Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE COURT (Fourth Chamber)

7 May 1998 (1)

(Aid granted by Member States - Meaning - National law providing that only one public utility is relieved of the obligation of observing a rule of general application relating to fixed-term employment contracts)

In Joined Cases C-52/97, C-53/97 and C-54/97,

REFERENCE to the Court under Article 177 of the EC Treaty by the Pretura Circondariale, Trento (Italy), for a preliminary ruling in the proceedings pending before that court between

Epifanio Viscido (C-52/97),

Mauro Scandella and Others (C-53/97),

Massimiliano Terragnolo and Others (C-54/97)

and

Ente Poste Italiane,

on the interpretation of Articles 92(1) and 93 of the EC Treaty,

THE COURT (Fourth Chamber),

composed of: H. Ragnemalm, President of the Chamber, J.L. Murray (Rapporteur), K.M. Ioannou, Judges,

Advocate General: F.G. Jacobs,

Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of: ,

- the Italian Government, by Professor Umberto Leanza, Head of the Legal Service in the Ministry of Foreign Affairs, acting as Agent, and Danilo del Gaizo, Avvocato dello Stato,

- the German Government, by Ernst Röder, Ministerialrat in the Federal Ministry of Economic Affairs, and Bernd Kloke, Oberregierungsrat in the same ministry, acting as Agents,

- the Commission of the European Communities, by Francisco Santaolalla, Principal Legal Adviser, and Dimitris Triantafyllou, of its Legal Service, and Enrico Altieri, a national civil servant seconded to that service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of the Italian Government, represented by Danilo Del Gaizo, and the Commission, represented by Dimitris Triantafyllou and Laura Pignataro, of its Legal Service, at the hearing on 29 January 1998,

after hearing the Opinion of the Advocate General at the sitting on 19 February 1998,

gives the following

Judgment

1. By three orders of 3 February 1997, received at the Court Registry on 7 February 1997, the Pretura Circondariale (District Magistrate's Court), Trento, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty four questions on the interpretation of Articles 92(1) and 93 of that Treaty.

2. Those questions were raised in three sets of proceedings brought by Epifanio Viscido, Mauro Scandella and Others and Massimiliano Terragnolo and Others, against Ente Poste Italiane (Italian Post Office), by which they are employed.

3. In the main proceedings, the plaintiffs object to the fact that Ente Poste Italiane recruited them on the basis of fixed-term contracts. They claim that such contracts should be deemed to have been converted into contracts of indeterminate duration.

4. Under Italian law, employment under fixed-term contracts is permitted only in a number of specified exceptional cases. Article 1 of Law No 230 of 18 April 1962 provides that, subject to certain exceptions specified in the Law, an employment contract is to be considered to be of indeterminate duration. Article 5 of the same Law provides that a worker employed under a fixed-term contract is to enjoy all the advantages accorded within the undertaking to workers employed under contracts of indeterminate duration on a basis proportional to their length of service, provided that the result is not objectively incompatible with the nature of a fixed-term contract.

5. Law No 56 of 28 February 1987 laying down arrangements for the labour market introduced, in relation to certain categories of workers, further exceptions to the principle that fixed-term contracts are prohibited.

6. Article 9(21) of Decree-Law No 510 of 1 October 1996, converted into Law No 608 of 28 November 1996, adopting urgent measures relating to work of social utility, income-support measures and social-welfare measures, provides:

   'Workers employed from 1 December 1994 under a fixed-term contract by Ente Poste Italiane shall have a right of priority, in accordance with the contractual provisions and those of a specific agreement with the trade unions, in the event of staff being taken on for an indeterminate period by Ente Poste Italiane for posts of the same level and/or involving the same duties until 31 December 1996; the workers concerned must give notice of their wish to exercise that right by 30 November 1996. Recruitment of staff under fixed-term contracts of employment by Ente Poste Italiane, from the date on which it was set up until 30 June 1997, shall not give rise to employment relationships of indeterminate duration and shall lapse upon the expiry date of each contract.'

7. In the main proceedings, Ente Poste Italiane contends that, under Article 9(21) of Decree-Law No 510, the plaintiffs' employment contracts are not subject to Laws Nos 230 and 56.

8. For their part, the plaintiffs in the main proceedings maintain that the rules at issue constitute State aid which, as such, must be subject to the procedures and to the verification of compatibility provided for in Articles 92 and 93 of the Treaty.

9. Considering that an interpretation of those provisions is needed for it to give judgment, the Pretura Circondariale has stayed proceedings and referred the following four questions to the Court of Justice for a preliminary ruling:

   '(1) whether a legal provision which relieves a particular public economic entity from the obligation of complying with the generally applicable legislation concerning fixed-term employment contracts falls within the scope of "aid granted by a Member State or through State resources in any form whatsoever";

   (2) whether, if question (1) is answered in the affirmative, an aid of that kind should be subject to the preliminary examination procedure under Article 93(3) of the Treaty;

   (3) whether, where that procedure has not been followed, the prohibition of an aid of that kind can be regarded as directly applicable within the domestic law of the Italian State;

   (4) whether, in the event of question (3) being answered in the affirmative, such a prohibition may be relied on in a dispute between the public economic entity and an individual who complains of failure to apply to him the general legislation concerning fixed-term employment in order to secure conversion of his employment relationship into one of indeterminate duration and/or compensation for damage.'

10. By order of the President of the Court of Justice of 25 February 1997, Cases C-52/97, C-53/97 and C-54/97 were joined for the purposes of the oral and written procedure and judgment.

11. By its first question the national court asks essentially whether a national provision relieving only one undertaking of the obligation of complying with the generally applicable legislation concerning fixed-term contracts constitutes State aid within the meaning of Article 92(1) of the Treaty.

12. The national court observes that, since Ente Poste Italiane is under no obligation to conclude employment contracts of indeterminate duration, it enjoys a flexibility not available to other undertakings operating in the same sector.

13. In that connection, it should be pointed out that only advantages granted directly or indirectly through State resources are to be considered as aid within the meaning of Article 92(1). The distinction made in that provision between 'aid granted by a Member State' and aid granted 'through State resources' does not signify that all advantages granted by a State, whether financed through State resources or not, constitute aid but is intended merely to bring within that definition both advantages which are granted directly by the State and those granted by a public or private body designated or established by the State (see Case 82/77 Openbaar Ministerie of the Netherlands v Van Tiggele [1978] ECR 25, paragraphs 24 and 25, Case C-72/91 Sloman Neptun v Bodo Ziesemer [1993] ECR I-887, paragraph 19, and Case C-189/91 Kirsammer-Hack v Sidal [1993] ECR I-6185, paragraph 16).

14. In this case, it must be observed that non-application of generally applicable legislation concerning fixed-term employment contracts to a single undertaking does not involve any direct or indirect transfer of State resources to that undertaking.

15. It follows that a provision of the kind at issue in the main proceedings does not constitute a means of directly or indirectly granting an advantage through State resources.

16. The answer to the first question must therefore be that a national provision which relieves only one undertaking of the obligation of complying with the generally applicable legislation concerning fixed-term employment contracts does not constitute State aid within the meaning of Article 92(1) of the Treaty.

17. In view of the answer given to the first question, it is unnecessary to answer the second, third and fourth questions.

    Costs

18. The costs incurred by the Italian and German Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fourth Chamber),

in answer to the questions referred to it by the Pretura Circondariale, Trento, by order of 3 February 1997, hereby rules:

A national provision which relieves only one undertaking of the obligation of complying with the generally applicable legislation concerning fixed-term employment contracts does not constitute State aid within the meaning of Article 92(1) of the EC Treat.

RagnemalmMurray Ioannou

Delivered in open court in Luxembourg on 7 May 1998.

R. Grass H. Ragnemalm

Registrar President of the Fourth Chamber

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1: Language of the case: Italian.