Opinion of the Advocate-General

I - Introduction

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 approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer (hereinafter: Directive 80/987). The national court first wishes the Court to 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 the institution liable for the guarantee under the directive, an employee may rely on that guarantee despite being excluded from it under a national provision if that provision cannot be based on Sweden's reservation with regard to the directive.

II - Applicable legislation

A - Community law

2. Under Directive 80/987 Member States are required to ensure that a guarantee institution guarantees payment of employees' outstanding claims resulting from obligations which an employer has failed to fulfil.

3. Article 1(1) of Directive 80/987 provides that the directive is to apply to employees' claims arising from contracts of employment or employment relationships and existing against employers who are in a state of insolvency within the meaning of Article 2(1). Under Article 1(2), Member States may, by way of exception, exclude claims by certain categories of employee from the scope of the directive, by virtue of the special nature of the employee's contract of employment or employment relationship or of the existence of other forms of guarantee offering the employee protection equivalent to that resulting from the directive. The categories of employee referred to are listed in the Annex to Directive 80/987.

4. In the Act concerning the conditions of accession of the Kingdom of Norway, the Republic of Austria, the Republic of Finland and the Kingdom of Sweden and the adjustments to the Treaties on which the European Union is founded (hereinafter: the Act of Accession), Annex I, IV (Social Policy), D (Labour Law), it is provided, with regard to Directive 80/987, that the Annex to that directive (Employees having a contract of employment, or an employment relationship of a special nature) is supplemented, as far as Sweden is concerned, by the following reservation:

An employee, or the survivors of an employee, who on his own or together with his close relatives was the owner of an essential part of the employer's undertaking or business and had a considerable influence on its activities. This shall apply also when the employer is a legal person without an undertaking or business.

5. Article 3 of Directive 80/987 lays down the following obligations for guarantee institutions:

1. Member States shall take the measures necessary to ensure that guarantee institutions guarantee, subject to Article 4, payment of employees' outstanding claims resulting from contracts of employment or employment relationships and relating to pay for the period prior to a given date.

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

- either that 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;

- or that of the onset of the employer's insolvency or that on which the contract of employment or the employment relationship with the employee concerned was discontinued on account of the employer's insolvency.

6. Under Article 4(1) of Directive 80/987, Member States have the option to limit the liability of guarantee institutions, referred to in Article 3. In case the Member States exercise that option, a number of complementary rules are laid down in Article 4(2).

7. Article 5 of Directive 80/987 provides as follows:

Member States shall lay down detailed rules for the organisation, financing and operation of the guarantee institutions, complying with the following principles in particular:

(a) the assets of the institutions shall be independent of the employers' operating capital and be inaccessible to proceedings for insolvency;

(b) employers shall contribute to financing, unless it is fully covered by the public authorities;

(c) the institutions' liabilities shall not depend on whether or not obligations to contribute to financing have been fulfilled.

B - National legislation

8. Paragraph 1 of the Lönegarantilagen (Wage Guarantee Law) provides that, under that Law, the State is liable for payment of a wage-earner's claim against an employer who has been declared insolvent 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 remuneration is made to the person enjoying a preferential right under Paragraph 12 of the Förmånsrättslagen (Law on Preferential Debts). There are three different wordings of Paragraph 12 of the Förmånsrättslagen which will be considered in the present case: the wording before 1 July 1994, a wording which was in force between 1 July 1994 and 1 June 1997, and the present wording which entered into force on 1 June 1997.

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 any share in the undertaking, but a close relative owned an essential part of it.

10. Under the transitional provisions relating to the amendments made to Paragraph 12 of the Förmånsrättslagen, that paragraph must be applied in its wording at the time of the receiving order. The wording of the last subparagraph of Paragraph 12 of the Förmånsrättslagen which thus applies, which entered into force on 1 July 1994, provided that an employee who himself or together with a close relative had owned at least a one-fifth share of the undertaking less than six months before the petition in insolvency was lodged did not enjoy a preferential right under that paragraph in respect of wages or pensions and that the same applied even where the share had been owned by a close relative of the employee. Through that latter addition the case-law of the Högsta domstolen was incorporated into the legislation.

11. On 1 June 1997 a new amendment to Paragraph 12 of the Förmånsrättslagen entered into force. The 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 petition in insolvency was lodged, an essential part of the undertaking and to have had a considerable influence on its activities. It is therefore necessary for the employee himself to own some share in the undertaking.

III - Facts, procedure and questions referred for a preliminary ruling

12. Soghra Gharehveran was employed by a company which operated a restaurant business. In particular, she performed accounting duties. Her husband held all the shares in the company, which was declared insolvent on 17 July 1995. Upon the insolvency, Mrs Gharehveran claimed compensation under the Lönegarantilagen. On 10 August 1995, the receiver rejected Soghra Gharehveran's claim on the ground that she was a close relative of the sole owner of the undertaking which had been declared insolvent.

13. Mrs Gharehveran subsequently brought an action against the State in the Tingsrätten (District Court), Lund, Sweden, claiming that the Tingsrätten should set aside the order of the receiver and grant her claim for payment under the Lönegarantilagen. By a judgment of 20 May 1997 the Tingsrätten dismissed her action. Soghra Gharehveran appealed against the judgment of the Tingsrätten before the Hovrätten över Skåne och Blekinge (Court of Appeal, Scania and Blekinge), which, by judgment of 9 June 1998, reversed the judgment of the Tingsrätten and granted her claim for payment under the Lönegarantilagen. In its judgment, the Hovrätten found that it was evident that Mrs Gharehveran played such a part in the business of the company that she had to be regarded as having a considerable influence on its activities. However, it was established, according to the Hovrätt, that all the shares in the company were owned by her husband. In those circumstances, an application of the Förmånsrättslagen - in its wording at the time of the declaration of insolvency - meant that Soghra Gharehveran was not entitled to payment under the wage guarantee. The Hovrätten found, however, that application of that law conflicted with the Swedish reservation with respect to Directive 80/987, a reservation which it considered could not apply to Mrs Gharehveran. The Hovrätten also took the view that Mrs Gharehveran was entitled to rely directly on Directive 80/987 in order to assert her right to compensation under Swedish national law.

14. Acting on behalf of the State, the Riksskatteverket (National Tax Board) lodged an appeal against the Hovrätten's judgment at the Högsta domstolen. The Riksskatteverket claimed that the wording of the Förmånsrättslagen which was applicable at the time of the declaration of insolvency was compatible with Sweden's reservation concerning Directive 80/987. Furthermore, the Board considers that the directive does not have direct effect because it gives Member States wide latitude with regard to the means of implementing it. According to the Riksskatteverket, that scope cannot be restricted in the national legal order by choosing a certain means of implementation, for example a guarantee fund which is financed by public funds.

15. In the light of the above matters, the Högsta domstolen requests the Court to give a preliminary ruling pursuant to Article 234 EC on the following questions:

1. Is the exception which applies to 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 workers in the event of the insolvency of their employer to be interpreted as meaning that, in accordance with Swedish case-law as it had developed and was applicable until 1 July 1994, the exception is 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. If Question 1 is answered in the negative:

A Member State has implemented Council Directive 80/987/EEC and designated the State as being liable for payment of an employee's claims against an employer who has been declared insolvent. In such a case, is the effect of the directive such that an employee may enforce a right to a wage 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 Member State?

16. The reference for a preliminary ruling was lodged at the Court Registry on 22 November 1999. The Riksskatteverket, Soghra Gharehveran and the Commission submitted written observations. No hearing was held.

IV - The reservation made by Sweden

A - Observations submitted to the Court

17. The Riksskatteverket considers that the reservation in the Annex to Directive 80/987 which concerns Sweden must be interpreted in the light of the manner in which the national provision in question is applied in Sweden. The reservation made by Sweden concerning the Annex to Directive 80/987 is based on the provisions of the law which previously existed in Sweden, and in particular on the last subparagraph of Paragraph 12 of the Förmånsrättslagen in the wording which was in force before 1 July 1994. In this connection, the Riksskatteverket takes the view that that provision must be interpreted in the light of Swedish law and having regard to the interpretation given by the Högsta domstolen in case NJA 1980, p. 743. In the submission of the Riksskatteverket, that interpretation is consistent with Community law because both Directive 80/987 and the Act of Accession give Member States a certain discretion granting them the possibility 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.

18. Mrs Gharehveran contends, for her part, that it would be contrary to the principles which govern the interpretation of Community law to be influenced by existing national legislation and case-law in interpreting provisions of Community law.

19. The Commission, for its part, suggests that the first question should be answered to the effect that an employee who does not himself own any share of the undertaking but whose close relative owns an essential share of that undertaking is not covered by the reservation made by Sweden with regard to the Annex to Directive 80/987. The Commission finds that the adoption of the last subparagraph of Paragraph 12 of the Förmånsrättslagen and the derogation which Sweden enjoys under Article 1(2) of Directive 80/987 are incompatible. An examination of the groups of employees referred to in the Annex to Directive 80/987 reveals that the derogations are described in that annex in a detailed and precise manner. The Commission claims that exceptions of this kind must be given a strict interpretation.

B - Assessment

20. The answer to the first question referred by the Högsta domstolen can be brief. The arguments put forward in support of a strict interpretation of the scope of the reservation made by Sweden are convincing both with regard to the substance of the provisions at issue and with regard to the purpose of Directive 80/987 and the context of the derogat