JUDGMENT OF 15. 12. 1982 — CASE 151/79 JUDGMENT OF THE COURT (FIRST CHAMBER)
In Case 158/79
THE COURT (First Chamber) composed of: A. O'Keeffe, President of Chamber, G. Bosco and T. Koopmans, Judges, Advocate General: F. Capotorti Registrar: P. Heim
gives the following
JUDGMENT
Facts and Issues
The facts of the case and the conclusions and arguments of the parties put forward during the written procedure may be summarized as follows:
I — Facts and written procedure
1. In fixing the weighting referred to in Article 64 of the Staff Regulations, the Council and the Commission have, since 1967, used the following procedure for comparing the level of prices between Brussels and the various other places of employment. The Statistical Office of the European Communities, in conjunction with the competent national offices, carries out regular price surveys in respect of goods and services considered as representing typical items of household expenditure for officials in the various places of employment. In respect of each item the relationship is calculated between the price in Brussels and the price prevailing in the town which is used as the point of reference for the place where the official performs his duties. By the use of this weighting it is possible to calculate the relative purchasing power of currencies in the countries where the officials of the Community perform their duties. For example, the index calculated using the “Fisher” method expresses in a single figure the relationship of prices in Brussels to those in Rome and vice versa. That figure is used for calculating the weightings within the Community because it expresses the relationship of prices from one town to another in a reversible manner and because it is therefore possible to make not only bilateral price comparisons but also multilateral ones. According to this method, the weighting is obtained by dividing the “Fisher” index calculated as described above, by the corresponding rate of exchange used to convert the remuneration of officials into the respective national currencies in accordance with Article 63 of the Staff Regulations. In October and November 1975 a comparative study of prices was carried out in all the capitals of the Community. Article 1 of Regulation No 3087/78 of 21 December 1978 adjusting the weighting applicable to the remuneration and pensions of officials and other servants of the European Communities employed or having a home in Italy (Official Journal L 369, p. 10) provides thai: That regulation was adopted in the following circumstances : The fall in the value of the Italian lira which depreciated rapidly at the end of 1975 and the beginning of 1976 and the monetary measures taken by the Italian Government as a result brought about strong inflationary pressure. It led the staff representatives in Ispra to submit a number of demands based on claims that the weighting for Italy no longer reflected the widening gap between the cost of living in Brussels and that in Ispra and that the weighting calculated according to the “Fisher” method led in particular to a large gap between the par value of the lira as against the Belgian franc on the currency markets and the equivalent value in lire of the remuneration paid to officials at Ispra and considerably reduced the external purchasing power of the remuneration. From July 1975 the weighting for Italy was 166.6 as against 148.7 for Brussels and Luxembourg. In the spring of 1976 the Commission proposed provisionally to increase the weighting for Italy to 5.5% as from 1 January 1976, the final percentage to be fixed once precise statistical data were available. The Council did not accept that proposal and on 29 June 1976 (Regulation No 1592/76) fixed the weighting at 176.6 for Italy as from 1 January 1976 as against 157.8 for Belgium. The statistical inquiries to which the Commission had referred were conducted by the Statistical Office in May 1976 in the Province of Varese. An inquiry into rem levels was then taken into account. The ensuing report found that there was a difference of 8.5% between the weighting for Italy, calculated for Varese by the Statistical Office (121.5 to the base 100 for Brussels) and the weighting for Italy adopted by the Council (112.04 to the base 100 for Belgium). Of that 8.5%, 6.7% was attributed to the widening gap between the cost of living index in Italy and that in Belgium from December 1975 to June 1976. According to the Statistical Office approximately 2% might be attributed to the difference in price levels between the Varese and Rome regions. On 21 December 1976 the Council adopted Regulation No 3177/76 (Official Journal L 359, p. 1) which from 1 July 1976 fixed the weighting at 189.3 for Italy as against 157.8 for Belgium and from 1 January 1977 at 120 for Italy as against 100 for Belgium. The inquiry was the outcome of various representations made by staff representatives at Ispra to the Commission and in particular of a meeting with the President of the Commission on 23 May 1976. The staff representatives questioned the statistical method used to fix the weighting and sought to have it amended. They considered the large gap between the purchasing power parities and the monetary parities of remuneration paid in lire to be incompatible with the principle of the equal treatment of officials. That was the result in particular of the fact that prices of imported goods react very much more quickly to the appreciation of a currency on the currency markets than the general price level. Equality of treatment in regard to pay may be attained only by reference to a common European “basket” of goods and services which are qualitatively and quantitatively identical. The Commission representatives rejected that basis of reference but they did agree that the purchasing power parities used to calculate the weighting might present some distortion. By a telex message of 12 December 1977 the suf f representatives asked the member of the Commission responsible for administrative matters, Mr Tugendhat, to make representations to the Council in order to have the weighting for 1977 acknowledged to be provisional. In May 1978, in addition to an adjustment of the weightings to take account of the increased cost of living, the Commission proposed to the Council a supplementary increase of 5% in the weightings for Italy, the United Kingdom and Ireland. On 12 June 1978 the President of the Commission met the staff representatives for a discussion on policy. A joint working party was set up in order to study the method of calculating and periodically reviewing the weighting. In its report of 26 July 1978 that party recommended that the Commission submit to the Council a proposal based on the following points: The 1967 list of consumer goods to be brought into line with that used for the 1975 inquiry; The prices adopted in 1975 to be adopted and extrapolated to 1978 using common indices (namely for Rome and Brussels); Justification of the use of those prices by the need to introduce a system enabling weightings to be regularly adjusted. The Commission representatives stated that the method proposed should apply to the weighting as from 1 January 1978 whilst the staff representatives believed there was justification for applying it trom an earlier date and reserved their freedom of action before the Council on this point. They also pointed out that some disparity still remained owing in particular to the differences in pnces between Rome and Varese. The working party's recommendations were incorporated in the Commission's proposal to the Council of 10 November 1978 to increase the weighting by 6.4% as from 1 January 1978 (Doc COM(78) 591). During the discussions at Council level the staff representatives refused to accept 1 January 1978 as the date for the entry into force of the amended weighting. After the adoption on 21 December 1978 of Regulation No 3087/78, in January 1979 the administration of the Commission calculated and paid the arrears due in respect of the period from 1 January 1978 to 30 June 1978. At the same time there were paid the arrears due in respect of the period from 1 July 1978 to 31 December 1978 under Council Regulation No 3084/78 of 21 December 1978 adjusting the remuneration and pensions of officials and other servants of the European Commumues and the weightings applied thereto (Official Journal L 369, p. 1), which fixed the weighting for Italy at 146.8 with effect from 1 July 1978.
“With effect from 1 January 1978, the weighting applicable to the remuneration of officials employed in Italy shall be 146.4.”
2. By a complaint formulated in the same terms as a large number of other complaints made at the same ume, and lodged with the Commission on 11 April 1979, the applicant, without challenging the payment made on the basis of Regulation No 3084/78, contested the payment made in pursuance of Regulation No 3087/78 on the ground that it was not retroactive to 1 January 1976. On 12 July 1979 the Commission rejected the complaint. This application was made on 11 October 1979 at the same rime as the other similar applications (Cases 159 to 529/79 and 734/79). On 9 January 1980 the Commission submitted a request for a declaration of inadmissibility pursuant to Arude 91 of the Rules of Procedure. It was subsequently decided that this case should become a test case. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court (First Chamber) decided to open the oral procedure on admissibility without any preparatory inquiry. At the sitting on 19 February 1981, the parties presented oral argument on the admissibility of the application. The Advocate General delivered his opinion on the admissibility of the application at the sitting on 14 May 1981. By order of 30 June 1981 the Court (First Chamber) decided to try the issues of admissibility and substance together. On hearing the repon of the Judge-Rapporteur and the views of the Advocate General, the Court (First Chamber) decided to open the oral procedure on the substance without any preparatory inquiry.
II — Conclusions of the parties
The applicant claims that the Coun should:
“1. Annul the implied decision rejecting the present applicant's complaint dated 11 April 1979 or, should the Court accept (which the applicant does not) the defendant's contentions, annul the Commission's alleged express individual decision of rejection dated 12 July 1979; 2. Declare invalid the decision taken by the Commission to pay to the applicant the arrears due as a result of the raising of the weighting applicable to Italy provided for by Council Regulation No 3087/78 on the ground that those arrean are backdated only to 1 January 1978; 3. Declare by way of preliminary that the aforementioned regulation is inapplicable in this case on the ground that it fixes at 1 January 1978 the date from which the increase in the weighting is to apply retroactively; 4. Note that, inasmuch as the contested measures are in breach of provisions adopted pursuant to the Treaty, they incorrectly sute the facts and are vitiated by misuse of powers and infringement of essential procedural requirements as stated in this application; 5. Declare, (within the context of the powers of unlimited jurisdiction enjoyed by the Court in this sphere) that the applicant is entitled to the amounts resulting from the increase in the weighting of 6.4 % applied to the 1976 and 1977 salaries as well as to the subsequent consolidation provided for to take account of the higher level of prices in Varese as against Rome (which the Court may confirm by whatever means it thinks fit) together with interest thereon; 6. Order the defendant to pay the costs.”
The Commission contends that the Coun should:
Dismiss the application as inadmissible in all its submissions;
In any event dismiss the application as unfounded;
Order the applicant to pay the costs.
Ill — Submissions and arguments of the parties
In her application the applicant observes that, following the lodging of her complaint on 11 April 1979, officials and other employees employed at the Joint Research Centre in Ispra had distributed to them, in a completely impersonal way by internal post, a photostat copy of the memorandum dated 12 July 1979 whereby the Commission replied to the various complaints made against “the financial consequences of Council Regulations Nos 3085, 3086 and 3087/78”. Following a request by the European Civil Service Federation for further information, the Commission let it be known that the aforementioned memorandum was to be regarded as an individuai decision on the complaints lodged against Council Regulations Nos 3085, 3086 and 3087/78 and against the application of Regulation No 3087/78. The applicant sutes that there was no indication that the recipients had been notified or of the date of any such notification. She also points out that the memorandum of 12 July 1979 had the effect of discouraging those concerned from seeking the protection of the Court's jurisdiction by stating that in any event the same question had been brought before the Court in Case 48/79 the decision in which, if the applicant's claims were conceded, might also be of benefit to those concerned in these proceedings. Those concerned were therefore allowed to become time-barred whilst awaiting the outcome of another case in which the Commission was the successful party. The applicant relies on the Court to find that there was an implied rejection of her complaint.
The applicant, in her first submission, sutes that Regulation No 3087/78 constitutes a clear breach of Article 65 (2) of the Surf Regulations since, faced with a substantial and even sizeable change in the cost of living in Italy, it did not provide for the weighting applicable to Italy to be adjusted in sufficient time or at least did not provide for it to be sufficiently retroactive. The weighting had not been adequate since 1975 because the level of prices recorded in Ispra ought to have led to adoption of a clearly higher weighting as from November 1975 (see Report of 17 June 1976 of the Sutistical Office) and, although calculated on the basis of the price levels recorded in the capiul, the weighting (112 as against 100 for Brussels) was lower than that which ought to have been applied (119 as against 100 for Brussels) as from October 1975 (Report of 5 October 1978 of the Sutistical Office under the heading “Results”).
The second submission is that the infringement does not merely exist ratione tempons but also from a quantiutive point of view. In fact Article 64 of the Staff Regulations provides that the weighting is to be calculated “according to the living conditions in the different places of employment”. According to the conclusions of the first report of the Sutistical Office of 17 June 1976, the Iulian weighting of 1975 was 12.9% lower than the figure which ought to have been applied in the Province of Varese. In the sutement of reasons accompanying the Commission's proposal, the text of which later became Council Regulation No 3087/78, the defendant admitted that the employment of a large number of Commission surf in Ispra ought to have caused it to have regard to the level of prices in that locality at the time at which the weighting was fixed.
There was a breach also as regards the method chosen. The scheme adopted by the Commission and approved by the Council gave rise to extremely well-founded criticisms as regards the products used for calculating prices in the various Member Sutes and for the scheme's tendency to uke account of divergent developments in the economic situation of the Member Sutes. Such criticisms were formulated in good time by representatives of the staff and by the officials themselves who sought to lodge a complaint under
Article 90. For their part, the competent authorities did not fail to recognize the imperfections of the method applied but, there as well, inertia prevailed over all opposition and all the well-founded reasons of an economic or legal nature.
If it is assumed that the weightings applied outside Italy are correa and adapted to reality, the fact remains that officials employed in Ispra were less well treated at least during 1976 and 1977 when the weighting remained unadjusted and there was no provision for any corresponding retroactivity. There was also discrimination between Commission staff employed in offices of the Community in other places in Italy. That state of affairs undeniably constitutes a difference of treatment between the employees of the same institution contrary to the principle of nondiscrimination and constitutes a misuse of powers since the weighting mechanism was not applied for the purpose for which it was intended by the provisions of the Staff Regulations.
In her third submission the applicant considers that, if the memorandum of 12 July 1979 is to be considered an individual decision rejecting her complaint, the formal defects vitiaung it are only too plain. These are in particular the absence of any statement of the reasons on which it is based and its notification by way of internal distribution in incertam personam. The situation existing in 1975 having been clearly established and cited as such to the authors of the complaint, there is no reason why the retroattive effect which was proposed, decided upon and applied went back only as far as 1 January 1978. The infringement of essential procedural requirements is to be found in the basic regulation. On the specific problem of retroactivity that regulation in its recitals contains no justification of the date from which it was to apply and merely states that “it is appropriate to correct the weighting for Italy in accordance with the result of studies carried out by the Statistical Office ...” and remains silent on the period to which those studies relate. Consequently, the opportunity for staff to defend their rights is restricted and defence is made more difficult, as is the Court's power of judicial review. The case-law of the Court relating to the duty to sute the reasons on which a measure is based is well-settled.
A — Admissibility
1. In its objection of inadmissibility, the Commission observes that the application is inadmissible first of all in its conclusions seeking annulment. The measure adversely affecting the applicant is said to be the Commission's decision to pay to the applicant arrears of salary with a retroactive effect limited to 1 January 1978 without taking account of the cost of living peculiar to the Province of Varese. In January 1979 arrears of salary were paid to the applicant in implementation, on the one hand, of Regulation No 3087/78 and, on the other, of Regulation No 3084/78 altering with effect from 1 July 1978 the scale of basic salaries and fixing, with effect from the same date, the weighting for Italy at 146.8. The applicant is not contesting the calculation of arrears of salary for the period subsequent to 1 July 1978. Her claim relates solely to the determination of her salary arrears by the application of Regulation No 3087/78 and the objection raised to the effect that one regulation is inapplicable relates only to Regulation No 3087/78. The calculation of salary arrears for the period subsequent to 1 July 1978 is therefore not at issue since it must be regarded as having become definitive. The Commission takes the view that the claim for arrears of salary for a period prior to 1 January 1978 is inadmissible since it is tantamount to a challenge, made outside the time-limits, to the various successive measures of the administrative authority which at the material time calculated the applicant's monthly remuneration. To challenge the decision relating to the salary arrears amounts to challenging successive calculations of remuneration from January 1976 to December 1977. Since it grants no additional amounts on the basis of each monthly. instalment of salary calculated and paid from January 1976 to December 1977, the contested decision is confirmatory as regards each of the monthly calculations made during that period. As such it can found no right of action, regard being had to well-settled authority to the effect that a confirmatory measure is not a measure adversely affecting an official. On the other hand, none of the administrative decisions calculating the monthly instalments of the salary paid to the applicant from January 1976 to December 1977 was ever the subject ot a complaint, still less was any legal action brought in respect of them. The Court is therefore faced with a situation similar to that which came before it in the 81 Joined Cases 15/73 etc. Kortner and Others v Commission, Council and Parliament [1974] ECR 177). The application is also inadmissible in its conclusions seeking compensation since the Court cannot exercise unlimited jurisdiction where no action for annulment lies (cf. Case 32/68 Grasselli v Commission [1969] ECR 505).
2. In her observations on the objection of inadmissibility, the applicant claims that, during the procedure leading to the alteration in the weighting (which is always subsequent, by quite a long period, to the facts justifying it) and pending notification of the amount and the retroactivity decided upon, any action would have been premature. An action brought against a calculation of a salary on the ground that the weighting had not yet been raised and particularly an action started during the procedure leading to the revision would certainly have laid the applicant open to an objection of inadmissibility. She would have been met with the reply that she should await the Council's decision and, if appropriate, then contest the decision calculating the arrears. Furthermore, an action against monthly salary payments which do not take account of the increased weighting falls far short of the requirement of legal certainty proclaimed by the other side. In the first place since, in the case of an increase pursuant to Article 65 (2), a review of the weighting is subject to an ad boc procedure (Council Decision on a proposal from the Commission, to be adopted within two months), the question arises whether the day to which retroactivity is to take effect should not be counted as from the expiry of the two months indicated above. Secondly, since those concerned are at liberty to assess the date on which the events of an economic nature justifying an increase occurred (for example a substantial increase in the cost of living) and thus the corresponding failure to adapt the weighting in force, there is a risk of there being as many different days a quo as there are applicants, according to their subjective assessments. Finally, those inclined to act belatedly might “construa” periods of time for complaints and applications by reducing the period of retroactivity requested to the three months preceding their respective complaints under Article 90. Such aberrant consequences which would result from the other party's argument run counter to the law, to equity and, quite simply, to reason. Although the ex post facto revision of the weighting is carried out under the Staff Regulations, any complaints or actions concerning the amount and the retroactive effect of the weighting may only be brought after those factors have been determined and implemented. This case and the Kortner case have nothing in common. In that case there had been a prior successful application by certain officials of the Commission who had been deprived of their expatriation allowance at the time of their marriage under the terms of earlier provisions of the Staff Regulations which were subsequently amended specifically as a result of the defendant institutions' losing the action. In implementation of the Court's decision, the institutions, during the procedure for amending the Staff Regulations, extended the benefit of the allowance, and moreover from the date of the Council's decision, to officials who had not brought an action against the decision depriving them of the allowance in the past. Those officials then had their claims for calculation of the arrears (from the date on which the allowance had been stopped or refused until the date of its grant ex gratia) dismissed as inadmissible on the ground that they were submitted well after the expiry of the period running from the date of the decision adversely affecting them to stop or refuse the allowance. The applicant's position is quite different. She did specifically attack the first decision adversely affecting her concerning the amount and the retroactive effect of the weighting specifically fixed for Italy, implemented in her case by the calculation of her remuneration for January 1979. On the other hand, in the Kortner case, 15/73, the adverse measure, being the termination or the formal refusal of the allowance, had already occurred and the institution had already unequivocally demonstrated by that measure its definitive opinion on the question in issue. Even if absurdly the opposing view were accepted, namely that the applicant ought to have brought her application against the calculation of her salary for January 1976, a non-confirmatory administrative measure would in any event have supervened (contrary to the situation considered by the Court in Case 15/73) which would be capable of being challenged independently and consequently of starting the time to run for bringing an action.
3. In its defence the Commission puts forward an additional submission of inadmissibility affecting the application in so far as it relates to the claim for a reevaluation of the weighting to take account of the higher price levels in Varese than in Rome. In fact that issue was not made the subject of a complaint. It is clear from the Court's case-law that the application to the Court must be preceded by a complaint and that, in any event, claims made at the suge of such an application may alter neither the cause nor the subject-matter of the complaint. It derives justification for its argument from the Opinion of Mr Advocate General Capotorti of 14 May 1981 in this case, the parallel Case 737/79 (Battaglia) and in Case 543/79 (Birke).
4. In her reply the applicant states that those concerned are in a position to complain about the inadequacy of the weighting only if they have information available to them. It is easy to see that the Commission itself, in spite of the considerable investigative resources at its disposal, is not in a position to verify in a brief space of time (such as the period of three months for lodging a complaint) whether the weightings applied correspond to reality. Moreover, the persons concerned had good reason for considering that their claim would be conceded at the decision stage. During the political discussion of 19 March 1976 the Commission itself let it be understood that, for its part, it had not taken a negative decision as regards the claims by employees. In the same way, the setting up of a mixed working group, with the participation of the administration, ought to have and might have been interpreted as meaning that the proposals relating to the adjustment of the weighting would be in compliance with the conclusions of that group. Having received approximately 900 complaints lodged by officials at Ispra, the administration addressed to staff representatives on 6 October 1981 a telex message worded as follows: “... as regards the time-limits for lodging complaints made subsequent to a Council regulation relating to your pecuniary rights the Commission undertakes for its pan in future not to take the point of the possible lateness of those complaints in relation to the date of the coming into effect of the regulation”. That is the same administration which before the Court insists on the inadmissibility of this application in a context identical to that mentioned by the official declaration referred to above. Furthermore, the allegation of an inadequate weighting (a submission which by definition seeks to ensure that the remuneration corresponds to the cost of living in the place of employment) certainly also encompasses in oudine the claim relating to the higher cost of living recorded in Ispra.
5. In its rejoinder the Commission retorts that the applicant's claim is invalidated by the facts which show that, during the period 1976 to 1978, regulations relating to the value of the Italian weighting were regularly adopted by the Council. Moreover, the statistical surveys, agreements and political compromises resulted finally in the adoption of Regulation No 3087/78 which did not call in question the weightings prior to 1 January 1978. As far as the telex message of 6 October 1981 is concerned, the Commission stresses that it is the Council which definitively determines the date on which the regulation is to come into effect and the Commission has no responsibility in this respect. In fact, for example, if in November 1982 the Commission proposed to the Council, following the results of the statistical surveys, an increase of 5% in the Italian weighting and the Council accepted that proposal in December 1982, officials could challenge the quantum without the Commission's raising any objection of inadmissibility on the ground that no complaints were lodged during the period taken into consideration by the regulation. If, on the other hand, the Council in December 1982 fixed a nearer date for the entry into force, for example October 1981, the Commission would not raise any objection of inadmissibility on account of any failure to lodge complaints during the period taken into consideration in that regulation, that is to say, as from October 1981, but it certainly could not guarantee that an application relating to the period prior to October 1981 might not be declared inadmissible. A close reading of the telex message can lead to no other conclusion and, furthermore, since those time-limits constitute an absolute bar to proceeding with a case, of which the Court must take cognizance of its own motion, the Commission was not in a position to give any such assurances. Proof, moreover, that the staff representatives perfectly well understood the meaning of the telex message is that a number of officials at Ispra, including the applicant, brought a fresh action (Case 320/81) to safeguard their rights and to protect themselves from any possibly inadequate retroactivity of the future Council regulation relating to the Italian weighting. Furthermore, as far as the additional submission of inadmissibility is concerned, the Commission remarks that something which is nonexistent can hardly contain in oudine something else.
B — The subitanee
1. The Commission, in its defence, seeks to examine “entirely in the alternative” the substance of the submissions put forward in support of the application. As regards the first submission, the Commission recalls that the weighting in question was established on the basis of the weighting schemes fixed as a result of the survey of officials' family budgets conducted in Brussels and Ispra in 1967 (the staff representatives were against the carrying out of a new survey in 1978, regard being had to the delay which such a survey would have entailed in fixing the new weighting); those schemes were however adapted for use in 1976. The price surveys themselves were carried out in October and November 1975; however, by the use- of the index of prices in Rome and Brussels established in December 1977, those prices were extrapolated in such a way that the weighting finally adopted is based on the cost òf living in Brussels and Rome in December 1977. There can therefore be no question of backdating to t January 1976 a weighting based on surveys of prices updated to December 1977. Moreover, Article 65 (2) of the Staff Regulations provides that the adjustments made to the weightings shall be applied retroactively “if appropriate”, thus showing that the legislative authority does enjoy a certain margin of discretion. Also, the staff representatives several times stated that they acknowledged that the retroactivity of the new weighting should go back only as far as 1 July 1977, or even 1 January 1978, thus acknowledging that on an objective view retroactivity was not necessary at all. As far as the second submission is concerned, and in the absence of any further details, the defendant assumes that the applicant is basing her claim, which was, moreover, not expressed by way of a complaint, on the fact that in its report of 17 August 1976 the Statistical Office stated that the cost of living in the Province of Varese was 1.8% higher than that in Rome. Pursuant to a Council decision adopted in 1968, the weighting relating to a given country is to be determined in accordance with the cost of living in the capital of that country; it is therefore not possible to take into account the cost of living in each place of employment; any other solution would come up against insurmountable practical problems when it is realized that the Commission's officials are spread over some 150 places of employment. Nor can the applicant maintain that the failure to take into account the cost of living in the Province of Varese is contrary to fairness; from the setting up of the centre in Ispra until a very recent period, the cost of living in Rome was significantly higher than in the Province of Varese; the applicant thus enjoyed, for a number of years, a weighting calculated in accordance with a cost of living higher than that which she was in fact required to meet. Finally, it should be stressed that the difference of 1.8% mentioned above is merely of importance as an indicator. That result was obtained on the basis of a test survey of prices carried out in the Province of Varese in May 1976 affecting 230 items and services, whilst the price surveys carried out in Brussels and Rome concerned 700 items and services. Furthermore, that result was obtained by the use of a weighting scheme drawn up following a survey dating back to 1967, which, admittedly, had been brought up to date, and recourse was not had to a fresh survey in view of the opposition mentioned above from the unions and staff associations. As regards the third submission, the Commission observes that a decision rejecting a complaint cannot found a cause of action. It is clear from Article 90 (2) of the Staff Regulations that the measure adversely affecting an official precedes the complaint, the decision rejecting the complaint is no more than a “confirmatory” measure. It is therefore otiose to reply to arguments relating to the allegedly inadequate statement of reasons accompanying the decision rejecting the complaint. As to Regulation No 3087/78 itself, the defendant considers that it contains a statement of the reasons on which it was based and that statement, however laconic, is sufficient to satisfy the requirement to provide such a statement. It refers to the proposal submitted by the Commission containing in its annex the results of statistical surveys carried out by the Statistical Office. In the statement of reasons on which the proposal was based it was stated that, on the basis of its studies, the Statistical Office of the European Communities had arrived at a weighting of 143.2 as at 1 January 1978 as against 100 for Brussels. Moreover, the survey carried out by the Statistical Office annexed to the proposal clearly highlighted the need for making certain adjustments to and updating the results available for the earlier statistical surveys, to obtain the correo weighting to apply at the beginning of 1978, namely 143.2 for Ispra. It is clear from the foregoing that the relevant date is 1 January 1978. By fixing that date as the date from which retroactivity was to run, the Council regulation gave the Commission's proposal and the statistical studies as the reasons for its choice, which in the Commission's view are an entirely clear justification of the choice of 1 January 1978.
2. In her reply, the applicant recalls that, pursuant to Article 64 of the Staff Regulations, officials' remuneration is to be adjusted periodically by the application of a weighting higher or lower than or equal to 100% according to the living conditions in the different places of employment. Specifically in compliance with that provision the Commission until 1970 applied differential weightings even within the same Member State to take account of the cost of living actually recorded in the various places in which officials were required to perform their duties. That happened in the case of both France and Italy, in the latter case by giving to Ispra a weighting which differed from that applied to Rome (Gazzetta Ufficiale L 289 of 17 February 1969). It was only subsequently, as from 1970, that the weighting was made uniform within each Member State and brought up to the level of prices in the capital. The legislature intended that measure similarly as a favour since in general the cost of living is higher in the capitals. However, that is not the case as far as the Province of Varese is concerned. The applicant draws attention to the fact that the Statistical Office, during May 1976, found unequivocally a difference of 5 or 6% in prices, in addition to a difference calculated separately, attributable to reasons of a monetary nature. The applicant leaves it to the Court to determine whether the Statistical Office acted in good faith in the “recantation” issued two months later when it minimized the difference by reducing it to a level below the intervention threshold of 2%. She considers, however, that it is in any event permissible to reproduce the findings published by the Italian Central Institute for Statistics which shows a difference in the cost of living in Varese and Rome whichever year is considered. From the indices published by that Institute in 1977 it is possible to draw up the following table: Varete Rome 1.29 1.27 from the base year 1961 (1961 = 1) to 1966 1.13 1.10 from the base year 1966 (1966 = 1) to 1970 1.46 1.40 from the base year 1961 (1961 = 1) to 1970 2.03 1.98 from the base year 1970 (1970 = 1) to 1976 2.30 2.18 from the base year 1966 (1966 = 1) to 1976 2.98 2.78 from the base year 1961 (1961 = 1) to 1976 Similarly, an ISTAT telex message dated 12 July 1980 enables the following table to be drawn up in respect of subsequent yean: Varese Rome 245.7 222.7 from the base year 1970 (1970 = 100) to 31 December 1979 83.5 75.3 from the base year 1976 (1976 = 100) to 31 December 1979 The Community institutions themselves, aware of the illegality stemming in given cases from the application of a uniform national weighting, are reviewing their own positions. In fact, by a regulation of 10 February 1981 (Official Journal L 46), the Council adopted a differential weighting within the United States, attributing a weighting of 100.7% to Washington and 108.8% to New York, with retroactive effect to 1 July 1980. Furthermore, in a communication to the Council containing a proposed amendment to the method of periodic adjustment of remuneration the Commission suggested in March 1981 that every five years the Statistical Office of the European Communities should determine whether the relationship between weightings correctly established equivalent purchasing power for the remuneration paid to staff employed in the capitals of the Member States. In addition it proposed that the same should be done as regards the other places of employment (that is to say, other than capitals) where objective factors showed that there was a risk of major distortions, regard being had to the dau recorded in the capital of the country concerned (proposal for a new method of adjusting remuneration). In the alternative, the applicant disputes certain statements of the Commission: in the first place, the statement that the staff representatives accepted, without conditions or reservations, 1 January 1978 as the date of entry into effect, and the statement that they were not opposed to other surveys in so far as they might be necessary (they appeared in fact to be inopportune in view of the considerable delay incurred by the institutions in taking specific action, and superfluous since the Statistical Office had established, by means of tables, the existence since 1975 of an understatement of seven points in the Italian weighting — 119 as opposed to 112 then in force). On the other hand, the defence based on the discretionary power enjoyed by the Commission in matters of particular economic complexity is inadmissible since the breach of Articles 64 and 65 constitutes a flagrant breach capable of being censured without restriction by the Court, which has jurisdiction in the matter both as to legality and substance. As regards the speculation by the Commission relating to the “contingent” nature of the retroactivity which may be provided for, suffice it to say that the only correct interpretation of the rule is as follows: the institutions are obliged to provide for appropriate retroactivity in a case in which revision of the weighting is carried out after a delay in relation to the events giving rise to it. Finally, and this enables it to be asserted with confidence that those directly concerned were kept in a state of uncertainty from the legislative point of view, the weighting for Italy fixed by Regulation No 3086/78 at 74.3 (as against 100 for Brussels) was reduced to 70.3 following a rectification of doubtful legality carried out three months later. That is strange because the weighting of 74.3 appears in all the versions of the Official Journal of 19 January 1978, in the Council minutes and even in the pleadings of the Commission in this case.
3. In its rejoinder the Commission retorts that, by approving the decision of 15 December 1981, the Council merely confirmed its previous decision of 1968 that a single weighting was to be fixed for each country of employment. That decision provides that a technical check as regards the other places of employment is only to be carried out when objective factors demonstrate that there is a risk of “major distortions”, regard being had to the information recorded in the capital of the country concerned. In the present case the Commission does not consider that there are any “major distortions”. As regards the applicant's claims as to an alleged breach by the Commission of the principle of nondiscrimination, the Commission considers that it is fairer not to limit the comparison of the respective situations of Varese and Rome to a given moment in time but to compare the cost of living in the two places over a more representative period. Moreover it points out that the tables submitted by the applicant are scarcely explicit. The first includes the indices of prices for Rome and Varese relating to 1966, 1970 a id 1976 without its being stated whether the index is for the year indicated or the average index for the period preceding that year. As regards the second table, which stops at the end of 1979, it also does not enable a year-by-year breakdown to be carried out. The Commission refers to the table drawn up by the Statistical Office which enables a comparison to be made on 1 June in each year of the cost of living in Brussels, Rome and Varese during the period from 1970 to 1981. It is clear from that table that, having been slightly greater in Varese in 1971, the increase in the cost of living was greater in Rome in 1972 and 1973, then lower as compared with Varese between 1974 and 1979; since 1979, the increase in the cost of living has again been greater in Rome. If the whole of the reference period is taken into consideration the cumulative increase in the cost of living was 3.71% greater in Varese than in Rome, that is to say, an average of 0.33% per year. The difference is so slight that the trend observed in the last two years, namely a rate of increase greater by 1.81% per annum in the cost of living in Rome, need only continue until June of next year to achieve arithmetical equality in the cost of living in Rome and Varese during the period from June 1970 to June 1983. The Commission has thus committed no breach of the principle of equal treatment nor has it infringed Articles 64 and 65 of the Staff Regulations. As far as the increase in the cost of living at the beginning of 1976 is concerned (1.8% greater in Varese than in Rome), the Commission considers that the discretionary power conferred on the Council, when it is faced with a complex economic situation as in the present case, allows it to take the view that a change in costs of that order is not a “substantial” change within the meaning of Article 65 (2) of the Staff Regulations. As regards the supplementary observations submitted by the applicant, the Commission replies that it did not assert that the staff representatives had accepted 1 January 1978 as the date for the entry into effect but merely that during the joint meetings those representatives or certain of them stated that of the several dates for retroactivity under discussion they were able to accept that the retroactivity of the new weighting should be fixed at that date. The wording of Article 65 (2) of the Staff Regulations clearly shows that an adjustment of the weighting presupposes a “substantial” change in the cost of living and that such an adjustment isto be retroactive only “if appropriate”. The use of the words, “if appropriate” indicates that the Council enjoys, as regards retroactivity, a certain discretionary power and also that it enjoys the same discretion in evaluating a “substantial change” in the cost of living. As far as the period of two months is concerned, that only begins to run as from the time when the Council has acknowledged the existence of such a “substantial change”. Apan from an analysis of that provision it should be remembered that, under Article 64 of the Staff Regulations, the weighting must be in conformity with the “living conditions” in the different places of employment; that criterion is certainly less compelling than the “cost of living”. In any event the weighting which came into force on 1 January 1978 was established by reference to factors brought up to date in relation to those which were used at the time the weightings were drawn up for preceding periods. That fact that the new weighting for 1978 was fixed by means of a more accurate method represents progress. That is not to say, however, that the weightings fixed during 1976 and 1977 on the basis of the factors available at that time must be regarded as incompatible with Article 65 (2). On the contrary, it must be remembered that in May 1976 the Statistical Office carried out, at the express request of the defendant, a survey of prices in the Province of Varese which showed at that time that the weighting applicable to Italy was lower by 1.8% than the weighting which should have been applied to Varese. After the determination by the Council, with effect from 1 July 1976, of the new weighting, that weighting proved to be only 1.3% lower than that which ought to have been applied to Varese. However, the discrepancy was in truth trivial and it certainly cannot be asserted that the method of calculation used at that time by the Statistical Office caused any distortions. It ought to be remembered also that the new weightings fixed by Regulations Nos 3084/78 and 3087/78, which were obtained by means of a more sensitive method than that used in the past, are based on the extrapolation of certain available statistical data with the agreement of the staff representatives and that they are in a sense the result of a compromise. Therefore if the applicant considers that the rates at which the Italian weightings were fixed for 1976 and 1977 are vitiated by illegality it would be for her to claim not, as she does, the retroactive application to 1 January 1976 of the weighting at the rate which came into force on 1 January 1978 but rather the fixing of four new rates each calculated on the basis of four fresh price surveys. Those would have to be carried out on the basis of the statistical information available on 1 January 1976, 1 July 1976, 1 January 1977 and 1 July 1977. But it is by no means certain that the Italian weightings calculated in that way for 1976 and 1977 would be more favourable than those actually applied during that period. It is, moreover, significant that neither the applicant nor the staff representatives have requested that the weighting be fixed by applying the method described above. They deliberately abstained, aware that the increase of 6.4% in the weighting was merely the result of a political compromise which they had also desired (see Minutes of the Meeting of the Joint “Iulian weighting” Group of 6 July 1978). As far as the observations concerning the weighting figure of 74.3 and its subsequent correction to 70.3 is concerned, suffice it to say in the first piace that the fixing of the weighting at those rates couid have had no influence on the conduct of those concerned since they were fixed by Regulation No 3086/78 which came into force on 1 April 1979, and not by Regulation No 3087/78 which is the one at issue in the present case and, secondly, that it was merely a factual error.
IV — Oral procedure
The parties presented oral argument at the sitting on 15 July 1982.
The Advocate General delivered his Opinion at the sitting on 30 September 1982.
Decision
1. By an application lodged at the Court Registry on 11 October 1979, Mrs Roumengous, an official of the Commission employed at the Joint Research Centre in Ispra, Italy, brought an action under Article 91 of the Staff Regulations of Officials for a declaration that Council Regulation No 3087/78 of 21 December 1978 adjusting the weighting applicable to the remuneration and pensions of officials and other servants of the European Communities employed or having a home in Italy (Official Journal L 369, p. 10) is not applicable to her.
2. Until the end of 1978 the Staff Regulations provided that an official's remuneration was to be expressed in Belgian francs and weighted at a rate above, below or equal to 100%, depending on living conditions in the various places of employment.
3. From 1975 officials employed at the Joint Research Centre in Ispra complained to the Commission that the cost of living in Italy had considerably increased and accordingly requested that the weighting for Italy be revised. They complained in particular that in their opinion the cost of living in the Province of Varese was higher than in Rome and they urged the Commission to take account of that difference when fixing the weighting applicable to their remuneration.
4. In 1976, 1977 and 1978 consultations on technical matters took place between representatives of the staff and those of the Commission and Council but no agreement was reached on the alteration of the weighting or on the date to which the new weighting should have retroactive effect. In the meantime by a series of regulations the Council had increased the weighting for Italy as from 1 January 1976 to 176.6 as against 157.8 for Belgium, as from 1 July 1976 to 189.3 as against 157.8 for Belgium, as from 1 January 1977 to 120 as against 100 for Belgium, as from 1 January 1977 to 132.1 as against 104.5 for Belgium and as from 1 July 1977 to 130.2 as against 100 for Belgium. In most cases those regulations had a retroactive effect of about six months.
5. On 26 June 1978 the Council adopted Regulation No 1461/78 (Official Journal L 176, p. 1) by which the weighting for Italy was fixed at 137.6 as against 102.3 for Belgium. The recitals in the preamble to that regulation state that “a decision on the Commission proposal for the correction of the weightings for three countries of employment will be taken only in the light of a study to be carried out by the Commission.”
6. After a fresh inquiry by the Statistical Office of the Communities and discussions between the Commission and the Council, on 10 November 1978 the Commission proposed to the Council that the weighting for Italy be fixed at 146.4 as against 102.3 for Belgium with retroactive effect to 1 January 1978. That proposal was accepted by the Council by the adoption of Regulation No 3087/78 of 21 December 1978 (Official Journal L 369, p. 10). On the same date the Council adopted Regulation No 3084/78 (Official Journal L 369, p. 1) fixing the weighting for Italy at 146.8 as against 100 for Belgium as from 1 July 1978.
7. The staff concerned challenged Regulation No 3087/78 in so far as it fixed the weighting at a level which did not take account of the cost of living at Varese and gave that weighting retroactive effect only to 1 January 1978.
8. In January 1979 the Commission paid the arrears of remuneration due under Regulations Nos 3087/78 and 3084/78.
9. By a complaint made to the Commission on 11 April 1979 pursuant to Article 90 (2) of the Staff Regulations, the applicant requested the Commission to take the measures necessary to compensate her for the loss in her purchasing power during the years 1976 and 1977.
10. By circular letter dated 12 July 1979 the Commission rejected that complaint.
11. The applicant then brought this application in which she seeks the annulment of the Commission's decision settling her arrears of remuneration by limiting them to 1 January 1978 without taking into account the cost of living peculiar to the Province of Varese; a declaration that Regulation No 3087/78 is not applicable to her in so far as it limits its retroactivity to 1 January 1978; and a declaration that she is entitled to the amounts resulting from the raising of the weighting by 6.4% on the salaries of 1976 and 1977 and to the subséquent consolidation provided for to take account of the higher level of prices in Varese as compared with Rome.
Admissibility
12. The Commission claims that the application is inadmissible as regards the period from July to December 1978 since Regulation No 3087/78, which is the only one in dispute, fixed the weighting for the first half of 1978. A second ground of inadmissibility is that the calculation of arrears carried out in January 1979 was in the nature of a confirmation of the monthly calculations of salary made during 1976 and Î977 and such payment of arrears does not therefore constitute a measure capable of founding an independent right of action, particularly since no complaint was made at that time against the calculations of salary for the years in question.
13. Regard being had to the circumstances of the case, the Commission's objection cannot be upheld. In fact, although it is important to safeguard the application of the rule contained in the Staff Regulations which provides for a prior complaint through official channels within a relatively short period it should not be overlooked that, owing to the fact that negotiations had been going on for many months between the Council, the Commission and staff representative bodies, the applicant was legitimately entitled to await the outcome of those negotiations before concerning herself about their possibly negative effect on her salary. In fact, the successive Council regulations adjusting the weightings come into effect after a period of delay and are therefore normally given retroactive application, the extent of which is, however, hardly foreseeable. In the recitals in the preamble to Regulation No 1461/78, moreover, the Council itself acknowledged that the adjustment of the weighting provided for by that regulation for three countries of employment was not definitive.
14. The Commission's argument, if it were accepted, would mean that an official who considered himself injured by the Council's delay in adjusting the weighting would have had not merely to submit a series of complaints possibly stretching over several years, but also to bring a series of anions before the Court, or risk being time-barred. That argument cannot be upheld. The facts of Case 15/73 (Kontier [1974] ECR 177) on which the Commission founds its argument are in no way similar to those of the present case.
15. As for the second objection raised by the Commission, regarding the application for compensation, suffice it to sute that the admissibility of the application for annulment entails the admissibility of the application for compensation where, as in this case, those applications are closely linked the one with the other.
16. The application must therefore be adjudged admissible.
The substance
17. As regards the weighting applied to officials employed in Ispra, the applicant is pursuing two objectives. First she seeks to obtain a revision of the amount of the weighting which, in her view, ought to be calculated on the basis of the cost of living at the official's exact place of employment, in this case in the Province of Varese, and not automatically in the capital of the country in question. In this case, the applicant maintains that the cost of living in the Province of Varese was, during the years 1976 to 1978, substantially higher than in Rome. Secondly the applicant requests that the weighting for Italy, fixed at 146.4 by Regulation No 3087/78, be applied retroactively to 1 January 1976.
18. The applicant challenges the arrears of salary calculated on the basis of Regulation No 3087/78 which, in her view, are in breach of Articles 64 and 65 of the Staff Regulations relating to the weighting, the principle of nondiscrimination and the rules which require observance of essential procedural requirements.
19. The applicant thus first puts forward the argument that Regulation No 3087/78 infringes Article 64 of the Staff Regulations inasmuch as the surveys of the Statistical Office of the Communities for determining the weighting were carried out with reference to living conditions in the capital and not at the place of employment, situated in the Province of Varese.
20. It should be noted that in the past the Council has interpreted Article 64 of the Staff Regulations as referring not necessarily to the capital of the country of employment as the place of employment bur, according to the circumstances of the case, the precise place of employment. Thus Regulation No 1/67/ECSC, 988/67/EEC and 9/67/EAEC of the Council of 12 December 1967 provided two weightings both for France (130.5% for Paris and for certain areas and 122.5% for the rest of the country) and for Italy (114% for Ispra and 114.5% for the rest of the country). It was only later that the Council decided to use a single weighting for each Member State.
21. That new system in reality confers in most cases a benefit on officials not resident in the capital since the cost of living there is generally higher than in the provinces. However, it seems that that is not the case specifically in Italy where the survey by the Statistical Office and the information supplied by the Italian Institute of Statistics both show that the cost of living in Varese is higher than that in Rome.
22. In fact it is clear from the figures communicated by the Commission on the basis of the results of the survey carried out by the Statistical Office in Varese in May 1976 taking into consideration 230 items of expenditure (excluding rent, heating and electricity which were the subject of a later investigation) that the cost of living in that province was 7.66% higher than in Rome. After the result of the investigation carried out in Varese on the level of rents had been taken into account, the difference was reduced to 2.76% which still represented a substantial difference within the meaning of Article 65 (2) of the Staff Regulations. Moreover it is clear from the reasons accompanying the Commission's proposal which led to Regulation No 3087/78 that the Commission itself entertained doubts as to whether the sole reference to the cost of living in Rome was well founded since it stated that: “the use of a single weighting for each country of employment, worked out for the capital, places staff working in Ispra at a slight disadvantage. The statistics available show that the cost of living in Rome has risen less rapidly than in the Varese area, from which it may reasonably be assumed that prices in Rome are now lower than in Varese. This existence of lower prices in the capiul than elsewhere is the exception rather than the rule in the Nine. In view of the number of staff employed in Ispra a special local price survey would appear justified. However, the Commission feels that it would be wiser not to innovate in this direction and to abide by the Council Decision of 1968, which provides specifically for the use of the price indexes relating to the capiul”.
23. Under those conditions, in order that the rule contained in Article 64 of the Suff Regulations to the effect that account must be uken of living conditions in the various “places of employment” may be observed, that expression must be understood as meaning not only the capitals of the Member Sutes but the exact places where the duties of a sufficiently large number of officials and other employees of the Communities are performed.
24. Therefore it is for the Community institutions, in cases in which the cost of living in such a place of employment undergoes fluctuations greater than those occurring in the capiul of the Sute in question, to determine separate weightings. Hence the applicant's submission relating to the calculation of the weighting affecting her salary on the basis of the cost of living in the Province of Varese must be considered well founded.
25. As regards the retroactivity of Regulation No 3087/78 the applicant claims that that regulation ought to have been applied as from 1 January 1976 since substantial increases in the cost of living had occurred as from that year.
26. In fact it is clear from the reports of the Statistical Office of 17 and 29 June 1976 and from its memorandum of 17 August 1976 that changes of more than 2% in the cost of living as against that in Brussels had occurred in 1976 both in Rome and, to a greater extent, in Varese.
27. The Commission states in that connection that Article 65 (2) of the Staff Regulations, which provides that “in the event of a substantial change in the cost of living, the Council shall decide, within two months, what adjustments should be made to the weighungs and if appropriate to apply them retroactively”, must be understood as giving the Council discretionary power to decide whether measures adjusting weighungs should be retroactive or not.
28. That argument cannot be upheld. In fact the wording of Article 65 (2) precludes any interpretation to the effect that the Council is not obliged to adjust the weightings within a period of two months following any substantial change in the cost of living. It should be remembered that the Court in its judgment of 6 October 1982 in Case 59/81 (Commission v Council [1982] ECR 3329) held that the Council's power in this respect was to decide whether or not there had been a substantial increase in the cost of living and, if there had, to draw the appropriate conclusions. Any other interpretation would run counter to the objective of the provision in question which is to guarantee to all officials the same purchasing power whatever their place of employment.
29. That submission is therefore well founded.
30. Consequently it is not necessary to examine the other submissions put forward by the applicant which were put only in the alternative.
31. The applicant's salary statement for the month of January 1979 must therefore be annulled, in so far as it is restricted to giving effect to Council Regulation No 3087/78, both as to the amount of the adjustment of the weighting and as to the retroactive effect of that adjustment, together with the decisions rejecting the applicant's complaints. Regulation No 3087/78 is not applicable to the applicant in so far as it takes no account of the cost ot living in Varese and limits the retroactive effect of the adjustment of the weighting to 1 January 1978.
32. Since it may be expected that the competent institutions will take the measures necessary to comply with this judgment, examination of the claim for compensation for the pecuniary damage suffered by the applicant is deferred to a date to be fixed at a later date if necessary.
33. Before 15 July 1983 the Commission shall report to the Court on the measures taken to compensate the applicant; the applicant will be given an opportunity to reply.
On those grounds, THE COURT (First Chamber) hereby:
1 Annuls the applicant's salary statement for January 1979, in so far as it is restricted to giving effect to Council Regulation No 3087/78, both as to the amount of the adjustment of the weighting and as to the retroactive effect of that adjustment, together with the decisions rejecting the applicant's complaints; declares Regulation No J087/78 not applicable to the applicant in so far as it takes no account of the cost of living in Varese and limits the retroactive effect of the adjustment of the weighting to 1 January 1978;
2 Orders the Commission to report to the Court before 15 July 1983 on the measures taken to comply with this judgment;
3 Defers examination of the claim for compensation for the pecuniary damage suffered by the applicant to a date to be fixed at a later date if necessary;
4 Reserves the costs.