C-1253/79

JUDGMENT OF 4. 2. 1982 — CASE 1253/79 BATTAGLIA v COMMISSION

CELEX: 61979CJ1253
Datum: 1982-02-04
Källa: eur-lex.europa.eu

THE COURT (First Chamber) composed of: G. Bosco, President of Chamber, A. O'Keeffe and T. Koopmans, Judges, Advocate General: F. Capotorti Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

The facts of the case and the conclusions submissions and arguments of the parties put forward during the written procedure may be summarized as follows :

I — Facts and procedure

1. Background provisions

This case should be seen against the background of the following provisions:

a) In the version in force until 31 March 1979 Article 63 of the Staff Regulations of Officials provided that: In accordance with Article 17 of Annex VII to the Staff Regulations an official may have part of his emoluments transferred either regularly or on an exceptional basis, to a country other than that in which he performs his duties. Until 31 March 1979 Article 17 (4) provided that such transfers were to be made through the institution to which the official belonged “at the official exchange rate ruling on the date of transfer.” The “official exchange rate” within the meaning of that provision was the last parity accepted by the International Monetary Fund, which had not been altered since 1 November 1969 (for example, BFR 13.66 = DM 1). After the collapse in 1971 of the international system of fixed exchange rates, which is at the heart of those provisions, the parities came to reflect less and less the purchasing power of the currencies involved and their value on the international money market. Officials who had transfers made to countries the value of whose currency had increased in relation to the parities notified to the International Monetary Fund were thus able to realize gains on the exchange rate, as compared with transfers made in normal market conditions. In accordance with the legal position existing prior to 1 April 1979 the weighting provided for in Article 64 of the Staff Regulations to reflect the living standards at the place where the official performed his duties had to be applied to the whole of the remuneration, including the pan to be transferred to another country pursuant to Article 17 of Annex VII. This led to an increase in the weighting for officials assigned to countries such as Italy, the United Kingdom and Ireland, where the value of the currency had decreased in relation to the parities notified to the International Monetary Fund, and to a reduction in the weighting for officials assigned to countries whose currency had gained in value in relation to the parities of the Fund. Pensioners were able to derive special advantages from these provisions. If they declared their domicile to be in a country whose currency had diminished in value, the weighting in respect of that country was applied to their pension in accordance with Article 82 (1) of the Staff Regulations. Article 45 of Annex VIII to the Staff Regulations gave them the opportunity of having their pensions paid in the strong currency of their country of origin or of that of the seat of the institution to which they belonged. This state of affairs was condemned by Mr Advocate General Mayras in his opinion in Case 28/74 Gillet [1975] ECR 475. In 1974 the Commission submitted proposals to the Council with a view to abolishing the anomalies in the rules governing the payment of remuneration and pensions brought about by the break-down in the international system of fixed exchange rates. The proposal for a Council regulation amending the Staff Regulations of Officials, submitted to the Council by the Commission on 13 June 1974 (Official Journal 1974, C 88, p. 25) provided for an amended version of Article 17 (4) of Annex VII to the Staff Regulations : On 1 April 1977 the Commission submitted to the Council a proposal for a Council regulation introducing the European unit of account (EUA) into the Staff Regulations (Official Journal 1977, C 99, p. 5). That proposal was rejected by the Staff Regulations Committee, to which it had been referred. The Council obtained the opinion of the European Parliament and of the Court of Justice. By resolution of 7 July 1977 (Official Journal C 183, p. 55), the Parliament approved the proposal taking note of “the Commission's assurance that its proposal will in no way affect the real value of the payments made to officials in the form of remuneration, pensions and allowances”. At the sitting, the Member of the Commission responsible for administration, Mr Tugendhat, stated: “The object of the Commission's system is financial neutrality, and what we think that our system can achieve is an equality of purchasing power. What we want is that a Commission official of a given grade, whetheı he is working in Brussels or Luxembourg or London or any other part of the Community, should be able to buy exactly the same quantity of goods as his equal in another part of the Community ... The problem of transfers is also one that has preoccupied the Commission. There is a proposal for an amendment of the Staff Regulations now under consideration. In our view, that amendment must be adopted no later than the present draft regulation, and that, I think, covers another point about which there has been concern.” The Council did not succeed in 1978 in adopting the regulation proposed by the Commission on 6 October 1976 (Official Journal C 271, p. 5) “on the procedure for applying the European unit of account (EUA) to the legal acts adopted by the institutions of the European Communities”. The Commission therefore set to work to bring up to date, in the light of the situation thereby created, the exchange rates in respect of remuneration for officials which was envisaged by the proposal of 1 April 1977. In an annex to its report in 1978 on the yearly survey of the level of remuneration (Doc. COM(78) 6735 final of 29 November 1978), the Commission sent the following communication to the Council on which neither the Parliament, the Court of Justice or the Staff Regulations Committee was consulted:

“An official's remuneration shall be expressed in Belgian francs. It shall be paid in the currency of the country in which the official performs his duties. Remuneration paid in a currency other than Belgian francs shall be calculated on the basis of the par values accepted by the International Monetary Fund, and in force on 1 January 1965.”

“Transfers provided for in paragraphs (2) and (3) shall be made on the basis of the par values referred to in the last paragraph of Article 63 of the Staff Regulations; the amounts transferred shall be multiplied by a coefficient representing the difference between the weighting for the country in whose currency the transfer is made and the weighting for the country in which the official is employed.”

“ .. The first two paragraphs of Article 63 are replaced by the following: ‘Officials’ remuneration shall be expressed in Belgian francs. It shall be paid in the currency of the country in which the official performs his duties. Remuneration paid in a currency other than Belgian francs shall be calculated on the basis of the exchange rates used for the implementation of the general budget of the European Communities on ...

The Commission urges the Council to adopt the aforementioned article before the end of the year as well as Article 17 of Annex VII which is the result of the Council's studies relating to the amendment of the Staff Regulations ...

The ... regulation should come into effect on 1 January 1979, ... and should apply from 1 April 1979. However, for pensioners in receipt of allowances whose net financial benefits will be less than those under the existing arrangements, the regulation will apply only from 1 October 1979 ...”

b) On 21 December 1978, the Council adopted Regulation No 3085/78 (Official Journal L 369, p. 6), amending, with particular reference to the monetary parities to be used, Regulation No 259/68 laying down the Staff Regulations of Officials of the European Communities and the Conditions of Employment of Other Servants of the Communities, Regulation No 2530/72 and Regulation No 1543/73 concerning certain special measures. The regulation embodies the wording of the communication from the Commission of 29 November 1978 and also the formula contained in the proposal of 1 April 1977 concerning the weighting to be applied to amounts transferred. The regulation fixes 1 July 1978 as the relevant date for calculating remuneration paid in a currency other than Belgian francs on the basis of the exchange rates used for the implementation of the general budget of the Communities and goes on to state that that date shall be changed at the time of the annual review of remuneration.

c) Hand in hand with the bringing up to date of the exchange rates, the Council adopted Regulation No 3086/78 of 21 December 1978 (Official Journal L 369, p. 8) adjusting the weightings applicable to the remuneration and pensions of Officials and Other Servants of the European Communities following the amendment of the provisions of the Staff Regulations concerning the monetary parities to be used in implementing the Staff Regulations which amended the value of the weighting according to the various places of employment, in such a way that every official or temporary employee employed elsewhere than in Belgium or Luxembourg received the same level of remuneration in April 1979 as his remuneration for the preceding monıh. Since the point of departure — the amount of the remuneration in Belgian francs — remained in effect ex hypothesi the same, as regards payment transactions, and the end of the procedure — calculation operations of the amount of the payment in national currency — ought itself normally to remain the same, therefore as soon as one of the parameters of payment, for example the exchange rate, was altered, it was then necessary to adjust the second parameter (weighting) in such a way as to ensure the neutrality of the transaction.

2. Facts and procedure

The applicant complains that the transfers pursuant to Article 17 of Annex VII, made at his request through the institution, have become more expensive. For example, in the case of a transfer of DM 1000 made on behalf of an official employed in Italy, for which in March 1979 the exchange value at the old exchange rates was LIT 170750 (DM 1 = BFR 13.66 and LIT 100 = BFR 8) — this was deducted from the remuneration actually paid in March to the person concerned in Italy — in April the exchange value was LIT 293111, on the basis of the new exchange rates provided for in Article 63 of the Staff Regulations (LIT 1000 = DM 2.43) and of the adjustment resulting from application of the weighting 1.4040 = 98.7 70.3 corresponding to the ratio between the new weighting for Germany (98.7) and the new weighting for Italy (70.3). Thus, for the same transfer of DM 1000 a deduction of LIT 293111 (LIT 122361 more than the previous deduction) was made from the remuneration paid to the person concerned at his place of employment for the month of April.In the case of the applicant, an official in Grade C 1, Step 8, whose total remuneration is LIT 1738225 (pay statement for April 1979) and whose monthly transfers corresponded to DM 407, FF 4788 and BFR 4281, the increased cost of the transfers amounted to:

LIT 889995 (April exchange value of the transfers) LIT 661712 (March exchange value) LIT 228183

This sum corresponds to 13.12 % of the total remuneration for April.

On 21 June 1979 the applicant submitted a complaint to the defendant (with the same wording as 68 other complaints) objecting to the increased cost of his transfers as from April, entailing a reduction in the remaining remuneration paid to him.

The Commission replied on 28 September 1979 rejecting his complaint.

This action was brought on 20 December 1979, at the same time as the other parallel actions (Cases 1254 to 1321/79).

It was subsequently decided that this case would be treated as a test case.

On hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court (First Chamber) decided to open the oral procedure without any preparatory inquiry.

II — Conclusions of the parties

1. The applicant claims that the Court should: 1. Declare null and void the decisions adopted by the defendant, the practical effects of which are to be found in the applicant's pay statement for April 1978 (and, so far as necessary, subsequent statements) and stem from the application of Regulations Nos 3085 and 3086/78 of the Council of Ministers; 2. Rule that Regulations Nos 3085 and 3086/78 of the Council of Ministers are inapplicable pursuant to Article 184 of the EEC Treaty, Article 156 of the EAEC Treaty and the third paragraph of Article 36 of the ECSC Treaty; 3. In so far as necessary rule that the decision of 28 December expressly rejecting the applicant's complaint is null and void; 4. Declare and order that all sums payable to the applicant as a result of the annulments referred to in paragraphs 1 and 3 shall bear the usual or legally prescribed interest in Italy, or both. In the alternative : 5. Declare and order that the defendant must take all the steps necessary to compensate for the effect of the said regulations until the expiry of the performance by the applicant of legal or contractual obligations incumbent on him as a result of undertakings ıntered into by him in the context of the former Article 17 of Annex VII to the Staff Regulations; 6. Order the defendant to pay the costs of the proceedings.

2. The Commission claims that the Court should: Dismiss the action as unfounded; Order the applicant to pay the costs; Subject to all necessary reservations.

3. In his reply, the applicant claims that the Court should: In the alternative, appoint a panel of experts who would be instructed to advise the Court, on the basis of such information as the parties may be obliged to give it, regarding the consequences for officials and servants of the introduction of the amendment to Article 17 of Annex VII to the Staff Regulations as it appears in Regulation No 3085/78.

III — Submissions and arguments of the parties

1. In his application, the applicant claims that the institutions which, pursuant to Article 24 of the Merger Treaty, must be consulted regarding any amendment to Staff Regulations were not consulted. The institutions concerned are the Economic and Social Committee and the Court of Auditors or the Audit Board. As regards consultation with the Parliament, the latter adopted a resolution taking note of the assurances given by the Commission that its proposals would in no way affect the real value of the payments made to officials. Since that resolution is comprehensible only if it is assumed that the impact of the measures envisaged was not revealed to the Parliament, the consultation was on the basis of a different text, and moreover one which was presented as seeking to attain an objective which would not affect the remuneration of officials. Accordingly there are grounds for concluding that the institutions which should have been consulted were not properly consulted. Likewise, since the Commission consulted the Staff Regulations Committee and thereby applied Article 110 of the Staff Regulations, the Staff Committee should also have been consulted. The first argument put forward by the applicant is based on breach of the principle of vested rights. The basis of the second argument is that, by drastically amending the conditions laid down in the Staff Regulations, so as to bring about a considerable reduction in the net remuneration received by officials and servants, the Commission radically altered the whole structure of the Staff Regulations and undermined fundamental conditions in such a manner as to compromise the applicant's decision to agree to be bound by the Staff Regulations. A third argument is to the effect that in any event the Commission gave a most solemn undertaking that it would ensure that the measures put forward by it with a view to substituting the European unit of account for the Belgian franc for calculating remuneration would be strictly “neutral” and would not, in the words of the Parliament, affect “the real value of the payments made to officials in the form of remunerations, pensions and allowances”. Implementation of the provisions in question involves discrimination against the applicant. Article 4 of Regulation No 3085/78 provides that implementation of the provisions of the regulation regarding pensions and allowances is to be deferred until 1 October 1979 and that thereafter the difference between the net amounts resulting from the implementation of that regulation and those received in September 1979 is to be reduced by 1/10 per month. The Commission also decided, by way of implementing measure, that certain types of transfers were to be permitted on the old basis for five years (Administrative Notices No 223 of 30 April 1979, p. 8). In any case, it is incumbent upon the Commission to ensure that implementation of the regulations submitted by it to the Council and adopted by the latter is not detrimental to officials and servants. In the discharge of its duty to assist officials (Article 24 of the Staff Regulations) it was therefore under an obligation to lay down by way of implementing measureı transitional procedures for providing compensation, which should be coterminous with the legal and contractual obligations of the officials and servants, in order to enable them to satisfy the obligations assumed by them in the context of Article 17 of Annex VII to the Staff Regulations, without suffering any loss of their net remuneration.

2. In its defence, the Commission observes that, as regards the instances of lack of consultation, neither the Economic and Social Committee nor the Court of Auditors are institutions within the meaning of the Treaties and accordingly the Council was not legally obliged to seek their opinions. Moreover, Regulation No 3085/78 was not adopted pursuant to Article 110 of the Staff Regulations and as such falls exclusively within the purview of the Council; it must not be viewed as a general provision for giving effect to the Staff Regulations within the meaning of Article 110; the twofold consultation provided for in that article is not therefore required in this case. As regards the allegation of insufficient consultation, the Commission observes that the applicant's view would be well founded if, after a first proposal from the Commission was put forward and before the Council adopted any decision on it, a quite new proposal was submitted, that is to say one concerning other matters or making substantial amendments (cf. a contrario Case 41/69 ACF Chemiefarm [1970] ECR 661). In the same way, the consultation procedure provided for in Article 10 of the Staff Regulations does not have to be repeated every time a minor alteration is made. In this case, by a communication of 30 November 1978 the Commission informed the Council of its desire that Article 1 of the initial proposal of April 1977 be re-worded. A comparison with the last-mentioned text shows clearly that the new provisions do not amount to a substantial amendment. The nub of the amendment to the Staff Regulations is merely the abandonment of the old IMF parities and replacement of them by updated parities whereby every official is still entitled to the same total remuneration in the currency of the place of his employment. That would have been the result obtained if the rates had been updated by application of the European unit of account. That is in fact the result obtained by the updating of the rates under the procedure finally adopted. In the case of transfers, updating on the basis of the European unit of account of the exchange rates to be applied to such transactions involved an increase in the cost thereof to an extent equivalent to that resulting from the application of Regulation No 3085/78. In fact, the exchange rates used for implementation of the general budget of the Communities as at 1 July 1978 were strictly related to the value of the currencies considered (Belgian franc on the one hand, other currencies on the other) with respect to the European unit of account on the same date. The Parliament was certainly not led into error but acted in full knowledge of the circumstances. It is in fact quite clear from its opinion that it was perfectly aware that the proposal for updating of the rates related also to transfers and that the consequence thereof would be an increase in the cost of such transactions when the country of destination was one with a strong currency. Nevertheless, its opinion was that it was “appropriate ... to abandon the exchange ratios introduced in 1965,” since the proposed updating would not have the result of “affecting the rights of staff.” It is wrong to claim that the assurances given regarding the “financial neutrality” of the operation extended also to the consequences of the updating of the rates for transfers. As regards the breach of general principles, the defendant considers that the applicant's criticisms are totally without foundation. The applicant deduces from the concept of “vested rights” an opinion contrary to the case-law of the Court (cf. Case 28/74 cited above in which it was held that “an official cannot in any case claim a vested right unless the facts giving rise to that right arose under a particular set of Staff Regulations prior to the amendment decided upon by the Community authority”). That ruling is the logical consequence of the view that the official's relationship is governed not by contract but by regulations (cf. Opinion of Mr Advocate General Gand in Case 20/68 Pasetti-Bombardella [1969] ECR 235, p. 250). It also forms the corollary of the principle that administrative measures must not be retroactive. The “advantages lawfully acquired” by the applicant- are fully safeguarded as regards the favourable exchange conditions granted in respect of transfers made on or before 1 April 1979. On the other hand, it is no longer possible to speak of a “vested right” to have those same favourable conditions maintained in force when the event giving rise to the right to make transfers arose after the Staff Regulations were amended. In order to prove an unfavourable change in the fundamental conditions of such a kind as to influence the applicant's decision to agree to be bound by the Staff Regulations, it must also be shown on what grounds the applicant relied, when he entered the service in 1964, to perceive in the transfer system then in force an “exchange guarantee” for the benefit of officials so as to safeguard them for all time from the effects of such fluctuations as might occur in the monetary parities and from the increased cost to which such fluctuations might give rise with regard to the financial obligations assumed by the staff in any particular Member State (cf. Opinion of Mr Advocate General Dutheillet de Lamothe in Joined Cases 63 to 75/70 Bode [1971] ECR 549, p. 557). The true reason for the transfer facilities regulated by that provision must be seen in the light of the historical context of the preparatory work on the texts of the Staff Regulations in 1961 when exchange control was often very strict and yet officials of different nationalities had to be allowed freely to honour their financial commitments in their countries of origin or in the countries where their families resided. Subsequently, as a result of the new situation in which currencies “float”, it became in practice easy to take improper advantage of the ratio legis of Article 17 of Annex VII, since transfers of a part of officials' remuneration, although within the limits laid down in a “code of good conduct” established in June 1974, became a means of obtaining “strong currencies” at a rate much lower than the market rate, with consequent adverse effects on the Community budget. The staff could not have been under any misapprehension any more than the Parliament as to the practical repercussions on transfers of the updating of exchange rates. An administrative circular distributed in May 1978 drew attention to “the disappearance of certain advantages now available” in that area and indicated that the transfers would thereafter be made on the basis of the value of the European unit of account, giving an example of the results of the calculations. It was therefore out of the question to conclude that the operation would be absolutely neutral from the financial point of view, since the object was to eliminate unjustified advantages in the future. As regards the alleged discrimination between officials and pensioners, the Commission contends that in fact the only legal principle applicable is that there must be no arbitrary discrimination, that is to say discrimination for which there are no objective grounds, and that the principle of equality is not applicable. The situation of pensioners, taken into account in Article 4 of Regulation No 3085/78, is not the same as nor even comparable with that of officials who arrange for transfers to be made. Inıthe case of pensioners the new system has entailed a sharp reduction, from one month to the next, which may be as much as half the amount in lire previously obtained from resale of the amount paid in Belgian francs or German marks in respect of the pension. On the other hand, in the case of serving officials, the increase in the amount of funds required for the transfers is nowhere near that proportion since at the most only 35% of remuneration may be transferred. In extreme cases, those of transfers to Germany of 35% of the remuneration for March of an official employed in Italy, the increased cost of the transfer might at the most be around 25% of the total remuneration for April. As regards the circular laying down detailed arrangements for transfers of part of the emoluments of officials (Administrative Notice No 230), it was not intended to avoid an increase in the cost for certain officials of making such transfers and it did not in fact do so; its object was to enable all officials to continue to transfer the same nominal amount of foreign currency as previously. The applicant therefore has nothing to gain by criticizing that provision, which is not in any way detrimental to him. The Commission is opposed to the adoption of any compensatory measures which, according to the applicant, should be based on the general duty of assistance which is incumbent upon the defendant. The latter has shown that such a wide definition of the duty of assistance conflicts with the fact that the employment relationship is governed by regulations. It would appear that an incorrect view of the concept of “vested rights” is at the root of the matter. Article 24 of the Staff Regulations may not therefore be relied upon for that purpose (cf. the opinion cited above in Joined Cases 63 to 65/70) and the result of its being so relied upon would be to render ineffectual the power of the authority responsible for the Staff Regulations to enact with immediate effect provisions adopting those regulations to economic realities.

3. In his reply, the applicant observes that the text of Article 24 of the Merger Treaty refers to the institutions “concerned” and not to the institutions as listed in the Treaties, the reason being that where decisions relating to staff are concerned it is appropriate to consult all the “institutions” which employ officials; this applies to the Economic and Social Committee and the Court of Auditors. Furthermore, although in form the regulation is a measure falling solely within the Council's area of responsibility the fact remains that since Article 110 of the Staff Regulations provides that the Staff Committee must be consulted on the adoption of general implementing measures within each institution, the same must a fortiori apply to a measure such as the amendment of the Staff Regulations which in principle is much wider in scope. The Parliament was not consulted on all the new provisions. In the first place, in order to prove that not only the two new versions of Article 63 of the Staff Regulations but also those of Article 17 of Annex VII are identical in form, it is necessary to show that, as between the previous situation and the situation which was the result of the implementation of the amendment based on reference to the European unit of account, officials did not suffer any losses other than purely technical losses. In the second place, the applicant maintains that the statement of reasons on which the draft report before Parliament was based makes no reference to the question of transfers. The table annexed to the report, if indeed the Parliament has examined it, gives a partial, and indeed biased, view of matters. The Parliament was never aware that, as regards transfers to countries with a strong currency, and in particular the Federal Republic of Germany, an official would suffer a loss of 42% on the transferable 35% of his salary. It cannot therefore, in the last analysis, be aımitted that Mr Tugendhat's statement on the “neutrality” of the operation does not extend to the sphere of transfers, when it is known that the expenses in respect of health, investment and savings by European officials are the result of commitments specifically referred to in the measures implementing Article 17 of Annex VII. Moreover, consideration of the resolution embodying the opinion of the Parliament is sufficiently explicit both as to the intentions of that institution and as to the information which was given to it. After indulging in a long inventory of international and Community legal theory and case-law, the applicant asserts that the European institutions themselves, whilst rejecting the theory of vested rights, consider that the right of the authority responsible for the Staff Regulations unilaterally to amend those regulations does not extend so far as to enable it to reduce the emoluments of officials. The Staff Regulations may be amended only in the interests of the service and the latter may not itself propose any reduction of emoluments except in the case of a reduction in the cost of living, an eventuality which has been wholly theoretical since 1945. The question to be answered is not whether the applicant thought when he entered the service that he perceived in Article 17 of Annex VII a guarantee regarding foreign exchange but whether at that time and thereafter he could have reasonably been persuaded that his emoluments, as a whole, would not diminish. He might also have considered that if the transfers constituted a system making it possible to compensate for the disadvantage which the application of Article 63 involved for him with respect to the remaining 65% of his salary, the compensation would not be discontinued without some other form of offsetting measure being substituted for it. In the Commission's view, the texts of the Staff Regulations of the Communities include provisions which are superfluous or go too far. However, it would be astonishing if the Council, acting on a proposal from the Commission, regarded itself as under an obligation to introduce them into the Staff Regulations or to retain them. As regards breach of the principle of equality, the submission is not intended to secure cancellation of the measures adopted in favour of pensioners. The applicant does not think, however, that any justification for the discrimination may be reasonably inferred from the real objective situations of the two groups of officials. In fact, in any system where problems of remuneration or pensions are resolved not step by step but on the basis of objective rules applicable to all those who find themselves in the same legal situation, no provision of the Staff Regulations or implementing measure should be particularly favourable to some and fundamentally disadvantageous to others. The grant of compensatory measures may be explained by the fact that the Commission's responsibility was incurred at the highest level, since the amendment of which the applicant complains was in fact prepared by its officials, was then presented to the Parliament and was finally submitted to the Council as a neutral measure, which it was not. The applicant does not ask for the benefit of a guarantee ad vitam aeternam but within the framework of his claims submitted in the alternative (see above). Moreover the Commission understood perfectly that it had to take measures of that kind, a fact evidenced by the measures relating to persons treated as dependent children, for a period fixed at five years (cf. Administrative Notice No 230 referred to by the Commission, instead of No 233, in which the measure referred to by the applicant with regard to the second part of the submission is indeed included).

4. In its rejoinder, the Commission replies that the treatment of the Economic and Social Committee and the Court of Auditors as institutions is valid only for the implementation of the Staff Regulations and not for laying them down or amendiıg them. As regards consultation with the Staff Committee, in addition to the fact that there are six such committees, that is to say one for each institution, consultation is optional and may not relate to amendment of the Staff Regulations. There can be no question therefore of any omission of essential procedural requirements. As regards consultation with the Parliament, the postulation by the applicant is not based on a relevant comparison. A comparison should be made between the situations resulting on the one hand from the proposal relating to the introduction of the European unit of account and on the other hand the situation arising from the entry into force of Regulation No 3085/78. A comparison between the previous situation and that which would have resulted from adoption of the proposal for the introduction of the European unit of account is of no interest in this case. The Court has just made clear in two recent judgments, of 29 October 1980 (Case 138/79 Roquette [1980] ECR 3333 and Case 139/79 Maizena [1980] ECR 3393), how far the obligation to consult the Parliament extends; in the Court's view, compliance with that obligation “implies that the Parliament has expressed its opinion”; in other words, once the Parliament's opinion has been given, as in this case, the argument based on the omission of essential procedural requirements cannot be sustained. The amendment complained of did not in any way lead to a decrease in officials' total remuneration; its only result was to render more costly a facility provided for in the Staff Regulations; by analogy, would the applicant maintain that officials' remuneration would be cut if the Commission increased the rates for the building loans granted by it? The alleged superior principle of law relied upon with regard to the concept of vested rights is unknown in the various national laws relating to the public service or in international organizations or in Community law. It is true that a system of compensatory measures was introduced when certain amendments were made to the Staff Regulations involving a reduction in pecuniary rights. However, in those cases it was merely a question of appropriateness and not of any legal requirement. When he entered the service, the applicant could not have inferred from the Staff Regulations any certainty that the “official rate” would remain unchanged for transfer purposes year after year, even though it might diverge to a considerable extent from the parities ruling in the market. The considerations which might have influenced the applicant's decision to agree to be bound by the Staff Regulations must be examined in the light of the circumstances prevailing when he entered the service; at that time, the so-called “disadvantages” relating to the nontransferable portion of 65% of his salary did not exist. As from 1971, the system of transfers had the effect of enabling certain officials to obtain “strong” currencies at a rate much lower than the market rate, to the detriment of the Community budget. By referring to this fact the defendant did not in any way wish to indicate that Article 17 of Annex VII constituted a source of abuse ab initio but rather that the provision had become open to abuse following developments in the monetary market. No document submitted by the Commission to the professional and trade-union organizations has ever contained a general clause regarding financial neutrality. The situations of pensioners and of serving officials are not comparable and the considerable difference in the financial impact as between them constitutes an objective criterion on the basis of which those two staff categories may have (temporarily) different conditions applied to them. As regards the grant of compensatory measures applied for by way of alternative claim, that is to say, a claim on the assumption that the amendment in question is perfectly legal, in what way is the Commissıon's action in taking the initiative regarding a procedure, which resulted in a regulation which is legal in every respect, improper and thus a basis for liability? A broad interpretation of the duty of assistance would result in suspending for many years the implementation of an amendment to the Staff Regulations which in any case had been recognized to be in order.

IV — Oral procedure

The parties presented oral argument at the sitting on 19 and 20 February 1981.

The Advocate General delivered his opinion at the sitting on 14 May 1981.

Decision

1. By an application lodged at the Court Registry on 21 December 1979, Mr Battaglia, an official of the Commission employed at the Ispra Joint Research Centre, Italy, brought an action pursuant to Article 91 of the Staff Regulations of Officials (hereinafter referred to as “the Staff Regulations”) for annulment of the Commission's decision fixing the applicant's remuneration for April 1979 and of the rejection of the complaint lodged by him against that decision.

2. Articles 63 and 64 of the Staff Regulations in the version in force until the end of 1978 provided: “An official's remuneration shall be expressed in Belgian francs. It shall be paid in the currency of the country in which the official performs his duties. Remuneration paid in a currency other than Belgian francs shall be calculated on the basis of the par values accepted by the International Monetary Fund ... on 1 January 1965. An Official's remuneration expressed in Belgian francs shall ... be weighted at a rate above, below or equal to 100%, depending on living conditions in the various places of employment ... The weighting applicable to the remuneration of officials employed at the provisional seats of the Communities shall be equal to 100% as at 1 January 1962”.

3. In accordance with Article 17 of Annex VII to the Staff Regulations an official may have part of his emoluments transferred either regularly or on an exceptional basis to a country other than that in which he performs his duties. Until 31 March 1979 Article 17 (4) provided that such transfers were to be made through the institution which he serves “at the official exchange rate ruling on the date of transfer”. The “official exchange rate” within the meaning of that provision was the last parity accepted by the International Monetary Fund, which had not been altered since 1 November 1969 (for example, BFR 13.66 = DM 1).

4. On 21 December 1978 the Council adopted Regulation (Euratom, ECSC, EEC) No 3085/78 (Official Journal 1978 L 369, p. 6). Article 1 of that regulation provides that Article 63 of the Staff Regulations is replaced by the following wording:

“Officials' remuneration shall be expressed in Belgian francs. It shall be paid in the currency of the country in which the official performs his duties.

Remuneration paid in a currency other than Belgian francs shall be calculated on the basis of the exchange rates used for the implementation of the general budget of the European Communities on 1 July 1978.

This date shall be changed, at the time of the annual review of remuneration provided for in Article 65, by the Council acting by a qualified majority upon, a proposal from the Commission as provided in the first indent of the second subparagraph of Articles 148 (2) of the EEC Treaty and of 118 (2) of the Euratom Treaty.

Without prejudice to the application of Articles 64 and 65, the weightings fixed pursuant to these articles shall, whenever the above date is changed, be adjusted by the Council, which, acting in accordance with the procedure mentioned in the third paragraph, shall correct the effect of the variation in the Belgian franc with respect to the rates referred to in the second paragraph.”

5. Article 2 of the regulation provides :

“Article 179 of Annex VII shall be replaced by the following :

‘Article 17

1. Payment shall be made tı each official at the place and in the currency of the country where he carries out his duties.

2. Under the terms laid down in rules drawn up by common agreement by the institutions of the Communities, after consultation of the Staff Regulations Committee, an official may:

a) through the institution which he serves, regularly have part of his emoluments transferred up to a maximum amount equal to his expatriation or foreign residence allowance:

either in the currency of the Member State of which he is a national,

or in the currency of the Member State in which either his own domicile or the place of residence of a dependent relative is located,

or in the currency of his previous country of employment or of the country in which his institution has its seat, provided that the official in question has been assigned to a post outside the territory of the European Communities;

b) have regular transfers made in excess of the maximum stated at the beginning of paragraph (a) provided that they are intended to cover expenditure arising in particular out of commitments proved to have been regularly undertaken by the official outside the country where the institution has its seat or outside the country where he carries out his duties;

c) be authorized, in very exceptional circumstances and for good reasons supported by evidence, to have transferred, apart from the aforementioned regular transfers, sums which he may wish to have available in the currencies referred to in paragraph (a).

3. The transfers provided for in paragraph (2) shall be made at the exchange rate specified in the second paragraph of Article 63 of the Staff Regulations; the amounts transferred shall be multiplied by a coefficient representing the difference between the weighting for the country [in whose currency the transfer is made and the weighting for the country] in which the official is employed.’ ”

6. Article 4 of the regulation provides that it is to enter into force on 1 January 1979 and is to apply from 1 April 1979.

7. On 21 December 1978 the Council also adopted Regulation (Euratom, ECSC, EEC) No 3086/78 adjusting the weightings applicable to the remuneration and pensions of Officials and Other Servants of the European Communities following the amendment of the provisions of the Staff Regulations concerning the monetary parities to be used in implementing the Staff Regulations. Article 1 (1) of the regulation fixes inter alia the weighting applicable to remuneration as 74.3 for Italy, 98.7 for the Federal Republic of Germany and 92.2 for France.

8. Under Article 17 of Annex VII to the Staff Regulations the applicant had a certain portion of his remuneration transferred regularly to France, Belgium and the Federal Republic of Germany. The exchange value in Italian lire of the sums thus regularly transferred amounted in March 1979 to LIT 661712.

9. As from 1 April 1979 the cost of those transfers in Italian lire at the exchange rate calculated in accordance with the newly worded Article 17 (3) of Annex VII to the Staff Regulations, mentioned above, amounted to LIT 889895.

10. On 21 June 1979 the applicant filed a complaint under Article 90 (2) of the Staff Regulations regarding the increase in the cost of transfers made by him as from April 1979. On 28 September 1979 the Commission replied by letter, to the effect that, on the one hand, it could not without exceeding its authority fail to apply Council regulations which had properly entered into force and, on the other hand, that in substance it approved the amendments made to the Staff Regulations.

11. The applicant therefore brought this action asking the Court (1) to declare void the decision adopted with regard to him, the practical effects of which are to be found in the pay statement for April 1979; (2) to rule that Regulations Nos 3085 and 3086/78 are inapplicable pursuant to Article 184 of the EEC Treaty, Article 156 of the EAEC Treaty and the thiıd paragraph of Article 36 of the ECSC Treaty; (3) to rule that the decision expressly rejecting the applicant's complaint is void; (4) to declare that all sums payable in consequence of the annulments are to bear interest; and (5) in the alternative, to declare that it is incumbent upon the Commission to take all steps necessary to compensate for the effects of the said regulations.

12. The applicant relies in the first place on certain grounds based on an infringement of essential procedural requirements. He maintains that the contested regulations were adopted without the prior consultation with the institutions concerned referred to in Article 24 of the Treaty of 8 April 1965 establishing a single Council and a single Commission of the European Communities (hereinafter referred to as “the Merger Treaty”). The Economic and Social Committee was not consulted, nor was the Court of Auditors which, according to the applicant, are the institutions concerned within the meaning of that article. Moreover, consultation with the European Parliament took place on the basis of a proposal from the Commission which was considerably different from the text of the regulation adopted by the Council. He further maintains that in its proposal the Commission implemented Article 110 of the Staff Regulations because the proposal was made after the opinion of the Staff Regulations Committee was obtained. It follows that the Commission should likewise have consulted the Staff Committee.

13. The applicant then puts forward arguments concerning the content and effects of the regulations. He criticizes the application of the regulations, maintaining that implementation of the new wording of Article 17 of Annex VII to the Staff Regulations breaches the principle of protection of vested rights; that since the change in the conditions laid down in the Staff Regulations involved a considerable reduction of the net remuneration received by officials it radically altered the scheme of the Staff Regulations and undermined the fundamental conditions which were of such a kind as to influence the applicant's decision to agree to be bound by the Staff Regulations; and that the application of the text was in breach of formal commitments entered into by the Commission to the effect that it would ensure that the measures proposed by it would be strictly neutral and would not affect the real value of payments made to officials in respect of their remuneration, pensions and allowances.

14. The applicant also complains of the discrimination which, according to him, is inherent in the transitional provisions applicable to pensions in view of the fact that no transitional provisions are applicable to the transfers made by the applicant in accordance with Article 17 of Annex VII to the Staff Regulations. The Commission should, in the discharge of its duty to assist officials, of which Article 24 of the Staff Regulations constitutes an illustration, have laid down transitional procedures for compensation, by way of an implementing measure, which should have been coterminous with the legal and contractual obligations of the officials. The applicant states that the Commission adopted, in favour of certain recipients of allowances for persons treated as dependants, a decision to freeze the amounts allocated for maintenance for a period of five years at the values applicable on 31 March 1979. It should have adopted a similar decision with regard to the transfers made as a result of the legal and contractual obligations of officials and servants.

Infringement of essential procedural requirements

15. It should be noted that, when changes are made to the Staff Regulations of Officials and the Conditions of Employment of Other Servants, Community law requires that the Parliament and the Court of Justice be consulted and that the opinion of the Staff Regulations Committee be obtained. Article 24 of the Merger Treaty provides that “The Coıncil shall, acting by a qualified majority on a proposal from the Commission and after consulting the other institutions concerned, lay down the Staff Regulations of Officials of the European Communities and the Conditions of Employment of Other Servants of those Communities.” Article 10 of the Staff Regulations provides that the Staff Regulations Committee (consisting of representatives of the Staff Committees) is to be consulted by the Commission on any proposal for the revision of the Staff Regulations.

16. A distinction should however be made between the requirements of Community law applicable to Regulation No 3085/78, which involves amendment of the Staff Regulations, and those applicable to Regulation No 3086/78, which adjusts the weightings. A regulation such as Regulation No 3086/78, which determines the weightings, is adopted by the Council on a proposal from the Commission pursuant to Article 64 of the Staff Regulations, which imposes no obligation involving consultation.

17. As regards Regulation No 3085/78, it is true that Article 24 of the Merger Treaty provides for consultation with the other institutions concerned, one of those being the Parliament. That consultation, which in particular enables the Parliament effectively to participate in the Community's legislative process, is an essential feature of the institutional balance which the Treaties seek to achieve. Regular consultation with the Parliament constitutes therefore an essential procedural requirement, the disregard of which renders the regulation in question void. It is therefore appropriate to consider whether the required consultation in fact took place.

18. On 1 April 1977 the Commission, after giving notice to the Staff Regulations Committee, placed before the Council a proposal for a Council regulation introducing the European unit of account (EUA) into the Staff Regulations (Official Journal 1977 C 99, p. 5). Article 1 concerns substitution of the EUA for the Belgian franc in Article 63 of the Staff Regulations. The proposal incorporated the changes made necessary by the adoption of the EUA, in particular the substitution of a new table in Article 66 of the Staff Regulations, in which remuneration is expressed in European units of account, in place of the old table in which remuneration is expressed in Belgian francs. Article 4 of the proposal concerns substitution of the following wording for Article 17 (4) of Annex VII to the Staff Regulations: The proposal included other provisions which are not pertinent to this case.

“Transfers provided for in paragraphs (2) and (3) shall be made on the basis of the value of the European unit of account (EUA) specified in the second paragraph of Article 63 of the Staff Regulations; the amounts transferred shall be weighted by a coefficient representing the ratio between the weighting for the country in the currency of which the transfer is made and the weighting for the country of the official's employment.”

19. Having received the proposal and a request for an opinion from the Council, the Parliament gave a favourable opinion (Official Journal 1977 C 193, p. 55). The Parliament's resolution included, inter alia, the following recitals:

“Whereas the sole purpose of the Commission's proposals submitted to Parliament is to express in European units of account those values (remunerations, allowances, transfers of funds, weightings, tax) hitherto expressed in Belgian francs, without affecting the rights of staff or exposing their emoluments to possible fluctuations;

...

Whereas following the introduction of the European unit of account, weightings will no longer be required to correct exchange parities and will henceforth be used principally to take account of increases in the cost of living, as originally intended;

Whereas the Commission has given assurances that its proposals will in no way adversely affect the remunerations and other allowances of officials and other servants of the European Communities;”

20. The resolution asks the Commission to introduce, in good time, the administrative arrangements needed to ensure that the application of the European unit of account does not disrupt existing administrative practices or even temporarily harm the interests of the European Civil Service and notes the Commission's assurance that its proposal will in no way affect the real value of the payments made to officials in the form of remuneration, pensions and allowances.

21. In a communication to the Council dated 29 November 1978 the Commission expressed the desire that Article 1 of its proposal of 1 April 1977 should be amended. The text of the new proposal corresponds to the first two paragraphs of Article 63 as amended by Regulation No 3085/78. In the same communication, the Commission proposed a transitional period of six months, that is to say until 1 October 1979, for pensioners and recipients of allowances whose net emoluments would suffer a reduction following the updating.

22. Regulation No 3085/78 followed that proposal from the Commission, adding, however, after the proposed transitional provision, a further transitional provision: “From that date the difference between the net amounts resulting from the implementation of this regulation and those received in September 1979 shall be reduced by 1/10 per month.”

23. It appears from the report of the Parliament's Committee on Budgets that the Parliament was in a position to assess the possible impact of the Commission's initial proposal on pensions and transfers made under Article 17 of Annex VII to the Staff Regulations and that the assurances given to the Parliament by the Commission must be understood to the effect that the “neutrality” of the proposal concerned the entire remuneration of officials and that in certain cases the Commission's proposal might have the effect of increasing the cost of transfers.

24. In fact, the regulation finally adopted conformed to the proposal submitted to the Parliament apart from the substitution of updated exchange rates for the EUA and the transitional provisions intended to alleviate the effect of the provisions of the regulation for a specific period with regard to certain pensioners. As regards the substitution of the updated exchange rates for the EUA, it should be noted that the rates adopted exactly reflected the value of the EUA in terms of national currencies as at 1 April 1978, so that the amendment to the initial proposal constituted in reality a change of method rather than of substance. As regards the transitional provision for the benefit of certain pensioners, it should be noted that that provision corresponded broadly to the wish expressed by the Parliament.

25. In those circumstances, further consultation with the Parliament regarding the contested provisions was unnecessary.

26. As regards the argument put forward by the applicant that the Economic and Social Committee and the Court of Auditors are institutions within the meaning of Article 24 of the Merger Treaty, and that consultation with them is an essential condition for the adoption of a regulation amending the Staff Regulations, it should be remembered that the Treaties establishing the Communities contain provisions specifying the institutions of the three Communities. The Economic and Social Committee and the Court of Auditors are not among those institutions. Accordingly, consultation with the Economic and Social Committee and the Court of Auditors was not mandatory.

27. It is true that, according to the second paragraph of Article 1 of the Staff Regulations, the Economic and Social Committee and the Court of Auditors are treated as Community institutions for the purposes of the Staff Regulations. That treatment, the object of which is to ensure that the Staff Regulations are applied to the officials and other servants of those two bodies and to identify the appointing authority for those employees, doeı not however extend to the application of the provisions of the Treaties, such as Article 24 of the Merger Treaty, relating to the adoption of Community regulations.

28. As regards the argument that the Staff Committee should have been consulted, it is sufficient to point out that Article 110 of the Staff Regulations, which imposes the obligation to consult the Staff Committee applies only to the general provisions for giving effect to the Staff Regulations by each institution. Consultation with the Staff Committee is not therefore necessary for the adoption of a regulation amending the Staff Regulations.

Content and effects of the regulations

29. The applicant is of the opinion that the new system for calculating the exchange rates for transfers encroaches upon his vested rights. On the basis of the provisions in force until April 1979 the applicant entered into binding commitments from which he could not be discharged for a specific period of time. The existence for many years of the facility for transferring regularly a certain part of his monthly remuneration induced him to enter into those commitments and he had every right to believe that the system would not be changed to his disadvantage before he was clear of commitments, particularly with regard to loans. He is therefore entitled to the maintenance in force of the old transfer system, or at least to a transitional system continuing to apply the previous exchange rates until he is clear of his commitments. The Commission gave a formal undertaking to the Parliament to ensure that the measures to be adopted would be strictly “neutral” and would not affect the real value of the payments made to officials in the form of remuneration, pensions and allowances.

30. The applicant's arguments are based on the premise that he is entitled to have the exchange rate applied to transfers made pursuant to Article 17 of Annex VII to the Staff Regulations maintained at a level enabling him to receive, after making those transfers, a balance of remuneration in Italian lire equal to the amount he received in March 1979, at least until he is clear of the commitments he entered into before April 1979. It should, however, be noted that the exchange rates applied until April 1979 were particularly favourable to officials employed in countries with a weak currency. In fact, the weighting had been fixed so as to take into account the devaluation of the currency in the place of employment, and was applied to the remuneration in its entirety, whereas the transfers were made at the exchange rate for the year 1969. As from April 1979 remuneration was calculated on the basis of the updated exchange rates, so as to ensure that each official received the same total remuneration, expressed in national currency, as he received in March 1979. Transfers continued to be made at an exchange rate more favourable than the official rate, although less favourable than the rate previously used, this being achieved by application to the amount transferred of the weighting derived from the relationship existing between the weighting fixed for the country in whose currency the transfer was made and the weighting fixed for the country in which the official was employed. This method of calculating the exchange rate was intended to enable an official employed in a country with a weak currency to make the transfers in question in respect of the same part of his total remuneration as an official employed in a country with a strong currency.

31. It is true that the application of the new provisions at issue entailed a decrease in the balance remaining for the applicant after making the same transfers as in March 1979. It should, however, be noted that that balance after the transfers are made has not been constant for many years, as is implied in the applicant's statements, but has varied according to adjustments of the weighting in line with changes in the cost of living and the raıe of inflation.

32. It must be remembered that the weighting was introduced during a period of relative stability of currencies and that its function was to ensure that an official's remuneration was commensurate with the living conditions in the various places of employment. However, following the monetary crisis, the weighting was used not only to adapt remuneration to the living conditions in the various places of employment but also to provide compensation for the devaluation of certain weak currencies. Thus, in 1978, whilst the cost of living in Italy was lower than that in Belgium, the weighting for Italy was almost half as high again as that for Belgium. The application of that weighting to the exchange rates provided for in the Staff Regulations in force until the end of 1978 (BFR 1 = LIT 12.50) compensated for the devaluation of the lira.

33. An inevitable result of that use of the weighting was that the weighting had to be applied to the portion of remuneration intended to be transferred pursuant to Article 17 of Annex VII to the Staff Regulations at the official rate since it formed part of the total remuneration. As a result, the more a weak currency was devalued, the greater was the decrease of the portion of the total remuneration required for the transfer of a specific amount to a country with a strong currency.

34. On the other hand, after the amendment to the Staff Regulations resulting from Regulation No 3085/78, it was possible to restore the proper function of the weighting, namely that of reflecting the living conditions in the various places of employment. Although the cost of the transfers was rendered less favourable, the system nevertheless continued to benefit officials employed in a country with a weak currency.

35. It appears therefore that even though there may be limits on the powers of the Community legislature to reduce the benefits enjoyed by officials under a system provided for in the Staff Regulations, the view that in this case those limits have not been observed cannot be upheld.

36. Furthermore the applicant maintains that the absence in the contested regulations of transitional provisions in favour of serving officials similar to those of which pensioners have the benefit breaches the principle of non-discrimination.

37. In that respect, it is sufficient to point out that discrimination in the legal sense consists of treating in an identical manner situations which are different or treating in a different manner situations which are identical. The situation of a serving official differs considerably from that of a pensioner, so that there is no discrimination in a case where the Community legislature accords to pensioners treatment which is not identical to that applied to serving officials.

38. The same principle applies regarding the alleged discrimination arising from the fact that the Commission's decision to apply for a period of five years a special policy concerning the values to be taken into consideration regarding the cost of maintenance of persons treated as dependants (Administrative Notice No 233 of 30 April 1979). The matter of transfers may not be treated on the same footing as the case of the persons referred to by that decision.

39. The arguments based on the alleged discrimination must therefore be rejected.

40. Consideration of the submissions of the applicant having shown that none of the grounds relied upon may be upheld, the action must be dismissed as unfounded.

Costs

41. Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs.

42. Nevertheless, pursuant to Article 70 of the Rules of Procedure, the institutions are to bear the costs which they have incurred in proceedings commenced against them by officials of the Community.

On those grounds, THE COURT (First Chamber) hereby:

1 Dismisses the application;

2 Orders the parties to bear their own costs.