C-94/95

Facts I -3975

Questions submitted by the national court I - 3978

III — Admissibility I - 3980

First question I - 3980

Second question I - 3981

Third question I - 3981

Directive 80/987 I - 3994

Meaning of Article 4(2) I - 3995

Validity of Article 4(2) I -4000

Minimum guarantee within the meaning of the Directive I - 4000

Content of reparation for failure to transpose the Directive I - 4002

Article 4(3) of the Directive I - 4004

2. The facts which gave rise to the reference to the Court are new and are as follows. A Member State which failed to transpose a directive into national law (a failure con­ II — Legal background and facts of the case firmed by judgment of the Court of Justice) and is consequently under an obligation to make reparation to those who have suffered loss or damage as a result of its failure to transpose the directive (on conditions like­ wise prescribed by the Court) has attempted, in the measures it takes to comply with the Relevant Community provisions directive, to establish directly the scope and level of the reparation.

5. Article 1 of Directive 80/987/EEC ('the Directive'), in Section I (Scope and defini­ 3. The national court, called upon to rule on tions), provides that: claims for compensation based on the

2 — Joined Cases C-6/90 and C-9/90 Francovich and Others v 1 — OJ 1980 L 283, p. 23. Italian Republic [1991] ECR I-5357.

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BONIFACI AND OTHERS v INPS

'1 . This Directive shall apply to employees' (b) where the authority which is competent claims arising from contracts of employment pursuant to the said laws, regulations or employment relationships and existing and administrative provisions has: against employers who are in a state of insol­ vency within the meaning of Article 2(1).'

2. At the choice of the Member States, the 2. When Member States exercise the option date referred to in paragraph 1 shall be: referred to in paragraph 1, they shall:

— in the case referred to in Article 3(2), first — either that of the onset of the employer's indent, ensure the payment of outstand­ insolvency; ing claims relating to pay for the last three months of the contract of employ­ ment or employment relationship occur­ ring within a period of six months pre­ ceding the date of the onset of the employer's insolvency; — or that of the notice of dismissal issued to the employee concerned on account of the employer's insolvency;

— in the case referred to in Article 3(2), sec­ ond indent, ensure the payment of out­ standing claims relating to pay for the last three months of the contract of — or that of the onset of the employer's employment or employment relationship insolvency or that on which the contract preceding the date of the notice of dis­ of employment or the employment rela­ missal issued to the employee on account tionship with the employee concerned of the employer's insolvency; was discontinued on account of the employer's insolvency.'

— in the case referred to in Article 3(2), third indent, ensure the payment of out­ standing claims relating to pay for the last 18 months of the contract of employ­ 8. Article 4, in the same section, reads: ment or employment relationship preced­ ing the date of the onset of the employ­ er's insolvency or the date on which the contract of employment or the employ­ ment relationship with the employee was discontinued on account of the employ­ er's insolvency. In this case, Member States may limit the liability to make '1 . Member States shall have the option to payment to pay corresponding to a limit the liability of guarantee institutions, period of eight weeks or to several referred to in Article 3. shorter periods totalling eight weeks.

'This Directive shall not affect the option of Member States:

13. On 20 April 1989, while the Directive had not yet been transposed into Italian law,

(a) to take the measures necessary to avoid abuses; 22// 87 Commission v Italy [1989 3 — Case 22 1989]] ECR 143 143..

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

Danila Bonifaci and 33 other employees of those rights against the State before the Gaia Confezioni Srl, which was declared national courts where no implementing mea­ insolvent on 5 April 1985, brought proceed­ sures are adopted within the prescribed ings against the Italian Republic before the period; Pretura Circondariale, Bassano del Grappa. It was stated during the proceedings that when the employment relationships were discontinued the plaintiffs were owed more than LIT 253 000 000, which was proved as a debt in the insolvency of the undertaking, that five years after the insolvency they had been paid nothing and that the receiver had 2. A Member State is required to make good told them that even a partial distribution in loss and damage caused to individuals by their favour was highly unlikely. Conse­ failure to transpose Directive 80/987/EEC.' quently, they claimed that, in view of its obligation to implement the Directive, the Italian Republic should be ordered to pay them the amounts due as arrears of wages, at least for the last three months of their employment, or in the alternative to pay compensation. 15. After that judgment was delivered, Decreto Legislativo (Legislative Decree) No 5 80 of 27 January 1992 was issued, transpos­ ing the Directive into Italian law.

19. Lastly, Article 2(7) provides that:

17. Article 2(1) of the Decreto Legislativo provides that: 'For the purposes of determining any com­ pensation to be paid to employees under the procedures referred to in Article 1(1) by way of reparation of the loss and damage result­ ing from the failure to transpose Directive 80/987/EEC within the prescribed period, the relevant time-limits, measures and proce­ dures shall be those referred to in Article 2(1), (2) and (4). The action for reparation must be brought within a period of one year 'The payment made by the Guarantee Fund to run from the date of entry into force of within the meaning of Article 1 relates to this Decree.' wage claims, other than those relating to sev­ erance pay, appertaining to the last three months of the employment relationship fall­ ing within the 12 months preceding: (a) the date of the measure opening one of the pro­ 6 cedures listed in Article 1(1), (b) ..., (c)...'. 20. After the publication of the Decreto Legislativo, Danila Bonifaci and others (plaintiffs in the main proceedings in Case 6 — It appears from the order for reference and the observations of the parties in the main proceedings that under Italian law C-94/95) brought an action before the Pre­ the date which marks the beginning of the period of 12 months, i. e. the date 'of the onset of the employer's insol­ tura Circondariale, Bassano del Grappa, pur­ vency' in the terms of the Directive, corresponds, according suant to Article 2(7) of that Decree, seeking to the case-law of the Italian courts to the date on which the judicial declaration of insolvency is issued. compensation from the Istituto Nazionale

della Previdenza Sociale ('the INPS'). A the cases were brought had serious doubts as similar action was also brought, before the to whether the rules contained in the same court, by Wanda Berto and 136 other Decreto Legislativo it was required to apply employees of various undertakings that had were consistent with the provisions of the been declared insolvent after 23 October Directive and the principles stated in the 1983 and before Decreto Legislativo No Court's judgment in Francovich I, which it 80/1992 entered into force (plaintiffs in the also had some difficulty in interpreting. main proceedings in Case C-95/95). It appears from the observations of the plain­ tiffs in the main proceedings that in many cases their applications to the INPS for com­ pensation had been rejected altogether because none of the periods of work fell within the 12 months preceding the judicial declaration of insolvency. In other cases, the applications had been partly accepted, inas­ much as the compensation awarded to the applicants for work within the 12 month period had either been limited to three months' remuneration in accordance with Article 2(1) of Decreto Legislativo No 22. In particular, it points out in the order 80/1992 or had been reduced because of the for reference that the Italian legislature, in ceiling set in Article 2(2) of that Decree. exercising the option offered under Article 4(2) of the Directive, limited the liability of the guarantee institution with respect not only to the future (as it was entitled to do) but also to the past. Thus it set a 'retroactive' limit on the compensation payable in respect of the failure to transpose the Directive, Questions submitted by the national court indeed doubly so, in that the compensation pursuant to Article 2(1) and (7) of the Decreto Legislativo, taken together, is based on claims which (a) appertain to the last three months of the employment relation­ ship and (b) fall within the 12 months pre­ ceding the date of the measure opening the procedure for satisfying collectively the claims of creditors (in this case the date of the judicial declaration of insolvency). That 21. In the light of that factual and legal limit may, however, make it impossible for background, the national court before which employees to obtain compensation since, given the delays in hearing insolvency cases in Italy, the judicial declaration of insolvency may well be issued more than a year after the 7 — According to Judgment No 285 285// 1993 of the Italian Consti- Court,, mentioned in the order for reference and tutional Court creditors have lodged their petition. Thus, cited in the observations of the parties in the main proceed- ings,, the INPS manages the Guarantee Fund referred to ings because of the delay in the administration of above and any actions for compensation under Article 2(7) justice, that is to say for reasons beyond the of Decreto Legislativo No 80 80// 1992 must accordingly be INPS.. brought against the INPS employees' control, it is likely that, as in the

24. Lastly, the national court points out that on the basis of Article 4(3) of the Directive '1 . Must Article 4(2) of Council Directive the Italian legislature first set a ceiling on the 80/987/EEC be interpreted as meaning that guarantee afforded to employees thereafter the Member States may opt to limit the (Article 2(2) of the Decreto Legislativo) and liability of the guarantee institutions to then imposed a similar limit on the liability pay remuneration to a particular period of arising from failure to transpose the Direc­ time — in this case, 12 months — even in tive into Italian law within the prescribed period (Article 2(7) of the Decree, which refers to Article 2(2)). It adds that the 8 — As is well known, the loss and damage in that case was loss provisions of Italian law governing non­ and damage suffered by employees as a result of the Italian Republic's failure to adopt measures to implement the Direc­ contractual liability (Articles 2043 et seq. of tive at issue.

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

cases where the period in time in question Ill — Admissibility was exceeded not because of inertia amount­ ing to fault on the part of the employee con­ cerned and, in particular, where the employee claims compensation for damage on account of the non-implementation or the First question belated implementation of the Directive itself?

26. The INPS contends essentially that the first question is inadmissible because the answer sought is irrelevant for the purpose of resolving the dispute, inasmuch as Article 4(2) of the Directive is in its opinion con­ cerned with defining the guarantee afforded to employees from the time when the Direc­ tive is transposed into national law and not with determining the compensation payable 2. In the event that question 1 is answered in in the event of failure to implement the the affirmative, must Article 4(2) of the Directive, as in the present case. Directive be considered valid in the light of the principle of equal treatment and non­ discrimination?

solely for the national courts before which 29. The INPS's observations set out above actions are brought, and which must bear the are concerned with the substance of the case, responsibility for the subsequent judicial inasmuch as they take for granted the very decision, to determine in the light of the par­ subject of the national court's reference, ticular facts of each case both the need for a namely the interpretation of Article 4(2) of preliminary ruling in order to enable them to the Directive. Accordingly, while they may deliver judgment and the relevance of the be taken into account in examining the 9 questions which they submit to the Court. substance, they have no bearing on the juris­ Consequently, where the questions submit­ diction of the Court and the admissibility of ted by the national court concern the inter­ the questions submitted to it and must there­ pretation of Community law, the Court of 12 fore be rejected. Justice is, in principle, bound to give a rul­ 10 ing. A request from a national court may only be refused if it is clearly inadmissible, for example 'where it is quite obvious that the interpretation of Community law or examination of the validity of a Community Second question rule sought by that court bears no relation to the actual facts of the main action or its pur­ 11 pose'.

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

the judgment in Francovich I and the Court 33. Moreover, the INPS's further argument, has no jurisdiction to answer it because its that the Italian Constitutional Court has allotted task is to interpret Community law, already ruled, or is about to rule, on the not to review the national measures taken to compatibility of Article 2(7) of the Decreto implement that law, which is a matter for the Legislativo, or the enabling Law, with the national courts alone. Italian constitution or with Community law, is irrelevant for present purposes.

That plea of lack of jurisdiction must be rejected. It should be noted in this connec­ tion that the Court has consistently held that although it has no jurisdiction under Article 177 of the Treaty to rule on the compatibility 34. Lastly, the INPS contends that, in so far of a national measure with Community law, as the answer to the third question presup­ poses an interpretation of the provisions of it does have jurisdiction to provide the Directive 80/987, which are not directly national court with interpretations of all rel­ applicable, the Court has no jurisdiction to evant points of Community law to enable it rule on the matter, since its jurisdiction to assess that compatibility for the purpose 13 under the second paragraph of Article 177 of of deciding the case before it. the Treaty is limited to the interpretation of Community provisions that are directly applicable.

32. In the present case, the national court has not asked the Court directly to examine the compatibility of the national measure with Community law, as the INPS wrongly supposes, but has asked for interpretations of all the points of Community law it considers That objection must in any case be rejected, necessary to enable it to examine that ques­ since, as has been held, 'the Court of Justice tion itself. Consequently, the Court has has jurisdiction to give preliminary rulings jurisdiction to rule on the question submit­ concerning the interpretation of acts of the ted to it. institutions of the Community, regardless of 14 whether they are directly applicable'.

36. It is also clear from the statement of rea­ 38. The combined effect of Article 5, which sons in the order for reference that the third imposes an obligation of cooperation, and question likewise raises two issues. The first the third paragraph of Article 189 of the is whether, in view of the circumstances Treaty is that Member States to which a described above, the Member State may set a directive is addressed must adopt within the ceiling on the compensation decided, pursu­ prescribed period all the necessary measures ant to Article 4(3) of the Directive. The sec­ to ensure that the result sought by the direc­ ond, more general, issue is to determine from tive is fully achieved. the point of view of Community law the relationship between the compensation laid down in the belated transposition of the Directive and the compensation due for fail­ ure to transpose the Directive within the prescribed period.

39. The State to which the directive is addressed may fail to fulfil that obligation either by failing to adopt any measures to implement the directive within the pre­ scribed period, or by adopting, within the 37. These questions arose from the attempt prescribed period, measures which are, how­ by the Member State to comply with the ever, inadequate, or by adopting measures — Directive, albeit belatedly, and to remedy the adequate or inadequate — belatedly.

I - 3983

C-94// 95 AND C-95 OPINION OF MR COSMAS — JOINED CASES C-94 C-95// 95

40. In all three cases, the breach causes a hia­ achieve the practical elimination of infringe­ tus and an anomaly in the Community legal ments and the consequences thereof, past and 17 order after the period allowed for implemen­ future'. Moreover, the Court has also held tation has elapsed, whether or not it is con­ that Member States' obligations under firmed by a judgment of the Court of Jus­ Article 5 of the Treaty include 'the obligation tice, which is of a purely declaratory nature. to nullify the unlawful consequences of a 18 This 'unhealthy' situation, for as long as it breach of Community law'. lasts, is the complete antithesis of the funda­ mental requirement that the rules of Com­ munity law must apply generally, uniformly and at the same time over the whole territory 15 of the Community and must be remedied.

44. Thus, as a means of defending individu­ als who have suffered loss and damage as a 15 — See Joined Cases C-46 C-46// 93 and C-48 C-48// 93 Brasserie du result of a State's inaction, the case-law has Pêcheur and Factortame [1996 1996]] ECR I-1029 I-1029,, paragraph 3333,, C-143// 88 and C-92 Joined Cases C-143 C-92// 89 Zuckerfabrik Süder- laid down, first, the principle that wherever dithermarschen and Zuckerfabrik Soest [1991 1991]] ECR I-415 I-415,, paragraph 26 26,, Case 61 61// 79 Amministrazione delle Finanze dello Stato v Denkavit Italiana [1980 1980]] ECR 1205 1205,, para- graph 1818,, and Case 48 48// 71 Commission v Italy [1972 1972]] 527.. ECR 527 70// 72 Commission v Germany [1973 17 — Case 70 1973]] ECR 813 813,, para- known,, the subjects of the Community legal system 16 — As is known 13,, ( my emphasis graph 13 ). emphasis). individuals,, comprise not only the Member States but also individuals on whom rights are conferred by virtue of obligations 18 — Francovich I (cited in footnote 2), paragraph 36 36.. See also which the Treaty imposes in a clearly defined manner upon 1960]] ECR 559 Case 6 / 60 Humblet v Belgian State [1960 559,, con- the Member States (secsec,, in particular particular,, Francovich I (cited in cerning the similar rule contained in Article 86 of the ECSC footnote 2), paragraph 31 31,, and Case 28 28// 67 Molkerei- Treaty.. Treaty Zentrale Westfalen v Hauptzollamt Paderborn 1968]] [1968 19 — Sec Brasserie du Pêcheur (cited in footnote 15 ), para- 15), 143,, point 1A ECR 143 ). 1A). 27.. graph 27

the provisions of a directive appear to be 46. However, although State liability is thus unconditional and sufficiently precise, those required by Community law, the conditions provisions may, in the absence of implement under which that liability gives rise to a right ing measures, be relied upon as against any to reparation for individuals depend on the national provision which is incompatible nature of the breach of Community law giv 23 with the directive or in so far as the provi ing rise to the loss and damage, that is to

25 reduced, or even no, discretion. 45. Secondly, the Court has then derived from Article 5 of the Treaty, in conjunction with the principles of the full effectiveness of Community rules and the effective protec tion of the rights which they confer, the principle of State liability for loss and dam age caused to individuals as a result of breaches of Community law for which the State can be held responsible, a principle 22 inherent in the system of the Treaty. 48. In the first case, individuals are entitled to reparation if (a) the rule of Community law infringed is intended to confer rights on individuals, (b) the breach is sufficiently 20 — Case 8/81 Becker v Finanzamt Münster-Innenstadt 1982]] [1982 26 53. .

. 23 — See Francovich I (cited in footnote 2), paragraph 38 38,, Bras- 22 — Sec Francovich I (cited in footnote 2), paragraphs 31-36 31-36,, serie du Pêcheur (cited in footnote 15 ), paragraph 38 15), 38,, Hed- Brasserie du Pêcheur (cited in footnote 15 ), paragraphs 15), ley Lomas (loc loc. . cit .), paragraph 24 cit.), 24,, and Dillenkofer (loc loc. .

. graph 43 et seq Dillenkofer and Others v Federal Republic of Germany 26 — In the sense that the State has manifestly and gravely disre- 1996]] ECR I-4845 [1996 I-4845,, paragraph 20 20,, and Joined Cases powers. . Sec judg- garded the limits on the exercise of its powers C-283// 94 C-283 94,, C-291 C-291// 94 and C-292 C-292// 94 Denkavit Internationaal above)) in Brasserie du Pêcheur, paragraphs 45 ments (cited above and Others v Bundesamt für Finanzen [1996 1996]] ECR I-5063 I-5063,, 55,, British Telecommunications, paragraph 42 and 55 42,, and Dil- paragraph 47 47. . lenkofer, paragraph 25 25.

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

link between the breach and the damage a sufficiently serious breach, although not sustained by the individuals. expressly mentioned in Francovich, was nevertheless evident from the circum­ stances of that case' (paragraph 23).

49. In the second case, which occurs when, as in Francovich I, the directive prescribes a — That is because 'where, as in Francovich, result but the State fails to adopt any meas­ a Member State fails ... to take any of the ure to transpose the directive into national measures necessary to achieve the result law, individuals are entitled to reparation if prescribed by a directive within the (a) the result prescribed by the directive period it lays down, that Member State entails the grant of rights to individuals, (b) manifestly and gravely disregards the the content of those rights can be identified limits on its discretion' (paragraph 26). on the basis of the provisions of the direc­ tive, and (c) there is a causal link between the breach of the State's obligation and the loss 28 and damage suffered by the injured parties.

— Such failure 'constitutes per se a serious breach of Community law' (paragraph 29) which gives rise to a right to repara­ tion on the conditions described above and 'no other conditions need be taken 50. The difference in wording in the two into consideration' (paragraph 27). cases does not reflect a difference in substance. In fact, as the Court stated in its judgment in Dillenkofer (footnote 22):

53. Although the Court has confirmed that these rights are conferred on individuals in cases of inaction on the part of the State, the problem I have already mentioned (point 41) — Third, it is excessively difficult for indi­ remains and it is consequently raised again viduals to avail themselves of the possi­ here. Does the fact that, in cases where a bility described above since it requires a directive is not transposed, or is transposed knowledge of the case-law of the Court belatedly, into national law, Community law in which it was established, a — necessar­ confers on the injured parties a right to rely ily imperfect — knowledge of the Direc­ on the provisions of the directive that are tive which confers the rights and, lastly, directly applicable and a right to reparation an action before the courts to assert from the State mean that the State is exoner­ them, with the result that very few of ated from any further obligation for the those entitled enjoy the advantages period during which the breach persists?

32 — It should be noted that the Court has consistently held that the right to rely on the provisions of the Treaty that 30 — Brasserie du Pêcheur (cited above ), paragraph 67 above), 67.. See also are directly applicable 'is only a minimum guarantee and above)) in Francovich I, paragraphs 41 the judgments (cited above is not sufficient in itself to ensure the full and complete 42,, and Faccini Dori, paragraph 29 and 42 29.. implementation of the Treaty' (see see,, in this connection connection,, above)) in Brasserie du 31 — See in particular the judgments (cited above C-120// 88 Commission v Italy [1991 Case C-120 1991]] ECR 1-621 1-621,, Pêcheur, paragraph 6767,, and Francovich I, paragraph 43 43.. paragraph 10 ). 10).

56. I hold retroactive implementation of the Directive to be a requirement of the Com­ munity legal order. In fact, as a State is required under Article 5 and the third para­ 'As the Commission has rightly stressed, if graph of Article 189 of the Treaty to take all national implementing measures are adopted appropriate measures to implement the belatedly, namely after the expiry of the Directive from the date specified in the 34 period in question, the simultaneous entry Directive and as it is a requirement of the into force of Directive 79/7 in all Member Community legal order that Community law States is ensured by giving such measures must be applied uniformly and at the same effect retroactively as from 23 December 35 time, it follows that, no matter when the 1984.' State transposes the Directive into its domes­ tic legal system, the transposition must apply from the date prescribed in the Directive. Thus, when the Directive provides for indi­ 79// 7 / EEC of 19 December 1978 on the 36 — Council Directive 79 progressive implementation of the principle of equal treat- ment for men and women in matters of social security (OJ 1979 L 6, p. 24 ). 24). 37 — Relating in particular to transitional provisions which dis- women.. criminated against women Sec,, in this connection 33 — Sec connection,, point 77 of the Opinion of Advo- 80// 87 Dik and Others v College van Burgemeester en 38 — Case 80 cate General Léger in Case C-5 C-5// 94 Hedley Lomas (cited in Wethouders Arnhem and Winterswijk [1988 1988]] ECR 1601 1601.. See footnote 22 ). 22). C-208// 90 Emmott v Minister for Social Welfare also Case C-208 above.. 34 — See point 38 above 1991]] ECR I-4269 and the Attorney General [1991 I-4269,, paragraph 4 above.. 35 — See point 40 above in conjunction with paragraph 2424..

61. In fact, as the Court emphasized in para­ 4 graph 15 of the judgment in Dik, 1cited above, the retroactive effect of belated imple­ 59. It is clear from the last two points that menting measures is valid provided that 'the an essential prerequisite for the validity of rights which ... the Directive confers ... as from the expiry of the (prescribed) period' are fully respected. C-377// 89 Cotter 39 — This second point was made again in Case C-377 and McDermott v Minister for Social Welfare and Attorney 1991]] ECR I-1155 General [1991 I-1155,, paragraph 25 25,, and Case C-343// 92 De Weerd, née Roks, and Others v Bestuur van C-343 de Bedrijfsvereniging voor de Gezondheid, Geestelijke en 40 — This is even more clear from the judgment in Roks (cited in Maatschappelijke Belangen and Others 1994]] (Roks) [1994 the preceding footnote ), paragraphs 18 footnote), 18,, 20 and 25 25.. I-571,, paragraph 20 ECR I-571 20.. above.. 41 — See point 57 above

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

Therefore, and this is the first conclusion to According to the case-law of the Court, such be drawn from the foregoing considerations, reparation must be appropriate in that it if retroactive implementation is to be 'full' in must allow full compensation to be made

C-271// 91 Marshall v Southampton and South West 47 — See Case C-271 39.. 42 — See footnote 39 Hampshire Area Health Authority 1993]] ECR I-4367 [1993 I-4367,, 43 — See Dik (cited in footnote 38 ), paragraph 8, and Roks (cited 38), paragraphs 31 and 32 32,, and Brasserie du Pêcheur (cited in footnote 39 ), paragraph 18 39), 18.. above ), paragraph 82 above), 82.. 44 — See Cotter and McDermott and Roks (cited in footnote 39 ), 39), 48 — See Francovich I (cited above ), paragraph 17 above), 17,, and point 51 judgments.. paragraph 18 of the judgments above.. above As,, in the cases under consideration 45 — As consideration,, the provisions of 49 — See Marshall (cited in note 47 ), paragraphs 31 and 32 47), 32.. Directive 8080// 987 (see Francovich I (cited above ), para- above), 50 — See Brasserie du Pêcheur (cited above ), paragraph 87 above), 87.. graph 26 ). 26). 51 — Such as the exemplary damages available under English law seq.. above 46 — See point 46 et seq above.. above)) paragraph 89 (see Brasserie du Pêcheur (cited above ). 89).

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BONIFACI AND OTHERS v INPS

the sense described, it must include both the 67. In this connection, it should be remem­ grant, with retroactive effect, of the advan­ bered that the Court of Justice has consis­ tage provided for in the Directive and com­ tently held that: pensation to those entitled for any additional loss and damage they may have suffered as a result of being denied that advantage at the proper time.

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

precise and unconditional to be relied upon favourable than those relating to similar before a national court. domestic claims and must not be such as to make it impossible or excessively difficult to obtain reparation. There is nothing in the order for reference that calls for a more detailed examination of the question. I shall therefore confine myself to that general Only the proper transposition of the direc­ observation, but will develop my views on tive will bring that state of uncertainty to an the subject in my Opinion of today's date in end and it is only upon that transposition the related case, Case C-261/95 Palmisani. that the legal certainty which must exist if individuals are to be required to assert their 53 rights is created.'

Review of retroactive implementation

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BONIFACI AND OTHERS v INPS

judgment in Dik, depend on the nature of If it does, the retroactive effect is in principle the principle that has been breached. Thus, if valid, on condition that the advantage the State has adopted measures to implement expressly conferred is not, in any event, infe­ the Directive without expressly stating that rior to the advantage that can be determined they have retroactive effect, the national on the basis of the provisions of the Direc­ 56 court must in principle interpret them in the tive alone. light of the principles of Community law 54 described above. So in cases where the national court, making use of the margin for interpretation available to it under national law, concludes that retroactive effect is pre­ cluded, those with claims that fall within the period concerned (that is to say, between the expiry of the period allowed for implementa­ tion and the adoption of transposition mea­ If it does not, inasmuch as it does not com­ sures) must be recognized as having a right ply with the Directive, the measure adopted to reparation arising from the State's failure cannot apply either to the future or to the to adopt any implementing measures, pro­ past. Consequently, there can be no retroac­ vided that they meet the conditions laid tive effect. 55 down in the judgment in Francovich I.

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

It follows that the compensation established compensation is to be valid, the guarantee in the implementing measures cannot be expressly determined and the compensation lower than the compensation due in the based on that guarantee must not fall short event of failure to transpose the Directive. of the 'capital' component of the compensa­ tion and the full amount of the compensa­ tion, respectively, that may be determined on the basis of the provisions of the Directive alone. It is therefore necessary, first, to ascer­ tain what guarantee the Directive affords to 75. I come now to the measures at issue, employees and what compensation they can which transposed Directive 80/987 into Ital­ claim if the Directive is not transposed ian law and determined the compensation for within the prescribed period. the period during which it was not trans­ posed.

I - 3994

BONIFACI AND OTHERS v INPS

That date must be one of three listed in Meaning of Article 4(2) Article 3(2), at the choice of the Member States.

80. Article 4(2) is not self-contained but depends directly on Article 3(2) and the two provisions will therefore be considered In relation to the date they choose, the together. Member States have the option to limit the liability of guarantee institutions by estab­ lishing that payment of claims is ensured only for a certain time within a reference period prior to the date chosen. The mini­ mum times and reference periods for each of the dates listed in Article 3(2) are laid down The key point for the purposes of both pro­ in Article 4(2). visions is the date of the onset of the employer's insolvency. The reason for this is that that date is either the starting-point for calculating a reference period (cf. Article 3(2), first indent, and Article 4(2), first 62 indent) or the date from which a reference period may begin (cf. Article 3(2), second 63 indent, and Article 4(2), second indent). Moreover, Article 4(3) provides that Member States may also set a ceiling to the guarantee of payment, in order to avoid the payment of sums going beyond the social objective of the Directive.

82. The parties in the main proceedings 85. The views of the plaintiffs and the Com­ claim in their observations that, in taking mission' cannot be accepted. that view, the Italian legislature was in breach of Articles 2, 3 and 4 of the Directive, under which the actual date on which pay­ ments ceased, which is much earlier than the date of the judicial declaration of insolvency or even the start of the judicial proceedings leading to that declaration, must be regarded as the date of the onset of the employer's insolvency. They add that this decision on the part of the Italian legislature, combined with notable delays in the course of the rel­ 86. As the second recital to the Directive evant proceedings in Italy, means that implies and as the Court had occasion to through no fault of their own their claims do point out in its judgment of 9 November not fall within the reference period pre­ 65 1995 in Francovich (hereinafter 'Francov- scribed by Italian law. ich II' ), in adopting the Directive the Com­ munity legislature had to overcome the objective difficulties presented by the adop­ tion of Community harmonizing provisions in general and the drawing-up of common rules on the protection of employees in the event of the insolvency of their employer, in particular. This is due partly to the diversity 83. The Commission endorses that view. It of the legal systems in force in the Member also points out, citing paragraph 25 of the States and the impossibility of finding a Court's judgment in Case C-53/88 Commis- commonly accepted concept of insolvency. 64 sion v Greece, that such a de facto situation These difficulties clearly prompted the Com­ necessarily predates the judicial declaration munity legislature to decide for itself, in of insolvency. Article 2(1) of the Directive, when an employer is to be deemed to be in 'a state of insolvency'. This made it impossible for the Member States and in general for those responsible for implementing the Directive to assign to the concept of insolvency, in the light of other factors, a meaning different 66 from that laid down in that Article. That 84. Although it is not expressly mentioned phrase has, in fact, a 'specific meaning' in the in the questions submitted by the national Directive, 67 in that Article 2(1) expressly court, the problem of determining the date states that that concept applies 'for the pur­ of the onset of the employer's insolvency is poses of this Directive'. Thus, the Directive directly connected with the problems raised by the national court and must be addressed before they can be answered. I therefore pro­ pose to state my position on the subject. C-479// 93 Francovich v Italian Republic [1995 65 — Case C-479 1995]] ECR I-3843,, paragraphs 25-27 I-3843 25-27.. Directive,, which contains a list 66 — See also Article 2(2) of the Directive of the terms that can lawfully be given a specific definition States.. by the Member States above.. 64 — See footnote 60 above 67 — Sec Francovich II (cited in footnote 65 ), paragraph 19 65), 19..

and the judgment in Francovich II adds that:

68 — It should be noted that that,, instead of the phrase 'état d'insolvabilité' (state of insolvency insolvency), ), the phrase 'état de ces- literally,, 'state of cessation of pay- sation des paiements' (literally ments',, but rendered in the English version as 'insolvent' ments' 'insolvent')) appears as a rule in the French version of the proposal for a Directive submitted by the Commission to the Council on 13 April 1978 (OJ 1978 C 135 135,, p. 2). The fact that the latter phrase was abandoned in the final text of the Directive sup- Opinion.. See also point 15 of ports the view taken in this Opinion 'It is clear from the terms of Article 2 that in my Opinion in Francovich II. may,, moreover 69 — Such situations may moreover,, vary considerably depend- order for an employer to be deemed to be in ing on the case and the Member State concerned with the a state of insolvency, it is necessary, first, that result that it becomes impossible to ensure the general and uniform application of Community law — the very situa- the laws, regulations and administrative pro­ tion that the Community legislature sought to avoid avoid.. Also Also,, bankruptcy,, a 'de facto situ- leaving aside cases of simulated bankruptcy visions of the Member State concerned pro­ ation' is not the same as a definite date, which can be taken vide for proceedings involving the employ­ employees,, as a starting point for determining the rights of employees and such a situation is consequently a source of legal uncer- er's assets to satisfy collectively the claims of tainty.. tainty decide,, in accordance It is for the competent authority to decide creditors; secondly, that employees' claims Directive,, whether the conditions with Article 2(1) of the Directive resulting from contracts of employment or provided under national law for opening proceedings to example,, ces- satisfy collectively the claims of creditors (for example employment relationships may be taken into payments,, etc sation of payments .) have been met etc.) met..

90. It also follows from that Article that the 89. The opposite view is not borne out by conditions it lays down are cumulative. The paragraph 25 of the judgment of 8 Novem­ fact that a request has been made for the ber 1990 in Commission v Greece, cited by 70 opening of proceedings to satisfy collectively the Commission. In response to an argu­ the claims of creditors is therefore not suffi­ ment advanced by the Hellenic Republic to cient; a decision is also required from the the effect that Article 205 of the Code of Pri­ 71 authority which is competent under national vate Maritime Law affords protection law to open the proceedings. So when, as in equivalent to that resulting from Directive the present case, the authority which is com­ 80/987, the Court ruled in the abovemen- petent under national law is the judicial tioned paragraph as follows: authority, it cannot possibly be held that the Member State is in breach of the Directive in deciding that the 'insolvency' or 'state of insolvency' or 'onset of the insolvency' exists from the time when the relevant judicial dec­ laration of insolvency is issued by that auth­ ority.

as the plaintiffs in the main proceedings the termination of the employment relation­ 72 73 contend. ship. On the contrary, as the plaintiffs themselves point out in their observations, they have outstanding claims in the main proceedings which do fall within the refer­ ence period laid down under Italian law and which also extend beyond a period of three 74 months. 92. That argument is irrelevant for the pur­ poses of the present case. Those facts would have some bearing if, within the meaning of the Directive, they had independent legal consequences and in particular if they marked the beginning or end of the reference period, but that is not the case. They mark neither the beginning (see points 88 and 90 94. To conclude, whether or not some above) nor the end because, in the case with employees' claims fall within the reference which we are concerned (Article 4(2), first period is a matter of chance. It is also a nec­ indent), the end of the reference period is a essary result of choosing a particular date or precise moment unconnected with the facts period as decisive for the purpose of legal in question. consequences. That choice is itself the result of an attempt to reconcile conflicting inter­ ests and it represents a compromise that is bound to favour some and not others.

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OPINION OF MR COSMAS — JOINED CASES C-94/95 AND C-95/95

Validity of Article 4(2) claims are likely to be included while others, for reasons beyond their control, are excluded does indeed differentiate between employees but that differentiation is justified by the requirements of gradual harmoniza­ tion and, in particular, by the requirement that provision be made to enable hitherto unknown provisions to be introduced gradu­ 96. In particular, those factors do not affect ally into the domestic legal systems of the the validity of Article 4(2) of the Directive in Member States. respect of compliance with the principles of equal treatment and non-discrimination.

Minimum guarantee within the meaning of 97. As stated in the judgment in Francovich the Directive II, in view of the difficulty of drawing up common rules on the protection of employ­ ees in the event of the insolvency of their 75 employer the Directive represents a first step towards harmonization and conse­ quently has limited objectives. Thus, the fact that it protects only a certain class of employees (namely those whose employers are subject to proceedings to satisfy collec­ tively the claims of creditors) and thus differ­ entiates between employees, does not consti­ tute a breach of the principle of equal 99. As Article 4(2) can lawfully be used to treatment since such differentiation is justi­ limit the guarantee provided for by the 76 fied by objective conditions. Directive, the content of that guarantee must be examined.

98. The same view should, I suggest, be taken in the present case. The fact that Article 4(2) of the Directive defines a refer­ ence period within which some employees'

'... it is possible to determine the minimum 101. However, the same judgment also guarantee provided for by the Directive by stated that, even though the provisions in taking the date whose choice entails the least question of the Directive are sufficiently pre­ liability for the guarantee institution. That cise and unconditional as regards the deter­ date is that of the onset of the employer's mination of the persons entitled to the guar­ insolvency, since the two other dates, that of antee and as regards the content of that the notice of dismissal issued to the guarantee, those elements are not sufficient employee and that on which the contract of to enable individuals to rely on those provi­ employment or the employment relationship sions before the national courts because was discontinued, are, according to the con­ those provisions 'do not identify the person ditions laid down in Article 3, necessarily liable to provide the guarantee, and the State subsequent to the onset of the insolvency cannot be considered liable on the sole and thus define a longer period in respect of ground that it has failed to take transposition which the payment of claims must be measures within the prescribed period' ensured' (paragraph 19). (paragraph 26). The Court accordingly stated, in reply to the question submitted by the national court, in which it sought to determine whether a private individual is entitled to rely directly on the precise and unconditional provisions of the Directive in proceedings against the State to obtain the guarantees which the State itself must pro­ 'The possibility under Article 4(2) of limiting vide, that '... the provisions of Directive the guarantee does not make it impossible to 80/987 which determine the rights of determine the minimum guarantee. It follows employees must be interpreted as meaning from the wording of that Article that the that the persons concerned cannot enforce those rights against the State before the national courts where no implementing mea­ 77 — See Case 22/87 Commission v Italy (cited in point 12 sures are adopted within the prescribed above), paragraph 23. 78 — See Francovich I (cited above), paragraph 19. period' (paragraph 27).

104. I take essentially the same view, albeit with the following observation. I consider that the national court has a margin of dis­ cretion but that margin is not unlimited. The 79 'Consequently, the national court must, in Directive sets a minimum level which is accordance with the national rules on liabil­ binding both on the State, which may not ity, uphold the right of employees to obtain disregard it even if the directive was trans­ reparation of loss and damage caused to posed within the prescribed period, and on them as a result of failure to transpose the the national courts. That minimum can only directive' (paragraph 45). represent a minimum right for employees, which the reparation must guarantee. Were it to be admitted that the reparation could be less than that minimum, the State would profit from its failure to implement the Directive and would be encouraged to repeat the omission — which would be unaccept­ able. Moreover, the reparation would ulti­ 103. Advocate General Mischo, in point 80 mately become purely symbolic if it did not of his Opinion in Francovich I, argued in this connection that in the case of directives such as Directive 80/987, whose provisions are not directly applicable, '... in an action guarantee.. 79 — With regard to the method of calculating the guarantee

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BONIFACI AND OTHERS v INPS

because,, in Article 3(2), the guarantee depends on a 80 — This is because variable,, namely the date that marks the beginning of the variable period.. A shorter reference period implies fewer reference period claims from employees and consequently a lighter burden institution.. So for the guarantee institution So,, as the shortest reference period is the period starting from the date of the onset of insolvency,, the guarantee based on that date the employer's insolvency lowest.. must necessarily be the lowest Under Article 4(2), on the other hand hand,, the guarantee result- ing from each of the three methods of calculation depends on three variables which do not have constant values in every case (namely the date on which the reference period 107. However, the task of the national court begins,, the length of the reference period and the length of begins the employment relationship in respect of which there are is facilitated when, as in the present case, the outstanding claims claims).). national legislature has stated with retroac­ Consequently,, on the conditions laid down in Article 4(2), Consequently it is by no means certain that choosing the date of the onset tive effect which method it wishes to adopt of the employer's insolvency to mark the beginning of the option)) will mean that the guar- reference period (the first option for calculating the guarantee on the basis of antee institution has to pay less than it would have to if it the combined provisions of the two Articles option,, for example exercised the third option example.. In fact fact,, in the first case,, the reference period is shorter (six months case months)) but the guarantee payable is greater (guarantee for three months months).). case,, the reference period is longer (18 months In the third case months)) but the guarantee less (guarantee for eight weeks weeks,, i. e. two months months). ). above.. 81 — See point 51 and footnote 29 above

109. While Article 4(2) can in principle be given retroactive effect, the same is not true of Article 4(3), which contains no specific element that could, by itself, justify placing a 108. It follows from the foregoing consider­ limit on employees' rights. Moreover, the ations that the national legislature must in exercise of the option to set a ceiling on the principle be held to comply with the Direc­ guarantee, within the meaning of that provi­ tive, irrespective of which of the three sion, presupposes that the Member State has options listed in Article 4(2) it chooses to already exercised the option provided in adopt for the purpose of determining the Article 4(2). Article 4(3) does not therefore guarantee when implementing the Directive. furnish any support for placing a retroactive Inasmuch as the provisions of that Article limit on the guarantee payable or, further, for can be taken into account in determining the limiting any compensation that may be reparation for failure to transpose the Direc­ determined on the basis of the provisions of tive within the prescribed period, there is 86 the Directive. generally speaking nothing to prevent the national legislature from giving retroactive effect to the guarantee already expressly laid down on the basis of the above provision 85 — Unless — I must again emphasize — the national rules on compensation provide for more generous compensation in and deciding that that guarantee is to serve as similar cases (see point 106 above above). ). If the national law pro- the basis for calculating the compensation vides for compensation calculated on a higher basis (of capital ), then the transposition measures giving retroactive capital), payable for the period marked by the failure effect to the Directive may in principle comply with the let- ter of the Directive's provisions but they will conflict with the principles of Community law which require the most applied.. In that favourable national rules on liability to be applied case,, in so far as they reduce compensation already guaran- case teed under Community law law,, they will be contrary to that 82 — See in this connection point 81 of the Opinion of Advocate law and will have to be set aside in favour of the only 'valid Mischo,, cited under point 103 above General Mischo above.. circumstances,, namely the national reference system' in the circumstances liability.. rules on non-contractual State liability above.. 83 — See points 73 and 74 above And,, logically is not lower 84 — And lower.. See footnote 56 above above.. 86 — See Marshall (cited in footnote 14 ), paragraph 30 14), 30..

(3) Examination of Article 4(2) of the Directive, as interpreted above, has revealed no factor of such a kind as to affect its validity in the light of the principle of equal treatment.

(4) Article 4(3) of the Directive must be interpreted as meaning that it offers no basis for setting a ceiling on the reparation determined, in the belatedly adopted measures transposing the Directive, as being payable for the period during which the Directive was not transposed.

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