THORKELSSON v. ICELAND
Inadmissible
Gaukur Jörundsson;Wilhelmina Thomassen
The applicants are Icelandic nationals, born in 1937 and 1932, and reside in Mosfellsbær, Iceland. Before the Court they are represented by Mrs Erla S. Árndóttir, a lawyer practising in Reykjavík. The facts of the case, as submitted by the parties, may be summarised as follows. The applicants are master house builders. In 1985 they established the limited liability company Trésmiðjan K 14 hf. together with three other persons. The applicants and one of the other persons formed the company's Board of Directors. They were on the company's payroll and worked there on carpentry. The first applicant is a member of the Association of Master Carpenters in Reykjavík. None of the applicants has been a member of the Reykjavík Carpenters' Union or other trade union during the period under reference. The applicants paid premiums to the Construction Workers' Pension Fund until the end of 1989. As of that time they commenced paying premiums to the Free Pension Fund. In April 1991 the Construction Workers' Pension Fund filed a request to Trésmiðjan to pay the company's part of the premiums with respect to the applicants. The company rejected payment as the applicants had shifted to the Free Pension Fund and thereby done their legally prescribed duty of payment to a pension fund. In October of 1993 the United Pension Fund, which had then taken over the rights and duties of the Construction Workers' Pension Fund, instituted proceedings against Trésmiðjan before the Reykjavík District Court, claiming payment of premiums in respect of the period from November 1989 until December 1992. The company disputed the claim, arguing, inter alia, that an interpretation of the provisions of the Act on Employment Terms of Wage Earners and Obligatory Pension Insurance 1980 (Act No. 55/1980, hereinafter referred to as “the 1980 Act”) to the effect that there was an obligation to participate in the United Pension Fund, would be incompatible with the right to freedom of association and the right to property as protected by the Icelandic Constitution, the Convention and Protocol No. 1 thereto. By a judgment of 3 March 1995 the District Court ordered Trésmiðjan to pay to the United Pension Fund the premiums claimed by it. The company appealed against the above judgment to the Supreme Court, which, by 3 votes to 2, upheld the District Court's judgment on 26 September 1996. The minority voting for acquitting the company of the pension claim relied, inter alia, on Article 11 of the Convention. The majority's reasoning included the following observations: “... from the above follows that the 1980 Act contains an unequivocal legal duty for the entire population to belong to a pension fund. The aim of this legislation is to promote public welfare and, inter alia, to base the right to life insurance on the most possibly equal conditions. Such general limitations under the law are not in conflict with the human rights provisions of the Icelandic Constitution .... Being employers the appellants were according to ... section 2 of the 1980 Act required to pay their employees' premiums and are therefore rightly considered as parties to the present case. It has been shown that the appellants engage in business operations falling within the plaintiffs' field of work. They have not referred to the Ministry of Finance any dispute about payments being made to the plaintiffs. The fact that the plaintiffs have not done so does not weaken their case. The appellants plead that, in addition to the fact that their employees have been paying a premium to the Free Pension Fund, they have met the duty for pension guarantee in accordance with the 1980 Act. They consider that according to Article 73 of the Constitution, which applied to the freedom of association at the time when the case was before the District Court, and Article 11 of the Convention, cf. Act No. 62/1994 incorporating the Convention, they could at least have discharged their duty towards any pension fund had the Ministry of Finance ratified its Regulations. The plaintiffs maintain, with reference to section 3 of the 1980 Act, that the appellants' wage-earners cannot select a fund for themselves as they work in the field to which participation of plaintiffs extend and are thus naturally parties thereto. The plaintiffs are a pension fund functioning in accordance with the 1980 Act. The appellants' employees were parties of The Construction Workers' Pension Fund being one of the funds merged with the plaintiffs. It has not been shown that the plaintiffs are unable to secure the appellants' wage earners the annuity rights provided for under the 1980 Act. Thus, their compulsory participation in a pension fund does not prevent them from purchasing additional rights from other instances. It follows from the above that pension funds like that of the plaintiffs are established under the law for the benefit of the funds' participants and in order to achieve a social aim, but this is a question of joint insurance funds. The legislators have considered that, if one were to be able to join and leave the funds at will, there would be a risk that this social aim would risk not be achieved and that the interests of other holders of rights in the fund would be set aside. Under the present circumstances, it is considered that the appellants have not shown that the restrictions on the employees' choice of pension fund, ... is inconsistent with the former provisions of the Constitution on the freedom of association, cf. the current provisions of paragraph 2 of Article 74 of the Constitution. ... In the light of the above the conclusion in the present case is that the appellants shall pay on behalf of their wage-earners the annuity contribution claimed by the plaintiffs...” On 21 February 1997 the District Court placed Trésmiðjan under bankruptcy administration, at a request made by the United Pension Fund on account of the Supreme Court's order that the company pay its arrears in pension contributions. The 1980 Act (Act No. 55/1980 on the Employment Terms of Wage Earners and Obligatory Pension Insurance) contained in its section 2 the following provision: “All wage earners and self-employed persons have the right and duty of membership of the pension fund of the members of the relevant profession or occupation, which shall function in accordance with laws enacted on that particular fund or a regulation approved by the Ministry of Finance. Any employer is obliged to withhold his employees' pension fund contributions from their wages and to return them to the fund with his own obligatory contribution, in accordance with the rules on contribution payments laid down in the regulation on the relevant fund or in law. The Ministry of Finance, having obtained the opinion of the Icelandic Confederation of Employers, the Icelandic Federation of Labour and/or other concerned parties, shall decide on any dispute as to what fund the contributions shall be paid.” Section 3 provided: “The duty of pension insurance shall be performed by participation in the pension funds provided for in Section 2 to the extent possible, and in accordance with the rules of the individual funds relating to membership. A person not automatically entitled to membership of a fund provided for in section 2 shall select a pension fund that is permitted under the rules of the individual funds. If this duty is not performed in this manner, it shall be performed by contributions to the pension fund indicated by the deciding authority under section 2, and by an agreement concluded with the pension fund in question.” On 1 July 1998 the 1980 Act was replaced by the Act on Mandatory Insurance of Pension rights and on the Activities of Pension Funds 1997 (Act no. 1929/1997, hereinafter referred to as “the 1997 Act”), containing comprehensive provisions on the general framework for compulsory pension insurance. One objective of the new legislation was to increase the freedom of choice of pension funds for persons who were not subjected to collective agreements. Following the changes brought about by its section 2, persons who, like the applicants, do not receive wages under a collective agreement, may chose not to contribute to the United Pension Fund but may instead select another pension fund.