C-618/79

In Case 618/79 A

HELMUT KNOEPPEL, an official of the Commission of the European Communities at the Ispra Joint Research Centre, Italy, residing at 116 Via Matteotti, Cadrezzate, Varese, Italy, represented by B. Potthast and H.-J. Rüber, Rechtsanwälte, Cologne, with an address for service in Luxembourg at the Chambers of V . Biel, 18a Rue des Glacis, applicant, v

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by J. Pipkorn, a member of its Legal Department, acting as Agent, with an address for service in Luxembourg at the office of O. Montako, Jean Monnet Building, Kirchberg, defendant,

APPLICATION in the terms set out in the applicant's conclusions,

KNOEPPEL v COMMISSION

T H E C O U R T (First Chamber)

By decision of 2 March 1970 concerning Article 7- (2) (a) provides that the interest the use of the sums available under the and repayments due from the official European Coal and Steel Community under the loan are to be retained from budget item · "Pension Funds" the his remuneration pursuant to instructions Council authorized the Commission to given for that purpose to the set aside 40 % of the said sums for the Commission. Article 11 (2) provides that grant of building loans to officials of the no amendment to the implementing Communities. provisions may jeopardize the rights conferred upon officials who have already been granted loans. By decision of 17 June 1971, published in Staff Courier No 170 A of 8 July Accordingly, the loan agreements 1971, the Commission issued the entered into between borrowers and the necessary implementing provisions, in Commission include inter alia the particular: following provision:

JUDGMENT OF 1. 7. 1982 — CASE 618/79 A

The system operated as follows: the " O n 27 July 1975 the Commission official's monthly salary, to which the decided that Commission building loans weighting was applied (for example BFR would in future be paid — and 100 000 × Italian weighting of 157.8 in deductions from salaries to repay the March 1979) was reduced by the amount loans would be made — in Belgian of the building loan instalment (for francs rather than in the currency of the example BFR 5 000), the net remuner- country where the property covered by ation then becoming, in the example the loan in question is situated. Hitherto, given, BFR 152 800, which was all deductions have been calculated, converted into Italian lire at the rate of where necessary, on the basis of parities BFR 1 = LIT 12.50. at 1 January 1965. Henceforth, by decision of the Director-General for By decision of 25 July 1975, published in Personnel and Administration, con- the Staff Courier of 15 September 1975 version will be based on 'updated' (special inter-institutional issue), the exchange rates. However, surf may Commission amended Article 9 of the request that the deductions be made at implementing provisions of 17 June 1971 the parities communicated to the Inter- as follows: national Monetary Fund, with reference to and within the scope of the provisions giving effect to Article 17 of Annex VII "Loans covered by this provision shall be to the Staff Regulations (transfer of expressed and paid in Belgian francs. part of emoluments through the The deductions and payments referred to Commission)."

On 23 December 1971 Mr Knoeppel had updated the exchange rates. The entered into an agreement with the reference to the IMF parity was Commission for a loan of BFR 787 500, abandoned and for transfers in a the exchange value of which in Italian currency other than that in which lire, namely LIT 9 843 750, was paid to remuneration was paid the exchange rate him pursuant to Article 9 of the used for implementation of the general implementing provisions adopted on budget of the European Communities on 17 June 1971. 1 July 1978 (reviewable) was imposed (that is to say LIT 26.11 = BFR 1), a coefficient being applied pursuant to Article 17 of Annex VII to the Staff The applicant made the request referred Regulations "representing the difference to in the Commission's decision of between the weighting for the country in 25 July 1975 and the amount of his whose currency the transfer is made and principal debt was reduced by BFR the weighting for the country in which 150 694. the official is employed". The object of the application of that coefficient was to ensure, as regards the pan of the salary Mr Knoeppel's salary statement for transferred to a country other than the March 1979 showed a sum of BFR 3 402 official's place of employment, that every in respect of repayment of the loan, official should, as a result of the converted into LIT 42 525. The same adjustment of that portion by means of amount in Belgian francs was converted the weighting applied in the other into LIT 62 454 in April 1979 and in country, enjoy exactly the same pur- September 1975 into LIT 65 170. chasing power, for the corresponding portion of his salary, as an official employed in that country. For the IMF rate of BFR 1 = LIT 12.50 the rate of In fact on 21 December 1978 the BFR 1 = LIT 18.35 was therefore sub- Council had adopted Regulation stituted, remaining in force until No 3085/78 amending, with particular 31 January 1980. As from 1 February reference to the monetary parities to be that rate was changed to BFR 1 = used, Regulation No 259/68 laying LIT 19.80. down the Staff Regulations of Officials of the European Communities and the Conditions of Employment of Other Servants of the Communities, Regulation The persons concerned were informed of No 2530/72 and Regulation No 1543/73 the new provisions by Circular concerning certain special measures No 19/C-2/79 of 1 March 1979 and by (Official Journal 1978, L 369, p. 6) and Administrative Notice No 230 of 9 April Regulation No 3086/78 adjusting the 1979 (which gave details of the new rates weightings applicable to the remuner- applicable to repayments in Belgian ation and pensions of officials and other francs for Commission building loans). servants of the European Communities following the amendment of the provisions of the Staff Regulations concerning the monetary parities to be On 27 March 1979 a complaint pursuant used in implementing the Staff Regu- to Article 90 of the Staff Regulations was lations (Official Journal 1978, L 369, lodged by the applicant against the p. 8). By means of those regulations the consequences for repayment of the Council amended in particular Article 63 building loan of Regulations Nos of the Staff Regulations of Officials and 3085/78 and 3086/78.

By letter of 12 July 1979 the Commission II — C o n c l u s i o n s of the parties rejected the complaint. The applicant claims that the Court A fresh complaint dated 11 July 1979 should: was lodged by the applicant (cf. Cases 530 to 729 and 781/79 Al and Others) I. 10. Declare unlawful and annul the pursuant to Article 90 (2) of the Staff salary statement issued by the Regulations against the application of defendant for April 1979 and its those regulations to the calculation of decision of 28 September 1979 the remuneration paid in respect of April on the applicant's complaint in 1979. so far as they relate to deductions for repayment of a The Commission rejected the second building loan granted by the complaint by letter of 28 September defendant, which, if converted at 1979. the rate applied for the advance of the loan, exceed the amounts in lire relating thereto; By applications dated 17 December 1979 received at the Court on 24 December 11. In the alternative, in the case of 1979, 13 officials (in the group 530 to the applicant, who in 1975 729 and 781/79), one of whom was the "updated" the building loan applicant, lodged a supplementary agreement concluded between application disputing the procedures for him and the defendant, declare repayment of the building loans granted unlawful «and annul the salary by the Commission, which the latter had statement issued by the changed as from April 1979 on the basis defendant for April 1979 and its of the contested Council regulations. decisions of 28 September 1979 on the applicant's complaint By memorandum dated 9 April 1980 the likewise in so far as they relate Commission contended that the sup- to deductions for repayment of a plementary applications should be building loan granted by the dismissed as inadmissible and that the defendant, which exceed the statements relating thereto be treated as amounts in lire paid for that separate applications. purpose until March 1979 inclusive on the basis of a higher By letter of 14 January 1981 the rate of exchange applied to the Registrar of the Court informed the advance of the loans at the time Commission that the Court (First of amendment of the contract Chamber) had decided to treat the sup- ("updating"); plementary claims as new applications. 12. Direct that, as regards the amounts thereof in lire, the On hearing the report of the Judge- monthly repayments of the Rapporteur and the views of the building loan are to remain the Advocate General the Court (First same as the amount thereof as at Chamber) decided to open the oral 1 April 1979; procedure without any preparatory enquiry. 13. In the further alternative, in the case of the applicant, whose It should be noted that, by order of contract was "updated" in 1975, 14 October 1981, the Court (First direct that, as regards the Chamber) declared the application amount thereof in lire, the inadmissible in so far as it was directed monthly repayments of the against the Council. building loan are to be

calculated on the basis of an agreement was entered into the parties exchange rate which corre- stipulated for repayment of the loan at sponds to the exchange rate the rate at which it was advanced, applied to the advance of the namely LIT 12.5 = BFR 1. The loans at the time of the Commission is not entitled to amend the updating; agreement unilaterally and to the detriment of the applicant. Had the 14. In the final alternative, declare applicant had notice of so onerous a that during the two years after provision he would not have signed the the Court's decision becomes res loan agreement since the long-term risk judicata, the applicant is to be of depreciation of the lira was, as far entitled to make early repayment as he was concerned, incalculable. of his building loan on the basis Similarly, the applicant adds, he would of the exchange rate applied to not have obtained in lire the real value at the advance of the loan; the material time of his loan expressed in 15. Order the defendant to amend Belgian francs, but rather an amount the applicant's building-loan calculated according to the special rate account, regard being had to the applicable to internal dealings. heads of claim in paragraphs 1.10 to 13; Both the applicant's remuneration and 16. Order the defendant to pay to his loan have been and are determined in the applicant in Italian lire the Belgian francs but paid in the currency amount of the difference of his country of residence. If now the resulting from the calculation loan were to be repaid in Belgian francs made in accordance with the the Commission could make deductions head of claim in paragraph 1.15; from the remuneration determined in Belgian francs and subsequently convert III. 1. Order the defendants to the amount, still expressed in Belgian compensate the applicant for the francs, into lire and pay that amount in pecuniary damage suffered, lire to the applicant. But the Commission which the Court is requested to wishes precisely to avoid that situation determine to be the amount of because, from a formal point of view, it interest, at the rate of 6 %, distinguishes between the loan and the accrued on the amount of the payment of remuneration and because arrears from the respective dates subsequently, when the loan is repaid, on which they fell due until the it achieves a very significant gain. date of payment; However, to regard the grant of the loan as the payment of remuneration is 2. Order the defendants to pay the contrary to Article 62 et seq. of the Staff costs. Regulations. The defendant contends that the Court should: Moreover, the Commission's procedure is also at variance with the obligation to Dismiss the action as unfounded; provide assistance which it must Order the applicant to pay the costs. discharge with respect to the applicant. Had there been any intention to impose upon the applicant a monetary risk for a Ill — Submissions and arguments period which now, as a result of the of t h e p a r t i e s increase in the amount to be repaid, extends beyond his retirement, an The applicant alleges in the first place a express provision to that effect should breach of the law of contract. When the have been included in the agreement.

If, when in 1975 it brought pressure to principal debt was reduced and the bear on officials to apply for updating, repayment table was amended. the Commission was planning the present measures, it has laid itself open to allegations of fraudulent conduct. Adherence to the parity of LIT 12.50 per Belgian franc never became an implied term of the contract which the defendant was not entitled unilaterally to delete. In In 1975 the applicant obtained a single fact, the parties performed the agreement reduction of the amount of his loan. It is on the basis of the IMF parities, but to be acknowledged that officials who subject to the express provision that then availed themselves of the oppor- those parities might be changed (cf. in tunity to update their agreements in fact that regard the contractual provisions obtained a higher rate for the repayment and the criterion of "parity ruling on the of the loan expressed in Belgian francs date of the payment or transfer"). by reason of the reduction of the principal debt. As the applicant did not wish to obtain any unjustified advantage either from his remuneration or from his After convertibility of the dollar into loan, he is naturally prepared to redeem gold was discontinued (15 August 1971) his loan on the basis of that higher rate nobody could seriously believe in fixed of exchange applied for the advance of parities. The Jamaica Agreements the loan. It is not, however, permissible (January 1976) officially abolished IMF to impose on him burdens such as those parities and as from March 1973 the de resulting from the Commission's sub- facto position was that currencies floated sequent decision to which effect was freely. Consequently, redrafting of given as from April 1979. Article 63 of the Staff Regulations and Article 17 of Annex VII no later than 1 January 1978 became not only an economic but also a legal requirement. The Commission thinks that the view put forward by the applicant presupposes that the loan agreement offered him a legal guarantee that payment of the If the applicant's view regarding main- monthly amounts expressed in Belgian tenance of the stipulated parity of LIT francs would be made at the same rate as 12.50 were to be upheld, the reduction that used for the advance of the loan. of his debt by BFR 150 694 would That view of the legal position is not constitute an unjustifiable gift in the view supported either by the provisions of the of the Community budgetary authorities contract or by the general implementing — the applicant would then be able to provisions of 17 June 1971 according to repay without loss his loan of BFR which the loan and the monthly amounts 787 500 by repaying the sum of LIT payable by the applicant are expressed in 9 843 750 which he had received; the Belgian francs. updating of the contract would not have been necessary. The fact that updating was agreed between the Commission and the applicant in 1975 is in effect conceivable only if the two parties also The amounts due from the applicant no expected an imminent adjustment of the longer bore any legal relationship with outdated IMF parity, which was the Italian lira as from the time when his applicable to the repayment of the loan.

The Commission considers that the Finally, since the Commission has principle of equality requires it to treat properly discharged its contractual the monthly instalments payable by the obligations, there can be no obligation, applicant in the same way as a transfer in contractual or otherwise, to pay Belgian francs made by an official compensation. employed outside Belgium to a Belgian credit establishment. When transfers are made to a credit establishment in accordance with Article 17 of Annex VII The applicant replies that it appears from the amount transferred is adjusted on the the wording of the Commission decision basis of the weighting for Belgium and of 25 July 1975 that the detailed consequently a rate much more arrangements for payment of the loans favourable than the market rate is were to be amended: for new agreements applied (LIT 18.35 per Belgian franc to be entered into, by payment in Belgian instead of more than LIT 26 in April francs and for agreements under which 1979). payments had previously been made in the currency of the relevant country, by conversion, and therefore reduction of In reply to the argument relating to the the sum granted by way of building loan, duty of protection and of assistance, the into Belgian francs according to the Commission states that it is under no parity ruling on the date of the payment, general obligation, by virtue of the Staff and thus on the date of the transfer. The Regulations, to safeguard officials problem of payment of the loans was in against risks of a monetary nature (cf. fact known to staff and was reflected in Opinion of Advocate General Dutheillet part of Written Question No 26/72 of de Lamothe in Joined Cases 63 to 65/70 13 April 1972 put by Mr Bermani. Bode [1971] ECR 549). For that reason it is likewise under no obligation to bear that risk within the context of a low-rate loan agreement of the kind involved in this case. It is clear from Article 2 of the provisions of 25 July 1975 that the deductions and payments remain unchanged as regards existing agreements and only the oppor- The updating of the parity of the lira tunity to make early repayment has been against the Belgian franc was not an changed. The letter accompanying the unforeseen event justifying amendment decision of 25 July stated that " . . . all of the agreement; on the contrary it was repayments made subsequently must be the underlying reason for updating the made in Belgian francs. You may debt. The agreement, as updated in therefore no longer make any early 1975, takes into account the updating of repayment in the currency which was the parity, which came about after a used for the advance of the loan". The considerable delay (in 1979), of which monthly deductions continue to be the applicant had the benefit. made, as in the case of non-updated agreements, in accordance with Article 15 of the agreement ("in Belgian francs Moreover, the applicant is free to make or in the currency of the country in early repayment of his debt in Italian which the financed property is situated lire, on the understanding that the and in which this loan is advanced"), amount is converted into Belgian francs that is to say on the basis of the parity at the rate ruling on the date of the ruling on the date of the transfer of the transfer. loan.

The applicant emphasizes that Anicie 9 the Commission from making speculative of the implementing provisions of monetary gains to the detriment of its 17 June 1971 provides that, as regards officials. A change of parity is transactions outside Belgium, the loans tantamount to a de facto change in the in question are, as from the time of the interest rate or of the principal debt, first advance, loans in the currency of which is prohibited by Article 4 (6) of the country in question, that is to say in the implementing provisions. this case a loan in lire and not a loan in Belgian francs. The meaning of that provision goes even further: since there is no further mention elsewhere of parities and repayments, it may be regarded as self-evident that the "corresponding payments" relate not The applicant shows that, although he only to the payments (made by the received LIT 9 843 750 in 1972, the lender to the borrower) but also to the remaining amount of his debt as at payments of interest and the repayments 15 April 1979 amounted to LIT of the loans (made by the borrower to 10 335 509 (although he had made the lender) according to the principle repayments since 1973) and, in March whereby the amount of the loan is due, 1981, despite two further years of as regards the principal and therefore the repayments, to LIT 10 943 614. interest and repayments, in the currency in which the loan was advanced. The basic idea of granting loans in each of the countries of employment or origin of officials within the framework of an accommodation policy was subsequently In 1971 it was clear that the fixed also included in the wording of the loan exchange rates could not remain agreement, in Article 15. The expression permanently fixed. Both parties were "parity ruling on the date of the therefore aware of the risk and, for the transfer" appearing in the second advance of the loan and repayment paragraph of that provision manifestly thereof, the parities which were used at means "parity ruling on the date of the the time of the advance were firmly transfers" in exactly the same sense as agreed upon. In reply to Mr Bermani's the expression "transfer" is used and question, the Commission stated that defined in Articles 1 and 5 of the "the correct application of Article 9 of agreement. the implementing provisions for the grant of building loans to officials requires fixed official parities", from which it is clear that in the absence of such parities Article 9 cannot be correctly applied. It added that "for repayment of the loans, the opportunity to choose the currency The grant of building loans to officials at ensures that the borrower is protected a favourable rate of interest (4%) would against possible fluctuations of exchange be completely deprived of its social rates from time to time", which clearly objective if, seven years after the means that the borrower may repay in agreement was entered into, the lire the lire obtained by him and that he conditions for repayment were amended is not obliged to repay them in Belgian unilaterally, exposing borrowers to the francs. The choice of the currency in problem of variable monetary parities. which the loan is to be repaid offers Commercial usage alone should prevent protection against variations in exchange

Regulation No 3085/78 amends only the The request for early repayment on the provisions of the Staff Regulations basis of the rate ruling on the date of the concerning the monetary parities "used advance, within a period of three years in application of the Staff Regulations from the date on which the judgment and the detailed arrangements for the becomes effective, is justified from the transfer of part of an official's legal point of view by the possibility that emoluments to a country other than the such a judgment might detract from the country of employment of the persons balance between the duties of each party

even sought. It should also be made clear lative purposes. that the "parity ruling on the date of the transfer" was not the same as the parity of 1 January 1965 referred to in Article The provisions of the agreement define 63 of the Staff Regulations in the version the "transfer" as the advance of the loan. prior to Regulation No 3085/78. Otherwise, it uses the expression "repayment". The expression "corre- sponding payments" in Article 9 refers The applicant claims in the alternative also to the monthly payments for that the amendment made to the redemption of the principal and agreement in 1975 is inoperative. Had discharge of the interest which are to be the Commission had the intention, when made in lire and converted into Belgian the loan agreement was amended, to francs on the basis of the parity of the change not only the early repayments but advance. also the monthly repayments or deductions from salary, it would have The acceptance of the Commission's been under an obligation to inform the proposal of 25 July 1975 did not convert borrower clearly and unequivocally. If, the amounts due from lire into Belgian moreover, it gave him a false impression francs except in the case of "early- as to the aim of the amendment, the repayments". In consequence, the borrower has a right of revocation, of deductions from salary should still be which he states his intention to avail treated in the same way as those under

JUDGMENT OF 1. 7. 1982 — CASE 618/79 A

any reference made to the parities case there was the loan agreement and provided for in Article 63. In fact, the also the reply given to Mr Bermani's IMF parities ruling in 1971 and 1972 question ("for repayment of the loans, were applied without their being referred the opportunity to choose the currency to explicitly as such. It is untrue to say ensures that the borrower is protected that those parities might be amended and against possible fluctuations in the that contractual provisions to that effect exchange rates from time to time"). had been adopted.

KNOEPPEL v COMMISSION

If the applicant's view that the debt advantage; if that course is not followed, might be paid off by means of monthly it can only result in a financial loss for deductions of the repayment instalments him. The Commission counters that from his salary up to the amount of LIT opposition with an objection of 9 843 750 (plus interest) were correct, inadmissibility and any argument which there would be no perceivable grounds falls within the scope of that objection is for the Commission's having abandoned in any event too late in this case. an opportunity for protection from a Repayment of the loan in Belgian francs collapse of the parity of the lira against does not entail any particularly the Belgian franc, in this case early burdensome consequences for the repayment of the loan, and having applicant from a social point of view offered the applicant a reduction of his since the application to the portion of debt outside the terms of the agreement. the remuneration used for that purpose The application · would be unfounded of the weighting for Belgium, within the even if the initial loan agreement had context of the conditions applicable to remained applicable since the oppor- the transfers referred to in Article 17 of tunity to repay the loan in lire does not Annex VII to the Staff Regulations, is no mean that each repayment must be more costly for the applicant than for an appropriated in lire to discharge the debt official employed in Brussels. expressed in Belgian francs on the basis of the rate which was in force at the time the loan was advanced. Only in the event IV — O r a l p r o c e d u r e of the Court's refusing to uphold the Commission's claims in the parallel case The parties presented oral argument at of Flamm (Case 567/79 A) would the the sitting on 17 December 1981. applicant's present opposition to the The Advocate General delivered his updating of the debt offer him any opinion at the sitting on 18 March 1982.

5 By virtue of Article 4 of the agreement, the borrower undertakes to repay the amount of the loan in monthly instalments due on the 15th day of each month in accordance with the table attached to the agreement. The table, drawn up in duplicate and signed by both parties, constitutes an integral part of the agreement.

6 By virtue of Article 5 of the agreement the borrower irrevocably instructs the Commission to deduct or cause to be deducted for transfer to the Commission by the Community institution by which he is or may be employed in the future, on the 15th day of each month, from his monthly salary or any other emolument, the monthly instalment shown in the repayment table referred to in Article 4.

7 Article 15 of the agreement provides that any transfer made by the borrower to the lender by way of early repayment or in payment of monthly instalments is to be made in Belgian francs or in the currency of the country in which the property to be financed is situated and in which the loan was advanced. The currency of the loan is to be convened into Belgian francs on the basis of the parity ruling on the date of the transfer.

8 In the table referred to in Article 4 of the agreement the amount of the loan, the monthly instalment, the monthly interest, the monthly repayment of principal and the principal outstanding are expressed in Belgian francs.

KNOEPPEL v COMMISSION

9 The amount of the loan was convened into Italian lire on the basis of BFR 1 = LIT 12.50, the parity notified to the International Monetary Fund on 1 January 1965 which at that time was used as the basis for calculation of the remuneration of officials in accordance with Article 63 of the Staff Regu- lations. Correspondingly, the sums lent were repaid (likewise on the basis of the above-mentioned exchange rate) by means of deductions made by the Commission as lender from the monthly remuneration of the official.

JUDGMENT OF 1. 7. 1982 — CASE 618/79 A

reduce the debt. If those repayments were made in the currency of the country in which the property is situated, they shall also be converted into Belgian francs at the rate specified in subparagraph (a).

(c) All repayments to be made after the decision to reduce the debt shall be made in Belgian francs."

1 3 By letter of 21 August 1975 that decision was notified to the applicant. The letter contained the statement: "In the event of reduction of the debt, all repayments made subsequently are to be made in Belgian francs. You may therefore no longer make any advance repayment in the currency in which the loan was made."

i4 By declaration of 1 September 1975 the applicant sought a reduction of BFR 150 694 in his principal debt (the amount specified in the letter of 21 August 1975). The reduction was granted by the Commission, with a consequent reduction in the monthly repayments expressed in Belgian francs.

is After that reduction was made, the Commission continued until 31 March 1979 to make transfers in respect of the monthly instalments payable by the applicant by converting into Belgian francs the amount transferred in lire, adopting the parity referred to in Article 63 of the Staff Regulations.

i9 The applicant refers to Article 9 of the implementing provisions of 17 June 1971 which states: "Loans covered by this provision shall be expressed in Belgian francs. The corresponding payments shall be made in the currency of the country where the property to be financed is situated, on the basis of the parity ruling as at the time of the payment." According to the applicant the expression "the corresponding payments" comprehends not only the payments of principal made by the Commission but also the repayments to be made by the borrower. In consequence, the parity to be applied for conversion of the repayments ought to be the same as that adopted for the advance of the loan.

20 The applicant seeks to corroborate his view by reference to a letter dated 21 March 1977 addressed by the Director-General of Personnel and Administration of the Commission to Mr R. Lubek, Vice-Chairman of the Ispra Staff Committee, in which he states:

"Finally, I would inform you that the repayments of loans in respect of which the borrowers have not applied for the benefit of the reduction of debt provided for in the decision of 25 July 1975 are to be made at the same rate as that used for the grant of the loan itself, namely LIT 100 = BFR 8. In such cases, those transactions do not fall within the heading of partial transfers of remuneration."

JUDGMENT OF 1. 7. 1982 — CASE 618/79 A

2i The applicant also refers to the Commission's reply given on 29 June 1972 to a question raised by Mr Bermani, a Member of the European Parliament, as follows:

"The problem raised by the honourable Member has been considered by the Commission.

KNOEPPEL v COMMISSION

24 In pursuance of that interpretation of the agreement, the Commission converted the amounts in lire transferred to repay the loan in question into Belgian francs according to the parity referred to in Article 63 of the Staff Regulations until the entry into force of Regulations Nos 3085/78 and 3086/78. As from 1 April 1979 it also based its calculations for conversion of the monthly payments on the rates laid down in the Staff Regulations, as amended by Regulations Nos 3085/78 and 3086/78, and applied the provisions of Article 17 of Annex VII to the Staff Regulations in its amended version. It claims that that method of making the transfers conforms wholly with the agreement.

25 The applicant's view is untenable. It disregards the fact that, according to the provisions of the agreement itself, the funds transferred in order to pay the monthly instalments were to be converted on the basis of the parity in force on the date of the transfer, that is to say on the date of each transfer. The agreement did not provide for a fixed parity to apply throughout its duration but rather for various parities which might apply successively during the term of the agreement.

26 It should be recalled that all the recipients of loans were officials of the European Communities and that the agreement provided that repayments were to be made to the Commission by the institution in which they were employed. It was consonant with that situation that the parity to which the agreement referred should be the parity adopted for calculation of the borrower's remuneration, that is to say the parity provided for in Article 63 of the Staff Regulations.

(2) Maintenance of their principal debt, which is the position in your case. As a result, you are entitled, as stated in Article 15 of your loan agreement, to choose the currency (Belgian francs or the currency used for the advance of the loan) to be used in the case of: Early repayment under Anicie 8 of the agreement; Monthly payments pursuant to Article 6 of the agreement (first and third paragraphs).

It should however be noted that any conversion into Belgian francs will be made on each occasion on the basis of the parity ruling on the date of each transfer, which at the present time is as follows: BFR 1 = LIT 12.50, FF 1 = BFR 9.00, UKL 1 = BFR 120.00. As regards repayment by deductions from salary (see Anicie 5 of the agreement) it is in all cases made in Belgian francs, the salary also being expressed in Belgian francs.

KNOEPPEL v COMMISSION

(3) For borrowers who did not take the benefit of the reduction in 1975 (as in your case), those deductions are not to be regarded as transfers of a pan of your remuneration. However, the exchange rate adopted is the same as that used for the advance of the loan (see paragraph (2) above);

(4) No guarantee can be given regarding maintenance of the exchange rate at present adopted by the Commission for the conversion into Belgian francs of the payments referred to in paragraph (2) above or of the deductions from remuneration referred to in paragraph (3)."

30 As regards the reply given to Mr Bermani's question, it should be noted that the Commission envisaged that new official parities would be fixed in the near future and that no guarantee was given that the parities would remain unchanged.

35 That complaint cannot be accepted. The applicant has put forward no argument capable of proving that the procedure proposed by him, if capable of implementation by the Commission, would have been more favourable for him. On the contrary, deduction in Belgian francs of the amount of the monthly payments would have exposed the applicant to the risk of his being deprived of the benefit now accruii.g to him from the fact that the transfers made in accordance with the procedure under Anicie 17 of Annex VII to the Staff Regulations are subjected to a multiplier in the form of a weighting for the country of transfer (in April 1979, 100) divided by that of the country in which the official is employed (in April 1979, 70.3). As a result of that operation in April 1979 a transfer of BFR 1 cost only LIT 18.35 instead of more than LIT 26 at the market rate.

36 The applicant claims in the alternative that the amount in lire of the monthly repayment instalments should be calculated on the basis of an exchange rate corresponding to the exchange rate applied to the advance of the loan at the time of the updating. He admits that those officials who at that time availed themselves of the opportunity to update their contracts obtained a higher exchange rate for the advance of the loan by reason of the fact that the principal amount of the loan was reduced. He is therefore prepared to pay off his loan at that higher exchange rate.

37 That claim disregards the fact that the Commission is entitled under the agreement to use the parity in force for the purposes of the Staff Regulations at the time of each successive transfer for the conversion into Belgian francs of the monthly repayment instalments and that the effect of the applicant's proposal would be to deprive the Commission of a right which is conferred on it by the agreement itself. That alternative claim must therefore be dismissed.

40 In fact, the Staff Regulations make provision for the adaptation of the remuneration of officials in the various places of employment by two different methods, namely on the one hand by adjustment of the weighting according to changes in the cost of living in those various places and, on the other hand, by alteration of the parities under Article 63 of the Staff Regu- lations in order to take into account the fluctuations of exchange rates. In the case of devaluation of the currency of the place of employment, the remuneration of an official calculated in Belgian francs but paid in national currency must be increased accordingly. The result should be that the application of the parities provided for by the Staff Regulations for the conversion into Belgian francs of a national currency should not cause an official any loss by virtue of exchange rates which is not offset by an increase in his remuneration as expressed in national currency, whilst the Commission receives only the exact amount in Belgian francs of the monthly repayments and cannot obtain any benefit therefrom.

4i In the result, even if the updating of the parities as from 1979 had the effect of depriving the applicant of the benefit of the advantageous rate which he had previously enjoyed it cannot be regarded as a circumstance justifying termination of the contract.

42 It appears from all the foregoing considerations that the view put forward by the applicant in support of his claims cannot be upheld and that accordingly the application must be dismissed.

OPINION OF MR CAPOTORTI — CASE 618/79 A

1. Dismisses the application;

2. Orders the parties to bear their own costs.

Bosco O'Keeffe Koopmans

Delivered in open court in Luxembourg on 1 July 1982.

J. A. Pompe G. Bosco Deputy Registrar President of the First Chamber

OPINION OF MR ADVOCATE GENERAL CAPOTORTI