C-399/96

I — Introduction redundant with 22 months' notice. O n 13 August 1993, he informed him, on the one hand, that Europièces had assigned part of the stock and equipment to the second respon- dent in the main proceedings, namely Auto- motive Industries Holding Company SA 1. In the present case, the Court is asked to (hereinafter 'Automotive'), and on the other, rule on a question referred for a preliminary that Automotive had not taken over all of ruling by the Cour du Travail (Higher Labour Europièces' activities. H e also informed him Court), Brussels, regarding the determination that, as from 24 August 1993, his activities on of the scope of Council Directive 77/187/EEC account of the liquidation would be carried of 14 February 1977 on the approximation of out in Brussels, under the direct instructions the laws of the Member States relating to the of the liquidator's representative. According safeguarding of employees' rights in the event to the liquidator, the change in working con- of transfers of undertakings, businesses or ditions was justified by the fact that Euro- parts of businesses 1 (hereinafter 'the Direc- pièces would carry on trading only for the tive'). The national court asks whether the purposes of the winding-up, which necessi- Directive covers the transfer of a company in tated the employee's transfer to Brussels. In voluntary liquidation to another company. the aforementioned letter, he also stated that Automotive had offered to maintain the employment contracts of certain members of staff, including Sanders, who had refused. The exchange of letters which followed between Sanders and the liquidator as regards the place II — The facts of employment and the nature of Sanders' activities did not resolve the matter, where- upon Sanders claimed, by letter of 16 October 1993, unilateral breach of his contract as sales representative or, at the very least, termina- 2. The first of the respondents in the main tion of that contract, by reason of the liqui- proceedings, Mr Wilfried Sanders, worked for dator's conduct. the appellant company (hereinafter 'Euro- pièces') as a sales representative in Erpent, Belgium, for the provinces of Namur, Lux- embourg and Hainaut. In July 1993, Euro- pièces was put into voluntary liquidation. On 27 July 1993, the liquidator made Sanders

Article 3(1), first subparagraph, of the Direc- tive provides that:

5. In view of the foregoing, the national court submitted the following question to the Court of Justice for a preliminary ruling:

'The transferor's rights and obligations arising from a contract of employment or from an employment relationship existing on the date 'Does Directive 77/187/EEC apply where a of a transfer within the meaning of Article company in liquidation transfers all or part of 1(1) shall, by reason of such transfer, be its assets to another company which then transferred to the transferee.'

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8. In my view, the plea of inadmissibility 7. The United Kingdom Government sub- should not be considered as made out. mits that the national court's question should According to the well-established case-law of be rejected as inadmissible because the factual the Court, referred to by the United Kingdom, and legal elements necessary for the Court's the answer to a question is designed to pro- legal analysis are not set out in sufficient vide an interpretation of Community law detail. 2 In particular, it submits that, in order enabling the national court to resolve the dis- to answer the question properly, the order for pute in the main proceedings. It follows from reference should describe and explain in detail, that general rule that, in order for the national first, the specific characteristics of the work court and Community judicature to coop- that Sanders performed at Europièces; second, erate fully, the latter replies to the questions whether he carried out that work exclusively submitted to it 'where it is in possession of in Erpent or whether it was also envisaged the minimum factual and legal elements nec- that he should work in Brussels; third, whether essary to be able to give an accurate and useful interpretation of the rule of Community law at issue, with a view to resolving the dispute in the main proceedings; it refrains from ruling 2 -— In this regard, it relics on the order in Case C-257/95 Gérard Bresle v Préfet de la Région Auvergne and Préfet du Puy-de- on purely hypothetical questions in any event. Dôme [1996] ECR I-233, the judgment in Joined Cases In the present case, the national court has for- C-320/90 to C-322/90 Telemarsicabruzzo v Circostel and Ministero delle Poste e Telecomunicazioni and Ministero della mulated in a clear and precise manner the Difesa [1993] ECR I-393, paragraph 6, as well as the orders in Case C-157/92 Banchero [1993] ECR I-108S, paragraph 4; legal issue that it has to deal with and for Case C-458/93 Saddik [1995] ECR I-511, paragraph 12; Case C-167/94 Grau Gomis and Others [1995] ECR I-1023, para- which it needs an answer in order to resolve graph 8, and Case C-307/95 Max Mara Fashion Group v the dispute before it. It follows, in my view, Ufficio del Registro di Reggio Emilia [1995] ECR I-5083, paragraph 6. from the analysis of the substance of the case

3 — Case 135/83 Administrative Board of the Bedrijfsvereniging voor de Metaalindustrie en de Electrotechnische Industrie [1985] ECR 469. 4 — Case C-362/89 Giuseppe d'Urto, Adriana Ventadori and 9. The problem raised by the question sub- Others v Ercole Morelli Elettromeccanica Generale and Others mitted concerns the extent to which there can [1991] ECR 1-4105. 5 — Case C-472/93 Luigi Spano and Others v Fiat Geotech and be a 'legal transfer' within the meaning of Fiat Hitachi Excavators [1995] ECR I-4321. Article 1(1) of the Directive where the under- 6 — Case C-319/94 Dethier Équipement [1998] ECR I-1061. taking transferred is in voluntary liquidation. 7 — Abels, cited above at footnote 3. 8 — In the D'Urso judgment, cited above at footnote 4, the Court As the Commission and the United Kingdom considered the problem of compulsory administrative liqui- Government rightly observe, in order to dation and the special administration procedure in respect of large undertakings in critical difficulties, introduced by Italian answer that question it is particularly useful Decree-Law N o 26 of 30 January 1979, while the Spano and Others judgment raised the problem of the transfer of an to examine the development of the case-law undertaking that was recognised as beine in critical difficul- of the Court concerning the scope of the ties under the procedure laid down by Italian Law N o 675 of 12 August 1977. Directive. 9 — Dethier Équipement, cited above at footnote 6.

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vency. By contrast, the same Community provisions were applicable to a large under taking in critical difficulties which, in accor dance with specific rules of Italian law, is under special administration, where it has 16. Similarly, in its judgment in Spano and been decided that the undertaking is to con Others, the Court held that the Directive tinue trading. applied to the transfer of an undertaking declared to be in critical difficulties under a procedure of Italian law similar to that which it had considered in the D'Urso judgment.

17. In the same judgment, the Court went on tives thus pursued cannot explain nor justify to base its reasoning first on a teleologicai the circumstance that, when all or part of the approach comparing the specific national pro undertaking concerned is transferred, its cedure and the Directive, and secondly, on employees lose the rights which the Directive the finding that this national procedure did confers on them under the conditions which not involve judicial supervision among the measures for administration of the assets of the undertaking and did not provide for any 13 — According to paragraph 25 of the D'Uno judgment, cited suspension of payments. 15 above at footnote 4. which refers to the decision in Abeh, the criterion of the kind of supervision exercised by the judicial or administrative authorities over the transfer of undertakings in the context of specific national procedures for creditors' arrangements, such as the special administra tion procedure under Italian law, provides certain indica 14 — Paragraph 32. tions as to the scope of Directive 77/187 but it does not con 15 — Paragraphs 26, 28 and 29 of the Sparto and Others judgment, stitute the most certain or precise criterion. citeď above at footnote 5.

18. It follows from the foregoing that the but the Court did not reply to the second main element to be examined in order to limb of the question since it was purely hypo- resolve the legal issue arising in the present thetical. case involves determining the objective of the specific national procedure which is at issue in each particular case and which governs the partial or total transfer of an undertaking. Additionally, in particular where the first cri- terion is not sufficient to resolve the matter, it is useful to take account of the manner in which the national procedure at issue is set out and put into practice because if it is imposed in a mandatory fashion by a judicial or administrative authority or is subject to rigorous judicial or administrative supervi- sion, the legal nature of the transfer, which is a precondition for the application of the Directive, may be called into question. 20. Before examining the judgment in Dethier Équipement, I believe it is necessary to point out that, under Belgian law, liquidation of an undertaking covers all measures that are intended to satisfy creditors by using the assets of the company and distributing any eventual excess between the members. 16 (b) The Dethier Équipement Case Although voluntary liquidation is close to insolvency, it is in certain respects preferable because it allows for a better valuation, or the least bad valuation, of the property and does not exclude the possibility of the business activities of the undertaking which remain profitable being continued, in whole or in 19. The case-law set out above was recendy part, after the winding-up. Furthermore, liq- followed by the Court in Dethier Équipe- uidation is never an alternative to insolvency. ment, a judgment to which I attach particular If the conditions for insolvency are fulfilled, weight because of the similarity of the problem liquidation is no longer possible, nor is it raised therein to the question referred to the desired by the creditors, who have far more Court in this case. Dethier Équipement con- extensive guarantees under the insolvency pro- cerned the transfer of an undertaking which, cedure than under the liquidation procedure. according to the rules of Belgian law, was Moreover, the distinction between voluntary being wound up by the court, while the dis- liquidation and winding-up by the court is pute pending before the Higher Labour Court, devoid of any practical merit under Belgian Brussels, in the context of which this refer- law. It simply lies in the fact that, in the case ence was made, concerns the voluntary liqui- dation of an undertaking under Belgian law. Furthermore, in Dethier Équipement, the national court had asked the Court about the 16 — In any event, the undertaking in liquidation does not neces- application of Directive 77/187 to both judi- sarily need to be faced with economic difficulties. The liq- uidation procedure may also be implemented where, for cial winding-up and voluntary liquidation, example, the members no longer wish to cooperate.

of winding-up by the court, the general criterion for the application of the Directive. meeting cannot appoint the liquidators by the Such trading was continued with a view to majority required by law; as a result, they are stabilising or restructuring the undertaking appointed by the competent national court in transferred, whereas, in the case of liquida- a non-contentious procedure; by contrast, in tion, trading may be continued solely with the case of voluntary winding-up, the liqui- the aim of dissolving the company; in other dators are chosen by the general meeting. words, trading 'is not directed towards the Apart from the question of the appointment future, but is only being continued until the of the liquidators, the two procedures are undertaking is sold.' 18 However, taking into essentially identical, which reinforces the sig- account the general scheme of the Directive nificance of Dethier Équipement in answering and the place it occupies in Community social the question submitted in the present case. law, the Advocate General reached the con- clusion that it was not the aim pursued by the continuation of trading on the part of the undertaking in liquidation which is decisive, but continuation of trading in itself.

employees. Starting from the premiss that continuation of trading was possible, but was designed to ensure the survival, restructuring or stabilisation of the company only in order the better to achieve the objectives of the liq- uidation, 17 he stated that the judgments in 22. That observation does not in any case D'Urso and Spano and Others could not amount to an affirmative answer to the ques- simply be applied without further qualifica- tion submitted for a preliminary ruling.

liquidation. Consequently, a company in liquidation can 18 — Point 39 of the Opinion of Advocate General Lenz in the only complete unfinished business, which is often necessary Dethier Équipement Case, cited above at footnote 6. in order to prevent a reduction in the value of the economic 19 — Point 44 of the Opinion of Advocate General Lenz in the units of the undertaking to be transferred. Dethier Équipement Case, cited above at footnote 6.

25. The Court followed that Opinion in its judgment of 12 March 1998. Having exam- 23. That comparison reveals fundamental dif- ined first of all the purpose of the procedure ferences between insolvency and liquidation. for winding-up by the court, which it did not The liquidator is an organ of the company consider decisive in itself for the resolution of who deals with the sale of the assets under the case, 21 it examined the characteristic fea- the supervision of the general meeting; more- tures of that procedure 22 and reached the fol- over, there is no special procedure supervised lowing conclusion: by the courts for establishing the company's liabilities, although a creditor has a remedy against the company on the basis of the gen- eral rules for enforcement. In contrast, the administrator in insolvency proceedings rep- resents the creditors, that is to say he is a 'It is thus apparent that the situation of an third party vis-à-vis the company, disposing undertaking being wound up by the court of the assets under the supervision of the presents considerable differences from that of judicial officer appointed, and there is also a an undertaking subject to insolvency proceed- special procedure supervised by the compe- ings and that the reasons which have led the tent national court for establishing liabilities, Court to rule out application of the Directive without the creditors being able to bring in the latter situation may be absent in the individual actions against the company on the case of an undertaking being wound up by basis of the general rules for enforcement. In the court. short, while the insolvency procedure is clearly characterised by judicial intervention, in the case of liquidation there is no judicial inter- vention except for the choice of liquidator, in particular in the case of winding-up by the court. Consequently, the determining factor That is the case where, as in the main pro- is that, to the extent that the liquidator of the ceedings, the undertaking continues to trade company disposes of the assets under the while it is being wound up by the court. In supervision of the general meeting, the pos- such circumstances, continuity of the busi- sible transfer of an undertaking, business or ness is assured when the undertaking is trans- part of a business is a matter for the company ferred. There is accordingly no justification organs themselves, a choice that does not need for depriving the employees of the rights to be approved by the court.

26. In my view, it follows fairly convincingly from the foregoing analysis that the results of the trend in the case-law — in particular the reasoning and the views adopted in Dethier Équipement by the Court — must be applied to the present case in order to answer the 28. In my view, the answer to be given to the question submitted to the Court. Given the question at issue stems directly from the fore- specific similarity of the voluntary liquidation going considerations. In order to resolve the procedure, under consideration here, to the dispute in the proceedings pending before the procedure for winding-up by the court which national court, it is obviously necessary to arose in the Dethier Équipement case, I believe clarify, first, to what extent it was decided to that, for the same reasons, it should be rec- continue the business of Europièces after the ognised that Directive 77/187 also applies to company was placed in voluntary liquidation the transfer of undertakings, businesses or and to what extent that business has in fact parts of businesses where the undertaking is been continued, and secondly, whether Euro- in voluntary liquidation, on condition of pièces or a part of Europièces was in fact course that the continuation of trading has transferred, within the meaning of the Direc- been decided upon and for as long as that tive, to Automotive. I assume, on the basis of decision remains in force. the scant details given in the order for refer- ence, that, in the context of the dispute, first of all, Europièces continued to trade after being placed in voluntary liquidation, and secondly, part of Europièces was transferred to Automotive. In any event, it does not seem 27. That solution applies with even greater necessary to me that the Court should take a force following the recent judgment in Dethier view on these questions, which are linked to Équipement; since the Directive applies to the application of the relevant rules of law to transfers of undertakings wound up by the the facts of the case. Moreover, according to court, in relation to 'which there has been well-established case-law, it is for the national judicial intervention, if only as regards the court to make the necessary factual appraisal, in the light of the criteria laid down by the Community judicature, to determine whether there is a legal transfer of an undertaking, 23 — Paragraphs 30 and 31 of the Dethier Équipement judgment, business or part of a business within the cited above at footnote 6.

33. In Merckx and Neuhuys, the Court referred to Danmols Inventar 28 and went on to hold that '... the protection which the Directive is intended to guarantee is redun- dant where the person concerned decides of 31. I believe the Court should bear in mind that the purpose of the Directive, in the case of the transfer of an undertaking, business or part of a business, is to maintain the acquired 25 — Joined Cases C-132/91, C-138/91 and C-139/91 Katsikas v Konstantinidis, Skreb and Scbroll v Stauereibetrieb Paetz [1992] ECR I-6577. 26 — Joined Cases C-171/94 and C-172/94 Albert Merckx and Patrick Neuhuys v Ford Motors Company Belgium [1996] ECR I-1253. 24 — Case 24/85 Jozef Maria Antonius Spijkers v Gebroeders Benedik Abattoir and Alfred Benedik en Zonen [1986] ECR 27 — Paragraphs 31 and 32 of the Katsikas judgment, cited above 1119, paragraph 14, and Case C-29/91 Sophie Redmond at footnote 25. Sachting v Hendrikus Baruland Others [1992] ECR I-3189, 28 — Case 105/84 Foreningen af Arbejdsledere i Danmark v Dan- paragraphs 23, 24 and 25. mols Inventar [1985] ECR 2639.

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his own accord not to continue the employ- the transferee, '...it is for the Member States ment relationship with the new employer to determine what the fate of the contract of after the transfer.' 29 In that situation, where employment or employment relationship the employee decides of his own accord not should be.' 30 to continue the employment relationship with

VI — Conclusion

34. In view of the foregoing, I propose that the Court should answer the questions submitted for a preliminary ruling in the following terms: