The author of this post is Jorg Sladič, associate professor of International and European Law at the European Faculty of Law in Ljubljana.
On 11 August 2020, the Slovenian Supreme Court dismissed an appeal challenging the enforcement of an Austrian judgement compelling the judgment debtor to pay levies to the Austrian Construction Workers’ Annual Leave and Severance Pay Fund, known as BUAK (Bauarbeiter-Urlaubs- und Abfertigungskasse). The sums (claims for wage supplements regarding annual leave pay) to be paid to BUAK even though rather a matter of Austrian public law are under interpretation of Brussels I bis Regulation a civil and commercial matter (case Cpg 8/2020, ECLI:SI:VSRS:2020:CPG.8.2020).
Facts
A Slovenian judgment debtor was condemned by an Austrian court upon application of the Austrian person of public law BUAK to pay a sum of money as capital and a levy for claims for wage supplements regarding annual leave to BUAK on 3 May 2018.
The Austrian judgment-creditor moved to enforce the judgment. A Slovenian court granted a writ of execution on 16 June 2019. The judgement-debtor appealed and the appeal arrived at the Slovenian Supreme Court and raised among others a plea in law according to which such an Austrian judgement is contrary to Slovenian public policy. As it was alleged that the liabilities to be paid under the Austrian judgement were already paid under Slovenian law, the enforcement would mean a double payment of the same obligation. Anyhow, according to the judgment-debtor the said Austrian judgment is not a civil or commercial matter governed by Brussels I bis Regulation as the judgment-creditor BUAK is a legal person of public law, the obligation to be paid under the said Austrian judgement (claim for wage supplements regarding annual leave pay) is an obligation of public law or even a levy
Ruling
The Supreme Court dismissed the appeal on the following grounds.
Civil and Commercial Matters
Article 1(1) of the Brussels I Regulation provides that it applies to civil and commercial matters, but does not cover tax, customs or administrative matters or the State’s liability for acts and omissions in the exercise of State authority (acta iure imperii). Point (c) of the second paragraph of Article 1 of the Regulation explicitly states that it does not apply to social security.
As the Court of First Instance rightly explained, the question of the applicability of the Brussels I bis Regulation has already been settled by the Court of Justice in a preliminary ruling in the case of Korana, decided in 2019 (Case C-579/17). The Court of Justice clarified that the term “civil and commercial matters” must be interpreted autonomously under the regulation and that the fact that BUAK has the status of a collective body governed by public law is not decisive. The legal basis of the relationship from which the claim originates shall be decisive.
The employer’s obligation to pay wage supplements regarding annual leave claimed by BUAK before the Austrian forum is inextricably linked to the employees’ right to annual leave paid under civil law, so the nature of BUAK’s claim is also that of a right under civil law. In addition, a distinction must be made between cases where BUAK itself can issue a certificate of unpaid debts, which is an enforceable title, and cases – such as the case under consideration – where BUAK has to claim unpaid wage supplements regarding annual leave belonging to posted workers not having their habitual place of work in Austria before a court, which is also an argument in favour of the nature of the claim as being a claim of civil law.
The Court of Justice of the EU has in addition also ruled that this is not a benefit in the sense of the“social security” exception, which would also be excluded from the scope of the Brussels I bis Regulation. A social security benefit exists where it would be granted to beneficiaries on the basis of a legally defined position without any individual or discretionary assessment of personal needs. In the present case, however, the issue is the remuneration for annual leave, which in turn depends on the wage supplements, which are the legal basis for employer’s payment. Remuneration for annual leave in connection with work performed by a posted worker must be paid by the employer, even if the payment is made through the BUAK.
Decisions of the Court of Justice of the EU on preliminary questions are binding on the national courts of the Member States, therefore the applicants’ disagreement with the position of the Court of Justice cannot lead to different conclusions than those already reached by the Court of First Instance in the contested order. The Brussels I bis Regulation also applies to claims of BUAK for wage supplements regarding annual leave of posted workers, as these claims are of a civil nature.
Ordre public defense
The applicants’ plea that the levies or contributions claimed by the judgement-creditor in the enforcement proceedings referring to the Austrian judgment had already been paid in Slovenia, as a result the recognition and enforcement of the judgment of the Republic of Austria is allegedly contrary to Slovenian ordre public does not have any merits. In the appeal, the appellants (judgment-debtors) themselves claim that the Slovenian legal order does not provide for the payment wage supplements regarding annual leave of posted workers in the construction sector, as foreseen in Austrian law, therefore as a consequence the performance of obligations under the challenged judgement cannot already notionally constitute a double payment of the same claim. The mere fact that the Slovenian legal system does not legislate on a certain contribution or that it enacts contributions differently does not mean that the payment of a claim under the impugned judgment is contrary to the Slovenian ordre public. Namely, ordre public does not include all mandatory provisions of domestic law, but only those imperative legal norms and moral rules, the violation of which would endanger the integrity of the Slovenian legal order. However, the payment of contributions in favour of workers does not justify such opposition.
Conclusion
The ruling does completely comply with the judgment of the Court of Justice in the 2019 Korana case. The Slovenian and the ECJ cases both refer to Slovenian posted workers in the construction sector in Austria (Slovenia and Austria are neighbouring countries). At the economic level both cases show how the freedom of movement and freedom to provide services operate between East- and West EU. Whereas the Korana case concerned a litigation before the Labour and Social Court of Vienna, the discussed Slovenian case shows the next stage, i.e. the enforcement of Austrian rulings in Slovenia.
The only surprising element in this case is the timing. The Korana case was decided by the ECJ on 28 February 2019, the first ruling by the highest national court of another EU Member State where an enforcement of Austrian judgements based on that ruling is sought was handed down already on 11 August 2020. Considering the translation issues, the service of judicial and extrajudicial documents in civil or commercial matters between two EU Member States and then the Coronavirus pandemics, the cross-border cooperation between Slovenia and Austria seems to work quite fast.
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The author of this post is Jorg Sladič, associate professor of International and European Law at the European Faculty of Law in Ljubljana.
On 11 August 2020, the Slovenian Supreme Court dismissed an appeal challenging the enforcement of an Austrian judgement compelling the judgment debtor to pay levies to the Austrian Construction Workers’ Annual Leave and Severance Pay Fund, known as BUAK (Bauarbeiter-Urlaubs- und Abfertigungskasse). The sums (claims for wage supplements regarding annual leave pay) to be paid to BUAK even though rather a matter of Austrian public law are under interpretation of Brussels I bis Regulation a civil and commercial matter (case Cpg 8/2020, ECLI:SI:VSRS:2020:CPG.8.2020).
Facts
A Slovenian judgment debtor was condemned by an Austrian court upon application of the Austrian person of public law BUAK to pay a sum of money as capital and a levy for claims for wage supplements regarding annual leave to BUAK on 3 May 2018.
The Austrian judgment-creditor moved to enforce the judgment. A Slovenian court granted a writ of execution on 16 June 2019. The judgement-debtor appealed and the appeal arrived at the Slovenian Supreme Court and raised among others a plea in law according to which such an Austrian judgement is contrary to Slovenian public policy. As it was alleged that the liabilities to be paid under the Austrian judgement were already paid under Slovenian law, the enforcement would mean a double payment of the same obligation. Anyhow, according to the judgment-debtor the said Austrian judgment is not a civil or commercial matter governed by Brussels I bis Regulation as the judgment-creditor BUAK is a legal person of public law, the obligation to be paid under the said Austrian judgement (claim for wage supplements regarding annual leave pay) is an obligation of public law or even a levy
Ruling
The Supreme Court dismissed the appeal on the following grounds.
Civil and Commercial Matters
Article 1(1) of the Brussels I Regulation provides that it applies to civil and commercial matters, but does not cover tax, customs or administrative matters or the State’s liability for acts and omissions in the exercise of State authority (acta iure imperii). Point (c) of the second paragraph of Article 1 of the Regulation explicitly states that it does not apply to social security.
As the Court of First Instance rightly explained, the question of the applicability of the Brussels I bis Regulation has already been settled by the Court of Justice in a preliminary ruling in the case of Korana, decided in 2019 (Case C-579/17). The Court of Justice clarified that the term “civil and commercial matters” must be interpreted autonomously under the regulation and that the fact that BUAK has the status of a collective body governed by public law is not decisive. The legal basis of the relationship from which the claim originates shall be decisive.
The employer’s obligation to pay wage supplements regarding annual leave claimed by BUAK before the Austrian forum is inextricably linked to the employees’ right to annual leave paid under civil law, so the nature of BUAK’s claim is also that of a right under civil law. In addition, a distinction must be made between cases where BUAK itself can issue a certificate of unpaid debts, which is an enforceable title, and cases – such as the case under consideration – where BUAK has to claim unpaid wage supplements regarding annual leave belonging to posted workers not having their habitual place of work in Austria before a court, which is also an argument in favour of the nature of the claim as being a claim of civil law.
The Court of Justice of the EU has in addition also ruled that this is not a benefit in the sense of the“social security” exception, which would also be excluded from the scope of the Brussels I bis Regulation. A social security benefit exists where it would be granted to beneficiaries on the basis of a legally defined position without any individual or discretionary assessment of personal needs. In the present case, however, the issue is the remuneration for annual leave, which in turn depends on the wage supplements, which are the legal basis for employer’s payment. Remuneration for annual leave in connection with work performed by a posted worker must be paid by the employer, even if the payment is made through the BUAK.
Decisions of the Court of Justice of the EU on preliminary questions are binding on the national courts of the Member States, therefore the applicants’ disagreement with the position of the Court of Justice cannot lead to different conclusions than those already reached by the Court of First Instance in the contested order. The Brussels I bis Regulation also applies to claims of BUAK for wage supplements regarding annual leave of posted workers, as these claims are of a civil nature.
Ordre public defense
The applicants’ plea that the levies or contributions claimed by the judgement-creditor in the enforcement proceedings referring to the Austrian judgment had already been paid in Slovenia, as a result the recognition and enforcement of the judgment of the Republic of Austria is allegedly contrary to Slovenian ordre public does not have any merits. In the appeal, the appellants (judgment-debtors) themselves claim that the Slovenian legal order does not provide for the payment wage supplements regarding annual leave of posted workers in the construction sector, as foreseen in Austrian law, therefore as a consequence the performance of obligations under the challenged judgement cannot already notionally constitute a double payment of the same claim. The mere fact that the Slovenian legal system does not legislate on a certain contribution or that it enacts contributions differently does not mean that the payment of a claim under the impugned judgment is contrary to the Slovenian ordre public. Namely, ordre public does not include all mandatory provisions of domestic law, but only those imperative legal norms and moral rules, the violation of which would endanger the integrity of the Slovenian legal order. However, the payment of contributions in favour of workers does not justify such opposition.
Conclusion
The ruling does completely comply with the judgment of the Court of Justice in the 2019 Korana case. The Slovenian and the ECJ cases both refer to Slovenian posted workers in the construction sector in Austria (Slovenia and Austria are neighbouring countries). At the economic level both cases show how the freedom of movement and freedom to provide services operate between East- and West EU. Whereas the Korana case concerned a litigation before the Labour and Social Court of Vienna, the discussed Slovenian case shows the next stage, i.e. the enforcement of Austrian rulings in Slovenia.
The only surprising element in this case is the timing. The Korana case was decided by the ECJ on 28 February 2019, the first ruling by the highest national court of another EU Member State where an enforcement of Austrian judgements based on that ruling is sought was handed down already on 11 August 2020. Considering the translation issues, the service of judicial and extrajudicial documents in civil or commercial matters between two EU Member States and then the Coronavirus pandemics, the cross-border cooperation between Slovenia and Austria seems to work quite fast.
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