## Facts

- Two individuals serving as bankruptcy trustees administered insolvent estates under a statutory priority scheme that clearly favored certain employee wage claims but did not expressly specify the priority treatment of severance-pay claims.
- The Federal Labour Court developed case law treating severance pay as enjoying elevated priority in insolvency, reasoning from contemporary social-policy considerations and the constitutional “social state” principle.
- Lower labor courts followed that approach, affecting distributions in insolvency proceedings and the trustees’ administration of the estates.
- The trustees filed constitutional complaints challenging the labor-court decisions as an impermissible judicial alteration of the legislatively designed priority structure.

## Issues

1. Whether a supreme ordinary court may, consistent with constitutional separation-of-powers and rule-of-law constraints, substantially re-rank insolvency priorities through judicial interpretation grounded in constitutional values and social policy.
2. Whether using the social-state principle as a basis to elevate severance-pay priority exceeds permissible interpretation when the statutory text and structure suggest a different priority scheme or leave the matter unresolved.
3. Whether abrupt, court-driven reordering of creditor priorities infringes constitutionally protected interests implicated in legal certainty and economic/professional freedom (as asserted by the trustees).

## Decision

- The court treated authoritative interpretation of statutes as a core judicial function, including limited judicial development of the law where statutory gaps or tensions exist.
- The court emphasized constitutional limits on judicial lawmaking: interpretation and judicial development must remain tied to the statute’s discernible text, structure, and legislative choices.
- Constitutional principles such as the social-state commitment may inform interpretation, but do not authorize courts to replace a statutory priority framework with a policy-preferred alternative.
- The decision is chiefly relied on for articulating the boundary between permissible interpretation and unconstitutional judicial substitution for legislative action in economically significant private-law regimes.

## Legal Principles

- Courts have constitutional responsibility to give binding interpretations of legal norms, but that responsibility does not confer general power to legislate through adjudication.
- Judicial development of the law is constitutionally permissible only within limits set by the rule of law, separation of powers, and fidelity to the legislature’s identifiable normative decisions.
- Constitutional value commitments (including the social-state principle) may guide interpretation, especially in protecting weaker parties such as employees, but must be applied in a manner consistent with statutory design.
- Legal certainty constrains major, judge-made shifts in the practical operation of statutory priority systems that affect expectations and distributions in insolvency.

## Conclusion

The court framed judicial interpretation as authoritative yet constitutionally bounded, allowing consideration of social-state values while requiring that any judicial development of insolvency priorities remain anchored in the legislature’s statutory scheme rather than substituting judicial policy choices for legislative decisions.


In re Constitutional Complaints of Two Bankruptcy Trustees, BVerfG (Ger.) (Oct. 18, 1983)