SECOND SECTION
Application no. 48357/07
AZIENDA AGRICOLA SILVERFUNGHI S.A.S. against Italy
and 3 other applications
(see list appended)
STATEMENT OF FACTS
The applicants are agricultural firms operating in northern and/or disadvantaged areas in Italy as defined in the relevant Italian laws. They are represented before the Court by Mrs A. Mari, a lawyer practising in Rome.
A. The circumstances of the cases
The facts of the cases, as submitted by the applicant companies, may be summarised as follows.
1. Background of the case
In the 1980s the Italian legislator instituted a series of norms to favour economic activity in general and more specifically agricultural activity.
More precisely, article 1 sub-article 6 of Law no. 48 of 1988 (Legislative Decree no. 536 of 30 December 1987) (see Relevant domestic law, below) provided a concession (fiscalizzazione), namely that as from 1 January 1987 the State would bear a portion of the contribution to be paid by employers in the agricultural sector for the purposes of article 31 sub-article 1 of Law no. 41/48, in respect of each employee.
Furthermore, article 9 sub-article 5 of Law No. 67 of 1988 (Legge finanziaria 1988) (see Relevant domestic law) introduced a system of exemptions (sgravi contributivi) in respect of payments for the purposes of premiums and contributions related to welfare and assistance, namely such payments were due in the measure of 15 % (sic) (later 30%) by employers in the agricultural sector in northern regions and 40 % (later 60 %) by employers in the agricultural sector working in disadvantaged agricultural zones in the south of Italy.
According to the applicants, article 9 sub-article 6 of Law No. 67 of 1988 indicated that the latter benefit was not alternative to the one provided for by Law no. 48 of 1988 mentioned above. This, they considered, was clear from the explanatory memorandum (scheda di lettura) to the law.
Following further normative changes between 1988 and 1996, the burden to be taken over by the State amounted to the following:
a) 85,000 Italian lire (approximately 44 euros “EUR”) per employee for twelve monthly salaries;
b) a global 5.62 percentage points for exemptions in respect of TBC, ENAOLI and SSN contributions;
c) a global 4.92 percentage points in exemptions regarding the said contributions in respect of labourers and 5.02 percentage points for employees and directors, as from 1 June 1996.
Despite the law, by circular no. 160 of 18 July 1988 the Istituto Nazionale della Previdenza Sociale (“INPS”), an Italian welfare entity, considered that the two benefits (concession and exemption) (fiscalizzazione and sgravi contributivi) could not be accumulated and had to be considered as alternatives.
In fact the applicant companies benefited only from the exemption (sgravi contributivi) and not from the concession (fiscalizzazione). They considered that this interpretation was contrary to that provided for in law.
Indeed a number of agricultural firms instituted proceedings complaining about the matter and a constant jurisprudence of the Italian courts, including the Court of Cassation, in favour of the agricultural firms, was established. The applicant companies submitted that between 1997 and 2003 there had been delivered on the same subject matter more than twenty-five first-instance judgments and more than five appeal judgments, together with two Court of Cassation judgments (see Relevant domestic law and practice, below) finding in favour of the agricultural firms.
In this light, in 2000/2002 the applicant companies instituted proceedings as explained below. Pending these judicial proceedings Law no. 326 of 24 November 2003 was enacted (see Relevant domestic law). By a judgment no. 274 of 7 July 2006 the Constitutional Court considered that the said law had been legitimate and not unconstitutional (see Relevant domestic law and practice).
2. The applicant companies’ domestic proceedings
(a) Azienda Agricole Silverfunghi SAS
On 7 November 2000 the applicant company requested the INPS to return the monies which it had held contrary to what was provided for by law when it failed to apply the concession in its respect, for the period between 1 April 1990 and 31 December 1997, amounting to 173,738,951 Italian lire (approximately EUR 90,000) plus interest and re‑evaluation.
The INPS’s failure to reply amounting to an implicit rejection (silenzio‑rifiuto), on 26 June 2001 the applicant company instituted an administrative procedure within the ambit of the INPS. The latter again failed to reply.
Thus, on 4 January 2002 the applicant company instituted judicial proceedings to recover the monies due (as mentioned above) for the period not covered by prescription.
By a judgment (no. 56/2003) of 13 February 2003 the Bergamo Tribunal found in favour of the applicant company. Considering that the two benefits could be accumulated and that the applicant had paid the relevant dues, it ordered the INPS to pay back the misappropriated sums, with interest and re-evaluation, together with the costs of the proceedings.
By a judgment (no. 276/03) of 25 September 2003 filed in the relevant registry on 4 November 2003 the Brescia Court of Appeal rejected the INPS’s appeal and confirmed the first-instance judgment.
Following the entry into force of Law no. 326 of 24 November 2003 the INPS appealed to the Court of Cassation.
The applicant company cross-appealed, arguing that the application of Law no. 326 of 24 November 2003 to its case would amount to a violation of Article 6 of the Convention and a violation of the Italian Constitution in so far as it obliged the State to abide by the European Convention, a matter which had not been in the least considered by the Constitutional Court in its judgment of 7 July 2006.
By a judgment (no. 10110/07) filed in the relevant registry on 2 May 2007 the INPS’s appeal was upheld by the Court of Cassation on the basis of Law no. 326 of 24 November 2003. The remaining grounds of appeal were rejected on the basis that Law no. 326 had an authentic interpretative nature and that the State had a legitimate discretion to decide whether benefits could be granted cumulatively or not, thus there could be no issues related to a fair trial.
(b) Scarpellini s.r.l
On 9 July 2001 and again on 29 January 2002 the applicant company requested the INPS to return the monies which it had held contrary to what was provided for by law when it failed to apply the concession in its respect, for the period between 1 April 1990 and 31 December 1997, amounting to 413,928,856 Italian lire (approximately EUR 213,776) plus interest and re‑evaluation.
The INPS’s failure to reply amounting to an implicit rejection (silenzio‑rifiuto), on 7 June 2002 the applicant company instituted an administrative procedure within the ambit of the INPS. The latter again failed to reply.
Thus, on 11 June 2002 the applicant company instituted judicial proceedings to recover the monies due (as mentioned above) for the period not covered by prescription.
By a judgment (no. 58/2003) of 13 February 2003 the Bergamo Tribunal found in favour of the applicant company. Considering that the two benefits could be accumulated and that the applicant had paid the relevant dues, it ordered the INPS to pay back the misappropriated sums, with interest and re-evaluation, together with the costs of the proceedings.
By a judgment (no. 277/03) of 25 September 2003 filed in the relevant registry on 4 November 2003 the Brescia Court of Appeal rejected the INPS’s appeal and confirmed the first-instance judgment.
Following the entry into force of Law no. 326 of 24 November 2003 the INPS appealed to the Court of Cassation.
The applicant company cross-appealed on the lines mentioned above.
By a judgment (no. 12863/07) filed in the relevant registry on 1 June 2007 the INPS’s appeal was upheld by the Court of Cassation on the basis of Law no. 326 of 24 November 2003. The remaining grounds of appeal were rejected for the same reasons as mentioned above.
(c) SAP Pietrafitta s.r.l.
On 14 and 30 July 1999 the applicant company requested the INPS to return the monies which it had held contrary to what was provided for by law when it failed to apply the concession in its respect, for the period between 1 January 1989 and 31 December 1997, amounting to 210,609,000 Italian lire (approximately EUR 108,770) plus interest and re‑evaluation.
The INPS failed to reply.
Thus, on 25 January 2000 the applicant company instituted judicial proceedings to recover the monies due (as mentioned above) for the period not covered by prescription.
By a judgment (no.8/2001) of 3 April 2001 the Siena Tribunal found in favour of the applicant company. Considering that the two benefits could be accumulated and that the applicant had paid the relevant dues, it ordered the INPS to pay back the misappropriated sums, with interest and re-evaluation, together with the costs of the proceedings.
By a judgment (no. 249/02) of 16 April 2002 filed in the relevant registry on 24 April 2002 the Florence Court of Appeal rejected the INPS’s appeal and confirmed the first-instance judgment.
Following the entry into force of Law no. 326 of 24 November 2003 the INPS appealed to the Court of Cassation.
The applicant company cross-appealed on the lines mentioned above.
By a judgment (no. 13291/07) filed in the relevant registry on 7 June 2007 the INPS’s appeal was upheld by the Court of Cassation on the basis of Law no. 326 of 24 November 2003. The remaining grounds of appeal were rejected for the same reasons as mentioned above.
(d) Floricultura Zanchi
On 10 December 2001 the applicant company requested the INPS to return the monies which it had held contrary to what was provided for by law when it failed to apply the concession in its respect, for the period between 1 April 1991 and 31 December 1997, amounting to 163,373,972 Italian lire (approximately EUR 84,375) plus interest and re‑evaluation.
The INPS’s failure to reply amounting to an implicit rejection (silenzio‑rifiuto), on 15 May 2002 the applicant company instituted an administrative procedure within the ambit of the INPS. The latter again failed to reply.
Thus, on 11 September 2002 the applicant company instituted judicial proceedings to recover the monies due (as mentioned above) for the period not covered by prescription.
By a judgment (no. 57/2003) of 13 February 2003 the Bergamo Tribunal found in favour of the applicant company. Considering that the two benefits could be accumulated and that the applicant had paid the relevant dues, it ordered the INPS to pay back the misappropriated sums, with interest and re-evaluation, together with the costs of the proceedings.
By a judgment (no. 278/03) of 25 September 2003 filed in the relevant registry on 4 November 2003 the Brescia Court of Appeal rejected the INPS’s appeal and confirmed the first-instance judgment.
Following the entry into force of Law no. 326 of 24 November 2003 the INPS appealed to the Court of Cassation.
The applicant company cross-appealed on the lines mentioned above
By a judgment (no. 12864/07) filed in the relevant registry on 1 June 2007 the INPS’s appeal was upheld by the Court of Cassation on the basis of Law no. 326 of 24 November 2003. The remaining grounds of appeal were rejected for the same reasons as mentioned above.
B. Relevant domestic law and practice
1. Concession (fiscalizzazione)
Article 1 sub-article 6 of Law no. 48 of 1988 (Legislative Decree no. 536 of 30 December 1987) reads as follows:
“A reduction of contributions for the purposes of article 31 sub-article 1 of Law no. 41/48, of Lire 133.000 per employee, is granted to employers in the agricultural sector to run from 1 January 1987 throughout the salary period up to 30 November 1988, for every monthly payment up to the twelfth month included. Such a reduction does not apply to employers in the agricultural sector who operate in the territories mentioned in Article 1 of the laws on interventions in the South of Italy (Italian Mezzogiorno) (testo unico) approved by Decree no. 218 of the President of the Republic of 6 March 1978.”
2. Exemptions (sgravi contributivi)
Article 9 sub-articles 5 and 6 of Law No. 67 of 1988 (legge finanziaria 1988) read as follows:
“(5) As from 1 January 1988, premiums and contributions related to welfare and assistance in respect of employees whether on indeterminate or determinate duration contracts are due in the measure of 15 % by their employers in the agricultural sector in Northern regions according to article 9 of Decree no. 601 of the President of the Republic of 29 September 1973. The said premiums and contributions are due in the measure of 40 % by employers in the agricultural sector operating in disadvantaged agricultural zones as defined in article 15 of Law no. 984 of 1977 and in the measure of 20% by employers in the agricultural sector operating in disadvantaged agricultural zones as defined in article 1 of the laws on interventions in the South of Italy (Italian Mezzogiorno) (testo unico) approved by Decree no. 218 of the President of the Republic of 6 March 1978.
(6) For the purposes of the calculation of the exemption mentioned in sub-article 5, the concession (fiscalizzazione) provided for in article 1 sub-article 5 and 6 of Legislative Decree no. 536 of 30 December 1987 as modified by Law no. 48 of 1988, is not to be taken into account.”
According to the travaux preparatoires in respect of sub-article 6, the amount of premiums and contributions due is arrived at by, firstly, calculating the percentage of exemption applicable according to the different rates provided by sub-article 5 of the text and subsequently subtracting the share, per head, of concession and percentage established in sub-articles 5 and 6 of article 1 of Legislative Decree 536/1987.
3. Law no. 326 of 24 November 2003
Law no. 326 of 24 November 2003 entitled Urgent Dispositions to Favour Development and to adjust the Trend in Public Finances, in so far as relevant, reads as follows:
“Article 9 sub-article 6 of Law No. 67 of 1988 together with any subsequent modifications, must be interpreted to the effect that the exemption referred to in its sub-article 5 (...) cannot be accumulated with the benefits provided for in (...) Law no. 48 of 1988.”
According to the travaux preparatoires the law provided an authentic interpretation about the non-cumulability of the two benefits, in relation to which a lot of proceedings had been instituted, with jurisprudence taking the opposite view than that taken and applied in practice by the INPS. Thus, the norm was intended to avoid greater burdens than those which had been currently in place for antecedent periods.
4. Case-law before the enactment of Law no. 326 of 24 November 2003
(a) Court of Cassation judgment no. 14227/00 of 14 July 2000 filed in the relevant registry on 27 October 2000
The Court of Cassation held that the two benefits (concession and exemptions) were not incompatible. They had been provided for by different laws and had different aims. Thus, if a firm fulfilled the requirements to be eligible for both benefits, they could not be denied. It considered that the INPS had not submitted any relevant arguments, save the reiteration of the text of the impugned law. According to the Court of Cassation, by means of article 9 sub-article 6 of Law No. 67 of 1988, the legislator wanted to specify that the exemption was to be applied on the entire rate and not on the rate resulting after concession, thus, excluding the incompatibility of the two benefits and presupposing the enjoyment of both contemporaneously. The Court of Cassation noted that when the legislator had wanted to exclude employers operating in the South from the reduction of concession, it had specifically done so (as in Legislative decree no. 536 of 1987). However, the legislator had remained silent in respect of employers operating in disadvantaged areas in the North.
(b) Court of Cassation judgment no. 17806/03 of 26 May 2003 filed in the relevant registry on 24 November 2003
The Court of Cassation reiterated the finding in its judgment no. 14227/00 of 27 October 2000 (above), considering that there had been no reason to depart from those conclusions. Moreover, it noted that the theory that, in general, benefits could not be granted cumulatively had been proved false even by article 68 of Legislative Decree No. 388 of 2000 which explicitly mentioned that certain benefits could not be granted cumulatively. Had it been a general principle no explicit statement by the legislator would have been required.
5. Constitutional Court judgment no. 274 of 7 July 2006 regarding the constitutionality of Law no. 326 of 24 November 2003.
The Constitutional Court noted that the legislator had intervened due to the uncertainty created by a constant administrative practice and supervening jurisprudence to the contrary. It considered that it was not necessary to verify whether the enacted law had been interpretative (thus retroactive) or innovative with retroactive effect. Indeed the prohibition on applying laws retroactively was a constitutional norm only applicable to the criminal sphere. It considered that the legislator could enact both laws of authentic interpretation – which clarify and determine the extent of the original norm within the content of what was originally plausibly provided –and innovative ones having retroactive effect in so far as such retroactivity was reasonably justified and not in contrast with other values and interests protected by the Constitution. The Constitutional Court noted that a law of authentic interpretation could not be unreasonable in so far as it was limited to assigning to the provision to be interpreted a meaning which was already therein contained and which was one of the possible meanings of the original text. Indeed, in the present case, the prohibition on applying the benefits cumulatively had been one of the possible interpretations of article 9 sub-article 6 of Law No. 67 of 1988 which had been immediately contested by the INPS but which ten years later had been given another, indeed possible, meaning by the Court of Cassation. Given this state of uncertainty the impugned law of authentic interpretation could not be considered unreasonable.
COMPLAINTS
The applicant companies complain under Article 6 of the Convention that the enactment of Law no. 326 of 24 November 2003 constituted a legislative interference in pending proceedings, in breach of their right to a fair trial. They further invoked Article 1 of Protocol No. 1 in so far as they had been deprived of their possessions.
QUESTIONS
1. Did the applicant companies have a fair hearing in the determination of their civil rights and obligations, in accordance with Article 6 § 1 of the Convention? In particular, was there an interference by the legislature with the administration of justice designed to influence the judicial determination of a dispute? If so, was the interference based on compelling grounds of general interest? Lastly, was the interference compatible with the principles of legal certainty (Zielinski and Pradal and Gonzalez and Others v. France [GC], nos. 24846/94 and 34165/96 to 34173/96, ECHR 1999-VII, and Scordino v. Italy (no. 1) [GC], no. 36813/97, ECHR 2006-...)?
2. a. Did the application of Law no. 326 of 24 November 2003 constitute an interference with the applicant companies’ peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1?
2. b. If so, was that interference in the public interest and in accordance with the conditions provided for by law, within the meaning of Article 1 of Protocol No. 1? Did it impose an excessive individual burden on the applicant companies? (see, mutatis mutandis, Draon v. France [GC], no. 1513/03, 6 October 2005 and Maurice v. France [GC], no. 11810/03, ECHR 2005‑IX).
APPENDIX
No.
Application
no.
Lodged on
Applicant name
place of registration
48357/07
31/10/2007
AZIENDA AGRICOLA SILVERFUNGHI S.A.S.
Grone (BG)
52677/07
28/11/2007
SCARPELLINI S.R.L.
Roma
52687/07
28/11/2007
S.A.P. PIETRAFITTA S.R.L.
Siena
52701/07
28/11/2007
FLORICOLTURA ZANCHI DI ZANCHI F.LLI SOCIETA SEMPLICE
Roma
Full & Egal Universal Law Academy