• In the case of Ferreira da Silva e Brito, the obligation to seek preliminary rulings from the European Court of Justice for the interpretation of concepts was explored

Facts of Case C-160/14 Ferreira da Silva e Brito, Judgment of 9 September 2015

  • Following the winding up of a subsidiary, the Supreme Court of Portugal held that the majority shareholder would take over its activities
  • The court held that this did not constitute as the transferring of a business under the Acquired Rights Directive of 2001
  • As it did not come under such, employees of the now wound-up subsidiary were made redundant and were not entitled to compensation, nor were their contracts reinstated
  • Employees asked the Supreme Court to refer to the European Court of Justice for a preliminary ruling, but the Portuguese court did not believe there was material in doubt for the interpretation to be necessary
  • The employees made the claim that the Supreme Court’s judgment was incompatible with the Directive, and sought damages

Issues in Case C-160/14 Ferreira da Silva e Brito, Judgment of 9 September 2015

  • Was the Supreme Court of Portugal correct in their judgment and their refusal to apply to the European Court of Justice for an interpretation of the relevant Directive? Or,
  • Were the employees correct in seeking an application for the interpretation of the EU Directive regarding acquired rights?

Held by the European Court of Justice

  • The Portuguese Supreme Court had an obligation to seek a preliminary ruling in respect of the transferring of a business. Therefore, the State of Portugal were made to pay the damages of the ex-employees.

Findings of the Court

Article 1(1) of Directive 2001/23: transfer of a business depends on the activities undertaken by the new owner

  • “the retention of a functional link of that kind between the various elements transferred allows the transferee to use them — even if they are integrated, after the transfer, in a new and different organisational structure — to pursue an identical or analogous economic activity” [34]
  • “must be interpreted as meaning that the concept of a ‘transfer of a business’ encompasses a situation in which an undertaking active on the charter flights market is wound up by its majority shareholder … the latter undertaking then takes the place of the undertaking that has been wound up by taking over aircraft leasing contracts and ongoing charter flight contracts, carries on activities previously carried on by the undertaking that has been wound up, reinstates some employees …” [35]

The need for legal certainty should not interfere with the right of individuals seeking liability from the State for loss and damage caused as a result of:

  • “infringement of EU law by a court or tribunal against whose decisions there is no judicial remedy under national law must be interpreted as precluding a provision of national law which requires, as a precondition, the setting aside of the decision given by that court or tribunal which caused the loss or damage, when such setting aside is, in practice, impossible.” [60]