C-28/83

JUDGMENT OF 15. 3. 1984 — CASE 28/83

In Case 28 / 83

SANDRO FORCHERI , an official of the Commission of the European Communities , represented by E . Lebrun , of the Brussels Bar , with an address for service in Luxembourg at the Chambers of T . Biever, 83 Boulevard Grande-Duchesse-Charlotte ,

applicant ,

supported by

LUIGI CASELLA, ENRICO OSIO , CORNELIA OUD AND JAN ROBERT DE RIJK , officials of the Commission , assisted and represented by E . Lebrun , also with an address for service in Luxembourg at the Chambers of T . Biever,

(a) an order requiring the Commission to take all the necessary steps to have the convertibility of his remuneration paid in convertible Belgian francs by the Commission restored to 100 % with retroactive effect from 1 February 1982 and

(b) the annulment of the implied decision rejecting his complaint of 29 July 1982 and , so far as is necessary, the implied decision rejecting his request for assistance of 8 February 1982 ,

FORCHERI / COMMISSION

THE COURT (Second Chamber )

composed of: K. Bahlmann , President of Chamber , P . Pescatore and O Due Judges , '

Advocate General : P . VerLoren van Themaat Registrar : H . A. Rühi , Principal Administrator

JUDGMENT OF 15. 3. 1984 — CASE 28/83

with which all foreign-exchange trans­ permitted to have the whole of their actions could be effected on the salary paid into a convertible account. regulated market. Only salaries paid by the European Communities and amounts On 1 June 1982 the Exchange Institute from other convertible accounts could be published a circular stating that such transferred to the special accounts. officials were once more authorized to have the whole of their salary credited to a special convertible foreign account, It had become common practice for provided, however, that the institution many officials to take advantage of the employing them countersigned a dec­ possibilities afforded by the special laration in which the account-holder convertible foreign accounts to buy acknowledged that he was aware that he foreign currency on the regulated market was "obliged to receive his remuneration which they immediately re-sold on the either in a convertible account or in free market ("arbitrage"), profiting in foreign currency which must be sold that way from the difference between the within eight days to an approved bank two rates ("exchange premium"). operating on the regulated market".

FORCHERI / COMMISSION

Since he considered that the undertaking 100% with retroactive effect from proposed following the Exchange Insti­ 1 February 1982; and tute's circular of 1 June 1982 was unac­ ceptable, that the aformentioned alter­ (b) Annul the implied decision re­ native procedure was still unlawful and jecting his complaint of 29 July that the Commission had not responded 1982 and, so far as is necessary, satisfactorily to his request for assistance, the implied decision rejecting on 29 July 1982 he also lodged a his request for assistance of complaint under Article 90 (2) of the 8 February 1982; Staff Regulations. Having received no reply to that complaint either, by application lodged at the Court Registry 3. Order the defendant to pay the costs; on 23 February 1983 the applicant brought the present action. In the alternative,

3. By order of the Court (Second Order the defendant to produce the Chamber) of 14 July 1983, four report or reports concerning its Commission officials. Luigi Casella, agreement to the Exchange Institute's Enrico Osio, Cornelia Oud and Jan second decision. Robert de Rijk, were granted leave to intervene in the case in support of the applicant. By a further order of the The Commission contends that the Court should: Court (Second Chamber) of the same date, the Government of the Kingdom of 1. Declare the application unfounded; Belgium was granted leave to intervene and in support of the defendant. 2. Order the applicant to pay the costs. 4. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to III — Submissions and arguments open the oral procedure without any of the parties preparatory inquiry.

(e) general legal principles and rules, in Admissibility particular the principle of equality and distributive justice and the duty to assist officials. 1. Whilst not questioning the ad­ missibility of the application, the Commission contends that the con­ The applicant's complaint is that, by clusions set out therein are, in certain reason of the contested decisions of the respects, inadmissible or extravagant Exchange Institute, the Belgian State has because, as a matter of law and of fact, failed to fulfil its obligations under the the Commission is altogether unable to EEC Treaty or secondary legislation and take "all the necessary steps to have the infringed the applicant's status and, convertibility of the applicant's remuner­ furthermore, that the defendant, which is ation paid in convertible Belgian francs under obligation to ensure that the by the defendant restored to 100% with provisions of the Treaty and provisions retroactive effect. . .". The Commission's adopted thereunder are observed and powers are limited to ordering the sums which, in particular, is under a duty to capable of being made convertible to be assist its officials and servants, including transferred, and the rest is a matter for the applicant, has not taken all the steps the Belgo-Luxembourg authorities and needed to have the aforementioned the banking authorities subject to their decisions annulled and is thus, in a control. certain manner, associated in the im­ plementation of the Exchange Institute's decision contained in the circular of In the Commission's view, the action can 1 June 1982. be taken to raise only two questions:

efforts to obtain still more favourable has, amongst other things, a duty to measures from the Belgian auth­ assist its officials and must ensure that orities? inter alia the Protocol is respected. The applicant alleges that the contested decisions of the Exchange Institute concern him directly and are contrary to Community law and he claims to be Consequently, the applicant's conclusions entitled, by reason of that duty and contain only two claims, namely for a obligation incumbent upon the Com­ finding that the Commission failed to act mission, to demand that it should use .ill and, if appropriate, an order requiring it means at its disposal that are necessary to pay damages. to have those decisions annulled retro­ actively. Since the applicant considers that the Commission has not in fact usud all such means, he takes the view that his claim for an order requiring the Even in that limted context, the applicant Commission to "take all the necessary may not raise the question of the steps to have the convertibility of his Commission's use of all the means at its remuneration paid in convertible Belgian disposal and, in particular, whether it francs by the defendant restored to should have initiated the procedure 100% with retroactive effect from 1 provided for under Article 169 of the February 1982" is admissible whether or Treaty against the two Member States not he may also require it to use the concerned. A refusal by the Commission ultimate means at its disposal, that is, ¡m to initiate that procedure may not be action for a declaration that a Member challenged either in an action for a State has failed to fulfil its obligations. declaration of nullity or in an action to establish a failure to act (see the judgment of the Court of 1 March 1966 — Case 48/65, Liitticke v Commission, [1966] ECR 19). Moreover, in pro­ With regard to that last submission, the ceedings brought under Article 169 of applicant emphasizes the special nature the EEC Treaty the Commission, ge­ of the present action, in which the Court nerally speaking, confines itself to has unlimited jurisdiction, based on applying for a declaration that a Member Article 179 of the EEC Treaty and State has failed to fulfil its obligations, Article 91 of the Staff Regulations and which would not afford the applicant consequently brought by an official co satisfaction in any case. Lastly and whom the Commission owes specific most importantly, the Commission still duties and obligations. In his view, an considers that there can be no sub­ official who complains of measures stantive legal objection to the new adopted by a Member State which are measures adopted by the Exchange contrary to Community law and not only Institute. concern him directly but also adversely affect his status may require the Commission, if it has failed to secure the withdrawal of those measures by other means, to initiate the procedure for 2. Whilst acknowledging that the establishing a Member State's failure to contested decisions of the Exchange fulfil its obligations or, alternatively, at Institute were not adopted by the least the preliminary stage of that Commission but by a Member State, the procedure. If the Court rules that a applicant points out that the Commission Member States has indeed failed to fulfil

(b) The applicant points out that Article 1 of the First Directive for the A — The legality of the new measures implementation of Article 67 of the adopted by the Exchange Institute Treaty requires Member States to grant "all foreign exchange authorizations (i) The applicant's arguments required for the conclusion or per­ formance of transactions or for transfers between residents of Member States in respect of the capital movements" (a) The applicant points out that relating inter alia to transfers of workers' Article 12 (c) of the Protocol provides savings during their period of stay. that officials and other servants of the Moreover, the transaction in question Communities are to be accorded in the are to be carried out "on the basis of the territory of each Member State the same exchange rate ruling for payments facilities in respect of currency or relating to current transactions", in other exchange regulations as are customarily words at the official exchange rate, accorded to officials of international which is the exchange rate prevailing on organizations. As is shown inter alia the regulated market. by the situation prior to 21 December 1981, described above, those facilities imply that remuneration paid by the Community insitutions to their officials Consequently, in so far as the Exchange and agents in convertible Belgian francs Institute's decisions require all, or some, must be freely convertible into foreign of the transactions in question to be currencies. carried out on the free market, where the exchange rate is not official and is less favourable than the official exchange rate, Article 1 of the First Directive has However, the two decisions at issue been infringed and those decisions reduce those facilities and consequently constitute, so to speak, measures having disregard Article 12 (c) of the Protocol. an effect equivalent to a restriction of The first decision restricts the proportion transfers.

Even in Belgium or Luxembourg, the Exchange Institute's decisions are applied to various categories of persons in The Commission considers first of all different ways. Only officials working that detailed consideration of the for international organizations are submissions set out above is not required. subject to them whereas diplomats are The only relevant question is whether not. the new measures adopted by the Exchange Institute required it to intervene for a second time. Consequently, it is sufficient to examine those measures and to investigate whether they are still (d) Moreover, the decisions at issue open to objection in any way. The result in unwarranted appropriation on measures have two main effects: first, the part of the Belgian State. The remun­ they restore the convertibility of the eration of officials and servants of the whole of an official's remuneration and, Communities comes from the Com­ secondly, they require holders of munities' own resources. By compulsorily convertible accounts to sign the dec­ and unilaterally changing convertible laration referred to above. No comment amounts into non-convertible amounts is called for on either aspect since they pursuant to the Exchange Institute's do not in themselves adversely affect the decision of 21 December 1981, the applicant. Besides, the applicant criticizes Belgian authorities are performing an the declaration only in so far as it refers unlawful transaction at the expense of to the prohibition of arbitrage the European taxpayer. transactions.

(a) As regards the arguments relied on by the applicant, the Commission denies that Article 12 (c) of the Protocol gives (e) The applicant makes the final point him the right to cany out arbitrage that the aim of the Exchange Institute's transactions. The fact that such a decisions is to stop "arbitrage" practice has been tolerated in the past transactions and that he is certainly not certainly cannot give rise to any legal claiming to be entitled to carry out such right since an official employed in transactions. However, the decisions are Belgium or Luxembourg does not need not confined to providing an appropriate to be able to cany out arbitrage

transactions in order to cover current officials of the European Communities expenditure. Article 12 (c) of the compared with Community nationals protocol merely requires that an official employed by international organizations whose country of origin is not Belgium and working in countries other than or Luxembourg be able to transfer funds Belgium or Luxembourg. freely to his country of origin or another country by means of his convertible account. As far as the Commission is aware, the Exchange Institute's new rules are The Commission points out that applied to all officials of international pursuant to Article 18 of the Protocol organizations employed in Belgium or and Article 23 of the Staff Regulations, Luxembourg who are in the same the privileges, immunities and facilities situation as Community officials. The aie to be accorded to officials and other Commission points out that diplomats servants of the Communities solely in the are not mentioned in Article 12 (c) of the interests of the Communities. Article 23 Protocol. Moreover, the applicant should of the Staff Regulations also provides not overlook a constraint which does not that: "Subject to the Protocol on necessarily apply to diplomats or officials Privileges and Immunities officials shall of other international organizations, not be exempt from fulfilling their namely Article 63 of the Staff Regu­ private obligations or from complying lations which states that an official's with the laws and police regulations in remuneration "shall be paid in the force". currency of the country in which the official performs his duties". Con­ sequently, there also cannot be held to exist inequalities in the treatment of The Commission concludes that the officials or servants of the Communities Protocol has not been infringed in the working in Belgium or Luxembourg present case. as compared with other Community nationals working in those two countries for other international organizations or foreign Governments. (b) The Commission contends that the submission regarding the alleged in­ fringement of Article 1 of the First Directive (Directive of the Council of 11 May 1960) for the implementation of (d) The Commission points out that the Article 67 of the Treaty (as subsequently applicant's assertion that the Exchange amended) is, in any case, irrelevant, since Institute's decisions lead to an convertibility has been restored. unwarranted appropriation on the part of the Belgian State has no bearing on the applicant's own personal situation. (c) The Commission points out that the European Monetary System applies in full to only six Member States, including Belgium and Luxembourg, which, (e) Finally, the Commission disputes moreover, apply it only to certain that the rules in question are contrary to transactions. The Commission concludes the principle of proportionality. On the that in those circumstances there is no contrary they seem to be consistent with uniformity in the system of transfer rates the present legal situation in so far as and therefore no unequal treatment of they allow the free transfer of funds and

(ii) The Commission's arguments

The Commission points out that its duty 1. Luigi Casella, Enrico Osio, Jan of assistance requires it to take certain Robert de Rijk and Cornelia Oud request steps but it is not under an obligation to the Court to order the Commission to obtain a specific result. At the end of pay the costs of the intervention. December 1981, when it was informed of the Exchange Institute's first measures, the Commission took the view 2. The Belgian Government states that, that the rules adopted for achieving the until the adoption of the Exchange legitimate aim of ending improper Institute's first decision in December arbitrage transactions were excessively 1981, officials and servants of the rigid and disproportionate to that aim Communities increased their income and immediatley protested to the quite substantially by engaging in very Exchange Institute and the Belgian auth­ simple arbitrage transactions involving orities in general. It continued its efforts the regulated market and the free market until June 1982 when the Exchange which were made possible by their access

JUDGMENT OF 15. 3. 1984 — CASE 28/83

FORCHERI / COMMISSION

transactions being allowed where they A. Vandencasteele, intervening in sup­ are necessary for meeting any obligation port of the Commission. entered into or for savings. At the hearing, the Belgian Government The Belgian Government accordingly stated that the sole purpose of the under­ requests the Court to declare the action taking to be signed by officials is to unfounded and to order the applicant to ensure that, for the purposes of an pay the costs of its intervention. official's current expenditure in either Belgium or the Grand Duchy of Luxem­ bourg, he does not attempt, by means of IV — Oral procedure currency transactions, to increase arti­ ficially the amounts of Belgian francs at At the sitting on 19 January 1984, oral his disposal. On the other hand, the argument was presented by the fol­ undertaking by no means prevents any lowing: the applicant and the inter­ payments to cover expenses abroad, veners supporting him, represented by including gifts. E. Lebrun; the Commission, represented The Advocate General delivered his by B. Paulin, acting as Agent; and the opinion at the sitting on 23 February Belgian Government, represented by 1984. '

Decision

1 By an applications lodged at the Court Registry on 23 February 1983 Sandro Forcheri, an official of Italian nationality at the Commission of the Luiropean Communmes, brought an action for an order requiring the Commission to take all the necessary steps to have the convertibility of his remuneration restored to 100% with retroactive effect from 1 February 1982 and, secondly, the annulment of the implied decision rejecting his complaint of 29 July 1982 and, so far as is necessary, of the implied decision rejecting his request for assistance of 8 February 1982.

4 Towards the end of 1981 the gap between the exchange rates on the regulated market and those on the free market widened and it became common practice for many officials to use the possibilities offered by the convertible accounts to effect "arbitrage" transactions in which they bought foreign currency on the regulated market and then immediately resold it on the free market, thereby making a profit in Belgian or Luxembourg francs based on the difference between the two rates. In order to stop that practice, on 21 December 1981 the Institut Belgo-Luxembourgeois du Change [Belgo- Luxembourg Exchange Institute, hereinafter referred to as "the Exchange Institute"] amended the existing system so that in future, in the absence of special authorization, only 25 % of sums paid as salary or allowances could be credited to the special convertible accounts which placed a corresponding limitation on the possibility for officials to buy foreign currency freely on the regulated market.

s Following the adoption of those measures, the Community institutions received numerous requests for assistance from their officials and then complaints submitted under Article 90 of the Staff Regulations. For their part, the institutions made representations to the Exchange Institute to have the possibility for officials of other than Belgian or Luxembourg nationality to have all their salary and allowances paid into a convertible account restored.

FORCHEIU / COMMISSION

6 1 Une 1982 , after ne tiations witn ^"L J g° the Community institutions, the Exchange Institute published a circular stating that such officials were once more authorized to have all their salary and allowances credited to a special convertible foreign account, provided, however, that they signed a declaration — which had to be countersigned by the institution employing them — in which the holder of the convertible account:

8 On 8 February 1982,, the applicant, taking the view that the rules laid down on 21 December 1981 were unlawful and adversely affected his status as, an official of the European Communities, requested the Commission for assistance under Article 24 of the Staff Regulations. He never received a reply to his request.

9 Considering that the undertaking proposed in the Exchange Institute's, circular of 1 June 1982 was unacceptable, that the alternative procedure was still unlawful and that the Commission had not responded satisfactorily to his request for assistance, the applicant also refused to sign the undertaking and on 29 July 1982 lodged a complaint under Article 90 (2) of the Staff Regu­ lations. Having received no reply to that complaint either, he brought the present action.

io Before the Court the applicant argued that the measures adopted by the Exchange Institute on, 21 December 1981 and 1 June 1982 constituted infringements by the two Member States concerned of Article 67 of the EEC Treaty and of the directives adopted for the implementation of that article. He further argued that those measures adversely affected the facilities accorded to officials of the Communities in respect of currency or exchange regulations under Article 12 (c) of the Protocol on the Privileges and Immunities of the European Communities, Finally, he argued that the measures were contrary to the principles of equality and distributive justice.

n He contends that, confronted with that unlawful situation adversely affecting the status of its officials, the Commission did not take the steps which were necessary. It thus failed to fulfil, on the one hand, its duty to assist officials and consider their welfare, laid down inter alia in Article 24 of the Staff Regulations, and, on the other hand, its duties as "guardian" of the Treaty.

is The second point which must be made is that, after the first measures were adopted by the Exchange Institute in December 1981, the Commission, together with the other Community institutions, immediately made repres­ entations to the Exchange Institute in order to have those measures replaced by others which, whilst putting an end to the improper use of special convertible accounts which enabled officials to enjoy an unjustified advantage by carrying out "arbitrage" transactions, would still make it possible for them to buy on the regulated market all the foreign exchange needed to cover their expenditure outside the Belgo-Luxembourg Economic Union. It was as a result of that action that the Exchange Institute, by its circular of 1 June 1982, introduced the present system which once again enables officials of other than Belgian or Luxembourg nationality to have all their remuneration and allowances paid into a special convertible account provided only that they comply with the obligations set out in a signed declaration. °

H As the applicant himself has admitted in the course of the proceedings before the Court, this action in fact raises only one question, namely whether the Commission was under a duty to pursue its efforts to persuade the Belgian and Luxembourg authorities to withdraw or amend the declaration to be signed by officials. In order to answer that question, it is sufficient to examine the applicant's objections regarding the text of that declaration.

is Those objections concern the obligation to sell to an approved bank at the rate prevailing on the regulated market all remuneration paid in foreign currency and to abstain not only from arbitrage transactions in the strict sense of the term but also from other currency transactions with the aim of procuring funds to cover current expenditure within the territory of the Belgo-Luxembourg Economic Union. Lastly, the applicant contends that, as

is It must therefore be held that, by the measures adopted on 1 June 1982, the Belgian and Luxembourg monetary authorities, acting in accordance with the spirit of the Protocol on Privileges and Immunities, fully restored the possibility for officials of other than Belgian or Luxembourg nationality to purchase on the regulated market all the foreign currency needed to cover their expenditure outside the territory of the Belgo-Luxembourg Economic Union, on the sole condition that they abstain from all currency transactions designed' to increase the value in Belgian or Luxembourg francs of means of payment intended to cover their expenditure within the territory of the Belgo-Luxembourg Economic Union and that they be subject to the control of the monetary authorities in that regard. It is by no means possible for that condition to affect officials in such a way that the interests of the Communities are harmed.

FORCHERI / COMMISSION

i9 In those circumstances, it cannot be maintained that the Commission has failed in its duty to assist its officials by not objecting to the measures adopted by the Exchange Institute on 1 June 1982. The application must, therefore, be dismissed.

Costs

20 Article 69 (2) of the Rules of Procedure provides that the unsuccessful party is to be ordered to pay the costs. However, under Article 70 of the Rules of Procedure, Community institutions are to bear their own costs in proceedings brought by servants of the Communities. The officials Luigi Casella, Enrico Osio, Jan Robert de Rijk and Cornelia Oud, who intervened in support of the applicant, and the Belgian Government, which intervened in support of the Commission, must bear their own costs.

Delivered in open court in Luxembourg on 15 March 1984.

For the Registrar

H. A. Rühi K. Bahlmann Principal Administrator President of the Second Chamber