Setting aside of a judgment due to violation of the right to be heard in proceedings for recovery of short-time work compensation

Facts

Facts and procedural history:

The sole proprietor [A.A.] received short-time work compensation amounting to a total of CHF 171,032.80 in 2020 and from January to April 2021. The State Secretariat for Economic Affairs (SECO) initiated an employer inspection, for which a meeting was scheduled for 14 October 2021. The co-director of the company, [D.] , requested a postponement without stating reasons, after which the auditing body unsuccessfully attempted to arrange a new date. With a revision order dated 8 February 2022, SECO revoked the company’s entitlement to short-time work compensation for the periods in question on the grounds of uncontrollability and demanded repayment of the unduly received benefits. The appeal decision dated 18 March 2022 confirmed this order.

On 18 April 2022, [D.] filed an appeal with the Federal Administrative Court seeking waiver of the repayment. Following the death of [A.A.] on 14 July 2022, the legal heirs [B.A.] and [C.A.] took over as appellants. With a rejoinder dated 17 January 2023, they requested that the repayment order be set aside to the extent of CHF 152,791.05 and that the repayment amount be reduced to CHF 18,241.75. SECO submitted a statement on 8 March 2023, which was served on the heirs on 9 March 2023. With a judgment dated 17 March 2023, the Federal Administrative Court dismissed the appeal. The heirs then filed an appeal in public law matters with the Federal Supreme Court, seeking to have the judgment set aside and the matter remitted for reassessment or, alternatively, for the repayment amount to be reduced.

Considerations

1. Continuation of proceedings following the death of the sole proprietor:

The Federal Supreme Court first examined the admissibility of continuing the proceedings following the death of [A.A.] . Pursuant to Art. 6 para. 2 FCPA in conjunction with Art. 71 FSCA, proceedings are suspended by operation of law upon the death of a party, but may be continued if the estate can no longer be disclaimed or official liquidation has been ordered. Continuation is also possible in urgent cases. The Federal Administrative Court considered this to be an urgent case since the heirs had not yet accepted the estate and the competent cantonal authority had extended the deliberation period. The Federal Supreme Court confirmed this assessment and continued the proceedings.

2. Scope of review and procedural principles:

The Federal Supreme Court recalled that, pursuant to Art. 95 and 96 FSCA, it reviews appeals for legal violations and applies the law ex officio (Art. 106 para. 1 FSCA). It is bound by the factual findings of the lower court (Art. 105 para. 1 FSCA), but may correct or supplement them ex officio if they are manifestly incorrect or based on a legal violation and could be decisive for the outcome of the proceedings (Art. 97 para. 1, Art. 105 para. 2 FSCA).

3. Violation of the right to be heard by the Federal Administrative Court:

The appellants alleged a violation of their right to file a rejoinder pursuant to Art. 29 para. 2 Cst. and Art. 6 ECHR. They claimed that the statement submitted by SECO on 8 March 2023 had been served on them only on 10 March 2023 and that they had filed an unsolicited rejoinder on 20 March 2023. The contested judgment, however, had already been issued on 17 March 2023 and served on them on 23 March 2023. The Federal Administrative Court had not taken the rejoinder into account, thereby depriving the appellants of their right to file a rejoinder.

The Federal Supreme Court confirmed that the right to be heard, according to consistent case law, includes the right to comment on the statements of other parties to the proceedings (FSCA 133 I 98 para. 2.1). This right exists regardless of whether the submission contains new facts or legal arguments. What is decisive is that the party is given the opportunity to comment before the court renders its decision. The Federal Supreme Court held that there is a violation of the right to file a rejoinder if the court renders a decision within less than ten days after serving a statement without granting the party sufficient time to file…