7 External coordination of social security
systems
| (a)
(32587)
7591/11
SEC(11) 261
(b)
(33298)
16231/11
COM(11) 671
(c)
(33815)
8556/12
COM(12) 152
|
Amended Draft Council Decision on the position to be taken by the European Union in the EEA Joint Committee concerning an amendment to Annex VI (Social Security) and Protocol 37 to the EEA Agreement
Draft Council Decision on the position to be taken by the European Union in the Joint Committee established under the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons as regards the replacement of Annex II to that Agreement on the coordination of social security schemes
Draft Council Decision on the position to be taken on behalf of the European Union within the Association Council set up by the Agreement establishing an association between the European Economic Community and Turkey with regard to the provisions on the coordination of social security systems
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| Legal base | (All) Articles 48 and 218(9) TFEU; QMV
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| Department | Work and Pensions
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| Basis of consideration | Minister's letter of 15 November 2013
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| Previous Committee Reports | HC 86-xi (2012-13), chapter 29 (5 September 2012);
HC 86-ii (2012-13), chapters 9 and 10 (16 May 2012);
HC 428-xlix (2010-12), chapter 6 (1 February 2012);
HC 428-xliv (2010-12), chapter 7 (14 December 2011);
HC 428-xxxv (2010-12), chapter 3 (7 September 2011);
HC 428-xxiv (2010-12), chapter 3 (27 April 2011)
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| Discussion in Council | Already agreed
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| Committee's assessment | Legally and politically important
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| Committee's decision | (a) Cleared
(b) and (c) Not cleared; further information requested
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Background and previous scrutiny
7.1 These three Decisions concern arrangements for
the coordination of social security systems between the EU and
EFTA States (together forming the European Economic Area —
"the EEA" — the EU plus Iceland, Liechtenstein
and Norway), Switzerland and Turkey. The first two Decisions
— documents (a) and (b) — amend the social security
provisions of the EEA Agreement and the EU-Switzerland Agreement
on the Free Movement of Persons in order to align arrangements
for the coordination of social security with those already applicable
within the EU. The third Decision — document (c) —
gives effect to provisions on social security coordination contained
in the EU/Turkey Association Agreement and Additional Protocol.
Our earlier Reports provide a detailed overview of each of the
Decisions and the Government's position.[30]
7.2 The Decisions were adopted by the Council in
2011 and 2012[31] and
cite the same substantive legal base — Article 48 of the
Treaty on the Functioning of the European Union ("TFEU")
— which provides for the adoption of "such measures
in the field of social security as are necessary to provide freedom
of movement for workers".
7.3 The Government objected to the use of an Article
48 TFEU legal base on the grounds that it only applies to mobile
EU citizens and cannot be used to extend EU social security law
to third country (non-EU) nationals. It considered the correct
legal base to be Article 79(2)(b) TFEU which expressly covers
the rights of legally resident third country nationals. As that
Article (unlike Article 48) is contained in Title V of Part Three
of the TFEU, the Government asserted that its Title V (justice
and home affairs) opt-in applied, even though the draft Decisions
did not cite a Title V legal base, and that it was entitled to
decide whether or not to participate in them. It decided not
to opt into the draft Decisions because they would extend the
social security rights of EEA, Swiss and Turkish nationals legally
resident in the EU, albeit on a small scale, and might set an
unwelcome precedent for extending similar rights to much larger
groups in the future.
7.4 The Council and the Commission do not accept
that the UK's Title V opt-in applies to EU measures which do not
cite a Title V legal base. In his oral evidence to the Committee
on 7 December 2011, the then Minister for Employment (Mr Chris
Grayling) accepted that the UK was "technically" bound
by the EU Decision amending the EEA Agreement, but added:
"This is all about principle [….] The
problem for us comes if this turns into a precedent for the future.
If the EU decides to reach all kinds of agreements with North
African countries or countries from the former Soviet Bloc, we
would not be in a position to do anything about that. I am not
saying that we should not have reciprocal relationships with those
countries; I am simply saying it is the job of the UK Government
to reach those agreements, and not the EU on our behalf. That
is really what this battle is about. The fact that we are legally
bound by the Agreement at the moment is not really a big problem
in its own right. What matters is that we get this sorted out
legally; that is what we are trying to do."[32]
7.5 The Government informed us that it had decided
to initiate proceedings in the Court of Justice to challenge the
validity of all three Decisions which, pending the Court's rulings,
have remained under scrutiny. We welcomed its decision, not only
because it would establish the correct legal base for Decisions
of this nature, but because it might also clarify the circumstances
in which the UK's Title V opt-in Protocol applies. For reasons
of legal certainty, we have rejected the Government's contention
that the UK's Title V opt-in applies, even in the absence of a
Title V legal base, if an EU measure creates obligations in the
justice and home affairs field and that, in such circumstances,
the UK is not bound unless it opts in. In our view, a Title V
legal base is a prerequisite for the application of the UK's Title
V opt-in.
The Court's ruling on the Decision amending the
EEA Agreement
7.6 The Court's judgment[33]
sets out the legal context by reference to the objectives and
content of the EEA Agreement and the relevant EU Treaty provisions
(Articles 48 and 79 TFEU and Protocol No. 21 to the EU Treaties
— the Title V opt-in Protocol) and summarises the main arguments
advanced by the parties to the dispute. It notes that the UK,
supported by Ireland (a co-beneficiary of the opt-in Protocol),
considers that a measure conferring additional social security
rights on third country nationals should be based on Article 79(2)(b)
TFEU, not Article 48, and that the choice of legal base will have
significant consequences for the UK and Ireland:
"In particular, unlike the measures adopted
under Article 48 TFEU, the measures adopted on the basis of Article
79 TFEU apply to those Member States only if they exercise the
option to be bound by those measures pursuant to Protocol No.
21.
"Consequently, the adoption of the contested
Decision on the incorrect basis of Article 48 TFEU deprived the
UK and Ireland of the option that they have, by virtue of EU primary
law, to opt out of the adoption of a decision extending social
security rights to nationals of EFTA States and to not be bound
by such a decision."
7.7 By contrast, the Commission and Council contended
that the amendment proposed to the EEA Agreement was not framed
within the context of developing a common immigration policy,
as envisaged in Article 79 TFEU. Moreover, the use of that Article
would entail the exclusion of Denmark (it does not participate
in EU justice and home affairs measures) as well as the possibility
that Ireland and the UK would also choose not to participate,
and could thus "jeopardise the attainment of the main objective
of the EEA Agreement, which is to provide for the fullest possible
realisation of the internal market within the whole EEA".[34]
According to the Council, the extension of EU rules on social
security to all parties to the EEA Agreement is:
"indispensable to the attainment of the main
objective pursued by the EEA Agreement by guaranteeing nationals
of those States effective freedom of movement within the European
Union [and] Article 48 TFEU is indeed the appropriate legal basis
[…]"[35]
7.8 In its judgment, the Court reiterates settled
case law establishing that "the choice of the legal basis
for an act of the European Union must rest on objective factors
amenable to judicial review, which include the aim and content
of that measure".[36]
It notes that the objective of the Decision is to extend internal
EU rules on the coordination of social security systems to all
parties to the EEA Agreement, and adds:
"In this regard, it should be borne in mind
at the outset that the EEA Agreement establishes a close association
between the EU and the EFTA States based on special, privileged
links between the parties concerned.
"As the Court has already had occasion to state,
one of the principal aims of the EEA Agreement, to which the UK
and Ireland are also parties, is to provide for the fullest possible
realisation of the free movement of goods, persons, services and
capital within the whole EEA, so that the internal market established
within the EU is extended to the EFTA States.
"So far as the present case is concerned, the
EEA Agreement enshrines inter alia, in Article 28, the freedom
of movement for workers among Member States and EFTA States and
recognises, in Article 29, the rights in the field of social security
pertaining thereto, which are drafted in essentially identical
terms to those of Articles 45 TFEU and 48 TFEU respectively."[37]
7.9 The Court notes that the Decision would also
confer reciprocal rights on EU citizens living or working in Iceland,
Liechtenstein and Norway and concludes from its analysis of the
EEA Agreement that:
"The contested Decision is thus precisely one
of the measures by which the law governing the EU internal market
is to be extended as far as possible to the EEA, with the result
that nationals of the EEA States concerned benefit from the free
movement of persons under the same social conditions as EU citizens."[38]
7.10 The Court affirms that Article 48 TFEU is the
correct legal base for the Decision, "taking into account
the context of which it forms part", and adds that Article
79(2)(b) TFEU is "manifestly irreconcilable" with the
objectives of the EEA Agreement and the purpose of the Decision.
Moreover, the Court suggests that recourse to Article 79(2)(b)
and, as a consequence, the application of the Title V opt-in Protocol,
might be in breach of Article 3 of the EEA Agreement, which requires
the Contracting Parties to "abstain from any measure which
could jeopardise the attainment of the objectives of this Agreement."
This is because the possibility that the UK and/or Ireland could
decide to opt out of the Decision without concluding a separate
agreement with Iceland, Liechtenstein and Norway would give rise
to "two parallel regimes for the coordination of social security
systems."
The Minister's letter of 15 November 2013
7.11 The letter from the Minister for Employment
(Esther McVey) confirms that the Court has rejected the UK's application
to annul document (a) — the Decision amending the social
security provisions of the EEA Agreement — and determined
that Article 48 TFEU is the correct legal base. She continues:
"The Court agreed with the Advocate General's
view that Article 79(2)b) TFEU could not be used to adopt such
a measure as the proposal did not concern a 'common immigration
policy'. Further, it held that the use of an Article 79 legal
basis, because it entails an opt-in for the UK and Ireland, could
result in undermining the objectives of the EEA Agreement. The
Government is arguing strongly against such an interpretation
in the EU-Swiss and EU-Turkey cases."
7.12 The Minister notes that the Decisions amending
the Agreements with the EEA and Switzerland entered into force
in 2012 and are being implemented by the UK, subject to the outcome
of legal proceedings. The Court has confirmed the validity of
the EEA Decision and is expected to give its judgment on the Decision
concerning the EU-Switzerland Agreement within the next three
to six months, following an oral hearing last October.
7.13 The Decision amending the EU-Turkey Agreement
was also adopted in 2012 but the Commission has given an undertaking
not to implement it (by seeking the approval of the EU-Turkey
Association Council) until the Court has given judgment in the
EEA and Swiss cases. Written observations have been submitted
and the UK has lodged an application for an oral hearing.
7.14 The Minister alludes to the adoption of a further
nine Council Decisions implementing social security provisions
contained in various EU-third country agreements which all cite
an Article 79(2)(b) TFEU legal base. The UK has not opted into
any of these Decisions and is not required to implement them.
She continues:
"The Government remains alert to the potential
implications of the EEA judgment for other agreements. However,
it considers that the EEA Agreement is substantially different
from other EU third country agreements and is advocating that
position in the CJEU [Court of Justice] in the Swiss and Turkish
Agreement cases."
Conclusion
7.15 We thank the Minister for informing us of
the outcome of the legal action brought by the UK to annul the
Decision amending the social security provisions of the EEA Agreement.
Now that the Court has determined that Article 48 TFEU is the
correct legal base, we are content to clear the Decision —
document (a) — from scrutiny. We ask the Minister to inform
us of the outcome of similar legal proceedings in relation to
documents (b) and (c), which we retain under scrutiny.
7.16 It is implicit in the judgment given by the
Court in the EEA case that the UK's Title V opt-in Protocol only
applies to EU measures which cite a Title V (justice and home
affairs) legal base. We note, moreover, that the arguments advanced
by the UK (as summarised by the Court in its judgment) appear
to concede this point by acknowledging that the use of Article
48 TFEU, instead of a Title V legal base, "deprived the UK
and Ireland of the option that they have, by virtue of EU primary
law [the Title V opt-in Protocol], to opt out of the adoption
of a decision extending social security rights to nationals of
EFTA States and not to be bound by such a decision."[39]
We ask the Minister to confirm whether this accurately reflects
the Government's position and whether the Court's judgment will
cause it to review its policy on the application of the UK's Title
V opt-in Protocol to EU measures which do not cite a Title V legal
base.
7.17 We also note that the judgment may have wider
implications for the application of the UK's Title V opt-in Protocol
to other international agreements, although the Court makes clear
that this will depend on an analysis of the legal context and,
in particular, the objectives and content of each agreement.
We ask the Government to ensure that the Explanatory Memoranda
it provides on EU-third country agreements containing justice
and home affairs provisions do not simply assert that the UK's
Title V opt-in Protocol applies but also include a sufficiently
detailed analysis of the broader legal context.
30 See headnote. Back
31
See Council Decisions 2011/407/EU, 2011/863/EU and 2012/776/EU;
OJ Nos. L 182, 12.07.11, L 341, 22.12.11 and L 340, 13.12.12. Back
32
See HC 1710-i (2010-12), Q 21. Back
33
Case C-431/11. Back
34
Para 37 of the judgment. Back
35
Para 38 of the judgment. Back
36
Para 44 of the judgement. Back
37
Paras 49 to 51 of the judgment. Back
38
Para 58 0f the judgment. Back
39
Para 34 of the judgment. Back
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