Volodymyr FURTSEV v the Czech Republic - 22350/10 [2011] ECHR 1499 (20 September 2011)

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The European Court of Human Rights (Fifth Section), sitting on 20 September 2011 as a Chamber composed of:

Dean Spielmann, President,
Elisabet Fura,
Karel Jungwiert,
Mark Villiger,
Isabelle Berro-Lefèvre,
Ganna Yudkivska,
Angelika Nußberger, judges,

Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,

The applicant, Mr Volodymyr Furtsev, is a Ukrainian national who was born in 1949 and lives in Sokolov. He was represented before the Court by Mr L. Zscherp, a lawyer practising in Plzeň. The Czech Government (“the Government”) were represented by their Agent, Mr V. A. Schorm, of the Ministry of Justice. The Government of Ukraine were invited to state whether they wished to submit written comments on the case (Article 36 of the Rules of Court). They did not avail themselves of that possibility.

Before moving to the Czech Republic on 22 July 1999, the applicant had lived and worked in Ukraine as a professional soldier for twenty years and then as an entrepreneur. He had received a military pension from Ukraine from 1991 to 2002. Afterwards, he had received a military pension from the Czech Republic until 8 August 2004. The applicant was employed in the Czech Republic from 1 June to 7 November 2003. From 20 December 2002 to 31 May 2003 and then from 8 November 2003 to 31 January 2004 he was registered as unemployed.

On 5 January 2005 the Czech Military Social Authority (Vojenský úřad sociálního zabezpečení) awarded him an old-age pension of 6,991 Czech korunas (CZK) per month (290 euros (EUR)) starting from 8 August 2004. The amount was calculated on the basis of the applicant’s wage in the Czech Republic in 2003 together with an unspecified notional amount determined by the Czech Ministry of Defence for the calculation of his military pension. On 3 March 2005 the Ministry of Defence upheld that decision.

The applicant lodged a request for judicial review arguing, inter alia, that he had been discriminated against on account of his employment in the Czech Republic because had he never worked in the country, his pension would be calculated based on section 7 (2) of the Czech-Ukrainian Agreement on the Application of the Treaty on Social Security (“the Agreement”). In that case it would reach CZK 8,147 (EUR 340). He further argued that he had been discriminated against because his income in Ukraine had not been taken into account at all when calculating his pension.

On 25 January 2006 the Plzeň Regional Court (krajský soud) upheld the decisions of the administrative authorities, holding that they had correctly applied the Czech-Ukrainian Treaty on Social Security (“Treaty”), the Agreement and the relevant law.

On 23 May 2007 the Supreme Administrative Court (Nejvyšší správní soud) dismissed the applicant’s appeal on points of law (dovolání). It rejected, inter alia, the applicant’s claim of discrimination, holding that the rule by which the income in another country cannot be taken into account when calculating a pension, was justified by technical and practical difficulties and it also protected persons whose pension would be lowered by taking into account low income abroad. The court further stated that it did not consider that any discrimination arose from the fact that section 7 (2) of the Agreement was not applicable in the applicant’s case.

On 9 October 2009 the Constitutional Court (Ústavní soud) rejected the applicant’s constitutional appeal as manifestly ill-founded, agreeing with the ordinary courts.

The entitlement to and the calculation of old-age pensions in the Czech Republic of persons having arrived from Ukraine is governed by the bilateral Czech-Ukrainian Treaty on Social Security of 4 July 2001 (“the Treaty”) and the subsequent Agreement on the Application of the Treaty on Social Security of 25 June 2003 (“the Agreement”) .

Under Article 18 of the Treaty a State Party undertakes to calculate the average wage or the basis for calculating the pension only on the basis of the insurance years earned under the law of that State Party.

Under section 7(1) of the Agreement, when calculating the pension under Article 18 of the Treaty, no account is taken of any income earned in the other State Party. Section 7(2) stipulates, however, that if the calculation of a pension is not possible because the person has acquired insurance periods only in the other State Party, the calculation in the Czech Republic shall be based on the average Czech wage two years before the date the pension is awarded.

Under the Pension Act (no. 155/1995), the amount of pension is calculated on the basis of the person’s contribution to the social security scheme during thirty years before the date the pension is awarded. However, certain periods are disregarded, including any periods when the person was unemployed, was receiving another pension or the amount of income cannot be established. The minimum old age pension under Section 33, irrespective of any prior contribution to the scheme, is currently CZK 3,000 (EUR 125).

Act no. 589/1992 determines the subjects required to contribute to the social security scheme and amounts which have to be paid. Section 3 sets out a list of persons who have to pay social security contributions. It includes, inter alia, employees, self-employed persons, persons in various paid elected State offices, civil servants, and shareholders and managers of corporations if they are remunerated for their work.

The applicant complained that he had been discriminated against in the calculation of his old-age pension based on his nationality because his income in Ukraine had not been taken into account. He further complained that he had been discriminated against based on his employment status because had he not been employed his pension would be higher. Lastly, he complained that the domestic courts had not protected him against this discrimination.

The applicant complained that he had been discriminated against based on his nationality and the fact that he had been employed for a short time in the Czech Republic because had he not worked at all his pension would be higher. He relied on Article 14 of the Convention, which reads as follows:

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

The Government objected that the complaint was incompatible ratione materiae with the Convention. They argued that there was no right under Article 1 of Protocol No. 1 to a particular amount of pension and therefore the complaint did not come within the ambit of this provision. Therefore, Article 14 of the Convention did not apply.

The Court reiterates that Article 14 of the Convention complements the other substantive provisions of the Convention and the Protocols. It has no independent existence since it has effect solely in relation to “the enjoyment of the rights and freedoms” safeguarded by those provisions. The application of Article 14 does not necessarily presuppose the violation of one of the substantive rights guaranteed by the Convention. It is necessary but it is also sufficient for the facts of the case to fall “within the ambit” of one or more of the Convention Articles (see Stec and Others v. the United Kingdom (dec.) [GC], nos. 65731/01 and 65900/01, § 39, ECHR 2005-X).

In the above mentioned Stec and Others, where the issue was alleged discrimination in entitlement to old-age benefit, the Court held:

“In cases ... 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 ...). 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.” (§ 55)

In Carson and Others v. the United Kingdom ([GC], no. 42184/05, § 64-65, ECHR 2010 ...) the applicants complained that they were receiving lower pensions because of their place of residence. The Court ruled that the facts underlying the complaint fell within the scope of Article 1 of Protocol No. 1.

Accordingly, discrimination complaints in the sphere of welfare benefit come within the ambit of Article 1 of Protocol No. 1 even though it concerns only “a part of a particular benefit”.

The Government referred to the cases of Kjartan Ásmundsson v. Iceland, no. 60669/00, ECHR 2004 IX and Domalewski v. Poland (dec.), no. 34610/97, ECHR 1999-V) in which the Court held that Article 1 of Protocol No. 1 does not guarantee a pension of a particular amount. However, the Court’s analysis did not concern any issue of applicability of Article 14 of the Convention which, in fact, applied in the latter case.

In view of the foregoing, the Court holds that Article 14 of the Convention applies in the present case and rejects the Government’s objection on compatibility ratione materiae.

Regarding the applicant’s claim that he was discriminated against based on his nationality, the Court considers that there was no different treatment of the applicant on this ground. His old-age pension was calculated based on the rules applicable to every old-age pensioner in the Czech Republic, that is based on the level of prior contributions to the social security scheme. His nationality did not play any role in the calculation. Moreover, the applicant did not submit any evidence of indirect discrimination based on nationality. The rule that income in Ukraine is disregarded in calculating the amount of pension rather protects persons arriving from Ukraine, where the average income is lower than in the Czech Republic.

This part of the application is therefore manifestly ill-founded and must be rejected under Article 35 § 3 (a) of the Convention.

It remains to be decided, whether the applicant was discriminated against on the ground of having performed remunerated work.

The Government argued that the applicant was not in an analogous position to persons who had not worked in the Czech Republic but that those who had in fact worked there were the appropriate comparator. In this respect, the applicant’s pension had not been calculated in a discriminatory way.

They further considered that the alleged ground of different treatment was not a relevant discrimination ground covered by other status in Article 14 of the Convention. They submitted that it had been the applicant’s own decision to enter into employment in the Czech Republic and that this ground did not relate to any personal characteristic.

The Government finally argued that any alleged difference in treatment had objective and reasonable justification. The applicant’s pension was in full compliance with the domestic law, of which the relevant bilateral treaties were part. Section 7 (2) of the Agreement pursued the legitimate aim of protection of persons who had never worked in the Czech Republic. They noted that had the applicant earned a wage above the average his pension would be higher compared to persons never having worked in the Czech Republic and thus consequently it was not even possible to say that all persons having worked in the Czech Republic were disadvantaged compared to those not having worked there.

The applicant maintained that there had been no justification for his less favourable treatment in the calculation of his pension compared with persons whose pension was regulated by the same bilateral treaty who had never worked in the Czech Republic. He was in fact penalised for having accepted a job with a lower than average wage and was paid taxes to the State. It would, therefore, have been unfair to treat him less favourably than those who had not worked and had been receiving the State welfare benefits. Moreover, it was not his free choice to choose employment with a certain wage, the amount of wages being determined by the labour market.

The Court has established a four-step analysis to determine whether an issue arises under Article 14 of the Convention. Firstly, it examines whether there is a different treatment to the detriment of the applicant compared with other persons in analogous or relevantly similar situations; secondly, whether the different treatment is based on an identifiable characteristic, or “status”; thirdly, whether it pursues a legitimate aim; and, lastly, whether there is a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see Carson and Others v. the United Kingdom [GC], cited above, § 61).

For the purposes of the present case, the Court starts on the assumption that, under the operation of the Czech-Ukrainian treaties, the applicant suffered a disadvantage in the calculation of his pension on account of having performed remunerated work in the Czech Republic for lower than average wage, compared with persons who did not work in the Czech Republic and that he was in an analogous situation with them.

The Court first considers that pursuing remunerated work is covered by “other status” for the purposes of Article 14 of the Convention. The choice to work, by which a person exercises his or her human right to work guaranteed by numerous international instruments, should be respected as an aspect of his personal status (see mutatis mutandis Carson and Others, cited above, § 71, where a relevant ground was a choice of place of residence, an exercise of a freedom of movement and a contrario Peterka v. the Czech Republic (dec.), no. 21990/08, 4 May 2010 where the different treatment was on the basis of various modes of work only).

Next, the Court considers as legitimate the aim that section 7 (2) of the Agreement protects persons coming from Ukraine who could not work in the Czech Republic for various reasons, such as health, old age, or being unable to find a job. It can accept as legitimate that no further distinction is made within this group of persons because it would be administratively too burdensome. The Court finds that keeping the welfare system administratively manageable and thus lowering its costs is a legitimate aim.

Regarding whether there was a reasonable relationship of proportionality between the means employed and the aim to be realised, the Court considers that where a difference stems from a period of remunerated work in the Czech Republic, the State enjoys a wide margin of appreciation and accordingly manifest unreasonableness is the appropriate test of scrutiny. It finds that the disadvantage to the present applicant was not considerable. Had he chosen not to work in the Czech Republic his monthly pension would be higher by CZK 1,156 (about EUR 50), that is by about 16.5 %.

Concerning his argument that he did not see why the State should dissuade persons from working for less than the average wage and thus motivate them to live on social benefits the Court finds that it was the applicant’s own choice. His pension was calculated based on the same criteria as everybody else’s, that is, based on the amount of previous contributions to the system. The only difference is that in concluding the Agreement with Ukraine the respondent Government chose to regulate the situation of persons moving to the Czech Republic from Ukraine and never working in the Czech Republic by stipulating that their pension would be calculated based on the average wage. If this provision was not included in the Agreement these persons would be entitled only to the minimum pension. The Court in this context reiterates that Article 14 does not prohibit a member State from treating groups differently in order to correct “factual inequalities” between them; indeed in certain circumstances a failure to attempt to correct inequality through different treatment may in itself give rise to a breach of the Article 14 of the Convention (D.H. and Others v. the Czech Republic [GC], no. 57325/00, § 175, ECHR 2007 IV; see further on bilateral social security treaties in Carson and Others v. the United Kingdom [GC], cited above, § 88).

Admittedly, the applicant might consider it unfair that the State does not inquire as to why the persons have not worked in the Czech Republic and draw appropriate conclusions therefrom. Nevertheless, the Court accepts the Government’s argument that such examination would be administratively excessively burdensome. It reiterates that any welfare system, to be workable, may have to use broad categorisations to distinguish between different groups in need (see Carson and Others v. the United Kingdom [GC], cited above, § 62). The approach adopted by the Czech Republic in the bilateral treaty with Ukraine is therefore not manifestly unreasonable.

The State did therefore not overstep its wide margin of appreciation in privileging one clearly defined, circumscribed, and in the context of all persons entitled to pensions not very large group of persons.

It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

Having regard to its finding under Article 14 of the Convention in conjunction with Article 1 of Protocol No. 1, the Court considers that the applicant’s complaint formulated under Article 6 of the Convention is likewise manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

The Court observes that the Czech Republic is not a party to this Protocol. Therefore, this complaint is incompatible ratione personae with the Convention and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

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You are here: BAILII >> Databases >> European Court of Human Rights >> Volodymyr FURTSEV v the Czech Republic - 22350/10 [2011] ECHR 1499 (20 September 2011) URL: http://www.bailii.org/eu/cases/ECHR/2011/1499.html Cite as: [2011] ECHR 1499