C-441/99

OPINION OF MR GEELHOED — CASE C-441/99

OPINION OF ADVOCATE GENERAL GEELHOED delivered on 29 March 2001 1

I — Introduction I I — Applicable legislation

A — Community law

1. In the present case the Högsta domstolen (Supreme Court), Sweden has requested the Court to give a preliminary ruling on the interpretation of Council Directive 80/987/ EEC of 20 October 1980 on the approx- 2. Under Directive 80/987 Member States imation of the laws of the Member States are required to ensure that a guarantee relating to the protection of employees in institution guarantees payment of employ- the event of the insolvency of their ees' outstanding claims resulting from obli- employer (hereinafter: Directive 80/987). 2 gations which an employer has failed to The national court first wishes the Court to fulfil. decide whether the reservation made with regard to that directive can be interpreted broadly in national case-law with the result that the group of employees who are excluded from the scope of the directive may be larger than follows from the wording of that reservation. Secondly, the national court raises the question whether, where a Member State designates itself as 3. Article 1(1) of Directive 80/987 provides the institution liable for the guarantee that the directive is to apply to employees' under the directive, an employee may rely claims arising from contracts of employ- on that guarantee despite being excluded ment or employment relationships and from it under a national provision if that existing against employers who are in a provision cannot be based on Sweden's state of insolvency within the meaning of reservation with regard to the directive. Article 2(1). Under Article 1(2), Member States may, by way of exception, exclude claims by certain categories of employee 1 — Original language: Dutch. from the scope of the directive, by virtue of 2 — OJ 1980 L 283, p. 23. the special nature of the employee's con-

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— or that of the onset of the employer's (b) employers shall contribute to finan- insolvency or that on which the con- cing, unless it is fully covered by the tract of employment or the employ- public authorities; ment relationship with the employee concerned was discontinued on account of the employer's insolvency.'

(c) the institutions' liabilities shall not 6. Under Article 4(1) of Directive 80/987, depend on whether or not obligations Member States have the option to limit the to contribute to financing have been liability of guarantee institutions, referred fulfilled.' to in Article 3. In case the Member States exercise that option, a number of comple- mentary rules are laid down in Article 4(2).

7. Article 5 of Directive 80/987 provides as follows: B — National legislation

'Member States shall lay down detailed rules for the organisation, financing and 8. Paragraph 1 of the Lönegarantilagen operation of the guarantee institutions, (Wage Guarantee Law) 4 provides that, complying with the following principles in under that Law, the State is liable for particular: payment of a wage-earner's claim against an employer who has been declared insol- vent in Sweden or in another Scandinavian country. Under Paragraph 7 of that Law, payment under the guarantee for such a claim in respect of wages or other remu- neration is made to the person enjoying a (a) the assets of the institutions shall be preferential right under Paragraph 12 of the independent of the employers' operat- ing capital and be inaccessible to proceedings for insolvency; 4 — SFS 1992:497.

9. Before 1 July 1994 it had been laid down in the relevant provision that an employee who himself or together with a close relative owned an essential share of the undertaking and who had crucial influence on its activity did not enjoy a preferential right under the paragraph in respect of wages or pensions. In Case NJA 1980, p. 743, the Högsta domstolen ruled that the provision was also applicable where the employee himself did not own 11. On 1 June 1997 a new amendment to any share in the undertaking, but a close Paragraph 12 of the Förmånsrättslagen relative owned an essential part of it. entered into force. 7The purpose of the amendment was to ensure that Swedish wage protection would be consistent with the terms of Directive 80/987 and the adjustments of the provisions applicable to Sweden. For an employee's wage claims to be excluded from the preferential right, it is now necessary for the employee to have owned, himself or together with a close relative, less than six months before the 10. Under the transitional provisions relat- petition in insolvency was lodged, an ing to the amendments made to Paragraph essential part of the undertaking and to 12 of the Förmånsrättslagen, that para- have had a considerable influence on its graph must be applied in its wording at the activities. It is therefore necessary for the time of the receiving order. The wording of employee himself to own some share in the the last subparagraph of Paragraph 12 of undertaking. the Förmånsrättslagen which thus applies,

6 —SFS 1994:6.59. 5 — SFS 1970:979. 7 — SFS 1997:203.

13. Mrs Gharehveran subsequently brought an action against the State in the Tingsrätten (District Court), Lund, Swe- den, claiming that the Tingsrätten should set aside the order of the receiver and grant her claim for payment under the Löne- g a r a n t i l a g e n . By a j u d g m e n t of 20 May 1997 the Tingsrätten dismissed 14. Acting on behalf of the State, the her action. Soghra Gharehveran appealed Riksskatteverket (National Tax Board) against the judgment of the Tingsrätten lodged an appeal against the Hovrätten's before the Hovrätten över Skåne och Ble- judgment at the Högsta domstolen. The kinge (Court of Appeal, Scania and Ble- Riksskatteverket claimed that the wording kinge), which, by judgment of 9 June 1998, of the Förmånsrättslagen which was applic- reversed the judgment of the Tingsrätten able at the time of the declaration of and granted her claim for payment under insolvency was compatible with Sweden's the Lönegarantilagen. In its judgment, the reservation concerning Directive 80/987. Hovrätten found that it was evident that Furthermore, the Board considers that the Mrs Gharehveran played such a part in the directive does not have direct effect because business of the company that she had to be it gives Member States wide latitude with regarded as having a considerable influence regard to the means of implementing it.

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According to the Riksskatteverket, that against an employer who has been scope cannot be restricted in the national declared insolvent. In such a case, is legal order by choosing a certain means of the effect of the directive such that an implementation, for example a guarantee employee may enforce a right to a wage fund which is financed by public funds. guarantee without regard to a national provision which excludes certain groups of employees from the right to a wage guarantee but which is not consistent with the exception to the directive which is applicable to the 15. In the light of the above matters, the Member State? Högsta domstolen requests the Court to give a preliminary ruling pursuant to Arti- cle 234 EC on the following questions:

interpreted in the light of the manner in to the effect that an employee who does not which the national provision in question is himself own any share of the undertaking applied in Sweden. The reservation made but whose close relative owns an essential by Sweden concerning the Annex to Direc- share of that undertaking is not covered by tive 80/987 is based on the provisions of the the reservation made by Sweden with law which previously existed in Sweden, regard to the Annex to Directive 80/987. and in particular on the last subparagraph The Commission finds that the adoption of of Paragraph 12 of the Förmånsrättslagen the last subparagraph of Paragraph 12 of in the wording which was in force before the Förmånsrättslagen and the derogation 1 July 1994. In this connection, the Rikss- which Sweden enjoys under Article 1(2) of katteverket takes the view that that provi- Directive 80/987 are incompatible. An sion must be interpreted in the light of examination of the groups of employees Swedish law and having regard to the referred to in the Annex to Directive interpretation given by the Högsta dom- 80/987 reveals that the derogations are stolen in case NJA 1980, p. 743. In the described in that annex in a detailed and submission of the Riksskatteverket, that precise manner. The Commission claims interpretation is consistent with Commu- that exceptions of this kind must be given a nity law because both Directive 80/987 and strict interpretation. the Act of Accession give Member States a certain discretion granting them the possi- bility to lay down certain exceptions in national law. Those exceptions would no longer be relevant if they could not be interpreted in the light of national law.

ably incompatible. The Annex to the direc- autonomous and uniform interpretation tive excludes from the system only an throughout the Community; that interpre- employee who on his own or together with tation must take into account the context a close relative is the owner of an essential of the provision and the objective pursued part of the undertaking or business and by the legislation in question. 8 exercises a considerable influence on its activities. Under the national legislation at issue, however, it is sufficient for a close relative of the employee to own an essential part of the undertaking for that employee to be excluded from the scope of the guarantee rules. The group of employees who are excluded from the guarantee under Swedish law is therefore more extensive 24. The Swedish reservation, as defined in than is permitted by the applicable Com- Annex I, IV, D of the Act of Accession, munity law. which, at present, forms part of section 1 of the Annex to Directive 80/987, does not refer to national law. 9That reservation must therefore be given an autonomous interpretation.

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26. Those considerations should be suffi- not opt for a system in which it would be cient to conclude that the exception to the for national law to determine the categories scope of Directive 80/987 which is at issue of employees who are excluded. The cate- in the present case cannot be interpreted in gories of employees who cannot avail the light of the interpretation given to themselves of the guarantee are exhaus- Paragraph 12 of the Förmånsrättslagen by tively set out in the Annex to Directive the Högsta domstolen until 1 July 1994. To 80/987. In my opinion, the argument put those reasons, I would add, for the sake of forward by the Riksskatteverket that the completeness, the following arguments Member States enjoy a certain discretion in which are based on the purpose of Direc- interpreting the exceptions mentioned in tive 80/987 and on the context of which the the Annex to the directive is not well contested exception forms part. founded.

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made an express reservation concerning the the question whether the judgments in employer's spouse. The Kingdom of Swe- Francovich 13 and Wagner Miret 14 are den evidently did not consider that it was applicable to the present case. In those necessary to remove the discrepancy which judgments, the Court ruled that employees exists between the wording of the reserva- cannot rely on the provisions of Directive tion and the conditions for the implemen- 80/987 against the State in national courts tation of that reservation in national legis- in order to obtain payment of wages on the lation by requesting an adaptation of basis of the guarantee system. The Högsta section 1 of Annex I to the directive. The domstolen has pointed out that the circum- Swedish legislature instead decided to bring stances of the present case differ from the the law into line with the abovementioned facts in Francovich and Wagner Miret. In Annex as from 1 June 1997. Francovich, the Member State in question had not taken any measures to establish a guarantee fund. In Wagner Miret, a guar- antee institution had been established which was financed by employer contribu- tions which were prescribed by the State. 15 Sweden has designated certain public 29. I therefore propose that the Court authorities as being liable for the payment answer the first question as follows: Swed- of the wages guarantee, which is financed ish case-law concerning the national legis- by social contributions under a public-law lation which was in force until 1 July 1994 system. is not to be taken into consideration in interpreting Article 1(2) of Directive 80/987. 12

having direct effect in the present case. In 33. Soghra Gharehveran has also claimed the view of the Riksskatteverket, in Fran- that she has based her action on Commu- covich and Wagner Miret the Court nity law. Once a Member State has desig- rejected direct effect on the basis of the nated the guarantee institution the claims provisions of the directive themselves in based on the directive cannot be treated less view of the conditions which must be favourably than those based on national satisfied in order for a directive to produce law. The measures taken by the Member such an effect and also stated that direct States may give national courts a certain effect cannot be dependent on the measures discretion in giving primacy to Community which the Member State in question has law in individual cases and in interpreting taken to implement the directive. Further- national law in the light of Community more, the Riksskatteverket considers that, law. If, in establishing a guarantee institu- if it were otherwise, it may be that an tion, a Member State permits such an incorrectly transposed directive would have interpretation, the national court is direct effect in one Member State but not in required, in the opinion of Soghra Ghar- others. Moreover, the Court does not have ehveran, to interpret national law in such a jurisdiction to interpret national law on the way that the only possible result is the basis of Article 234 EC. If Mrs Ghareh- application of the directive. veran has suffered damage as a result of the incorrect implementation of the directive with respect to her, in the view of the Rikskatteverket she is entitled to claim damages on the basis of Community law. The Riksskatteverket considers that this 34. The Commission suggests that the principle makes a broad application of the Court must give an answer to the effect principle of direct effect unnecessary in the that a Member State cannot apply national present case. provisions which, contrary to the wording of the directive, exclude certain categories of employees from the right to a wage guarantee where the other provisions of the directive have been correctly transposed into national law. The Commission relies on three arguments in support of that assertion. 32. Mrs Gharehveran contends, on the other hand, that in the situation that arose in Sweden individuals may have recourse to national courts in reliance on Directive 80/987. Unlike the situation in Francovich, in the present case Sweden has implemen- 35. Firstly, the Commission recalls that it is ted the directive and designated the Swed- the duty of the national court to interpret, ish State as the institution responsible for as far as possible, national law in the light guaranteeing employees' wage claims of the wording and purpose of the directive against employers found to be insolvent. in order to achieve the result sought by the Soghra Gharehveran considers that the directive. The Commission states that it is directive clearly identifies the guarantee fully aware that it can be difficult in the institution and that it can therefore be case before the national court to apply the recognised as having direct effect. principle that the national provision must

be interpreted in accordance with the than Directive 80/987 with regard to the directive, given that, at the material time, persons covered by the directive. Other- the wording of Paragraph 12 of the För- wise, the binding effect and the effective- månsrättslagen was incompatible with the ness of the directive would be weakened reservation made by Sweden in the Annex and the national court would not comply to the directive. However, the amendment with its obligations under Article 249 EC. of Paragraph 12 in 1997 means that Swedish law is consistent with Directive 80/987 and, because that adjustment was favourable to Mrs Gharehveran, the Com- mission points out the possibility for the national court, in such a case, to apply the 37. Finally, and in the alternative, the Swedish law in its amended wording, Commission states that the factual circum- which is fully consistent with the require- stances in the present case are rather ments of Community law. different from the situation which existed in Wagner Miret. In the present case, the Swedish legislature has fully and uncondi- tionally implemented the obligation to establish a guarantee institution financed by the State, which was not yet the case in Wagner Miret. The Commission raises the question whether, in such a case, where the Member State in question to some extent has lost its discretion as regards the imple- mentation of the directive, the directive 36. Second, the Commission states that the may not have direct effect. The Commis- Member States are required to respect the sion does not, however, give preference to binding effect and the effectiveness of this solution of the problem raised by the Directive 80/987. In the judgment in Fran- national court. covich, the Court admittedly pointed to the broad latitude enjoyed by the Member States in regard to the organisation, opera- tion and financing of the guarantee institu- tions, but in the same judgment it held that the provisions of that directive are suffi- ciently precise and unconditional as regards the category of employees entitled to the B — Assessment guarantee and as regards the content of that guarantee. Relying on the judgments in Ratti 16 and Francovich, 17 the Commission considers that the national court in the present case should be able to disapply 38. On the basis of the order for reference Paragraph 12 of the Förmånsrättslagen, from the Högsta domstolen I conclude that, which contains more extensive restrictions by its second question, it is seeking to ascertain whether the manner in which the Kingdom of Sweden has fulfilled its obliga- 16 — Case 148/78 Ratti [1979] ECR1629, paragraphs 20 to 24. tions under Directive 80/987, that is to say 17— See footnote 1 3above, paragraphs 25 to 27. by establishing a State-financed guarantee

41. To make the extent of the rights which individuals may claim under Directive 80/987 depend on the question whether or how Articles 3 and 5 have been imple- 40. I do not think that the key to the mented by the national legislature could problem before the Högsta domstolen is, or give rise to the peculiar situation that ever can be, the manner in which Articles 3 individuals in one Member State can rely and 5 of Directive 80/987 were transposed into national law. In Francovich and Wagner Miret, the Court held that those 18 —Joined Cases C-6/90 and C-9/90 francovich and Others, provisions gave the Member States a broad cited in footnote 13 above, paragraph 26, and Case C-334/02 Wagner Miret, cited in footnote 11 above, discretion with regard to the organisation, paragraph 17. operation and financing of the guarantee 19 — See, along similar lines, the Opinion of Advocate General Lenz in Wagner Miret, cited in footnote 11 above, institutions. Individuals cannot therefore paragraph 14.

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on the directive but not in other Member sation from the guarantee fund which, States. Unity and equality in the operation under Directive 80/987, should be available of Community law would then no longer to her. be assured. Furthermore, in such a hypoth- esis, the Community Courts would have to engage in the interpretation of the legal rules whereby effect is given to the directive in national law.

44. In Francovich and Wagner Miret the Court stated that the provisions of Direc- tive 80/987 concerning the definition of its scope ratione personae were sufficiently precise and unconditional to enable the national court to determine whether a person was covered by the directive. In 42. I do not therefore consider that I can the view of the Court, the same applies to accept the idea of extending the direct the content of the guarantee. 20 It is against effect of Directive 80/987 by calling in aid this background that it is necessary to the national implementing measures, in this examine how the national court can allow case the existence of a State-financed applications concerning payment of claims guarantee fund. by employees who, like Mrs Gharehveran, are wrongly excluded from the guarantee.

OPINION OF MR GEELHOED — CASE C-441/99

comply with the obligations imposed by Commission has pointed out, the national Community law. 22 court will have in particular to examine whether national law makes it possible to remedy the incomplete implementation of Directive 80/987 during the period from 1 January 1995 — the date of Sweden's accession to the European Union — to 1 June 1997, in the light of the correct 46. I consider that the application of that transposition on 1 June 1997. In that case-law to the present case will mean that regard, the national court may also bear the national court can proceed on the basis in mind that the wording of the Förmåns- that the Kingdom of Sweden properly rättslagen before 1 July 1994 was consis- transposed the provisions of Directive tent with the reservation made by Sweden 80/987 concerning the guarantee institu- in Directive 80/987. 23 tion into national law. With a view to guaranteeing the effectiveness of Directive 80/987 the national court may also take into consideration the fact that the provi- sions of the directive concerning the cate- gory of persons covered by it are suffi- ciently precise and unconditional and that Paragraph 12 of the Förmånsrättslagen, in the wording which was in force at that time, was unquestionably incompatible with the reservation made by Sweden in Directive 80/987.

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V — Conclusion

49. In the light of the foregoing, I propose that the Court give the following answers to the two questions referred by the Högsta domstolen:

(1) Swedish case-law concerning the Swedish legislation which was in force until 1 July 1994, may not be taken into consideration in interpreting the exception which applies to the Kingdom of Sweden under Article 1(2) of Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer. That exception is not therefore applicable to an employee who did not himself own any share of the undertaking but whose close relative owned an essential share of that undertaking.

(2) Where, contrary to the exception to Directive 80/987/EEC which is applicable to it, a Member State excludes, by virtue of a national law implementing that directive, certain employees from the protection provided by the directive, that law should be interpreted and applied in such a way that the result sought by the directive is achieved. It is for the national court concerned to determine whether and to what extent, in the particular case, the national law permits such an interpretation and application.