C-260/80

IVAR ANDERSEN AND OTHERS, officials of the General Secretariat of the Council of the European Communities, represented by Georges Vander- sanden, of the Brussels Bar, with an address for service in Luxembourg at the Chambers of Janine Biver, 2 Rue Goethe, applicants, v

COUNCIL OF THE EUROPEAN COMMUNITIES, represented by R. O. Dalcq and M. Grossmann, of the Brussels Bar, with an address for service in Luxembourg at the office of H. J. Babbruwe, Director of the Legal Affairs Department of the European Investment Bank, 100 Boulevard Konrad-Adenauer, defendant, 1 — Language of the Case: French.

JUDGMENT OF 19. 1. 1984 — CASE 260/80

A P P L I C A T I O N for the a n n u l m e n t of the decision of the General Secretariat of the Council of the E u r o p e a n Communities of 7 O c t o b e r 1980 expressly rejecting the applicants' complaint against the Council's decision to pay their r e m u n e r a t i o n on the basis of Council Regulation N o 160/80 of 21 J a n u a r y 1980 a m e n d i n g the Staff Regulations of Officials and the Conditions of E m p l o y m e n t of O t h e r Servants of the E u r o p e a n Communities (Official J o u r n a l L 20, p. 1),

T H E C O U R T (First C h a m b e r )

composed of: T . K o o p m a n s , President of Chamber, A. O'Keeffe and G. Bosco, Judges,

adjusting the remuneration of officials the Conditions of Employment of Other and other servants of the Communities. Servants :

It appears from the file that the adoption "The rate of adjustment decided shall be of that new method of adjustment was applied to the amount of the net salary intended, inter alia, to incorporate the for each step of each grade of official weighting, which amounted at the time and for each class in every group of to 148.7 as regards Belgium and Luxem- other servants. bourg, into the basic salary scales. Without concomitant measures such incorporation would have involved a reduction in net remuneration since the The new scale in gross terms shall be basic salaries as increased are also the drawn up by calculating for each step or basis for the Community tax and other class the gross amount which, after mandatory deductions. deduction of tax and compulsory contri- butions, gives the new net amount referred to above.

JUDGMENT OF 19. 1. 1984 — CASE 260/80

65 (2) of the Staff Regulations and made troduced by Regulation No 2859/77 of by adjusting the relevant weightings; 19 December 1977 adjusting the re- muneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (Official Journal L 330, p. 1) an The current weighting for Belgium and amendment to Regulation No 260/68 of Luxembourg is to be incorporated into the Council of 29 February 1968 laying the salary scales in accordance with the down the conditions and procedure for aforesaid conditions; the weighting for applying the tax for the benefit of Belgium and Luxembourg thus becomes the European Communities (Official 100% and the weightings for the other Journal, English Special Edition 1968 (I) countries of employment are to be p. 37). The amendment subjected the adjusted accordingly. amounts liable to Community tax, for the period from 1 July 1977 to 30 June 1978, to a weighting of 106.084.

ANDERSEN v COUNCIL

situation and on 21 January 1980 statements of payment of arrears of adopted Regulation No 160/80 amend- remuneration and claiming that their ing the Staff Regulations (Official remuneration and the arrears in question Journal L 20, p. 1). That regulation lays should be calculated without regard to down a new table of gross monthly Regulation No 160/80. salaries and abolished the distortions in question. It entered into force on 27 January 1980 with effect from 1 July The Council rejected those complaints in 1979. It provides however that no part of a memorandum of 7 October 1980 from the salaries paid between 1 July 1979 and its Secretary General and the applicants the date on which the regulation entered brought the present joint action on into force should be required to be 25 November 1980. repaid. On the other hand it lays down a transitional scheme for the benefit of Upon hearing the report of the Judge- officials who might suffer a loss of Rapporteur and the views of the income on application of the new scale. Advocate General the Court (First So long as the new scale would involve Chamber) decided to open the oral them in a loss of income the regulation procedure without any preparatory provides that they are to continue to inquiry. enjoy the benefit of the former scheme.

However, at the request of the applicants Except for certain special cases the the President of the First Chamber reduction in basic salaries resulting from adjourned the opening of the oral the adjustment of the scale were procedure until after the judgment of the reabsorbed following the adjustment Court in Case 59/81 Commission v made on the same day by Council Regu- Comici/, which was given on 6 October lation No 161/80 effecting the annual 1982. adjustment of remuneration on the basis of the revised scales (Official Journal, L 20, p. 5) which also applied as from 1 July 1979. I I — C o n c l u s i o n s of the p a r t i e s

III — Submissions and argu- documents are "covered by the ments of the parties obligation of professional secrecy" and cannot be produced except with the authorization of the Council. Since that Admissibility authorization was not requested the documents in question must be excluded from the file. The applicants state that the application is directed against the statements of arrears and salary statements for Substance February 1980, the annulment of which is sought in so far as they reflect the application of the revised scales The applicants put forward six sub- introduced by Regulation No 160/80. missions in support of their objection The claim is therefore for annulment of that Regulation No 160/80 is unlawful. individual measures and is accompanied by an objection of illegality as regards Council Regulation No 160/80. In the first place Regulation No 160/80 is based on an erroneous statement of reasons. Contrary to what is stated in the The Council considers that the ap- second recital in the preamble thereto it plication is inadmissible for want of an cannot be claimed that the regulation interest on the part of the applicants in was adopted to correct "unintended so far as it is directed against the increases" in remuneration resulting decision rejecting the complaints. The from the incorporation of the weighting annulment of that decision would not into the salary scales. affect either Regulation N o 160/80, which is objected to as unlawful, or the salary statements the amount of which is It was in spite of an opinion to the challenged. contrary by the Commission, the staff representatives and the Working Party In reply the applicants state that the on the Staff Regulations and after staff statements of salary and arrears con- representatives expressly drew attention stitute measures adversely affecting them to the problem of distortions that the within the meaning of Article 90 (2) of Council adopted Regulation No 3177/76 the Staff Regulations. However, they which was to be at the origin of the also have an interest in seeking the increases in salary corrected by Regu- annulment of the decision rejecting the lation No 160/80. Moreover the Council complaint because it confirms expressly has already in the past tried on two and with a due statement of reasons the occasions the same method, which validity of the contested measures. produced the same effects. In the applicants' view the Council was fully alerted to the risks of distortion inherent in the course of action contemplated. The procedure

running the risk of accepting all the method of incorporating the weightings consequences arising from Regulation into the scale by inserting a formula No 3177/76 it cannot subsequently for adjusting the taxable portions of re- justify its attitude by an alleged error. muneration in accordance with the view expressed by the staff representatives in 1976. The Council however frustrated the applicants' legitimate expectation of the observance of the established method The applicants' second submission is that by using the review clause to re-open the the adoption of Regulation No 160/80 is issue of the incorporation of the incompatible with Article 65 of the Staff weightings into the scale. Regulations and with the new method of adjustment established in 1976. According to the judgment of 5 June 1973 (Case 81/72, Commission v Council [1973] ECR 575) on the annual Further, Regulation No 3177/76 gave adjustment of salaries for 1979 the the applicants vested rights in the main- Council was bound to observe the tenance of the salary scales arising from criteria which it established itself in the application of the method of incor- adopting the new method of adjustment. porating the weightings in force at the That method does not allow the Council time for the purpose of the subsequent to re-open the issue of the salaries during annual adjustments of their remuner- the reference period, in the present case ation. the period from 1 July 1978 to 30 June 1979. The Council was not therefore empowered to make the adjustment for 1979 on the basis of amended scales. The The applicants' sixth submission is that only ground capable of justifying in the Regulation No 160/80 was adopted in present case a derogation from the breach of essential procedural require- method of adjustment would be an error ments. The Council formed an intention previously made in drawing up the to adopt the regulation before the scales. In adopting Regulation No opinion of the European Parliament, 160/80 the Council was however in no which was unfavourable, was known. way correcting an error; on the contrary Furthermore the Council observed it had gone back on its assessment of neither the conciliation procedure salary policy as determined in 1976. demanded by Parliament pursuant to the Joint Declaration of 4 March 1975 (Official Journal C 89, p. 1) nor the procedure for consultation with the staff which the Council terminated before the In those circumstances the applicants in opinion of the Parliament was given. their fourth and fifth submissions also rely on the principle of the protection of legitimate expectation and vested rights. In its defence the Council rejects the various submissions made by the applicants. The review clause provided by the new method of adjustment would have allowed the Council, first on the adoption of Regulation No 2859/77 and Although, just like the staff represen- then in 1978, to alter for the future the tatives, the Council was not unaware of

As regards the compatibility of Regu- lation No 160/80 with the Staff Regu- lations the Council observes that the objective pursued by the incorporation of Moreover since Regulation No 160/80 the weightings into the scale was to bring excluded repayment of amounts already the weightings for Belgium and Luxem- paid and a reduction in net remuner- bourg back to 100% and thus to give ation, neither its object nor its effect was back to the weightings, which have been to call in question the applicants' vested used for several years as a technical rights as regards the past. In fact the instrument for adjusting remuneration, simultaneous entry into force of Regu- their true function consistent with Article lation No 161/80 even involved an 64 of the Staff Regulations, namely to increase in remuneration in the large compensate for the differences in the majority of cases. Moreover the principle cost of living in the various places of cited in no way excludes alteration in employment. If that aspect of the new future of established positions especially method of adjustment thus falls clearly if they are incompatible with the re- within the limits of Articles 64 and 65 of muneration policy pursued. The sole the Staff Regulations such is eyen more objective of Regulation No 160/80 was the case for the correction of distortions to re-establish equality between the caused thereby, first in 1977 and 1978 remuneration of officials for the future.

ANDERSEN v COUNCIL

Finally there has been no infringement of In a memorandum of 8 November 1977 essential procedural requirements. On from the Directorate General for the one hand the regulation was adopted Personnel and Administration of the after the Parliament had given its Commission containing the minutes of opinion and on the other the application the conciliation meeting of 28 October does not specify the obligations which 1977 on the 1977 report for the annual were disregarded in respect of the two review of remuneration it is stated in other procedures mentioned. relation to the method of incorporating weightings:

"This manner of incorporating the All that shows that when incorporating weighting has in some cases involved the weightings on the basis of the case of considerable increments for officials in an "unmarried official not in receipt of employment and also considerable the various allowances" the Council, reductions for quite a high number of with full knowledge of the position, those in receipt of pensions or the adopted a salary policy favouring heads allowance payable on termination of of family and those in receipt of the employment under special measures expatriation allowance. The statement of adopted under Regulations Nos 259/68, the reasons on which Regulation No 2530/72 and 1543/73. 160/80 is based is therefore inaccurate in so far as the regulation was intended to reverse the effects of a method, deliberately selected, of incorporating The Working Party of National Experts the weightings. (the Working Party on the Staff Regu- lations) considered the distortion giving rise to increments. In the context of the submissions relating to disregard of legitimate expectations On the other hand it was not foreseen and vested rights the applicants state that that the incorporation would involve the transitional measures to exclude losses in a certain number of cases." repayment of amounts actually received

JUDGMENT OF 19. 1. 1984 — CASE 260/80

ANDERSEN v COUNCIL

As regards the infringement of essential contested measure. Finally the Council procedural requirements the Council is in no way bound to initiate the observes finally that Regulation No procedure of discussions with staff 160/80 is dated 21 January 1980 and is representatives until after receipt of the therefore subsequent to the Parliament's Parliament's opinion. opinion even if drafts and intentions may have been put forward or declared before that date. The conciliation procedure with the Parliament to which IV — Oral procedure the applicants refer is not mandatory and in any event applies only on the adoption The parties presented oral argument at of measures of a general scope the sitting on 15 September 1983. concerned with fundamental choices of Community policy and having The Advocate General delivered her appreciable financial implications, con­ opinion at the sitting on 10 November ditions which are not satisfied by the 1983.

Decision

1 By application lodged at the Court Registry on 25 November 1980 Ivar Andersen and 173 other officials of the Council of the European Communities brought an action under Article 179 of the EEC Treaty for the annulment of the decision of the Secretary General of the Council of 7 October 1980 rejecting the complaint which the applicants had jointly made against the decision of the Secretary General to calculate their salary statements for February 1980 and the statements of payment of the arrears on the basis of Council Regulation N o 160/80 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).

6 Since the Council has however not put forward any argument to justify the removal of the documents in question from the file by reason of their nature or content, its objection must be dismissed. It may however be noted that the documents do not add anything new to the other matters in the file to assist a decision on the substance of the action.

7 In those circumstances it is necessary to consider the substance of the application. The six submissions put forward by the applicants all challenge the validity of Regulation No 160/80.

8 The first submission alleges an inaccurate statement of reasons in the regu- lation. The recitals in the preamble thereto refer to the need to correct "unintended" increases in remuneration resulting from the incorporation of the weighting into the salary scales of officials, whereas in fact, it is claimed, the Council had been alerted to the risks inherent in the manner in which the incorporation was effected and the distortions which would result therefrom; in nevertheless proceeding therewith the Council thus acted with full knowledge of the situation.

ANDERSEN v COUNCIL

9 The incorporation of the weighting into the basic salary scales laid down by the Staff Regulations was decided upon by the Council on 29 June 1976 as part of a new method of adjusting the remuneration of officials. The incor- poration was effected by Council Regulation No 3177/76 of 21 December 1976 adjusting the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (Official Journal L 359 p. 1). The regulation introduced new scales with effect from 1 January 1977 and reduced the weighting for Belgium and Luxembourg, which had been 157.8 from 1 July 1976, to 100.

o The second submission alleges infringement of rules of law inasmuch as the Council did not observe the criteria which it had itself laid down in adopting the decision of 1976 in relation to the method for adjusting remuneration. Whereas Regulation No 3177/76 constituted a correct application of the method of adjustment defined by that decision Regulation N o 160/80 was intended to call that application in question, it is claimed, by readjusting the basic salaries and thus undertakings entered into in relation to the adjustment of remuneration.

u According to the Council, the objective pursued by the incorporation of the weightings into the salary scales was to reduce the weighting for Belgium and Luxembourg to 100 in order to give the weightings back their true function in accordance with Article 64 of the Staff Regulations, namely to compensate for the difference in the cost of living in the various places of employment. Since that incorporation, by Regulation No 3177/76, was based on Articles 64 and 65 of the Staff Regulations the rectification of the distortions caused by the method of incorporation was effected pursuant to the same provisions by Regulation N o 160/80 and in accordance with the review clause provided for that purpose.

is The submission must be dismissed. On the one hand it overlooks the fact that the Council in the decision of 1976 had inserted a review clause relating in particular to distortions which might arise from the incorporation of the weighting into the scale. On the other hand the method adopted by the said decision was intended to implement Article 65 of the Staff Regulations;

i9 The fourth and fifth submissions complain that in adopting Regulation No 160/80 the Council infringed the principle of the protection of legitimate expectation and the vested rights of the applicants.

JUDGMENT OF 19. 1. 1984 — CASE 260/80

20 Those submissions are first of all based on the argument that Regulation risto Ü60/80 substantially departs from the method which the Council had selected in June 1976. It nevertheless appears from the previous consider- ations that the regulation is outside the field of application of the method adopted for implementing Article 65 of the Staff Regulations.

21 The two submissions are also based on a slightly different argument, namely that the rights acquired by officials under Regulation N o 3177/76 cannot be called in question by the Council save in the event of the adoption of a new method for adjusting remuneration.

22 In that respect it must be remembered that Regulation N o 160/80, which has retroactive effect from 1 July 1979, provides that no part of the amounts paid between that date and the date of its entry into force, namely 27 January 1980, is to be required to be repaid. Furthermore, it provides transitional measures intended progressively to re-absorb the distortions without bringing about a reduction in the amounts actually paid. Moreover the effect of Council Regulation N o 161/80 of 21 January 1980 effecting the annual review of remuneration under the revised scales (Official Journal L 20, p. 5) was to increase, also from 1 July 1979, the remuneration resulting from the application of Regulation N o 160/80 in such a way that, apart from certain special cases, the reductions in basic salaries resulting from the revision of the scale were immediately re-absorbed.

26 As regards inter-institutional conciliation, the applicants have referred to the Joint Declaration of the European Parliament, the Council and the Commission of 4 March 1975 (Official Journal C 89, p. 1). That declaration provides that the conciliation procedure which it lays down may be followed for Community measures of general application which have appreciable financial implications, and of which the adoption is not required by virtue of existing measures.

27 The Council has claimed that the conditions for applying that procedure were not satisfied in this case since Regulation No 160/80 is not a measure with appreciable financial implications. The applicants have not challenged that contention. In those circumstances the fact that the Parliament had requested the initiation of the conciliation procedure is not capable of affecting the legality of the regulation at issue. That complaint also must therefore be rejected.

28 It follows from all the foregoing that the action must be dismissed in its entirety.

OPINION OF MRS ROZÈS — CASE 260/80

Costs

29 Under Article 69 (2) of the Rules of Procedure the unsuccessful party is to be ordered to pay the costs. However, under Article 70 of the Rules of Procedure in proceedings brought by servants of the Communities the institutions are to bear their own costs.

J. A. Pompe T. Koopmans Deputy Registrar President of the First Chamber

O P I N I O N OF MRS ADVOCATE GENERAL ROZÈS

(see Case 211/80, p. 147)