Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
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1.References for a preliminary ruling - Jurisdiction of the Court - Reference for interpretation made under the ECSC Treaty - Included
( ECSC Treaty, Arts 31 and 41; EEC Treaty, Arts 164 and 177; EAEC Treaty, Arts 146 and 150 )
2.Measures adopted by the institutions - Directives or ECSC recommendations - Direct effect - Conditions - Limits - Whether possible to rely on a directive or an ECSC recommendation against an individual - Not possible
( ECSC Treaty, third paragraph of Art . 14; EEC Treaty, third paragraph of Art . 189 )
3.ECSC - Production levies - Insolvency of debtor undertaking - Preferential status conferred on Community levies - Recommendation 86/198 - Failure to comply with the mandatory time-limit for transposition - Direct effect - Limits
( Recommendation 86/198/ECSC, Art . 4, first paragraph )
4.Community law - Principles - Protection of legitimate expectations -Limits - Application of new rules to the future effects of situations which arose under earlier rules
Summary
1.Article 31 of the ECSC Treaty, Article 164 of the EEC Treaty and Article 146 of the EAEC Treaty contain identical provisions under which the Court is to ensure that the law is observed in the interpretation and application of those Treaties .
However, Article 177 of the EEC Treaty and Article 150 of the EAEC Treaty, on the one hand, and Article 41 of the ECSC Treaty, on the other, do not define in identical terms the Court' s jurisdiction with regard to preliminary references, particularly in so far as Article 41 of the ECSC Treaty contains no express provision governing the exercise by the Court of a power to interpret that Treaty and acts adopted by the institutions pursuant thereto . All of those provisions, however, do in fact express a two-fold need; to ensure the utmost uniformity in the application of Community law and to establish for that purpose effective cooperation between the Court of Justice and national courts .
That is why, bearing in mind the fact that this two-fold need is just as cogent and clear in the case of the ECSC Treaty as in that of the EEC and EAEC Treaties and that there is a connection between interpretation and appraisal of validity, it is necessary, in order to give effect to the objectives and cohesion of the Treaties, to recognize that the jurisdiction conferred on the Court by the abovementioned Article 41 covers not only appraisal of the validity of measures but also their interpretation .
2.Where Community authorities have placed Member States under a duty to adopt a certain course of action, whether by means of a directive or an ECSC recommendation ( the same rules being applicable in both cases since the measures are similar in nature ), the effectiveness of such a measure would be diminished if individuals and national courts were precluded from taking it into consideration as an element of Community law . Consequently, a Member State which has not adopted the implementing measures required by the directive within the prescribed period may not plead, as against individuals, its own failure to perform the obligations which the directive entails .
Thus, wherever the provisions of a directive appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied on as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the Member State .
Such a possibility, however, exists only as against the Member State concerned and other public authorities . A directive cannot therefore, of itself, impose obligations on an individual, and a provision of a directive may not be relied upon as such against an individual .
3.Since Recommendation 86/198/ECSC imposes on Member States obligations which are precise and unconditional, it must be interpreted as meaning that in the absence of any national implementing measure adopted by a Member State at the expiry of the mandatory time-limit laid down for that purpose in the first paragraph of Article 4, a failure which constitutes a breach of Community law, the ECSC may rely on the recommendation against that Member State with regard to all debts owed to it by undertakings in respect of the levies referred to in Articles 49 and 50 of the ECSC Treaty, irrespective of the date on which they arose, if those debts are still provable in the liquidation of the undertaking in accordance with the provisions of national law governing the rights of creditors . However, it may only do so subject to the condition that the preferential status of the debts owed to it may be recognized solely as against that State, the Community' s claims being placed on the same footing as any claims by the State, and that it does not prejudice the rights of creditors other than the State under national legislation on the rights of creditors in the absence of the recommendation .
4.The principle of protection of legitimate expectations cannot prevent preferential treatment from being conferred on debts which arose prior to the entry into force of the measure which introduced such treatment, since that principle may not be extended to the point of generally preventing new rules from applying to the future effects of situations which arose under earlier rules .
Parties
In Case C-221/88
REFERENCE to the Court under Article 41 of the ECSC Treaty by the tribunale ( sez . fallimentare ) di Brescia ( District Court, Brescia ( Bankruptcy and Insolvency Division ) ) for a preliminary ruling in the proceedings pending before that court between
European Coal and Steel Community ( ECSC )
and
Acciaierie e ferriere Busseni SpA ( in liquidation )
on the interpretation of Commission Recommendation 86/198/ECSC of 13 May 1986 on the establishment of preferential treatment for debts in respect of levies on the production of coal and steel ( Official Journal 1986, L 144, p . 40 ),
THE COURT
composed of : O . Due, President, C . N . Kakouris, F . A . Schockweiler and M . Zuleeg ( Presidents of Chambers ), T . Koopmans, G . F . Mancini, R . Joliet, T . F . O' Higgins, J . C . Moitinho de Almeida, G . C . Rodríguez Iglesias and F . Grévisse, Judges,
Advocate General : J . Mischo
Registrar : H . A . Ruehl, Principal Administrator
after considering the observations submitted on behalf of
the applicant in the main proceedings, by the Commission of the European Communities, represented by Enrico Traversa, a member of its Legal Department, acting as Agent,
the defendant in the main proceedings, by Sandro Conti, avvocato at the Italian Corte di Cassazione ( Court of Cassation ),
having regard to the Report for the Hearing,
after hearing the oral observations of the Italian Government, represented by Professor Luigi Ferrari Bravo, Head of the Legal Department of the Ministry of Foreign Affairs, acting as Agent, assisted by Ivo Braguglia, avvocato dello Stato, at the hearing on 25 October 1989,
after hearing the Opinion of the Advocate General delivered at the sitting on 28 November 1989,
gives the following
Judgment
Grounds
1 By an order of 28 April 1988, which was received at the Court on 4 August 1988, the tribunale di Brescia referred for a preliminary ruling under Article 41 of the ECSC Treaty a number of questions on the interpretation of Commission Recommendation 86/198/ECSC of 13 May 1986 on the establishment of preferential treatment for debts in respect of levies on the production of coal and steel ( Official Journal 1986, L 144, p . 40, hereinafter referred to as "the recommendation ").
2 Those questions were raised in the course of proceedings between the ECSC and Acciaierie e ferriere Busseni SpA ( in liquidation ), hereinafter referred to as "Busseni", on the issue whether the ECSC should be accorded preferential treatment in proving certain debts owed to it by the insolvent undertaking .
3 Following the decision of 3 February 1987 declaring Busseni insolvent, the ECSC sought to prove two debts, one a preferential debt in the amount of LIT 246 652 086 in respect of unpaid levies and surcharges for delay in payment, the other an ordinary debt of LIT 4 480 192 938 in respect of fines and surcharges for delay in payment .
4 The official receiver rejected the ECSC' s claim for preferential treatment in respect of a portion of its debts, made on the basis of the recommendation . The ECSC thereupon appealed to the tribunale di Brescia .
5 The tribunale noted that Member States were required under the recommendation to confer, not later than 1 January 1988, on debts arising from the application of the levies referred to in Articles 49 and 50 of the ECSC Treaty the same preferential treatment as that enjoyed by tax debts; where there were different ranks of preference depending on the tax involved, they should enjoy a special preference of the same rank as that conferred on debts owed to the State in respect of value-added tax . As the Italian Republic had failed to adopt any measures implementing that recommendation, the tribunale was uncertain as to whether that recommendation could, in the absence of such measures, directly confer preferential status under Italian law on debts owed to the ECSC .
6 The tribunale therefore referred the following questions to the Court :
"( 1)Does Recommendation 86/198/ECSC of 13 May 1986, which provides ( in cases of competition between creditors ( Articles 1 and 2 ) ) that Member States which confer on tax debts due to the State preferential treatment in respect of all or part of the debtor' s assets are to confer the same preferential treatment on debts arising from the application of the levies referred to in Articles 49 and 50 of the (( ECSC )) Treaty and that Member States in which tax debts enjoy general or special preference of a different rank depending on the tax involved are to confer on debts arising from the application of ECSC levies preference of the same rank as that conferred on debts in respect of value-added tax, have direct and immediate effect in a Member State so that it may be applied by a national court or tribunal without the need for any subsequent measures giving effect to the recommendation to be adopted by the State to which it is addressed, or does the recommendation retain ( Article 15 of the ECSC Treaty ) its status as a legislative measure which is binding as to the aims to be pursued but leaves the choice of the methods for achieving them to the States to which it is addressed?
( 2)If the recommendation does have direct and immediate effect, does it apply only to debts relating to levies which became due after its adoption ( on 13 May 1986 ) or also to those based on a right which arose earlier?
( 3)If, on the other hand, the recommendation in question does retain its status as a legislative measure which is binding as to the aims to be pursued but leaves the choice of the methods for achieving them to the States to which it is addressed, is the time-limit of 1 January 1988 laid down in Article 4 for compliance with the recommendation by the Member States mandatory so that, in the light of the principles laid down by the Corte Costituzionale ( Constitutional Court ), failure to comply with that time-limit raises doubts as to the constitutionality of the legal provisions relating to preferential treatment ( because of contravention of Article 11 of the Constitution ) in so far as they do not extend preferential treatment for tax debts to debts arising in respect of the levies referred to in Articles 49 and 50 of the (( ECSC )) Treaty?"
7 Reference is made to the Report for the Hearing for a fuller account of the facts of the main proceedings, the course of the procedure and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .
The jurisdiction of the Court
8 It should be noted at the outset that, contrary to the view expressed by Busseni, the measure to be interpreted is not an opinion but a recommendation of the Commission adopted under Article 14 of the ECSC Treaty, that is to say, a measure which, according to that article, is binding as to the aims to be pursued but leaves the choice of the appropriate methods for achieving those aims to those to whom it is addressed . The arguments made by Busseni on this point are therefore devoid of substance in any event .
9 It is, however, necessary to examine the jurisdiction of the Court to deal with a reference for a preliminary ruling on the interpretation of the ECSC Treaty or of measures adopted under it .
10 Article 31 of the ECSC Treaty, Article 164 of the EEC Treaty and Article 146 of the EAEC Treaty contain substantially identical provisions, despite purely formal differences in drafting between the first and the other two Treaties, under which the Court is to ensure that the law is observed in the interpretation and application of those Treaties .
11 However, while both the EEC and the EAEC Treaties, in Article 177 and Article 150 respectively, define in identical terms the conditions under which the Court may be called on to exercise its power to interpret Community law by way of questions referred for a preliminary ruling by national courts or tribunals, the ECSC Treaty contains no express provision governing the exercise by the Court of a power of interpretation .
12 On the other hand, the ECSC Treaty does expressly provide in Article 41 that "the Court shall have sole jurisdiction to give preliminary rulings on the validity of acts of the High Authority and of the Council where such validity is in issue in proceedings brought before a national court or tribunal ".
13 Different though their actual terms may be, Article 41 of the ECSC Treaty, Article 177 of the EEC Treaty and Article 150 of the EAEC Treaty - treaties which were concluded at different times, the ECSC having been signed in 1951 and the EEC and EAEC Treaties in 1957 - all express a twofold need : to ensure the utmost uniformity in the application of Community law and to establish for that purpose effective cooperation between the Court of Justice and national courts .
14 It should also be observed that interpretation and appraisal of validity are related matters . In the first place, although Article 41 of the ECSC Treaty refers only to the jurisdiction of the Court to give preliminary rulings on the validity of acts of the Commission and the Council, the appraisal of the validity of a measure necessarily presupposes its interpretation . Secondly, with regard to the application of Article 177 of the EEC Treaty, which makes no express provision in this respect, the Court has ruled that it alone has jurisdiction to declare a measure of the Community institutions to be invalid ( judgment of 22 October 1987 in Case 314/85 Foto-Frost v Hauptzollamt Luebeck-Ost (( 1987 )) ECR 4199 ), a result corresponding to the express provision of Article 41 of the ECSC Treaty .
15 Although national courts, because of the nature of the powers which the ECSC Treaty has devolved on the Community authorities, in particular the Commission, less often have occasion to apply that Treaty and measures adopted under it and, consequently, to consider their interpretation, cooperation in this area between national courts and the Court of Justice is just as necessary in the context of the ECSC Treaty as it is in that of the EEC and EAEC Treaties, since the requirement of ensuring uniformity in the application of Community law is equally cogent and equally obvious .
16 It would therefore be contrary to the objectives and the coherence of the Treaties if the determination of the meaning and scope of rules deriving from the EEC and EAEC Treaties were ultimately a matter for the Court of Justice, as is provided in identical terms by Article 177 of the EEC Treaty and Article 150 of the EAEC Treaty, thereby enabling those rules to be applied in a uniform manner, but such jurisdiction in respect of rules deriving from the ECSC Treaty were to be retained exclusively by the various national courts, whose interpretations might differ, and the Court of Justice were to have no power to ensure that such rules were given a uniform interpretation .
17 It follows from all the above considerations that the Court has jurisdiction to rule on the questions referred to it by the tribunale di Brescia .
The first question
18 In its first question, the national court seeks to ascertain whether the ECSC may, in the absence of national implementing measures, rely on Articles 1 and 2 of the recommendation so that certain of the debts owed to it arising from the application of the levies referred to in Articles 49 and 50 of the ECSC Treaty may, in the cases of competition between creditors provided for under national legislation, enjoy general or special preference of the same rank as that conferred by the law of the State in question on debts owed to it in respect of VAT .
19 In the view of the Commission, the conditions laid down by the Court under which the provisions of a directive which a Member State has failed to transpose into its domestic legal system may be relied on before a national court or tribunal are satisfied .
20 Busseni, on the other hand, argues that the ECSC cannot, in the absence of national measures transposing the recommendation, rely on its provisions before the tribunale .
21 As a preliminary point, it should be noted that the rules evolved by the Court to determine the effects of a directive which has not been transposed into national law apply in equal measure to recommendations adopted under the ECSC Treaty, which are measures of the same kind, binding upon those to whom they are addressed as to the result to be achieved but leaving to them the choice of form and methods to achieve that result .
22 According to the case-law of the Court, where the Community authorities have, by means of a directive, placed Member States under a duty to adopt a certain course of action, the effectiveness of such a measure would be diminished if individuals and national courts were precluded from taking it into consideration as an element of Community law . Consequently, a Member State which has not adopted the implementing measures required by the directive within the prescribed period may not plead, as against individuals, its own failure to perform the obligations which the directive entails . Thus, wherever the provisions of a directive appear, as far as their subject-matter is concerned, to be unconditional and sufficiently precise, those provisions may, in the absence of implementing measures adopted within the prescribed period, be relied upon as against any national provision which is incompatible with the directive or in so far as the provisions define rights which individuals are able to assert against the State ( see, in particular, the judgment of 19 January 1982 in Case 8/81 Becker v Finanzamt Muenster-Innenstadt (( 1982 )) ECR 53 ).
23 Such a possibility, however, exists only as against the Member State concerned and other public authorities . A directive cannot therefore, of itself, impose obligations on an individual, and a provision of a directive may not be relied upon as such against such a person ( judgment of 26 February 1986 in Case 152/84 Marshall v Southampton and South-West Hampshire Area Health Authority (( 1986 )) ECR 723 ).
24 In cases such as the present, where the ECSC' s claims may compete not only with those of the Member State concerned but also with those of other creditors of the undertaking, the application of the recommendation, far from operating solely against the Member State to which it is addressed, may also reduce the prospects of certain of those other creditors of being paid .
25 If the claim made by the ECSC before the competent national authorities that some of the debts owed to it should be classified on the basis of the regulation as preferential debts were upheld, that would affect not only the position of the Member State in question but would inevitably alter the relative position of the various creditors in the bankruptcy proceedings . It is thus the rights of all those other creditors of the undertaking whose debts do not enjoy any preferential status or enjoy only a preferential status equal to or lower than that of debts owed to the Member State in question in respect of VAT that would be directly affected if this latter preferential status were conferred on certain debts owed to the ECSC .
26 It follows from all the foregoing that the ECSC may, if the recommendation in question has the characteristics which would allow a directive which has not been transposed to be relied on before national courts and tribunals, rely on that recommendation as against a State, subject to the condition that the grant of preferential status to debts owed to the ECSC is effective only as against that State, the Community' s claims being placed on the same footing as any claims by the State . The preferential status granted to the ECSC may not, however, prejudice the rights of creditors other than the State under national legislation on the rights of creditors in the absence of the recommendation .
27 It thus remains to be considered whether the recommendation has the characteristics which would allow it to be relied on before the national courts, that is to say, whether its provisions are unconditional and sufficiently precise .
28 In the first place, the obligation which Articles 1 and 2 of the recommendation impose on Member States to confer preferential treatment on debts owed to the ECSC which arise from the application of the levies referred to in Articles 49 and 50 of the ECSC Treaty is sufficiently precise .
29 Secondly, while the second paragraph of Article 4 of the recommendation, which states that its provisions are to be applied to proceedings in progress at the date of its implementation, obliges Member States to ensure "by means of appropriate transitional measures, adequate legal safeguards for the rights of other creditors of the debtor undertaking", and thereby imposes a condition on the implementation of the directive, it is clear from its own terms that that provision refers only to the protection of the rights of creditors other than the ECSC and the State in question .
30 The reply to the first question must therefore be that the recommendation must be interpreted as meaning that in the absence of national implementing measures the ECSC may rely on that recommendation, once the period laid down for its implementation has expired, as against a Member State which has failed to implement it, subject to the condition that the preferential status of the debts owed to it may be recognized only as against that State, the Community' s claims being placed on the same footing as any claims by the State, and that it does not prejudice the rights of creditors other than the State under national legislation on the rights of creditors in the absence of the recommendation .
The second question
31 In its second question the national court asks whether, in so far as the ECSC is entitled to require that the recommendation be applied within the legal system of a Member State, it confers preferential treatment on all debts owed by undertakings to the Community by virtue of the levies referred to in Articles 49 and 50 of the ECSC Treaty irrespective of the date on which they arose, or only on those which became due after its adoption .
32 Member States were required under the first paragraph of Article 4 of the recommendation to bring into force the measures necessary to transpose that recommendation into their legal systems "not later than 1 January 1988 ". Consequently, its provisions could, as has already been stated, be relied on before national courts and tribunals, in the absence of implementing measures, as from 2 January 1988 .
33 Under the second paragraph of Article 4, "Member States shall provide that these (( measures )) are to be applied to proceedings in progress on the date of actual implementation of this Recommendation ". It is clear from that wording that the recommendation could be relied on before national courts and tribunals in all bankruptcy proceedings which had not yet been concluded by 2 January 1988 .
34 With regard to the specific question referred, that is to say, whether the recommendation may have the effect of conferring preferential status on debts owed to the ECSC which arose prior to its adoption, it should be noted that, as the seventh recital in the preamble to the recommendation makes clear, the Commission intended by that provision that the ECSC should be able to exercise the preferential right which the recommendation confers "in proceedings still in progress at the date" of its actual implementation, "in order to ensure the most extensive possible recovery of debts arising from the application of levies in the years preceding" its adoption .
35 Contrary to the view taken by Busseni, the principle of protection of legitimate expectations cannot prevent preferential treatment from being conferred on debts which arose prior to the entry into force of the measure which introduced such treatment, since that principle cannot, as the Court has already ruled, be extended to the point of generally preventing new rules from applying to the future effects of situations which arose under the earlier rules ( judgment of 14 January 1987 in Case 278/84 Federal Republic of Germany v Commission (( 1987 )) ECR 1 ).
36 The reply to the second question must therefore be that the second paragraph of Article 4 of the recommendation must be interpreted as meaning that the ECSC may claim preferential treatment, in the circumstances and subject to the conditions specified above, for all debts owed to it by undertakings in respect of the levies referred to in Articles 49 and 50 of the ECSC Treaty, irrespective of the date on which they arose, if those debts are still provable in the liquidation of the undertaking in accordance with the provisions of national law governing the rights of creditors .
The third question
37 In its third question, the national court asks in substance whether the time-limit of 1 January 1988, the date by which the recommendation was to be implemented by the Member States, is mandatory in nature .
38 As the Court has already ruled ( judgment of 19 January 1982 in Becker, cited above ), it is clear from the third paragraph of Article 189 of the EEC Treaty that Member States to which a directive is addressed are under an obligation to achieve a result, which must be fulfilled before the expiry of the period laid down by the directive itself .
39 It follows from this principle, which applies to recommendations adopted under Article 14 of the ECSC Treaty, that the time-limit of 1 January 1988, the date by which Member States were required under the first paragraph of Article 4 to have transposed the recommendation, is mandatory in nature .
40 Failure by a Member State to transpose the recommendation within the period thus prescribed therefore constitutes an infringement of Community law .
41 The reply to the third question must therefore be that the first paragraph of Article 4 of the recommendation must be interpreted as meaning that the time-limit of 1 January 1988 is mandatory in nature and that failure to comply with it constitutes an infringement of Community law .
Decision on costs
Costs
42 As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court .
Operative part
On those grounds,
THE COURT,
in answer to the questions referred to it by the tribunale di Brescia, by order of 28 April 1988, hereby rules :
( 1)Commission Recommendation 86/198/ECSC of 13 May 1986, on the establishment of preferential treatment for debts in respect of levies on the production of coal and steel, must be interpreted as meaning that in the absence of national implementing measures the ECSC may rely on that recommendation, once the period laid down for its implementation has expired, as against a Member State which has failed to implement it; however, the preferential status of the debts owed to it may be recognized only as against that State, the Community' s claims being placed on the same footing as any claims by the State, and does not prejudice the rights of creditors other than the State under national legislation on the rights of creditors in the absence of the recommendation .
( 2)The second paragraph of Article 4 of the recommendation must be interpreted as meaning that the ECSC may claim preferential treatment, in the circumstances and subject to the conditions specified above, for all debts owed to it by undertakings in respect of the levies referred to in Articles 49 and 50 of the ECSC Treaty, irrespective of the date on which they arose, if those debts are still provable in the liquidation of the undertaking in accordance with the provisions of national law governing the rights of creditors .
( 3)The first paragraph of Article 4 of the recommendation must be interpreted as meaning that the time-limit of 1 January 1988 is mandatory in nature and that failure to comply with it constitutes an infringement of Community law .
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