which they provide subject to conditionsconcerning the Greek nationality or Greek origins of family members.

24.

    In imposing a discriminatory nationality requirement, that administrative practice,like those legislative provisions, infringes Article 48(2) of the Treaty, Article 7(2)of Regulation No 1612/68 and Article 7 of Regulation No 1251/70. For the samereason, they also constitute an infringement of Article 52 of the Treaty and Article7 of Directive 75/34 (Case C-111/91 Commission v Luxembourg [1993] ECR I-817,paragraph 17).

25.

    Secondly, as regards social security benefits, the Court has ruled on numerousoccasions that a benefit may be regarded as a social security benefit in so far as itis granted, without any individual and discretionary assessment of personal needs,to recipients on the basis of a legally defined position, and provided that it concernsone of the risks expressly listed in Article 4(1) of Regulation no 1408/71(Commission v Luxembourg, paragraph 29, and the case-law cited).

26.

    It is apparent from that definition that, among the benefits provided for by Law No1910/1944, those relating to health-care also constitute social security benefits, sincethey fall within the category of sickness benefits referred to in Article 4(1)(a) ofRegulation No 1408/71.

27.

    The same is true of the cash benefits provided for by Decree-Law No 1153/1972and by Article 63(1) to (4) of Law No 1892/1990, which must be regarded as familybenefits within the meaning of Article 4(1)(h) of Regulation No 1408/71.

28.

    Accordingly, the administrative practice and legislative provisions making the awardof those benefits subject to discriminatory nationality requirements are also contraryto the rule laid down in Article 3(1) of Regulation No 1408/71 concerning equaltreatment of workers which, it should be recalled, may also be relied upon bymembers of their families (Case C-308/93 Cabanis-Issarte [1996] ECR I-2097).

29.

    In that connection, the Hellenic Republic contends that most of the advantagesprovided for by Law No 1910/1944 are now redundant.

30.

    It must be observed that the maintenance in force, even if only in a formal way, oflegislation which, if it had not become obsolete, would infringe Community law, islikely to engender doubt incompatible with the principle of legal certainty, in so faras such a situation exacerbates the difficulties for potential beneficiaries inascertaining the extent of their rights.

31.

    The Greek Government also contends that, notwithstanding the express provisionsof Decree-Law No 1153/1972, the benefits provided for therein are not reserved

for Greek nationals but, in accordance with the directly applicable provisions ofRegulation No 1408/71, are also paid to Community nationals.

32.

    On that point, suffice it to recall that, according to established case-law, themaintenance of national legislation which is in itself incompatible with Communitylaw, even if the Member State concerned acts in accordance with Community law, gives rise to an ambiguous state of affairs by maintaining, as regards those subject to the law who are concerned, a state of uncertainty as to the possibilities for themof relying on Community law (Case C-307/89 Commission v France [1991] ECRI-2903, paragraph 13, and the case-law cited).

33.

    The Greek Government contends, lastly, that the Greek nationality requirement towhich the grant of the benefits provided for by Article 63(1) to (4) of Law No1892/1990 is subject is justified because those benefits help to further demographicpolicy aims. So far as concerns the life pension for mothers of large familiesprovided for by Article 63(4), the Greek Government maintains, in particular, thatthe nationality requirement is justified by the fact that the pension in question isawarded as an honour in recognition of a contribution made to society which, inview of the declining birthrate in Greece, may be regarded as a service to thecountry.

34.

    On that point, it should be recalled that the Court has consistently held that socialmeasures cannot be regarded as exempt from the application of the rules ofCommunity law solely because they have been adopted for reasons of demographicpolicy (Case 65/81 Reina [1982] ECR 33, paragraph 15).

35.

    Consequently, it must be held that, by precluding by regulation or administrativepractice on the grounds of their nationality employed or self-employed workersfrom other Member States and the members of their families from being attributedlarge-family status for the purpose of the award of special benefits for such familiesand from being awarded family allowances, the Hellenic Republic has failed to fulfilits obligations under Articles 48 and 52 of the EC Treaty, Article 7 of RegulationNo 1612/68, Article 7 of Regulation No 1251/70, Article 7 of Directive 75/34 andArticle 3 of Regulation No 1408/71.

Costs

36.

    Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs. Since the Hellenic Republic has been unsuccessful andthe Commission has applied for costs, the Hellenic Republic must be ordered topay the costs.

On those grounds,

THE COURT (Fifth Chamber)

hereby:

1.    Declares that, by precluding by regulation or administrative practice on thegrounds of their nationality employed or self-employed workers from otherMember States and the members of their families from being attributedlarge-family status for the purpose of the award of special benefits for suchfamilies and from being awarded family allowances, the Hellenic Republichas failed to fulfil its obligations under:

    —    Articles 48 and 52 of the EC Treaty;

    —    Article 7 of Council Regulation (EEC) No 1612/68 of 15 October 1968on freedom of movement for workers within the Community;

    —    Article 7 of Commission Regulation (EEC) No 1251/70 of 29 June1970 on the right of workers to remain in the territory of a MemberState after having been employed in that State;

    —    Article 7 of Council Directive 75/34/EEC of 17 December 1974concerning the right of nationals of a Member State to remain in theterritory of another Member State after having pursued therein anactivity in a self-employed capacity; and

    —    Article 3 of Council Regulation (EEC) No 1408/71 of 14 June 1971 onthe application of social security schemes to employed persons, toself-employed persons and to members of their families movingwithin the Community;

2.    Orders the Hellenic Republic to pay the costs.

PuissochetJann Moitinho de Almeida Gulmann Wathelet

Delivered in open court in Luxembourg on 29 October 1998.

R. Grass

J.-P. Puissochet

Registrar

President of the Fifth Chamber

1: Language of the case: Greek.