C-72/80

JUDGMENT OF T H E COURT (FIRST CHAMBER) 12 NOVEMBER 1981 1

Marco Airola ν Commission of the European Communities

(Officials — Rate of exchange for calculating remuneration)

Case 72/80

Officials — Remuneration — Allowance compensating for the separation allowance paid prior to the Staff Regulations — Payment of a currency other than the Belgian franc — Application of updated exchange rates — Inapplicability of weightings (Staff Regulations of Officials, Arts 63, 64 and 106)

Article 106 of the Staff Regulations must currency of the place where an official is be understood as meaning that it entitles employed at the rate fixed in Article 63 an official to receive a separation of the Staff Regulations as in force when allowance the amount of which, the allowance has to be paid. The expressed in Belgian francs, has been weighting referred to in Article 64 of the frozen at the 1961 level. That amount Staff Regulations does not apply to that must be calculated in the national allowance.

APPLICATION in the terms set out in the pleadings,

T H E 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

"Any official in receipt of a separation A new system of rates of exchange allowance before these regulations were was introduced by Council Regulation applied who does not qualify for an No 3085/78 of 21 December 1978, expatriation allowance under Article 4 of amending with particular reference to Annex VII shall be allowed the same the monetary parities to be used, Regu- amount as that which he would have lation No 259/68 laying down the Staff received by way of separation allowance Regulations of Officials of the European under the scale of remuneration existing Communities and the Conditions of before these Staff Regulations entered Employment of Other Servants of these into force. Such amount shall not in Communities, Regulation No 2530/72 future be varied for any reason whatever, and Regulation No 1543/73 concerning save where the official qualifies for an certain special measures (Official Journal expatriation allowance by satisfying the L 369, p. 6), and entering into force requirements therefor." from 1 April 1979, and by Council Regu- lation No 3086/78 of 21 December 1978, adjusting the weightings applicable to the remuneration and pensions of officials and other servants of the European Communities following the It is to be noted that Article 106 was amendment of the provisions of the Staff applied after May 1974 with retroactive Regulations concerning the monetary effect from 1 February 1973 to officials parities to be used in implementing the who had been recruited between 19 June Staff Regulations (Official Journal L 1960 and 31 December 1961 by the 369, p. 8). The officials concerned former Commission of the European thereupon found that in their salary Atomic Energy Community and had statements for April 1979 the amount never received the separation allowance. expressed in Belgian francs was By letter of 14 March officials in that considerably reduced whilst that paid in category belonging to the Joint Research Italian lire remained unchanged. Centre were sent a circular in which the amount of the separation allowance was expressed in Belgian francs on the basis of the basic salary, likewise expressed in Complaints were submitted in good time Belgian francs, shown in their letters of to the Commission under Article 90 of employment. the Staff Regulations against the "reductions in real terms" of the allowance paid to the officials concerned. By a letter of 21 November 1979 the Commission rejected those The allowance in question continued to complaints. be paid to officials on the basis of the exchange rate of 1 Belgian franc to 12.50 Italian lire. On 15 February 1976 an administrative provision, which the This application dated 3 March 1980 was applicant claims was never brought to received at the Court on 7 March 1980 the notice of the staff, provided for the at the same time as those of the other allowance to be paid on the basis of officials concerned (Cases 73 to 94/80). updated exchange rates, that is to say, rates revised every three months. However, the provision remained a dead letter as far as the allowance in question It was subsequently decided that this case is concerned. should become a test case.

(1) Annul the decision of 21 November — Order the applicant to pay the costs. 1979 whereby the Commission rejected the complaint submitted by the applicant in so far as that III — S u b m i s s i o n s and argu- decision infringes Article 106 of the m e n t s of the p a r t i e s Staff Regulations and breaches the general principles governing the application of secondary Community In his first submission the applicant law (the principles of non-discrimi- alleges infringement of Article 106 of the nation, of protection of acquired Staff Regulations. The Commission begs rights and of good faith); the question in replying to the applicant's complaint that he receives an "allowance (2) Declare unlawful, on the foregoing the amount of which may not exceed grounds, the reduction occurring as that received in Italian lire at Ispra if it from the payment of the remuner- had been paid there by way of separation ation for April 1979 in the basic allowance for December 1961 or which amount in Belgian francs of the the applicant would have received if he allowance due to the applicant under had been assigned there". The first Article 106 of the Staff Regulations; corollary which must be rejected is the reference to the (converted) amount in Italian lire. Under the Staff Regulations (3) Declare, in the exercise of its and in the period prior to their adoption jurisdiction to decide the substance the remuneration of officials is and of the matter, that the applicant is was expressed in Belgian francs. The entitled to retain the said amount applicant therefore believes that the unaltered and to have the updated amount referred to in Article 106 is that exchange rate or, alternatively, the of the allowance expressed in Belgian exchange rate resulting from the francs and that alone must remain combined provisions of Regulations constant. The use of the word "received" Nos 3085/78 and 3086/78 applied to does not militate against that view. Only it when it is converted; a Byzantine construction could sustain the contention that that expression refers (4) Declare, further, that, pursuant to only to the value of the actual payment. the administrative provisions of In the second place it is not possible to 21 January 1976, the applicant is accept the arguments of the Commission entitled to arrears of payments as to the allowance being unalterable

with exclusive reference to the amount have been obtained by the application of paid in Italian lire. The Commission is an adequate rate of exchange. wrong to consider in its reply to the complaint that the letter and spirit of Article 106 have been observed in full when the amount in Italian lire paid to the applicant in December 1961 is the same as the amount in Italian lire paid — on the same basis — for April 1979. In stating that the amount of the allowance might not be adjusted in future the legislature was simply saying that the amount loses any relationship in The applicant makes a second submission percentage terms with an official's salary concerning the breach of the general (which existed at the time of the principles of law governing the separation allowance) and becomes an application of secondary Community amount which stays unaltered law. The Commission's practice of irrespective of the course of an official's considering as unalterable solely the career or increases in salary. amount of the allowance converted into national currency causes obvious dis­ crimination between officials of that institution. Officials employed in Member States which have strong currencies are at an advantage compared to those employed in countries the currency of which has fallen in value in relation to the Belgian franc. That again results from the unjustified abandonment of the Belgian franc as an established base for reference. The corollary to the The Commission's contention that the infringement of Article 106 of the Staff exchange system provided for by Regu­ Regulations is the failure to observe the lation No 3085/78 may not be applied to principle of the inviolability of acquired the allowance in question also proves to rights and of the protection of legitimate be wrong. The Commission did apply it expectation. In the first place, the in this case but by the converse method. amount of the allowance was invariably Instead of re-assessing the sum obtained indicated either per relationem (letter of from the conversion into lire, it reduced employment prior to the Staff Regu­ the basic amount in Belgian francs which lations) or explicitly (measures awarding the applicant considers to be the proper the substitutional allowance to certain unalterable element. Since in the past the EAEC officials). That confirmed the Commission excluded the allowance belief of the recipients of the allowance provided for in Article 106 from both that the amount was fixed and unalter­ possible adjustments, the applicant now able. Secondly, the existence of possible claims nothing more than what is strictly weightings and above all the reasonable due to him. As a result, there is no hopes placed in the regulations on the question of unjust enrichment. The updating of exchange rates raised the alleged "neutrality" of the operation expectation that the issue would be does not therefore hold good; the fixing equitably resolved. Furthermore, the of the amount in Italian lire perpetuates administrative provisions adopted by the the damage complained of by the Director-General for Administration on applicant whereas neutrality could only 21 January 1976 according to which the

allowance provided for by Article 106 allowance referred to in Article 106 was was to be paid on the basis of a rate of one of the amounts to which the updated exchange updated every three months exchange rate would have to be applied. could only increase anticipation of a But it claims that that list was drawn up solution's being found different from for reference purposes. After a careful that which was finally adopted. check of the various items of payment, it was deliberately and properly decided not to apply the updated exchange rate to the allowance paid under Article 106 because it is an allowance governed by The Commission states in reply that the Article 63. rules in force before the Staff Regu- lations were adopted provided officials with a specific salary expressed in Belgian francs but paid in lire, florins, marks and so on, depending on their In fact from 31 December 1961 the sum place of employment, on the basis of the expressed in Belgian francs was paid to official monetary parities in force on 31 the applicant in Italian lire at the rate December 1961 but they did not make resulting from the parities in force under provision for a weighting. When drafting the scale of remuneration applied at the Article 106 the legislature had no time when the allowances were "frozen". intention other than to freeze the Those parities happened still to allowance at the level at which it was or correspond (it was then a period of would be under the scale of remuner- monetary stability) with those declared ation in force on 31 December 1961. to the International Monetary Fund, and The Commission was therefore right not in force on 1 January 1965 and to which to have applied the weighting provided the new version of Article 63 of the Staff for in Article 64 of the Staff Regulations Regulations expressly referred.

The Commission has always used the Therefore in relation to Articles 63 and parities in force on 31 December 1961 to 64 of the Staff Regulations Article 106 is which Article 106 refers and those a lex specialis derogating from a lex happen to be identical to those of 1 generalis. January 1965. The applicant may not claim to be entitled to the amount (expressed in Belgian francs) of the separation allowance to which he would have been entitled under the previous The Commission points out that on rules. However, the applicant excludes 6 November 1974 it took the decision in from those rules the element which is principle to apply an updated rate to all unfavourable to him, namely the amounts payable under the Staff Regu- monetary parities applied at the time to lations where the weighting referred to that amount.

AIROLA ν COMMISSION

In Joined Cases 177/73 and 5/74 Reinarz [1974] ECR 819 the Court stated that: "a transitional provision issued on the transition to a less generous system does not normally seek to give employees greater rights than they would have had under the Finally, as regards the principle of the system which is revoked". In this case equal treatment of officials, the Article 106 leaves no room for doubt Commission contends that, since because it states that "such amount shall entitlement to the allowance referred to not in future be varied for any reason in Article 106 has not in fact been altered

The Regulations, acquired rights have not Commission does not deny that since the been infringed nor has the principle of legislature has not altered the amount of the protection of legitimate expectation the allowance provided for by Article been breached. 106 in relation to the amount which would have been paid under the rules in force on 31 December 1961, some difference in treatment occurred owing to fluctuations in the respective strengths of the currencies of the Member States. It replies however that the relationship The Commission explains that if the between an official and the Commission applicant found a considerable reduction is governed by regulations and staff rules of the amount expressed in Belgian and the regulatory authority was not francs in his salary statement for April bound to introduce the transitional 1979 this was in order that the new allowance provided for in Article 106 parities introduced by the Staff Regu into the new Staff Regulations.

JUDGMENT OF 12. 11. 1981 — CASE 72/80

AIROLA ν COMMISSION

entitled. Secondly, the point in issue here of Regulations Nos 3085 and 3086/78. is not currency depreciation but rather The amount of allowance paid under the unjustified losses resulting from the Article 106 and received on 15 April depreciation of the Italian lira in relation 1979 in Italian lire, the currency in to the Belgian franc which is the which payment of the applicant's re reference currency for the payment of muneration had been and was being officials' entitlements. That is confir made, is identical to that received on 15 mation of the fact that the applicant is March 1979. Certainly, if the applicant's not seeking to benefit from two systems argument were accepted, namely that the of payment but is rather seeking to avoid amount of the allowance paid under any further damage. Article 106 and expressed in Belgian francs should be converted into lire by applying the new monetary parities specified by Regulation No 3085/78,

1961. Even in 1961 the Commission had Dutch guilders from 1961 until the official fixed panties. In providing that present time. It is not difficult to imagine any official shall be allowed the same the consequences of a reduction in the amount as that which he would have amount in marks or guilders, particularly

(3) Declare, in the exercise of its jurisdiction to decide the substance of the matter, that the applicant is entitled to retain the said amount unaltered and to have the updated exchange rate or, alternatively, the exchange rate resulting from the combined provisions of Regulations Nos 3085/78 and 3086/78 applied to it when it is converted;

(4) Declare, further, that, pursuant to the administrative provisions of 21 January 1976, the applicant is entitled to arrears of payments arising from the application, from no later than 15 February 1976, of the updated rate of exchange to the allowance in question.

AIROLA ν COMMISSION

2 In the version in force until the end of 1978, Articles 63 and 64 of the Staff Regulations of Officials 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 re­ muneration 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 On 21 December 1978 the Council adopted Regulation (Euratom, ECSC, EEC) No 3085/78 (Official Journal L 369, p. 6). Article 1 thereof provides that Article 63 of the Staff Regulations is to be replaced by the following provision :

4 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 (1) of the regulation fixes amongst other things the weighting applicable to the remuneration of officials and other servants.

5 The rules in force before 1 January 1962 prior to the adoption of the Staff Regulations provided for a so-called “separation” allowance equal to 20% of the basic salary to be paid to officials who could prove that their place of employment was more than 70 kilometres (25 kilometres under the Staff Regulations of the European Coal and Steel Community of 1956) from their place of origin. Nationality was not taken into consideration.

6 The Staff Regulations which entered into force on 1 January 1962 replaced that allowance by the “expatriation” allowance, so-called because an official has to work in a Member State other than that of which he is a national. As a transitional provision Article 106 provided that:

AIROLA ν COMMISSION

"Any official in receipt of a separation allowance before these regulations were applied who does not qualify for an expatriation allowance under Article 4 of Annex VII shall be allowed the same amount as that which he would have received by way of separation allowance under the scale of remuneration existing before the Staff Regulations entered into force. Such amount shall not in future be varied for any reason whatever, save where the official qualifies for an expatriation allowance by satisfying the requirements therefor."

JUDGMENT OF 12. 11. 1981 — CASE 72/80

reduction of the amount in Belgian francs which was apparent from his salary statement for April 1979 but also of the non-application of the administrative decision of 1976. The Commission rejected that complaint and the applicant brought this application.

1 1 The applicant's main claim, relating to the period beginning on 1 April 1979, should be examined first. He maintains that the amount of the separation allowance should be paid at the updated exchange rate from April 1979. That, he claims, follows from Article 63 of the Staff Regulations as it now stands. The Commission contests that argument. It maintains that under Article 106 of the Staff Regulations an official may receive only the amount which he would have received by way of separation allowance under the scale of remuneration existing prior to the entry into force of the Staff Regu- lations. That amount may not in future be varied for any reason whatever. It follows that the amount of the allowance in the national currency of the place where officials are employed was fixed by applying the exchange rate in 1961 and that this amount may not be changed.

12 The Commission's argument cannot be accepted. It is common ground that officials' remuneration was expressed in Belgian francs before the Staff Regu- lations were adopted and thereafter the amount of remuneration of each official has been fixed in Belgian francs, even if the remuneration is paid in national currency. Article 106 of the Staff Regulations must therefore be understood as meaning that it entitles an official to receive a separation allowance the amount of which, expressed in Belgian francs, has been frozen at the 1961 level. That amount must be calculated in the national currency of the place where an official is employed at the rate fixed in Article 63 of the Staff Regulations as in force when the allowance has to be paid.

17 Following that instruction the officers of the Commission drew up a list of the budgetary items to which it had to be applied. Amongst those items there was mention of allowances in accordance with Art. 106, Art. 95, 96 ECSC Staff Regulations. Shortly afterwards, at any rate before payments were actually made pursuant to the instruction, a check was carried out on the various items comprised in that list. It was ascertained that the separation allowance was governed by Article 63 of the Staff Regulations with the result that the instruction was never applied with respect to that allowance.

18 It is common ground that whatever its legal value may be the instruction was never brought to the notice of staff, which the applicant himself accepts. It was not until he made his complaint on 27 June 1979 that he first asked for updated exchange rates to be applied in respect of the period prior to 1 April 1979.

JUDGMENT OF 12. 11. 1981 — CASE 72/80

19 It follows from the considerations set forth above that the allowance in question must be regarded as an amount expressed in Belgian francs, but which, pursuant to Article 63 of the Staff Regulations, must be paid in the national currency of the place at which an official is employed at the rate applying on the date on which the allowance has to be paid. The Commission therefore rightly decided to apply until 1 April 1979 the exchange rate referred to in Article 63 of the old version of the Staff Regu- lations. It follows that in so far as the applicant's claim relates to the period prior to 1 April 1979 it must be dismissed.

2. Orders the Commission to pay to the applicant the difference between the amounts paid from 1 April 1979 by way of separation allowance and those which would have been obtained from the application of the updated exchange rate.

AIROLA ν COMMISSION

3. Dismisses the remainder of the application.

4. Orders the Commission to pay the costs.

Bosco O'Keeffe Koopmans

Delivered in open court in Luxembourg on 12 November 1981.