C-64/80

JUDGMENT OF T H E COURT (THIRD CHAMBER) OF 26 FEBRUARY 1981 1

F. Giuffrida and G. Campogrande v Council of the European Communities

'Official — Remuneration"

Case 64/80

1. Measures adopted by institutions — Regulation — Concept (EEC Treaty, Art. 189) 2. Procedure — Costs — Actions by officials based on Article 173 of the EEC Treaty (Rules of Procedure, Arts 69 (2) and 70)

1. A regulation is a measure applying to that such application takes effect by objectively determined situations and virtue of an objective legal or factual involving legal effects in respect of situation defined by the instrument in categories of persons regarded question in relation to its purpose. generally and in the abstract. These characteristics are not called in 2. When an action by an official is based question by the fact that it is possible on Article 173 of the EEC Treaty and to determine more or less exactly the not Article 179 it is Article 69 (2) and number or even the identity of the not Article 70 of the Rules of persons to whom it applies at any Procedure which applies in regard to given time as long as it is established costs.

applicants, v

COUNCIL OF THE EUROPEAN COMMUNITIES, represented by R. O. Dalcq of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Douglas Fonteyn, Director of the Legal Department of the European Investment Bank, 100 Boulevard Konrad-Adenauer, Kirchberg,

defendant,

APPLICATION for a declaration that Regulation No 160/80 of the Council of 21 January 1980 amending the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities (Official Journal, L 20, p. 1) is void,

T H E COURT (Third Chamber)

composed of: J. Mertens de Wilmars, President, Lord Mackenzie Stuart and U. Everling, Judges,

— This conversion of net amounts into gross amounts shall be based on the situation of an unmarried official who does not receive the various I — Facts and w r i t t e n p r o c e d u r e allowances.

The Council has the power under Article That method did not provide for any 65 of the Staff Regulations to review the adjustment in the part liable to remuneration of officials and to decide Community tax in line with the increase what, if any, adjustments should be in remuneration. Its implementation by made. Article 64 provides for the Council Regulation No 3177/76 of possibility of weighting the salary 21 December 1976 adjusting the re- depending on living conditions in the muneration and pensions of officials various places of employment. and other servants of the European Communities and the weightings applied thereto (Official Journal L 359, p. 1) was the origin of distortions between the remunerations of officials to the By Decision of 29 June 1976 the Council advantage of those enjoying abatements decided that in future it would adjust the in their taxable income and/or ex- remuneration of officials and incorporate patriation allowance. those adjustments in the table contained in Article 66 of the Staff Regulations which determines the basic gross salaries for each grade and step. As a result of so Faced with those distortions and in order doing the weightings for Belgium and to avoid their repetition in the future the Luxembourg were fixed at 100% and Council introduced in its Regulation No incorporated into the salary scale as 2859/77 of 19 December 1977 adjusting follows : the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (Official Journal L 330, p. 1) an amendment to — The new scale in gross terms shall be Regulation No 260/68 of the Council of drawn up by calculating for each step 29 February 1968 laying down the or class the gross amount which, conditions and procedure for applying after deduction of tax and the tax for the benefit of the European compulsory contributions, gives the Communities (Official Journal, English

Although the Council thus avoided a II — C o n c l u s i o n s of the p a r t i e s repetition of the distortion occurring on the adjustment by Regulation No The applicants claim that the Court 3177/76 of remuneration and pensions should: for the period from 1 July 1976 to 30 June 1977, it was still a fact that since "— Rule that the application is the subsequent adjustment of salary was admissible and well founded and based on the scale adopted in that regu- order the defendant to pay the lation, the distortion to which it led costs". passed on from year to year. The Council claims that the Court In order to put an end to that situation should : the Council adopted on 21 January 1980 "— Rule that the application is Regulation No 160/80 amending the inadmissible and in any event Staff Regulations of Officials (Official unfounded and order the applicants Journal L 20, p. 1). That regulation laid to pay the costs". down a new table of gross monthly salaries abolishing the distortions in question. It entered into force on 27 January 1980 and applied from 1 July III — Submissions and argu- 1979. It provides, however, that no part m e n t s of the p a r t i e s of the amounts paid during the period between 1 July 1979 and the date on which the regulation enters into force Admissibility shall be required to be repaid. Further it makes transitional provision for officials In the view of the applicants the who suffered a reduction in income on contested regulation constitutes in reality the application of the new scale. For a set of specific decisions of direct and their benefit and so long as application individual concern to them within the of the new scale would involve a meaning of the second paragraph of reduction in income the previous system Article 173. continues to apply. It is of individual concern to the applicants not only because those to By application lodged at the Court whom Regulation No 160/80 is Registry on 28 February 1980 the addressed are identifiable (they are all applicant brought an action for a the officials benefiting from a distortion declaration that the aforesaid Council of salary as a result of the entry into Regulation No 160/80 is void. force of Regulation No 3177/76), but

It is also of direct concern to the applicants by reason of the fact that the measures adopted in Regulation No Substance 160/80 are directly applicable without the intervention of any authority being necessary and that they involve a partial The applicants make five submissions in freezing of remuneration directly their application: in the first place they affecting their financial positions. claim that the statement of reasons on which Regulation No 160/80 is based is erroneous. Contrary to what is stated in the second recital in the preamble to that In the Council's view Article 1 of Regu- regulation it was not adopted to rectify lation No 160/80 fixes in a general and "unintended increases in remuneration". abstract way according to grades and steps the remuneration of all officials. In place of the rule in Regulation No 3177/76, whose legislative nature no-one In spite of the unfavourable opinion of can deny, it substitutes a new rule the Commission, the staff representatives incorporating the weightings into the and the Working Party on the Staff salary scale. Regulations and after the staff rep- resentatives expressly drew attention to the problem of distortions, the Council adopted Regulation No 3177/76 which The fact that the applicants belong to a was to be at the origin of the increases in group of officials whom the repealed remuneration rectified in Regulation regulation specially favoured in no way No 160/80. In the applicants' view, means that the new regulation is of therefore, it is not possible to speak of individual concern to them. Article 1 of unintended increases since the Council

In the second place the Council, by In its defence the Council rejects the adopting Regulation No 3177/76 in spite various submissions put forward by the of the warnings given it by the applicants. Commission, the Working Party on Staff Regulations and the staff representatives, failed in the elementary duty of care Although, like the staff representatives, incumbent upon a public authority in the Council was not unaware of the the exercise of its powers and thus technical difficulties associated with established its liability. incorporating weightings into the scales of remuneration, it is, in its view, not possible to accuse it of having intended increases in financial entitlement. On the In the third place the Council's departure contrary the fact that the Decision of 29 from the method adopted in Regulation June 1976 contains a Section V headed No 3177/76 not only after the expiry of "Review clause" shows its intention of the period of two months provided for in rectifying any distortion. the third paragraph of Article 173 of the EEC Treaty but even after the expiry of the period of a year in Article 65 of the Staff Regulations for the annual review The applicants' second submission is of salaries frustrates the legitimate incompatible with their assertion that expectation of the applicants in the main- Regulation No 160/80 is in fact a bundle tenance of the method of calculation of individual decisions, in that the adopted by Regulation No 3177/76. submission alleges a lack of care in the exercise of the Council's legislative power. The submission moreover is bad in fact and in law. The lack of care, even In the fourth place adjustment of salaries assuming its existence, would be in for reasons other than those listed in respect of Regulation No 3177/76 and Article 65 of the Staff Regulations, and not in respect of the contested measure in disregard of the procedure specified and the legal principle cited governs only there, constitutes an infringement of the the subordinate power to take decisions. vested right of officials in the mainten- ance of their salary scale. Since the Council had always stressed its intention to avoid distortions and to In the fifth place Regulation No 160/80 review, if necessary, Regulation No was adopted in breach of essential pro- 3177/76, it is not possible, to accept the cedural requirements. The Council's submission that there has been a breach intention to adopt the regulation was of the principle of the protection of formed before the unfavourable opinion legitimate expectations. In the Council's of the European Parliament was known. view the repeal or subsequent amend- Further the Council observed neither the ment of the regulation was perfectly conciliation procedure requested by the lawful. In any event the contested regu- Parliament pursuant to the Joint lation does not, properly speaking, Declaration of 4 March 1975 nor the infringe vested interests.

Finally there was no infringement of " . . . the application of that method of essential procedural requirements since incorporating the weightings has in- the regulation was adopted after the volved sometimes considerable gains for Parliament had given its opinion and the officials in active employment and application does not state in which way equally serious losses for quite a number the other procedures cited were dis- of those in receipt of pensions or regarded. allowances for termination of service pursuant to special measures adopted under Regulations Nos 259/68, 2530/72 In their reply the applicants first of all and 1543/73. stress that the solution adopted by the Council in Regulation No 3177/76 was one of the possible ways of incorporating The group of national experts (Working the weighting and did not involve any breach of the principle of equality. Party on the Staff Regulations) has Council Regulation No 3177/76 is considered the distortions giving rise to therefore perfectly legal from a strict financial advantages. legal point of view. Further the applicants state that they are not disputing the Council's right to adopt On the other hand it had not been another method of incorporation for the foreseen that incorporation would future but simply the retroactive sub- involve reductions in a certain number of stitution of Regulation No 160/80 for cases." Regulation No 3177/76.

The submissions which they make are In a note dated 8 November 1977 from identical to those contained in the the Directorate-General for Personnel

— It was on 17 January 1980, before the opinion of the Parliament was known, that the Council informed In the applicants' view the Council the staff that it had decided to adopt could, however, not be mistaken about Regulation No 160/80 and that is the the quantitative effect of incorporating date which must be taken into weightings since as early as 1972 a account in considering whether the weighting of 128 had been the subject of Council disregarded the procedure similar incorporation involving effects for consulting the Parliament. In any the magnitude of which had certainly event the fact that the regulation is been felt. dated 21 January, that is three days, including a Saturday and a Sunday, after the opinion of the European Parliament was received, shows that the Council attached no importance Finally the fact that there is a revision to it. clause in the Decision of 29 June 1976 enables the Council to determine any improvements in the system established and to correct any distortions solely for the future. — Because of the wholly negative nature of its opinion the European Parliament invited the Council to consult it and in the circumstances that invitation amounted to a Under the fourth submission relating to requirement pursuant to the Joint infringement of vested interests the Declaration; in not complying applicants state that they are not therewith the Council misused its claiming a right that Regulation No rights in a manner which involved an 3177/76 should continue in force, for infringement of essential procedural which there is no foundation in law, but requirements. the right to profit from its effects which is recognized in the case-law of the Court (Joined Cases 7/56 and 3 to 7/57 Algera [1957] ECR 39 and Joined Cases 42 and 49/59 SNUPAT[1961] ECR 53) — The staff representatives refused to and by legal commentators. They add enter into consultations with the that even if it had to be admitted that Council in the absence of an opinion Regulation No 3177/76 were irregular it from the Parliament and the Council would have been possible to withdraw it took the view that the consultative

At the request of the Court each of the parties forwarded tables of figures In the Council's view the applicants, in showing for two selected grades and putting forward the general principle of steps the calculation made to arrive at the non-retroactivity of administrative the salary in the scale resulting from measures to contest the fact that the Regulation No 3177/76 and illustrating new regulation may freeze, if only the distortions arising from this in the temporarily, the remuneration of officials net remuneration of officials “put at an who benefited from the former regu- advantage” in relation to the remuner- lation, fundamentally misconceive the ation of other officials. The Council also import of that principle which in no way submitted a table showing how the prevents those situations from being distortions have been rectified for the modified as to the future. All that the officials in question by Regulation No principle prohibits is to reduce salaries 160/80. which have fallen due and that is not contemplated in Regulation No 160/80. The Council considers that to accept the point of view of the applicants would mean denying the “law of change”, The applicants further explained the which is another fundamental principle circumstances in which the Admini- of public administration. stration had adopted, since 1 July 1977,

JUDGMENT OF 26. 2. 1981 — CASE 64/80

a method of calculation different from V — Oral procedure that used in Regulation No 3177/76 and the Council forwarded to the Court a The parties submitted oral argument at copy of its Decision of 29 June 1976 as the sitting on 27 November 1980. The amended by Decision of 26 June 1978. Advocate General delivered his opinion at the sitting on 29 January 1981.

5 Article 2 of the same regulation provides certain transitional measures relating to the application of those modified salaries and remuneration for

GIUFFRIDA AND CAMPOGRANDE v COUNCIL

officials or former officials who find themselves in the objective financial situation described in that article.

6 It follows that the contested regulation applies to objectively determined situations and involves legal effects in respect of categories of persons regarded generally and in the abstract. It does therefore have the charac- teristics of a regulation.

7 These characteristics are not called in question by the fact that it is possible to determine more or less exactly the number or even the identity of the persons to whom it applies at any given time as long as it is established that such application takes effect, as in this case, by virtue of an objective legal or factual situation defined by the instrument in question in relation to its purpose.

8 The action must therefore be declared inadmissible.

1. Dismisses the action as inadmissible;

OPINION OF MR REISCHL — CASE 64/80

2. Orders the applicants jointly to pay the costs.

Mertens de Wilmars Mackenzie Stuart Everling

Delivered in open court in Luxembourg on 26 February 1981.

J. A. Pompe J. Mertens de Wilmars Deputy Registrar President