EHRM, 06-07-2005, nr. 65731/01, nr. 65900/01

The Government's main submission was that the applications were incompatible ratione materiae with the provisions of the Convention in that non-contributory benefits, like REA and RA, could not be considered to fall within the scope of Article 1 of Protocol No. 1. The Convention and Article 1 of Protocol No. 1 did not confer a right to receive benefits from the State. It was a matter for the State's discretion what provision to make, since there was no right under the Convention to acquire possessions. A limited exception had been recognised in relation to contributory benefits, because the individual had, in effect, paid for the benefits and therefore had a proprietary claim. The distinction between contributory and non-contributory benefits was principled and relatively easy to apply in practice. The applicants were seeking to widen the concept of a ‘possession’ to include claims which had no basis in domestic law, in order to bring a general complaint of discrimination of the type which would be covered by the new Protocol No. 12 but not by Article 14. The Convention and Protocol No. 1 were concerned with civil and political, rather than social and economic, rights. To treat a claim to a non-contributory social security benefit as property within the scope of Article 1 of Protocol No. 1 would conflict with the purpose and effect of the 1961 European Social Charter.

Moreover, the Government contended that to conclude that Article 1 of Protocol No. 1 applied to non-contributory benefits would be to expand the scope of that provision beyond what had been recognised in the Court's jurisprudence. In its Gaygusuz v. Austria judgment of 16 September 1996 (Reports of Judgments and Decisions 1996-IV), the Court had held in paragraph 39 that the applicant's entitlement to emergency assistance was a pecuniary right because it was ‘linked to the payment of contributions to the unemployment insurance fund’. Most of the decisions after Gaygusuz stated that non-contributory benefits were not ‘possessions’ (see for example, Szrabjet and Clarke v. the United Kingdom, nos. 27004/95 and 27011/95, Commission decision of 23 October 1997; Carlin v. the United Kingdom, no. 27537/95, Commission decision of. 3 December 1997; Coke and Others v. the United Kingdom, no. 38696/97, Commission Decision of 9 September 1999; Stawicki v. Poland, (dec.), no. 47711/99, 10 February 2000; Jankovic v. Croatia (dec.), no. 43440/98, 12 October 2000; Kohls v. Germany (dec.), no. 72719/01, 13 November 2003; Kjartan Asmundsson v. Iceland, no. 60669/00, judgment of 12 October 2004; and the Chamber judgment of 20 June 2002 in Azinas v. Cyprus, no. 56679/00, §§ 32–34, which was however superseded by the Grand Chamber judgment of 28 April 2004, which decided the case on a different ground).

The applicants asserted that the benefits in question fell within the ambit of Article 1 of Protocol No. 1 and that Article 14 of the Convention therefore applied. Properly read, the Court in paragraph 41 of Gaygusuz v. Austria (cited above), had held that the statutory right to emergency assistance at issue in the case was of itself a property right within the ambit of Article 1 of Protocol No. 1 and that it was not necessary to determine whether it was contributions-based. This was a principled and workable approach, which the Grand Chamber should also apply.

To sustain the distinction drawn in the early decisions of the European Commission of Human Rights (‘the Commission’) between benefits systems based on contributions and non-contributory social assistance schemes would be arbitrary and without any sensible policy objective. Such an approach would require the Court to apprise itself of the detailed nature of the funding regime applicable to any benefit which formed the object of a discrimination claim under Article 14. Only if it found that there was a connection with the payment of contributions, whether as a condition precedent for the benefit (as in Gaygusuz), or paid by somebody else (as in Willis v. the United Kingdom, no. 36042/97, ECHR 2002-IV), would Article 14 apply.

There was no principled reason for drawing a distinction. While contributions undoubtedly fell within the scope of Article 1 of Protocol No. 1, so did the taxes which funded non-contributory schemes. The United Kingdom's industrial injuries scheme, at issue in the present case, well illustrated the arbitrary and inconsistent result that such an investigation might produce. The scheme had evolved over time from a situation where benefits were paid out of a separate industrial injuries fund, maintained at least in part from contributions paid as a result of the employee's status as an employed earner; through a situation where benefits were paid out of the national insurance fund, maintained in the same way; to the present situation, where they were funded out of general taxation.

The Court notes that REA and RA are non-contributory benefits, to the extent that they have, since 1990, been funded by general taxation rather than the National Insurance Scheme. Although only employees or former employees who have suffered impairment in earning capacity due to an accident at work or an occupational disease are eligible for the benefits, entitlement is not conditional on any or a certain number of contributions having been made to the National Insurance Fund.

The Commission was the first Convention organ to consider the extent to which entitlement to pensions and other benefits was protected by Article 1 of Protocol No. 1. It applied the principle that the Article did not confer any right to receive a social security benefit or pension. The making of compulsory contributions, for example to a pension fund or a social insurance scheme, might however create such a right, where there was a direct link between the level of contributions and the benefits awarded. Otherwise the applicant did not, at any given moment, have an identifiable and claimable share in the fund (see, for example, Müller v. Austria, no. 5849/72, Commission decision of 1 October 1975, DR 3, p. 25; G v. Austria, no. 10094/82, Commission decision of 14 May 1984, DR 38, p. 84; De Kleine Staarman v. the Netherlands, no. 10503/83, Commission decision of 16 May 1985, DR 42, p. 162).

The first judgment of the Court on the subject was Gaygusuz v. Austria (cited above). The applicant, a Turkish citizen, had lived in Austria from 1973 until 1987. He had worked from 1973 until 1984 but from 1984 to 1987 he was either unemployed or was certified unfit. From July 1986 to March 1987 he was paid an advance on his retirement pension by way of unemployment benefit. When this entitlement expired, he applied for another advance on his pension, in the form of ‘emergency assistance’. There were several preconditions for such a payment. A claimant had to be unemployed, but fit and available for work; to have exhausted his entitlement to unemployment benefit; to be in urgent need; and to possess Austrian nationality. The applicant satisfied all these criteria except that of Austrian nationality. In particular, as the Court found, he had been entitled to unemployment benefit since he had paid unemployment insurance contributions in the same way as every employee in Austria and his entitlement to the benefit had been exhausted at the time he applied for emergency assistance. In paragraph 21 of the Court's judgment, it was further noted that the amount of unemployment benefit was ‘financed partly from the unemployment insurance contributions every employee had to pay and partly from various governmental sources.’ The ‘fund’ from which benefits were drawn was not, therefore, financed wholly from contributions made by employees or employers.

The parties in the present case disagree as to whether the fact that Mr Gaygusuz had made unemployment insurance contributions was crucial to the Court's finding that Article 1 of Protocol No. 1 applied. The applicants submit that the central basis of the Court's decision was, as set out in paragraph 41 of the judgment, that:

The Government for their part rely on paragraph 39, in which the Court emphasised that the payment of contributions was a pre-condition for the payment of unemployment benefit and that:

They submit that the Court would not have found emergency assistance to fall within the scope of Article 1 of Protocol No. 1 if eligibility for it had not been dependent on the prior payment of contributions.

The Grand Chamber accepts that the Gaygusuz judgment was ambiguous on this important point. This is reflected in the fact that two distinct lines of authority subsequently emerged in the case-law of the Convention organs. The Commission, and the Court in some cases, continued to find that a welfare benefit or pension fell within the scope of Article 1 of Protocol No. 1 only where contributions had been made to the fund that financed it (see the cases cited in paragraph 35 above). In other cases, however, the Court held that even a welfare benefit in a non-contributory scheme could constitute a possession for the purposes of Article 1 of Protocol No. 1 (see Buchen v. the Czech Republic, no. 36541/97, § 46, 26 November 2002; Koua Poirrez v. France, no. 40892/98, § 42, ECHR 2003-X; Wessels-Bergervoet v. the Netherlands, no. 34462/97, ECHR 2002-IV; Van den Bouwhuijsen and Schuring v. the Netherlands, (dec.), no. 44658/98, 16 December 2003).

Against this background, it is necessary to examine afresh the question whether a claim to a non-contributory welfare benefit should attract the protection of Article 1 of Protocol No. 1. Since the Convention is first and foremost a system for the protection of human rights, the Court must have regard to the changing conditions within the respondent State and within Contracting States generally, and must interpret and apply the Convention in a manner which renders its rights practical and effective, not theoretical and illusory (see Christine Goodwin v. the United Kingdom[GC], no. 28957/95, § 74, ECHR 2002-VI).

The Convention must also be read as a whole, and interpreted in such a way as to promote internal consistency and harmony between its various provisions (Klass and Others v. Germany, judgment of 6 September 1978, Series A no. 28, § 68; and see also Maaouia v. France[GC], no. 39652/ 98, § 36, ECHR 2000-X and Kudła v. Poland[GC], no. 30210/96, § 152, ECHR 2000-XI). It is noteworthy in this respect that, in its case-law on the applicability of Article 6 § 1, the Court originally held that claims regarding only welfare benefits which formed part of contributory schemes were, because of the similarity to private insurance schemes, sufficiently personal and economic to constitute the subject-matter of disputes for ‘the determination of civil rights’ (see Feldbrugge v. the Netherlands and Deumeland v. Germany, both judgments of 29 May 1986, Series A nos. 99 and 100). However, in the Salesi v. Italy judgment of 23 February 1993 (Series A no. 257-A), Article 6 § 1 was held also to apply to a dispute over entitlement to a non-contributory welfare benefit, the Court emphasising that the applicant had an assertable right, of an individual and economic nature, to social benefits. It thus abandoned the comparison with private insurance schemes and the requirement for a form of ‘contract’ between the individual and the State. In Schuler-Zgraggen v. Switzerland, (judgment of 24 June 1993, Series A no. 263, § 46), the Court held that:

It is in the interests of the coherence of the Convention as a whole that the autonomous concept of ‘possessions’ in Article 1 of Protocol No. 1 should be interpreted in a way which is consistent with the concept of pecuniary rights under Article 6 § 1. It is moreover important to adopt an interpretation of Article 1 of Protocol No. 1 which avoids inequalities of treatment based on distinctions which, at the present day, appear illogical or unsustainable.

The Court's approach to Article 1 of Protocol No. 1 should reflect the reality of the way in which welfare provision is currently organised within the Member States of the Council of Europe. It is clear that within those States, and within most individual States, there exists a wide range of social security benefits designed to confer entitlements which arise as of right. Benefits are funded in a large variety of ways: some are paid for by contributions to a specific fund; some depend on a claimant's contribution record; many are paid for out of general taxation on the basis of a statutorily defined status (see, with reference to the United Kingdom's system, Lord Hoffmann's comments in ex parte Carson, cited in paragraph 21 above). The REA and RA are good examples of this. Originally funded out of the national insurance fund, since 1990 they have been financed by general taxation (see paragraph 17 above). Given the variety of funding methods, and the interlocking nature of benefits under most welfare systems, it appears increasingly artificial to hold that only benefits financed by contributions to a specific fund fall within the scope of Article 1 of Protocol No. 1. Moreover, to exclude benefits paid for out of general taxation would be to disregard the fact that many claimants under this latter type of system also contribute to its financing, through the payment of tax.

In the modern, democratic State, many individuals are, for all or part of their lives, completely dependent for survival on social security and welfare benefits. Many domestic legal systems recognise that such individuals require a degree of certainty and security, and provide for benefits to be paid — subject to the fulfilment of the conditions of eligibility — as of right. Where an individual has an assertable right under domestic law to a welfare benefit, the importance of that interest should also be reflected by holding Article 1 of Protocol No. 1 to be applicable.

Finally, and in response to the Government's contention, the Court considers that to hold that a right to a non-contributory benefit falls within the scope of Article 1 of Protocol No. 1 no more renders otiose the provisions of the Social Charter than to reach the same conclusion in respect of a contributory benefit. Whilst the Convention sets forth what are essentially civil and political rights, many of them have implications of a social or economic nature. The mere fact that an interpretation of the Convention may extend into the sphere of social and economic rights should not be a decisive factor against such an interpretation; there is no water-tight division separating that sphere from the field covered by the Convention (see Airey v. Ireland, judgment of 9 October 1979, Series A no. 32, § 26).

In conclusion, therefore, if any distinction can still be said to exist in the case-law between contributory and non-contributory benefits for the purposes of the applicability of Article 1 of Protocol No. 1, there is no ground to justify the continued drawing of such a distinction.

It must, nonetheless, be emphasised that the principles, most recently summarised in Kopecky v. Slovakia[GC], no. 44912/98, § 35, ECHR 2004-IX, which apply generally in cases under Article 1 of Protocol No. 1, are equally relevant when it comes to welfare benefits. In particular, the Article does not create a right to acquire property. It places no restriction on the Contracting State's freedom to decide whether or not to have in place any form of social security scheme, or to choose the type or amount of benefits to provide under any such scheme (see, mutatis mutandis, Kopecky[GC], § 35(d)). If, however, a Contracting State has in force legislation providing for the payment as of right of a welfare benefit— conditional or not on the prior payment of contributions — that legislation must be regarded as generating a proprietary interest falling within the ambit of Article 1 of Protocol No. 1 for persons satisfying its requirements (ibid.).

In cases, such as the present, concerning a complaint under Article 14 in conjunction with Article 1 of Protocol No. 1 that the applicant has been denied all or part of a particular benefit on a discriminatory ground covered by Article 14, the relevant test is whether, but for the condition of entitlement about which the applicant complains, he or she would have had a right, enforceable under domestic law, to receive the benefit in question (see Gaygusuz, and Willis, also cited above, § 34). Although Protocol No. 1 does not include the right to receive a social security payment of any kind, if a State does decide to create a benefits scheme, it must do so in a manner which is compatible with Article 14.

It follows that the applicants' interests fall within the scope of Article 1 of Protocol No. 1, and of the right to property which it guarantees. This is sufficient to render Article 14 applicable.

The Government submitted that it was objectively justifiable to link the age criteria for the receipt of REA and RA to State retirement pension age. REA was a benefit designed to compensate those who had suffered an industrial injury for their loss of earning capacity, and was therefore a benefit linked intrinsically to work. By stopping the benefit at State pension age, Parliament had acted in an objectively justified manner by ensuring that a person, whether male or female, would not both be eligible for a State retirement pension and for a benefit for loss of earnings capacity. Using the State pension age promoted, in a manner that could easily be understood and administered, and was proportionate, the objective of discontinuing REA for those who were no longer a regular part of the working and earning sector of the population.

The justification for linking social security benefits to State pension age had been recognised by Article 7 of the EC Directive 79/7 on Social Security (see paragraph 22 above). In May 2000 the full ECJ had considered and rejected the contention raised by the present applicants that they had unlawfully been discriminated against on the ground of their sex in breach of the Directive (see paragraph 24 above). If the Court were to find a violation in the present case it would create considerable confusion, since the domestic legislation would be lawful under a Directive specifically concerned with sex discrimination in social security, but unlawful under the general provisions of the Convention concerned with property and discrimination. A finding of a violation would undermine the purpose and effect of Community law.

In 1995, Parliament had decided that the State pension ages should be equalised for men and women by 2020. From 2010 onwards, the age at which women become entitled to receive State retirement pension would gradually be increased from 60, until, in 2020, it reached 65, the same as the age for men. Parliament had decided to implement the reform in stages because moving towards equality had enormous financial implications both for the State and for individuals, particularly women who had long been expecting to receive a State retirement pension at 60. Several Contracting States retained different pension ages for men and women, and a number had chosen to implement a gradual equalisation of those ages (see paragraphs 26–27 above).

Finally, the Government contended that three of the applicants — Mr Lunn, Mrs Spencer and Mr Kimber — had not been directly affected by the difference in treatment of which they complained. Any loss experienced by Mr Lunn or Mrs Spencer had been caused by their own acts or omissions, rather than the operation of the transitional scheme. Thus, Mr Lunn had had the option of giving notice of retirement once he reached the age of 65, rather than waiting, as he did, until he was deemed to have retired at 70. Conversely, Mrs Spencer had not been obliged to give notice of retirement when she reached pensionable age at 60, but could have deferred her pension until the age of 65, so bringing herself outside the operation of the transitional regime and entitling her to claim REA and RA in the same way as a male comparator. As for Mr Kimber, a woman with the same birthday would have been entitled to transitional-rate REA only if she had given notice of her intention to retire between 30 September 1984 (her sixtieth birthday) and 9 April 1989 (the ‘cut-off’ date for the transitional regime). Applying the principle expressed by the Court in Cornwell v. the United Kingdom, ((dec), no. 36578/97, 11 May 1999), since Mr Kimber gave no such notice, he could not claim to have been directly affected by the discrimination of which he complains, since a woman in the same position who had made no claim would have had no entitlement under domestic law to the transitional rate.

The applicants did not deny that it had been reasonable for the Government to seek to address the anomaly whereby industrial-injury earnings-replacement benefits continued to be paid to workers after the age when they would, in any event, have ceased paid employment. There was, however, no justification for introducing sex-based discrimination into the scheme by linking the cut-off date to pension age. The same objective could have been achieved, without unacceptable financial consequences, by adopting a common age-limit for men and women or by the use of overlapping benefit regulations, ensuring that any State pension received was off-set against REA.

It was important to note that the Commissioner, in his reference to the ECJ (see paragraph 23 above), had stated in paragraphs 26 and 27 that ‘the introduction after 1986 of unequal age conditions on REA for the first time was not necessary to maintain the financial equilibrium or coherence (insofar as that word is to be understood in a financial sense) of the UK social security schemes’. He had also found as a fact ‘that such imposition was not necessary to enable the United Kingdom to retain the different pension ages under its old-age pension scheme’.

The applicants did not consider that a finding in their favour would have wider implications for the case-law of the ECJ under Article 7 of 79/7. In the present case, the ECJ had been dealing with the scope of the derogation under Article 7, and had not considered afresh whether the discrimination had been justified.

In response to the Government's objection as to his victim status, Mr Lunn submitted that there had been no reason for him to have given notice of retirement on his sixty-fifth birthday, since it would have made no difference to his benefits position at that date. Mrs Spencer argued that the course she had taken in giving notice of retirement on her sixtieth birthday, which led to the transfer from REA to RA, would not have been open to a male comparator. Accordingly the problem she faced would not have been faced by such a comparator, and she could claim to be a victim of discrimination. Mr Kimber, for his part, reasoned that, unlike a woman in his position, there had been no point in his giving notice of retirement, because under the legislative scheme only women were entitled to receive transitional-rate REA upon giving such notice. It could not be assumed against him that, if he had been a woman, he would not have exercised that option.