Documents considered by the Committee on 21 July 2015 - European Scrutiny Contents


52 EU/Turkey coordination of social security systems

Committee's assessment Legally and politically important
Committee's decisionCleared from scrutiny; drawn to the attention of the Work and Pensions Committee
Document detailsDraft 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
Legal baseArticles 48 and 218(9) TFEU; QMV
Department

Document numbers

Work and Pensions

(33815), 8556/12, COM(12) 152

Summary and Committee's conclusions

52.1 The purpose of this Council Decision is to implement provisions on the coordination of social security systems contained in the EU/Turkey Association Agreement. The Decision remains under scrutiny, despite having been adopted in December 2012, pending the outcome of a legal challenge brought by the United Kingdom in the Court of Justice contesting its validity.[ 364] This follows unsuccessful challenges to two similar Council Decisions, one concerning social security arrangements within the European Economic Area (encompassing EU Member States and Iceland, Liechtenstein and Norway), the other the implementation of an EU/Switzerland Agreement on the Free Movement of Persons.[ 365]

52.2 The nub of the dispute between the Commission and Council, on the one hand, and the UK Government, on the other, concerns the appropriate legal base for measures determining the social security rules applicable to certain third country nationals. The choice of legal base is significant as it determines whether the UK's Title V (justice and home affairs) opt-in, set out in Protocol No. 21 to the EU Treaties, applies to a particular measure and whether or not, as a consequence, the UK is bound by it.

52.3 In this chapter, we summarise the Court's judgment and the Government's reaction.

52.4 This is the third case concerning the legal base for EU measures on the coordination of social security arrangements for certain third country nationals which the UK has lost. The Government does not appear to accept that these defeats have any wider implications for its policy of asserting that the UK's Title V (justice and home affairs) opt-in can apply to measures which do not cite a Title V legal base.

52.5 In evidence to Sub-Committee E (Justice, Institutions and Consumer Protection) of the European Union Committee in the House of Lords last January, the then Lord Chancellor and Secretary of State for Justice (Chris Grayling) suggested that, in a series of cases brought by the UK to challenge the omission of a Title V (justice and home affairs) legal base, the Court of Justice had "ducked the issue" by failing to give "a definitive judgment" on the application of the UK's opt-in Protocol to measures containing "partial" or "incidental" JHA content.[ 366] It had simply ruled that the measures in question lacked any JHA content.

52.6 The Court's judgment in the EU/Turkey case makes clear that the UK's opt-in Protocol "is not capable of having any effect whatsoever on the question of the correct legal basis".[ 367] Moreover, the Court also refers to its earlier judgment in Case C-137/12 (concerning the legal base for EU accession to the Council of Europe Convention on conditional access services) which expressly clarifies that "it is the legal basis for a measure — the appropriateness or otherwise of which falls to be assessed […] on the basis of objective factors such as main or predominant purpose of the measure and its content — which determines the Protocols to be applied, and not vice versa".[ 368] We take this as a clear statement that a Title V legal base, rather than the more tenuous assertion of partial, incidental or ancillary JHA content, is a necessary pre-requisite for the application of the UK's Title V opt-in.

52.7 This latest Court of Justice ruling concludes recent litigation on the correct legal base for EU measures determining the rules on the coordination of social security systems applicable to certain third country nationals. We now release the Council Decision from scrutiny, but draw our observations to the attention of the Work and Pensions Committee.

Full details of the documents: 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: (33815), 8556/12, COM(12) 152.

Background

52.8 The Agreement, concluded in 1963, establishing an Association between the then European Economic Community and Turkey was intended to pave the way for Turkish membership of the EEC by, amongst other things, "progressively securing freedom of movement of workers".[ 369] The Agreement was supplemented, in 1970, by an Additional Protocol which required the Association Council (a body comprising representatives of Turkey, the Member States and the Commission) to adopt social security measures for workers of Turkish nationality moving within the Community and members of their family living with them.[ 370]

52.9 These measures were to provide for:

·  the aggregation of periods of insurance or employment completed in individual Member States for the purpose of determining entitlement to health care and to old age pensions, death benefits and invalidity pensions;

·  the payment of family allowances in respect of family members resident within the Community; and

·  the transfer (or export) of old age pensions, death benefits and invalidity pensions (meaning that payment can be made in Turkey if the beneficiary has left the paying State).

52.10 In 1980, the EU/Turkey Association Council adopted Decision No 3/80 to give effect to the social security provisions of the Association Agreement, but a further implementing Regulation (proposed in 1983 but never adopted) was required. Notwithstanding the absence of implementing rules, the Court of Justice determined that two provisions of Decision No. 3/80 were directly effective and could therefore be relied on in proceedings brought in national courts.[ 371] The provisions concerned the application of the principle of equal treatment and the payment (export) of certain benefits and pensions to beneficiaries resident in Turkey.[ 372]

52.11 The Council Decision proposed by the Commission would repeal and replace Decision No. 3/80 and implement "in one single step" the provisions on social security coordination contained in the Association Agreement and Additional Protocol, thereby ensuring legal certainty. It would also "permit Turkey to align its policies on social security coordination with those of the EU in preparation for future accession to the EU".[ 373] The Council Decision is based on Article 48 of the Treaty on the Functioning of the European Union (TFEU) which authorises the EU to adopt "such measures in the field of social security as are necessary to provide freedom of movement for workers".

52.12 The legal challenge brought by the UK concerns the appropriate legal base for EU measures determining the social security rules applicable to certain third country nationals. In recent cases concerning the coordination of social security arrangements between the EU and Switzerland, and within the European Economic Area, the Court of Justice rejected the argument advanced by the UK that the relevant Council Decisions should be based on a Title V (justice and home affairs) legal base — Article 79(2)(b) TFEU which defines the rights of legally resident third country nationals within the framework of the EU's common immigration policy. It ruled that Article 48 TFEU, a non-Title V Treaty provision, was the appropriate substantive legal base for both Decisions. As a consequence, the UK is bound by the Decisions.

52.13 The Court issued its judgment in the EU/Turkey case on 18 December 2014. A more detailed overview of the legal issues at stake in this case, and in the earlier EEA and Switzerland cases, can be found in our earlier Reports listed at the end of this chapter.

The Court's judgment

52.14 In its judgment[ 374], the Court notes that the contested Decision was adopted on the basis of Articles 48 and 218(9) TFEU, the latter establishing the procedures for its adoption by a qualified majority of the Council. The Court describes the legal context by reference to the relevant provisions of the Association Agreement, the Additional Protocol and Decision No. 3/80 concerning the application of Member States' social security schemes to legally resident Turkish workers and their families. It explains that the UK, supported by Ireland (a co-beneficiary of the Title V opt-in Protocol), contended that Article 48 TFEU "is a provision ancillary to the principle of free movement within the EU for employed and self-employed workers who are nationals of Member States" and cannot, therefore, extend to the coordination of social security systems for Turkish nationals. The UK considered Article 79(2)(b) TFEU to be the appropriate legal base for a measure which concerns "the definition of the rights of third country nationals residing legally in a Member State". The UK added that the choice of a different legal base, outside Title V of Part Three of the TFEU, would deprive the UK of the right, enshrined in Protocol No. 21, not to take part in, and be bound by, the draft Decision. The UK also contended that the adverse judgments already given by the Court in the EEA and EU/Switzerland cases should not apply by analogy to the facts in this case, as "the purpose of the EEC/Turkey Agreement and the Additional Protocol is not to extend the internal market to Turkey or to secure the free movement of persons between the Union and that non-Member State".[ 375]

52.15 By contrast the Council, supported by the Commission, argued that Turkish workers were "no longer in the same situation as that of nationals of other non-member countries" by virtue of provisions in the Association Agreement and Additional Protocol providing for freedom of movement of workers to be secured by progressive stages. The partial coordination of social security systems contained in the Decision was intended to achieve that objective, not to develop a common immigration policy, as envisaged in Article 79 TFEU.[ 376]

52.16 The Court's judgment reiterates settled case law establishing that "the choice of the legal basis for a European Union measure must rest on objective factors amenable to judicial review, which include in particular the aim and content of the measure".[ 377] It adds that the context of the measure — in this case the Association Agreement and Additional Protocol — may also be relevant to the choice of legal base, and concludes:

    "Thus, the contested Decision constitutes a further stage in progressively securing freedom of movement for workers between the European Union and Turkey and in developing the links created by their Association Agreement."[ 378]

52.17 The Court rejects the UK's contention that Article 79(2)(b) TFEU is the appropriate substantive legal base, as the Decision "pursues a purpose other than that of the common immigration policy" and must reflect the specific context of which it forms part.[ 379] The Court makes clear that "Protocol No. 21 is not capable of having any effect whatsoever on the question of the correct legal basis for the adoption of the contested Decision".[ 380]

52.18 The Court accepts that the objectives of the Association Agreement differ from those considered previously in its judgments concerning the EEA Agreement and the EU/Switzerland Agreement on the Free Movement of Persons and concludes that Article 48 TFEU should not constitute the sole legal base for the Decision, since:

    "As a rule, it is only in the sphere of the internal policies and actions of the European Union or of the external actions relating to third countries which can be placed on the same footing as a Member State of the European Union […] that Article 48 TFEU empowers the European Union to adopt measures in this area."[ 381]

52.19 The Court considers whether Article 217 TFEU, which empowers the EU to conclude Association Agreements establishing "reciprocal rights and obligations, common action and special procedure" with third countries, should have been cited as a legal base for the Decision. It concludes that the Decision should cite both Article 48 TFEU and Article 217 TFEU "since it has been adopted in the framework of an Association Agreement and is aimed at the adoption of measures coordinating social security systems".[ 382] As the omission of Article 217 TFEU has no effect on the content of the Decision or the procedure for its adoption, the Court rules that its absence constitutes "a purely formal defect which does not entail its annulment".[ 383]

The then Minister's letter of 22 February 2015

52.20 As a consequence of an administrative oversight within the Department for Work and Pensions, we only received the letter from the former Minister for Employment (Esther McVey) in May. The Minister explains the background to the Commission's proposal, in 2012, for a Council Decision to repeal Decision No. 3/80 of the EU/Turkey Association Council and to implement the provisions on social security coordination contained in the Association Agreement and Additional Protocol:

    "Decision 3/80 established the rules for implementing the social security provisions in the Additional Protocol. In 2011 the Court of Justice of the EU (CJEU) in Akdas (C-485/07) decided that Decision 3/80, although never actually implemented, had direct effect. It meant that certain non-contributory benefits or social assistance that are not exportable within the EEA under the EU Regulations may be payable to Turkish nationals living in Turkey under the EU-Turkey Agreement.

    "The 2012 proposal is therefore intended to correct the unintended imbalance created by Akdas. The European Commission considered that to achieve this, the proposal required an Article 48 TFEU legal base. Although the draft Council Decision was adopted by QMV on 6 December 2012, the UK and Ireland again entered a minute statement objecting to the Article 48 legal base and on this occasion were joined also by the Netherlands. The Commission gave an assurance that the Decision would not be put forward for adoption in the EU-Turkey Association Council until the CJEU had ruled in the EU-EEA Agreement (C-431/11) and EU-Switzerland Free Movement of People Agreement (C-656/11) cases.

    "For the reasons already contested in those two cases, the United Kingdom, again supported by Ireland, brought a third legal action in the CJEU (Case C-81/13) over the use of Article 48."

52.21 As in the earlier cases, the Minister explains that the Court found that Article 48 TFEU was the correct legal base "in so far as the Decision extended rights under the EU-Turkey Agreement to EU nationals", but also ruled that this legal base should have been used in conjunction with a second legal base, Article 217 TFEU, which "empowers the EU to guarantee commitments towards third countries". The Court added that Article 79 TFEU — the legal base proposed by the Government — was only to be used "for the purposes of a common immigration policy aimed at ensuring efficient migration flows". Since the omission of Article 217 TFEU from the Council Decision "had no effect on the content of the measure", the Minister notes that the Court did not require the measure to be annulled.

52.22 Now that the Court has confirmed the validity of the Council Decision, the Minister sets out the next steps:

    "[…] the Decision adopted by QMV in December 2012 is the EU's negotiating position which it will take to the EU-Turkey Association Council. We wait to see if Turkey will accept the repeal of Decision 3/80 with the subsequent loss of rights for their nationals achieved from the Akdas judgment. The Government will carefully consider any further developments and remains committed to protecting the United Kingdom's best interests."

Previous Committee Reports

Second Report HC 86-ii (2012-13), chapter 10 (16 May 2012); Eleventh Report HC 86-xi (2012-13), chapter 29 (5 September 2012); and Twenty-ninth Report HC 83-xxvi (2013-14), chapter 7 (8 January 2014). The previous Committee's Forty-fifth Report HC 83-xl (2013-14), chapter 4 (2 April 2014) is also relevant.


364   The Commission has given an undertaking not to implement the Decision (by seeking approval of the EU/Turkey Association Council) until the Court has given its ruling. Back

365   The main elements of the Court's rulings in these cases are summarised in our Twenty-ninth Report of Session 2013-14, agreed on 8 January 2014, and our Forty-fifth Report, agreed on 2 April 2014, listed at the end of this chapter. Back

366   Public oral evidence session held on 14 January 2015.  Back

367   Para 37 of the judgment in Case C-81/13 (Turkey). See also para 49 of Case C-656/11 (EU/Switzerland). Back

368   Para 74 of Case C-137/12.  Back

369   Article 12 of the Association Agreement.  Back

370   Article 39 of the Additional Protocol.  Back

371   See Case C-485/07, Akdas. Back

372   Articles 3(1) and 6 of Decision No. 3/80.  Back

373   See recital (7) to the draft Decision and p. 3 of the Commission's accompanying explanatory memorandum.  Back

374   Case C-81/13. Back

375   See paras 19-27 of the judgment.  Back

376   See paras 29-32 of the judgment.  Back

377   Para 35 of the judgment.  Back

378   Para 45 of the judgment.  Back

379   Para 46 of the judgment.  Back

380   Para 37 of the judgment.  Back

381   Para 59 of the judgment.  Back

382   Para 63 of the judgment.  Back

383   Para 67 of the judgment.  Back


 
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Prepared 30 July 2015