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THE SOCIAL SECURITY COMMISSIONERS
Commissioner’s Case no: CIB 3586 1999
SOCIAL SECURITY ACTS 1992 - 1998
APPEAL FROM A DECISION OF A SOCIAL SECURITY APPEAL TRIBUNAL
ON A QUESTION OF LAW
DECISION OF THE SOCIAL SECURITY COMMISSIONER
Mr Commissioner David Williams
DECISION OF THE SOCIAL SECURITY COMMISSIONER
1 I allow the claimant's appeal against the decision of the Newcastle upon Tyne social security appeal tribunal on 12 November 1998, brought by my leave. The decision of the tribunal was the decision of the adjudication officer was confirmed. That decision was that the existing entitlement of the claimant to incapacity benefit was reviewable on 24 April 1996 because she had left Britain on the previous day. On review, the claimant is not entitled to incapacity benefit from and including 24 April 1996. For the reasons given below, the decision was erroneous in law. I set it aside. I refer the case to a freshly constituted tribunal to determine the appeal in accordance with this decision, unless it is struck out in accordance with the direction at paragraph 27 below.
The claimant’s entitlement to benefit under British law
2 The facts of this case are relatively straightforward, although the law is not. The claimant became incapable of work on 24 February 1996, although she last worked in October 1995. She was awarded and paid incapacity benefit. Her husband was also incapable of work. On 23 April 1996 they left Britain for the USA. In a claim made in July 1996 for benefit while abroad, the claimant said that she had left for an extended holiday/convalescent break. She was not sure when she would return but it might be September/October 1996. In January 1998, the claimant stated that she did not intend to return to Britain and had applied to stay in the USA. It was better for her husband's health. They were still there when the tribunal heard the case in November 1998, and she did not return to Britain for the hearing. The claimant had not worked since arriving. At all relevant times, she was neither employed nor self-employed. She was 45 when she arrived in the USA.
3 Section 113 of the Social Security Contributions and Benefits Act 1992 disqualifies any individual who is absent from Great Britain from entitlement to benefit except where regulations provide otherwise. The relevant regulation here is regulation 2 of the Social Security (Persons Abroad) Regulations 1975.
The tribunal considered the application of this regulation. The adjudication officer submitted that, although the tribunal did not consider all questions that arose under that regulation, its failure to do so did not amount to an error of law. This was because it concluded that the claimant could not qualify under regulation 2(1) in any event. I agree with that submission. On the established facts, the decision of the tribunal is not erroneous in law by reference to what I would term the underlying British law.
The claimant’s entitlement by reason of international agreements
4 Nonetheless, the appeal is supported by the adjudication officer. This is because no attention had been paid to any entitlement under the reciprocal international social security agreements concluded between the United Kingdom and the United States of America. Where there is a bilateral social security agreement, an Order in Council may make provision “for modifying or adapting” the United Kingdom’s social security legislation “to such extent as may be required to give effect to the provisions contained in the agreement” : Section 179 of the Social Security Administration Act 1992.
5 An Agreement on Social Security between the Government of the United Kingdom and the Government of the United States of America was concluded in 1984 (“the 1984 USA Agreement”). It was incorporated into British law by the Social Security (United States of America) Order 1984, Statutory Instrument 1984 no 1817, together with a supplementary Administrative Agreement. The Order was amended by Statutory Instrument 1995 No 767 to provide that any reference to sickness or invalidity benefit was to include a reference to incapacity benefit. A Supplementary Agreement was concluded in 1996. It was incorporated by Statutory Instrument 1997 No 1778. The modifications incorporated by that Order came into effect on 1 September 1997. The Orders (in Article 2 in each case) modify the relevant Acts of Parliament “so as to give effect to the Agreement”. I refer to these Agreements and implementing Orders together as “the USA Agreements” in this decision.
6 A bilateral social security agreement may affect the entitlement of a claimant to benefit in several ways:
• It may remove any discrimination against the claimant in the new state to which the claimant has gone on grounds of continuing nationality of the old state from which the claimant has left. I am unable to comment on any effect that might have in the USA in this case.
• It may provide for the continued payment in the new state of benefits to which the claimant remains entitled under the laws of the old state despite living in the new state. That does not apply here. (It is, in any event, a question of payability not entitlement.)
• It may provide entitlement under the laws of the new state by reference to deemed contributions in the old state. I am unable to comment on this as it involves entitlement under United States law.
• It may preserve any entitlement under the law of the old state that was otherwise lost because the claimant moved to the new state. This is the issue relevant in this case.
It may prevent claims in both states at once, or require that double claims be offset. That does not appear to arise here.
7 I discussed general issues about the effect to be given to reciprocal international agreements in CP 4679 1997 (star 84/98). While that related to the United Kingdom - New Zealand agreement, the general comments I made about interpretation and application of, and dispute resolution under, that agreement also apply to this agreement.
8 I directed the adjudication officer, in making a submission on this appeal, to address the question of any entitlement that the claimant might have under the USA Agreements. The adjudication officer submitted that there might be an entitlement, and the tribunal had erred in not considering it. In the view of the adjudication officer, it might arise under either Article 7 or Article 14 of the USA Agreements. Questions also arise about my jurisdiction to consider these issues. As I find that I have jurisdiction to consider Article 7, I deal with that issue in considering Article 14.
Article 7 of the US Agreements
9 The “Benefit provisions” of the USA Agreements, at the time that the claimant left Britain, are to be found in Article 7 of the 1984 Agreement and following. Until the Agreement was extended with effect from 1 September 1997 by the 1996 Agreement, Article 7 applied only to “an old age pension, a retirement pension or a survivor's benefit under the laws of the United Kingdom”: Article 7 paragraph 2. Subject to any retrospective effect of the later amendment, the USA Agreements were not of assistance to the claimant in maintaining her claim for British incapacity benefit when she left. Because of section 113 of the Social Security Contributions and Benefits Act 1992, she has no entitlement to incapacity benefit from and including the date she left, at least until 31 August 1997.
10 The adjudication officer rightly pointed out that Article 7 paragraph 2 was amended with effect from 1 September 1997 (by Article 6 of the 1996 Agreement). From that date, the Article also applies to “invalidity benefit”. That includes incapacity benefit: Statutory Instrument 1995 No 767, Schedule 1. Had the claimant left Britain after that date with an existing entitlement to incapacity benefit, Article 7 paragraph 2 would have entitled her to receive the benefit in the USA while she “ordinarily resides in the territory of the United States, as if she were in the United Kingdom”. The adjudication officer submitted that this provision would assist the claimant after it came into effect, but not before. This assumed a continuing underlying entitlement to British benefit that may not be there, and needs closer examination.
11 Article 7 paragraph 2, in the form in which it took effect on 1 September 1997, and in so far as it applies to the claimant, provides:
Subject to the provisions of paragraph 3 of this Article and the provisions of Article 14, a person who would be entitled to receive an old age pension, a retirement pension, a survivor’s benefit or invalidity benefit under the laws of the United Kingdom if [she] were in the United Kingdom shall be entitled to receive that pension or benefit while [she] ordinarily resides in the territory of the United States, as if [she] were in the United Kingdom.
Article 7 paragraph 3 (increases in pensions) is not relevant here. Article 14 is noted below.
12 The new form of Article 7 paragraph 2 helps the claimant if she “would be entitled to receive ... invalidity benefit ... if she were in the United Kingdom” while “she ordinarily resides in the territory of the United States”. It applies to invalidity benefit and not sickness benefit, and therefore to long-term incapacity benefit and not short-term incapacity benefit. The purpose of the provision is to protect recipients of long-term incapacity benefit in the same way as recipients of retirement pension are protected by the Article. Continuing entitlement (for example for long term disablement) is implicit. The paragraph replaces a requirement of residence or presence in Britain with a requirement of residence in the USA .
13 The problem in this case is that the rule did not operate throughout the claimant’s absence from the United Kingdom. She lost her entitlement to incapacity benefit when she left Britain, and she is not therefore entitled to long-term incapacity benefit thereafter. If we treat the claimant as notionally returning to Britain on 1 September 1997, she would still have no entitlement to long-term incapacity benefit until, first, she claimed the benefit and, second, she met the requirements for long-term benefit. I therefore do not consider that the claimant is someone who “would be entitled” on the basis provided for incapacity benefit in Article 7 paragraph 2 when it came into effect for that benefit.
14 The only express transitional provision in the 1996 Agreement is in Article 2. This provides that the Agreement “shall not result in any reduction in the amount of a benefit to which entitlement was established prior to its entry into force.” That does not assist the claimant. Consequently I conclude that, regardless of any issues that might arise about ordinary residence in the United States, the claimant has no entitlement under Article 7 either before or after amendment.
Article 14 of the USA Agreements
15 The adjudication officer also raised a possible alternative basis of entitlement under Article 14 paragraph 2. Article 14 was also amended by the 1996 Supplementary Agreement. The post-1997 version of Article 14 provides that:
1. The provisions of paragraphs 2 to 5 of this Article shall apply to claims for invalidity benefit under the laws of Great Britain, Northern Ireland or the Isle of Man.
2. A person who has satisfied the first contribution condition for sickness benefit as defined in Article 1 using contributions under the laws of Great Britain, Northern Ireland or the Isle of Man only, who is in the territory of the United States and is not subject to the laws on coverage of Great Britain, Northern Ireland or the Isle of Man under Articles 4, 5 or 6 of this Agreement, shall be entitled to receive invalidity benefit under the laws of Great Britain, Northern Ireland or the Isle of Man provided that:
(a) the second contribution condition for sickness benefit under the laws of the United Kingdom is satisfied using relevant periods of coverage under the laws of the United Kingdom and, if necessary, the United States, and
(b) the person is incapacitated for work and has been so incapacitated throughout the qualifying period for invalidity benefit, in which case the person shall be treated as if sickness benefit followed by invalidity benefit, under the laws of Great Britain, Northern Ireland or the Isle of Man, had been paid throughout that period of incapacity.
For the purposes of sub-paragraph (a), a person will be considered to meet the second contribution condition if he is credited with quarters of coverage under the laws of the United States in the last 2 complete contribution years before the relevant benefit year. The relevant Competent Authority of Great Britain, Northern Ireland or the Isle of Man will reallocate any quarter of coverage credited to a person under the laws of the United States within a calendar year to calendar quarter within that year if it is needed to satisfy the second contribution condition in a relevant contribution year, as long as it has not been used to satisfy the second contribution condition in any other relevant contribution year.
The rate of the invalidity benefit payable shall be that which would be paid under the laws of Great Britain, Northern Ireland or the Isle of Man without the application of this Agreement unless a disability benefit under the laws of the United States is in payment, whether or not under the provisions of this Agreement, in which case the rate of invalidity benefit payable shall be determined in accordance with the provisions of paragraph 3 of this Article.
16 The form of Article 14 that applied before the amendments taking effect in 1997 was more restrictive. The adjudication officer submitted that the claimant may have entitlement under this article since 1 September 1997, but would not appear to be assisted by the earlier version of the Article. I am in broad agreement with that submission, but it raises two separate jurisdictional issues.
17 The first jurisdictional issue is that any questions about British contribution conditions are no longer questions for the Secretary of State, but are for the Inland Revenue and tax tribunals under the Social Security Contributions (Transfer of Functions, etc.) Act 1999. That Act applies to decisions relevant to section 179 of the Social Security Contributions and Benefits Act 1992 as it does to decisions under the general provisions of the Social Security Contributions and Benefits Act 1992. The 1999 Act amended section 179 to allow effect to be given to international agreements under the section: Social Security Contributions (Transfer of Functions, etc.) Act 1999, Schedule 7, paragraph 15.
Decisions against which no appeal lies
18 The second jurisdictional issue is that the application of Article 14 paragraph 2 requires decisions of law or fact about coverage under the laws of the United States and may involve apportionment between British entitlement and entitlement in the United States of America. It therefore requires decisions or determinations of the Secretary of State using the provisions of the USA Agreements and the Administrative Agreement that supplements the working of the Agreement. This raises the question of whether and how far a tribunal or Commissioner may consider those questions on appeal.
19 Since the implementation of the Social Security Act 1998, the general rule is that decisions of the Secretary of State are open to appeal. But Schedule 2 to the Social Security Act 1998 lists decisions of the Secretary of State that are excluded from this general rule, and are not open to appeal. There are further exclusions in regulations. Paragraph 22 of Schedule 2 to the Social Security and Child Support (Decisions and Appeals) Regulations 1999 amends Schedule 2 to the Social Security Act 1998 by adding the following category of “decisions against which no appeal lies”:
A decision of the Secretary of State made in accordance with an Order made under section 179 of the Administration Act (reciprocal agreements with countries outside the United Kingdom.
20 It is not entirely clear what is meant by “a decision ... made in accordance with an Order”. It has long been accepted by the courts that the general approach to interpreting an ambiguous provision that purports to exclude a right of appeal is to interpret it restrictively. But it is also a well-established principle of interpretation of provisions that implement international agreements that the interpretation adopted should be purposive, and should be so far as possible consistent with the United Kingdom’s international obligations. Those obIigations include the USA Agreements, and also the European Convention on Human Rights, and in particular Article 6 paragraph 1. This provides that:
In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal.
21 With these approaches to interpretation in mind, I note that the Order in Council in this case contains no relevant provisions. But the USA Agreements do.
Article 19 of the 1984 Agreement provides:
1. A written appeal to, or against, the determination made by the Agency of one Party may be validly filed with an Agency of the other Party. The appeal shall be dealt with according to the appeal procedures of the laws of the Party which has jurisdiction.
2. Any claim, notice or written appeal which, under the laws of one Party, must have been filed within a prescribed period with the Agency of that Party, but which is instead filed within the same period with the Agency of the other Party, shall be considered to have been filed on time.
Article 21 provides:
1. Disagreements between the two parties regarding the interpretation or application of this Agreement shall, as far as possible, be resolved through agreement of the Competent Authorities.
2. If a disagreement cannot be resolved by the Competent Authorities, it shall be submitted, at the request of either Party, for arbitration in accordance with the procedures to be agreed upon by the Competent Authorities.
Article 21 paragraph 2 was amended under the 1996 Agreement and now reads:
2. If a disagreement cannot be resolved through negotiation, the Competent Authorities will endeavour to settle the issue through arbitration, mediation, or other mutually agreed procedure.
22 It is clear that the parties to the USA Agreements contemplated appeals by individual claimants about matters to which the Agreements applied, because they made express procedural provision for them. Nonetheless, unless it is accepted that paragraph 22 is beyond the powers of the primary legislation under which it is made, effect must be given to it. My view is that effect can be given to it in a way that is consistent with the general principles noted above and is also consistent with the Agreements to which it relates. This is that paragraph 22 has effect only when the provisions of the Agreements are such that a decision of the Secretary of State is required “in accordance with” the Agreements, rather than under British law, to give effect to any entitlement. When this is so depends on the terms of each individual provision and on the underlying British law.
23 The wording of Article 7 paragraph 2 is that of entitlement. It treats a claimant as being in the United Kingdom if certain criteria are met. There is no issue of discretion or calculation, and no decision “in accordance with” the Order is required for it to operate. If a decision is needed to deal with the question, then it is by reason of British procedural law only and not by reason of the Agreement. Paragraph 22 does not exclude a tribunal or Commissioner considering the application of Article 7 paragraph 2.
24 The position of Article 14 paragraph 2 is not so clear. It also refers to entitlements, but it provides for aggregation of the rights of a claimant to long term incapacity benefit by reference to accumulated entitlements under both social security systems and then, if there is also entitlement under the United States system, apportionment of the liability to pay between the authorities responsible for those systems. All decisions under Article 14 paragraph 2 require one or more decisions or determinations from both the states parties. In this case, some of the relevant decisions can be made by reference to British law alone, some require that the Agreements be used, and some are decisions for the United States authorities. For instance, the decision whether the claimant is incapacitated for work would be made under section 171A of the Social Security Contributions and Benefits Act 1992. It is not made “in accordance with the” the Agreements, and is subject to appeal to a tribunal or Commissioner. But a decision about coverage under the laws of the USA would involve a decision “in accordance with” the Agreements. So would any decision under Article 14 paragraph 3 about the rate of benefit following apportionment of liability. Those are decisions that are not subject to appeal by reason of paragraph 22.
25 The limited scope given to paragraph 22 in this way will, in my view, largely accord with the practicalities of operating an international agreement. Regardless of paragraph 22, a British tribunal or Commissioner has no jurisdiction to decide United States law or to consider the actions of the United States authorities. There is a procedure for that laid down in the Agreements. Any rights to challenge a determination by the United States authorities arise in the United States. In my view, the practical effect of paragraph 22 is therefore to limit appeals only against those decisions which directly involve reconciling any conflicts between the two systems. The effect in this case is to preserve a right of appeal where a claimant is claiming incapacity benefit under article 7, but to restrict it where the claim is made instead under Article 14 by reference in part to coverage under the United States system. It may be argued that even this restricted interpretation of paragraph 22 is not in accordance with the obligations under the Agreements themselves. For example, had the claimant sent her claim and appeal through the United States authorities rather than direct to the British authorities, she might have argued that the application of paragraph 22 to any resulting decision was a breach of Article 19 paragraph 1 of the Agreements, and therefore of the Order itself, if it precluded an appeal. However, that does not arise in this case and I leave it to be considered when it does arise.
26 This must go back to a tribunal but for limited reasons only. I summarise my directions to the new tribunal as follows:
26.1 The claimant is not entitled to incapacity benefit on and after 23 April 1996 by reference to British law alone. I accept and adopt the tribunal decision on this issue, including the question of reviewing existing entitlement. I direct the new tribunal to decide the appeal accordingly.
26.2 The claimant's claim is not assisted by Article 7 of the US Agreements at any date before 1 September 1997. Although the tribunal has jurisdiction to deal with the matter, I direct the new tribunal to decide the appeal accordingly.
26.3 Although an existing entitlement to incapacity benefit under British law would be assisted under the US Agreements on and after 1 September 1997, the claimant has no existing entitlement at that date and the Agreements do have retrospective effect. Article 7 of the US Agreements therefore does not assist the claimant's claim on or after that date. Again, the new tribunal has jurisdiction, but I direct it to decide the appeal accordingly.
26.4 Article 14 of the US Agreements may assist the claimant. I refer that issue to a new tribunal. But the tribunal should note that it is only competent to decide a limited number of the issues that arise under that Article, as discussed in paragraph 24 above.
26.5 The tribunal is to consider the appeal from the date of claim down to the date of hearing, unless there is a decision on a subsequent claim or application for review, or some other circumstance, that supersedes the current claim at an earlier date.
27 The Secretary of State is directed to consider any entitlement that the claimant may have under Article 14 paragraph 2 either before or after 1 September 1997 and to advise the new tribunal accordingly. If the Secretary of State finds that the claimant is not entitled to any benefit under Article 14 paragraph 2 because she does not satisfy the coverage provisions, and the Secretary of State advises the tribunal and claimant accordingly, then the appeal may be considered for striking out under regulation 46 of the Social Security and Child Support (Decisions and Appeals) Regulations 1999 as an out of jurisdiction appeal.
14 March 2000
Incapacity benefit - entitlement under United Kingdom -United States Agreements - limitations on jurisdiction to consider entitlements - Social Security and Child Support (Decisions and Appeals) Regulations 1999, Schedule 2 paragraph 22.
This decision considers the entitlement of a claimant for incapacity benefit under both Article 7 and Article 14 of the reciprocal agreements with the USA both before and after the amendments on 1 September 1997.
It considers how far a tribunal and Commissioner are deprived of jurisdiction to consider such issues by paragraph 22 of Schedule 2 to the Social Security and Child Support (Decisions and Appeals) Regulations 1999. It adopts a restrictive interpretation of paragraph 22. It notes the effect of the Social Security Contributions (Transfer of Functions, etc.) Act 1999 on decisions about the application of the Agreements.
14. 3. 2000
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This decision has been reproduced in plain text only. If you wish to submit a copy of a decision as part of an appeal, please download a Word copy from the link below.