Facts

The [A. GmbH] (later in liquidation) based in Lucerne, a company active in the travel industry whose registered shares were held by [A. GmbH] Deutschland, generated annual revenue of over CHF 5 million in the relevant period. On 16 March 2021, it applied to the Department of Finance of the Canton of Lucerne for non-repayable hardship contributions of CHF 2.2 million to address the economic consequences of the Covid-19 pandemic. By decision of 28 June 2021, the Department of Finance rejected the application on the grounds that the company’s wage costs were not predominantly incurred in Switzerland. The appeal against this decision was dismissed by the Court of Appeal of the Canton of Lucerne, 4th Division, by judgment of 29 December 2021.

On 7 February 2022, the appellant filed an appeal in public law matters with the Federal Supreme Court, seeking the annulment of the lower court’s judgment and the granting of the hardship assistance. In the alternative, it requested that the matter be referred back to the Canton of Lucerne for the assessment and payment of the hardship assistance. The Canton of Lucerne requested that the appeal be dismissed. During the federal court proceedings, bankruptcy proceedings were opened against the appellant on 3 May 2022 and the bankruptcy proceedings were terminated on 18 July 2022 due to lack of assets. The termination was published in the Swiss Official Gazette of Commerce (SOGC) on 22 July 2022.

Considerations

The Federal Supreme Court first examined its jurisdiction and the admissibility requirements of its own motion. It found that, despite the bankruptcy and the termination of the bankruptcy proceedings due to lack of assets, the appellant still had a legitimate interest in the annulment of the contested judgment, as the company will only be deleted from the Commercial Register ex officio on 22 July 2024 and liquidation must continue until then. In addition, assets that can be realised may still emerge after the termination of the bankruptcy proceedings, which could lead to the re-registration of the company and the conduct of bankruptcy proceedings. The appellant therefore remained entitled to file the appeal.

The Federal Supreme Court then examined whether there was a legal entitlement to the Covid-19 hardship assistance. It recalled that the federal regulations (Covid-19 Act and Covid-19 Hardship Ordinance) do not themselves grant any entitlement to hardship measures, but merely define the conditions for cantonal co-financing by the Confederation. The cantons are free to decide whether and under what conditions to grant hardship measures. The appellant based its application on the Ordinance of the Canton of Lucerne on Hardship Measures (NELO/LU), which refers to the subsidiary cantonal law. The Federal Supreme Court analysed whether the NELO/LU provides for a subsidy entitlement within the meaning of Art. 83 lit. k FSCA. The decisive factor is whether the material conditions for the granting of the subsidies are sufficiently precise and do not leave any discretion to the authority.

The Federal Supreme Court concluded that the NELO/LU does not create a subsidy entitlement. Although the ordinance itself does not contain an explicit “may-provision”, it is governed by the framework provision of the Economic Promotion Act of the Canton of Lucerne, which provides for discretionary grants. In addition, the NELO/LU contains a budget reservation, making the granting of funds dependent on the availability of the approved credits. The material conditions for the granting of hardship assistance, in particular the requirement…