C-33/80

defendants,

APPLICATION in the terms set out in the pleadings,

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

composed of: T. Koopmans, President of Chamber, A. O'Keeffe and G. Bosco, Judges,

Advocate General: F. Capotorti Registrar: J. A. Pompe, Deputy Registrar

gives the following

I — Facts and procedure After the collapse in 1971 of the inter­ national system of fixed exchange rates, This case should be seen against the which is at the heart of those provisions, background of the following provisions : the parities came to reflect less and less the purchasing power of the currencies In the version in force until the end of involved and their value on the inter­ 1978, Article 63 of the Staff Regulations national money market. Officials who of Officials provided that: made transfers to countries the value of whose currency had increased in relation "An official's remuneration shall be to the parities notified to the Inter­ expressed in Belgian francs. national Monetary Fund were thus able to realize gains on the exchange rate, as It shall be paid in the currency of the compared with transfers made in normal country in which the official performs his market conditions. duties. In accordance with the legal position Remuneration paid in a currency other existing prior to 1 April 1979 the than Belgian francs shall be calculated on weighting provided for in Article 64 of the basis of the par values accepted by the Staff Regulations to reflect the living the International Monetary Fund . . . on standards at the place where the official 1 January 1965." performed his duties had to be applied to the whole of the remuneration including The relevant parity was BFR 12.50 to the part to be transferred to another D M 1 and BFR 8 to LIT 100. country pursuant to Article 17 of Annex VII. This led to a parallel increase in the In accordance with Article 17 of Annex weighting for officials assigned to VII to the Staff Regulations, an official countries such as Italy, the United may have part of his emoluments Kingdom and Ireland, where the value transferred, either regularly or on an of the currency had decreased in relation exceptional basis, to a country other than to the parities notified to the Inter­ the one in which he performs his duties. national Monetary Fund and to a Until 31 March 1979 Article 17 (4) reduction in the weighting for officials provided that such transfers were to be assigned to countries whose currency made through the institution to which had gained in value in relation to the the official belonged "at the official rate parities of the Fund.

Pensioners were able to derive special On 1 April 1977 the Commission advantages from these provisions. If they submitted to the Council a proposal for a declared their domicile to be in a Council regulation introducing the country whose currency had diminished European unit of account (EUA) into the in value, the weighting in respect of that Staff Regulations of Officials (Official country was applied to their pension in Journal, C 99, p. 5). That proposal was accordance with Article 82 (1) of the rejected by the Staff Regulations Staff Regulations. Article 45 of Annex Committee to which it had been VIII to the Staff Regulations gave them referred. The Council obtained the the opportunity of having their pensions opinion of the European Parliament and paid in the strong currency of their of the Court of Justice. By resolution of country of origin or of that of the seat of 7 July 1977 (Official Journal, C 183, the institution to which they belonged. p. 55) the Parliament approved the This state of affairs was condemned by proposal taking note of "the Mr. Advocate General Mayras in his Commission's assurance that its proposal opinion in Case 28/74 (Gillet, [1975] will in no way affect the real value of the ECR 475). payments made to officials in the form of remuneration, pensions and allowances". At the sitting the Commissioner responsible for administration, Mr From 1974 onwards the Commission has Tugendhat, stated: "The object of the submitted proposals to the Council with Commission's system is financial a view to abolishing the anomalies in the neutrality, and what we think that our rules governing the payment of remun- system can achieve is an equality of eration and pensions brought about by purchasing power. What we want is that the break-down in the international a Commission official of a given grade, system of fixed exchange rates. whether 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 The proposal for a Council regulation goods as his equal in another part of the amending the Staff Regulations of Community . . . The problem of transfers Officials, submitted to the Council by is also one that has pre-occupied the the Commission on 13 June 1974 Commission. There is a proposal for an (Official Journal, C 88, p. 25) provided amendment of the Staff Regulations now for an amended version of Article 17 (4) under consideration. In our view, that of Annex VII to the Staff Regulations as amendment must be adopted no later follows : than the present draft regulation and that, I think, covers another point about which there has been concern".

by the institutions of the European On 21 December 1978 the Council Communities". The Commission there­ adopted Regulation No 3085/78 fore set to work to bring up to date, in (Official Journal 1978, L 369, p. 6), the light of the situation thereby created, amending, with particular reference to the exchange rates in respect of remun­ the monetary parities to be used, Regu­ eration for officials which was envisaged lation N o 259/68 laying down the Staff by the proposals of 1 April 1977. In an Regulations of Officials of the European annex to its Report in 1978 on the yearly Communities and the Conditions of survey of the level of remuneration Employment of Other Servants of the (COM. (78) 673 final of 29 November Communities, Regulation N o 2530/72 1978) the Commission sent the following and Regulation N o 1543/73 concerning communication to the Council on which certain special measures. The regulation neither the Parliament, the Court of embodies the wording of the communi­ Justice nor the Staff Regulations cation from the Commission of 29 Committee was consulted : 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 " . . . The first two paragraphs of Ar­ calculating remuneration paid in a ticle 63 are to be replaced by the currency other than Belgian francs on following: Officials' remuneration shall the basis of the exchange rates used for be expressed in Belgian francs. It shall be the implementation of the General paid in the currency of the country in Budget of the Communities and goes on which the official performs his duties. to state that that date shall be changed at Remuneration paid in a currency other the time of the annual review of remun­ than Belgian francs shall be calculated on eration. the basis of the exchange rates used for the implementation of the general budget of the European Communities on . . .

the point of departure — the amount of dividing the "Fisher" index calculated as the remuneration in Belgian francs — described above, by the corresponding remained in effect ex hypothesi the same rate of exchange used to convert the as regards payment transactions and the remuneration of officials into the end of the procedure — the amount of respective national currencies in the payment in national currency — accordance with Article 63 of the Staff ought itself normally to remain the same, Regulations. In October and November

employment. The Statistical Office of the European Communities, in conjunction The application was registered at the with the competent national offices, Court on 24 January 1980. carries out regular price surveys in respect of goods and services considered as representing typical items of The Council and the Commission put household expenditure for officials in the forward objections of inadmissibility on various places of employment. In respect 28 and 29 February 1980 respectively. of each item the relationship is calculated between the price in Brussels and the The Court (First Chamber), on hearing price prevailing in the town which is the report of the Judge-Rapporteur and used as the point of reference for the the views of the Advocate General, place where the official performs his decided to open the oral procedure on duties, by the use of this weighting it is the preliminary objections without any possible to calculate the relative pur- preparatory inquiry. chasing power of currencies in the countries where the officials of the Community perform their duties.

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— In the alternative: Order the The remaining two-thirds are financed defendants to pay to the applicants a by the Communities. It is therefore clear compensatory allowance calculated in that the pension is nothing other than a such a way as to avoid any form of deferred remuneration and not a diminution or the pension paid to the kind of gratuity given by the employer. applicants before the entry into force of Regulations Nos 3085 and All officials of a given grade and a given 3086/78; seniority pay the same amount on the one hand by way of a direct deduction — In any event, order the defendants, and on the other hand by way of a the Council and the Commission, to corresponding contribution from the pay the costs. employer, regardless of their nationality or of their place of employment. In reality all deductions are made in Belgian The Council, applying by separate francs by deduction at source and document for determination of a pre­ without the application of any weighting liminary objection under Article 91 of mechanism. the Rules of Procedure, contends that the Court should declare the applications The applicants point out that under this to be inadmissible as regards the scheme an official who has paid a given Council. sum, identical to the amount paid by other officials of the same grade and seniority, is intended to receive a pension The Commission, applying by separate of the same amount as that enjoyed by document for determination of a pre­ others corresponding to the contributions liminary objection under Article 91 of which he has paid by way of deduction the Rules of Procedure, contends that from salary and to the payments made the Court should: by the employer.

The applicants maintain that it is entailed very severe consequences for unlawful to apply a weighting to reduce pensioners whose contributions were the amount of a pension to the place of made in Belgian francs, who live in weak residence and of the cost of living currency countries and have arranged prevailing there since to do this is to their standard of living on the basis of limit the freedom of movement of the the pensions which they were receiving pensioner precisely at the moment when and who are now faced with a drastic he has the most need of that freedom. reduction in the amounts paid. The amount of the pension should be determined purely and simply by the amount of contribution which no one has any right to influence or to vary on According to the applicants, Article 64 of the basis of geographical monetary the Staff Regulations provides that criteria. weightings are to be determined according to the living conditions in the various Member States; Article 65 The applicants consider that as a result provides for weightings to be determined of the adoption of the contested regu­ by means of an arithmetical calculation. lations, which has resulted in the In the case of Italy, the calculation is as pensions' being reduced by more than follows: at a rate of exchange of BFR 8 one-half, their legitimate expectations to LIT 100 the relevant weighting would have been frusTRated. be 146.8. Since the present rate of exchange is BFR 3.83 to LIT 100 the new weighting to be applied is found Article 45 of Annex VIII to the Staff from the equation 8 : 146,8 = 3.83 : x, Regulations provides that "beneficiaries so that may elect to have their pensions paid in 146.8 x 3.83 70.28 the currency either of their country of χ = = 70.28 origin or of their country of residence or of the country where the institution to rounded up to 70.3 which is in fact the which the official belongs has its seat". new weighting figure.

The applicants maintain that the with it a complaint within the meaning European Parliament was not consulted of Article 90 (2) of the Staff Regulations, on Regulations Nos 3085 and 3086/78. and on the other hand the Council cannot be considered as the appointing authority as regards the applicants who The purpose of the Commission's are former officials of the Commission. proposal of 1 April 1977 (Official Regulations Nos 3085 and 3086/78 do Journal 1977, C 99), which was not constitute acts adversely affecting the approved by the Parliament (Official applicants and thus capable of being Journal 1977, C 183), was to introduce challenged by means of the remedies the European unit of account into the provided by Article 91 since that article Staff Regulations of Officials and to fix merely grants rights of appeal to officials the value of the unit of account in adversely affected by acts of the relation to the various currencies as at 1 appointing authority (Article 90 (2)). July 1977. On the other hand Regulation N o 3085/78 of 21 December 1978 (Official Journal 1978, L 369) was Neither does the Council believe that the merely intended to bring up to date, in application for annulment may be based relation to other currencies, agreed rates upon Article 173 of the EEC Treaty of exchange in Belgian francs as at 1 July since Regulations Nos 3085 and 3086/78 1978. The references in the preamble to apply to all officials and retired officials Regulation N o 3085/78 mention the of the Communities. It cannot therefore opinion of the Parliament which was be said that this is a "decision" delivered a year and a half earlier on the addressed to the applicants or a decision Commission's earlier proposal dated 1 of "direct and individual concern" to the April 1977 concerning the introduction applicants, although in the form of a of the European unit of account. regulation.

JUDGMENT OF 16. 7. 1981 — CASE 33/80

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under Article 179 of the Treaty and decision which, although in the form of Articles 90 and 91 of the Staff Regu a regulation, is of direct and individual lations . . . " . concern to them, the application is likewise inadmissible in so far as it is The Commission states that a judgment based upon Article 173 of the EEC of the Court, pronounced in the context Treaty"). of an action for damages, remains of full force in the framework of an action for As regards the applicants' submissions as annulment (cf. the judgment of 22 to the inapplicability to them of Regu October 1975, referred to above, in lations Nos 3085 and 3086/78, the which the Court held that: Commission points out that the applicants may not invoke Article 184 of "Although the action for annulment and the Treaty. That article does not confer the action for damages are indeed an independent right of action but distinct types of action, it is none the less envisages a declaration of the inap the case that, within the context of plicability of a regulation incidentally disputes between officials and the and with limited effect only in institutions, Articles 90 and 91 of the proceedings before the Court on the Staff Regulations make no distinction basis of another provision of the Treaty between them as regards both the (cf. judgments or 14 December 1962 in administrative and the contentious pro

annulment. As regards the claim for a compensatory allowance, it is settled law, according to the Commission, that the Court cannot Even if it were to be held nevertheless exercise unlimited jurisdiction where no that the ordinary law governing actions action for annulment lies (judgment of for annulment could apply in parallel 10 December 1969, Case 32/68, Grasselli and concurrently where an action against ν Commission [1969] ECR 505). the Communities by one of their employees or former employees is for the annulment of an act of the Commission Furthermore the application, in so far as or the Council, the Commission claims it seeks compensation, does not comply that the action would still appear to be with Article 38 (1) of the Rules of inadmissible because it does not fulfil the Procedure because it completely omits to conditions laid down by Article 173 of give any grounds in support of the claim.

Decision

1 By an application received at the C o u r t Registry o n 24 J a n u a r y 1980 the applicants b r o u g h t proceedings u n d e r Article 91 of the Staff Regulations of Officials against the Council of the E u r o p e a n C o m m u n i t i e s and the Commission of the E u r o p e a n Communities. T h e applicants, w h o are ten retired officials of the Commission, claim that the C o u r t should :

(1) A n n u l o r at least declare inapplicable to t h e m Council Regulations N o s 3 0 8 5 / 7 8 and 3 0 8 6 / 7 8 of 21 D e c e m b e r 1978;

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(2) In the alternative award the applicants a compensatory allowance calculated in such a way as to avoid any reduction in the pensions paid to the applicants before the entry into force of Regulations Nos 3085/78 and 3086/78.

2 In the version in force until the end of 1978, Articles 63 and 64 of the Staff Regulations provided that: "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 remuner­ ation 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."

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."

6 According to the provisions of Article 4 of the regulation it was to enter into force on 1 January 1979 and was to apply from 1 April 1979. However, for pensions and allowances of which the net amount became less than that under the existing arrangements, the regulation was to apply only from 1 October 1979. From that date the difference between the net amounts resulting from the implementation of that regulation and those received in September 1979 was to be reduced by Vio per month.

7 On 21 December 1978 the Council also adopted Regulation (Euratom, ECSC, EEC) No 3086/78 adjusting the weightings applicable to the re- muneration and pensions of officials and other servants of the European Communities following the amendment of the provisions of the Staff Regu- lations concerning the monetary parities to be used in implementing the Staff Regulations. Article 1 (2) of the regulation fixes inter alia the weighting applicable to pensions in accordance with the second subparagraph of Article 82 (1) of the Staff Regulations at 74.4 for Italy.

10 The applicants maintain that the pension scheme for officials is a con­ tributory one, financed as to one-third by the contributions of the officials. Therefore the pension is nothing other than deferred remuneration and is not a kind of gratuity granted by the employer. All officials of a certain grade and seniority pay the same amount of contribution by means of a deduction at source. All deductions are made in Belgian francs at source and without being weighted. The scheme presupposes that an official who has made contributions of the same amount as those paid by other officials of the same grade and seniority should receive a pension of the same amount as the pension enjoyed by other officials and that such pension should correspond both to the contributions which he has paid by way of deduction and to the payments made by the employer. The applicants consider that it is illegal to reduce the pension by applying a weighting depending on the place of residence and on the cost of living prevailing there because to do so would be to limit the freedom of movement of the pensioner at the very moment when he has the greatest need of it. Through the adoption of the contested regulations and the consequent reduction in their pensions by more than one- half, the legitimate expectations of the applicants have been frustrated.

1 1 By documents lodged on 28 and 29 February 1980 respectively, the Council and the Commission, in pursuance of Article 91 of the Rules of Procedure of the Court, put forward objections of inadmissibility relating to the action for annulment, to the claim for a declaration of the inapplicability of the regu­ lations as regards the applicants and to the claim for a compensatory allowance.

1 4 As regards the claim for a declaration of the inapplicability of the regulations in question the Council and the Commission point out that such a claim could only be brought under Article 184 of the Treaty. However, that article only allows an applicant to invoke the invalidity of a regulation incidentally and with limited effect and then only in the framework of proceedings brought before the Court under a different provision of the Treaty. The right to call in question the legality of the regulation incidentally cannot found an action which seeks as its main object a declaration of inapplicability. The Council and the Commission therefore consider that the claim brought under Article 184 of the Treaty is inadmissible.

15 The Council takes the view that the claim for damages is likewise inadmissible. Such a claim conflicts with the case-law of the Court according to which proceedings by an official (or a former official) for damages when based on the employment relationship between the institution and the person concerned must be brought on the basis of Article 179 of the Treaty and

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Articles 90 and 91 of the Staff Regulations. The action can thus only be brought against the appointing authority. The Commission adds that, where an official under Article 179 of the Treaty brings proceedings for the annulment of a measure adopted by an institution and at the same time for the award of damages to compensate for the damage he has suffered as a result of that measure, if the action for annulment is held to be inadmissible, in accordance with the case-law of the Court, this leads to the inadmissibility of the action for damages.

18 As regards the claim for damages the case-law of the Court (in particular the judgment of 12 December 1967, Müller ν Commission [1967] ECR 365, and the judgment of 20 October 1965, Meyer-Burckhardt ν Commission [1975]

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ECR 1171) lays down that where an official brings proceedings under Article 179 of the Treaty for the annulment of an act of an institution and for the award of compensation for the damage he has suffered as a result of that act, the claims are so closely connected that the inadmissibility of the application for annulment must entail the inadmissibility of the claim for compensation.

19 The application must therefore be dismissed as inadmissible.

Costs

20 Under Article 70 of the Rules of Procedure the costs incurred by the institutions in proceedings brought by employees of the Communities are to be borne by such institutions.

Delivered in open court in Luxembourg on 16 July 1981.

A. Van Houtte T. Koopmans Registrar President of the First Chamber