Application no. 60669/00

by Kjartan �SMUNDSSON

against Iceland

lodged on 31 May 2000

The European Court of Human Rights (Second Section), sitting on 28 January 2003 as a Chamber composed of

Mr J.-P. Costa, President,

Mr A.B. Baka,

Mr Gaukur J�rundsson,

Mr K. Jungwiert,

Mr V. Butkevych,

Mrs W. Thomassen,

Mr M. Ugrekhelidze, judges,

and Mr T.L. Early, Deputy Section Registrar,

Having regard to the above application introduced on 31 May 2000,

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

Having deliberated, decides as follows:

THE FACTS

The applicant, Mr Kjartan �smundsson, is an Icelandic national, born in 1949 and living in Reykjav�k. He is represented before the Court by Ms Lilja J�nasd�ttir, a lawyer practising in the same city. The respondent Government are represented by Mrs Bj�rg Thorarensen, Agent of the Government of Iceland.

The facts of the case, as submitted by the parties, may be summarised as follows.

In 1969, at the age of 20, the applicant completed his education as a Navigation Officer at the Icelandic College of Navigation and started work as a seaman. This he continued to do until 1978 when he sustained a serious work accident on board a trawler. As a consequence, he had to give up work as a seaman. His disability was assessed at 100%, which made him eligible for a disability pension from the Seamen�s Pension Fund (hereinafter referred to as �the Pension Fund�), to which he had paid premiums on an interrupted basis from 1969 until 1981. The assessment was made on the basis of the criteria that applied under Act No. 49/1974, notably that the claimant was unable to carry out the work he had performed before his disability and to which his participation in the Fund had been linked, and that he had a sustained loss of physical strength (of 35 % or more).

Subsequently, the aforementioned Act No. 49/1974 was amended by sections 5 and 8 of Act No. 44/1992, which altered considerably the basis for the assessment of disability, in that the assessment was to be based, not on the Fund-participants� inability to perform the same work, but work in general. The new provisions had been enacted on the initiative of the Pension Fund and with reference to the Fund�s financial difficulties. The Pension Fund applied the new provisions not only to persons who claimed a disability pension after the date of their entry into force but also to persons who had started to receive a disability pension before that date.

Pursuant to an interim provision, the above change in the reference criterion was not to apply during the first five years following the loss of working capacity.

Act No. 49/1974, as amended by Act No. 44/1992, was replaced by Act No. 94/1994 when it entered into force on 1 September 1994. All the provisions covering the basis of disability pensions and child benefit payments were removed from the Act and included in Regulations on the Seamen�s Pension Fund, which also entered into force on 1 September 1994. According to the Government, this did not affect the applicant specifically, since the interim provision of Act No. 44/1992 still applied to his situation up until 1 July 1997. The applicant held the view that the interim provision was repealed on 1 September 1994.

Under the new rules, a fresh assessment of the applicant�s disability was carried out by an officially accredited physician of the Pension Fund, who concluded that the applicant�s loss of capacity for work in general was less than 35 %. As a consequence, as of 1 July 1997, the Fund stopped paying the applicant the disability pension, and relevant child benefits, which he had been receiving for nearly 20 years ever since the accident in 1978.

According to the Government, in 1997, when the interim provision of Act No. 44/1992 had expired there were 689 disability pensioners who received benefit payments from the Seamen�s Pension Fund. Some of those whose disability had been assessed at 100% in terms of their capacity for work as seamen also turned out to receive disability ratings of 100% in terms of their capacity for work in general, and so payments made to them remained unchanged. Others with a lesser degree of disability also remained in the same place regarding disability rating. In a large number of cases, the disability rating was reduced considerably, and in yet other cases, such as that of the applicant, the disability rating for work in general did not reach the level of 35% required under the Act in order to retain the right to disability benefit, and benefit payments were therefore discontinued. Altogether 54 disability pensioners, including the applicant, were in the same position in this respect and consequently payment of disability benefits to them were discontinued.

The applicant instituted proceedings against the Pension Fund and, in the alternative, against both the Fund and the Icelandic State, challenging the Fund�s decision to terminate the payments to him. In a judgment of 12 May 1999 the Reykjav�k District Court found for the defendants.

The applicant appealed to the Supreme Court, which by a judgment of 9 December 1999 upheld the judgment of the District Court.

The Supreme Court accepted that the applicant�s pension rights under the Act No 49/1974 were protected by the relevant provisions of the Icelandic Constitution as property rights. However, it considered that the measures taken by virtue of Act No. 44/1992 had been justified due to the Fund�s financial difficulties. The Court further stated:

COMPLAINTS

The applicant alleged a violation of Article 1 of Protocol No. 1, on its own and in conjunction with Article 14 of the Convention, maintaining that the deprivation of his pension rights had not been supported by substantive reasons and had resulted in major discrimination.

THE LAW

The applicant complained that the deprivation of his disability pension gave rise to a violation of Article 1 of Protocol No. 1 to the Convention, on its own and in conjunction with Article 14 of the Convention, which provide:

The applicant argued that his pension rights fell within the scope of protection of Article 1 of Protocol No. 1 and that the national measures depriving him of these rights entailed an interference with his peaceful enjoyment of possessions within the meaning of this provision.

The applicant further submitted that, contrary to former Article 67 (currently Article 72) of the Icelandic Constitution, the deprivation of his pension rights had not been based on any clear and unequivocal national legal provision. In fact, the measure had been taken without legal authority. The retroactive application of the new rules had been founded on an interim provision which was repealed three years before the authorities in June 1997 decided to terminate his pension. Thus, the interference with his Article 1 rights was unlawful.

In the applicant�s view, there was no reasonable relationship between the interference and the interests pursued. According to figures supplied by the Government, at the material time there were 689 persons receiving disability pensions from the Fund. The applicant was one of 54 individuals who had lost their entitlements in similar circumstances, a tiny group constituting only around 0.1 % of the Fund�s total membership, which last year comprised 38,584 members. On any analysis, the restrictions imposed affected only a very small minority and could in no way be regarded as having been of any significant financial advantage to the Fund or to have served the purpose of the Fund.

No comparable abridgements had been imposed on the pension rights of other Fund participants. The contested measure could not be described as a general measure addressed to an unspecified group of persons in accordance with the principle of equality. In Iceland, there was no legal tradition of depriving active pensioners of annuity rights without the payment of compensation.

The applicant refuted the Government�s suggestion that his disability rating of 100% in terms of loss of working capacity as a seaman did not affect his chances of earning income to support himself through work on shore. The applicant stated that he had been employed on shore since 1978, but as his disability had substantially reduced his possibilities of employment, he had been employed in office work for a transport company on a salary which was only a fraction of what he would have earned as a seaman. Even if he had continued to receive a pension, his total income would have been considerably less than he would have had as a seaman.

The Government disputed the applicant�s submissions and requested the Court to declare the application inadmissible as being manifestly ill-founded. It was clear that the legislative amendments in question were the logical and necessary consequences of the financial position of the Seamen�s Pension Fund at the material time. Their aim was to serve the general interest of members and the amendments were made in accordance with law. It should be emphasised that the decision to adopt new criteria for the assessment of disability applied in an objective manner to all those who were in the same position. The changes made had been instigated by the Fund�s Governing Board, composed of representatives of employers and employees, including of the employee organisation of which the applicant was a member.

The purpose of a disability pension from the Fund was indisputably to provide financial assistance to those who had had their working capacity reduced and who were in need of special assistance in order to ensure their subsistence. In instances where this did matter, recipients of disability pension would be given time to adapt themselves to changed conditions, notably through training, irrespective of whether they started to receive a disability pension before or after the entry into force of the new legislation.

The Government accepted that the impugned measure constituted an interference with the applicant�s peaceful enjoyment of possession for the purposes of paragraph 1 of Article 1 of Protocol No. 1 to the Convention. However, they maintained that the interference was justified under paragraph 2 of Article 1. The measure was provided for by law, was in accordance with the general interests of the community and there was a reasonable relationship between the interference and the interests pursued,

The Government emphasised that the applicant retained his full right to receive a retirement pension from the Seamen�s Pension Fund, in addition to which he acquired further such pension rights while receiving disability benefits.

The right to disability pension benefits should be subject to the ordinary considerations of compensation, i.e. the basic principle in the law on liability that the claimant should receive full compensation, but not more. In the Seamen�s Pension Fund it had been seen that a considerable number of former seamen who had paid premiums to the Fund and who were no longer considered capable of working at sea due to disability had been receiving disability pensions from the Fund notwithstanding the fact that they were in full employment on shore. The applicant was such a person. He was in full employment on shore and thus earned income to support himself, but under the former rules he also received a full disability pension.

After it had been established by the methods prescribed by law, according to Article 8 of Act No. 49/1974, that there was an operational deficit at the Seamen�s Pension Fund, the first obligation of the board of the Fund was to reduce or stop expenditure such as the payment of disability pensions to those who had not suffered any loss of income due to their loss of working capacity, as they were demonstrably able to perform work other than as a seaman.

These measures, which abridged the applicant�s rights to disability benefit, were no more extensive than necessary in terms of the aim they were intended to achieve. Admittedly they only abridged the rights of those Fund members who were no longer able to work as seamen, but this was done in such a way that this group had the full possibility of earning income on shore, and the majority of them were in fact already earning such income.

The Government rejected the view that other Fund members were treated differently from the applicant when it came to the abridgement of their benefit rights, so resulting in a violation of Article 1 of Protocol No. 1 in conjunction with Article 14 of the Convention. There were many Fund members in a similar or identical position to the applicant.

The Court, having regard to the parties� submissions, considers that the case raises complex issues of law and fact under the Convention, the determination of which should depend on an examination of the merits of the application as a whole. The Court concludes, therefore, that the application is not manifestly ill-founded within the meaning of Article 35 � 1 of the Convention. No other grounds for declaring it inadmissible have been established.

For these reasons, the Court unanimously

Declares the application admissible, without prejudicing the merits of the case.

T.L. Early J-P. Costa

Deputy Registrar President