C-301/90

COMMISSION » COUNCIL

OPINION OF MR ADVOCATE GENERAL JACOBS delivered on 7 November 1991 *

My Lords, procedure for annual review of salaries, in June 1989 the Commission proposed the fixing of a specific weighting for Munich, but the proposal was not accepted by the Council. In June 1990 the Commission submitted to the Council a proposal for a regulation containing three elements, namely: (a) a general rectification of the 1. In this case the Commission seeks the salaries payable to Community officials, (b) partial annulment, pursuant to Article 173 an adjustment of the weightings for certain of the EEC Treaty, of Council Regulation countries and (c) the fixing of a specific (EURATOM, ECSC, EEC) No 2258/90 of weighting for Munich. When that proposal 27 Juh/ 1990 correcting the remuneration was examined by COREPER it became and pensions of officials and other servants apparent that there was a qualified majority of the European Communities and adjusting in favour of the first two elements and that the weightings applied thereto (Officia] none of the delegations supported the third Journal 1990 L 204, p. 1). The Commission element. The Commission therefore agreed wishes to have the regulation annulled only to sever the third element and put it forward in so far as it omits to establish a specific in a separate proposal, which was not weighting applicable to the salaries of staff accepted by the Council, while the other employed in Munich. two elements were adopted by means of the contested regulation.

The background to die dispute

3. It may also be noted that several officials posted to Munich have brought actions against the Commission before the Court of First Instance as a result of the failure to fix 2. The Commission and the Council have a spécifie weighting for Munich. In Case been in disagreement for some time over the T-134/89 Hettrich the Court of Erst need to fix a specific weighting for Munich, Instance dismissed the application and an although it does not seem to be disputed appeal is now pending before the Court of that the cost of living is appreciably higher Justice. In Case T-22/90 BrambiUa the in that city than in the rest of Germany proceedings before the Court of Erst (with the exception of Berlin). As part of the Instance have not yet terminated.

These weightings shall be adopted by the Council, acting by a qualified majority on a proposal from the Commission as provided 3. For the purposes of this Article, the for in the first indent of the second Council shall act by a qualified majority subparagraph of Article 148(2) of the on a proposal from the Commission as Treaty establishing the European Economic provided for in the first indent of the Community and 118(2) of the Treaty estab- second subparagraph of Articles 148(2) lishing the European Atomic Energy of the Treaty establishing the European Community. The weighting applicable to Economic Community and 118(2) of the the remuneration of officials employed at Treaty establishing the European Atomic the provisional seats of the Communities Energy Community.' shall be equal to 100% as at 1 January 1962.' 6. Point II. 1.1. of the annex to Council Decision 81/1061/EURATOM, ECSC, 5. Arude 65 of the Staff Regulations EEC of 15 December 1981 amending the provides as follows: method of adjusting the remuneration of officials and other servants of the Communities (Official Journal 1981 L 386, '1. The Council shall each year review the p. 6) provides: remunerations of the officials and other servants of the Communities. This review shall take place in September in the light of a joint repon by the 'Cost-of-living trends Commission based on a joint index prepared by the Statistical Office of the European Communities in agreement with the national statistical offices of the The Statistical Office of the European Member States; the index shall reflect Communities shall draw up, in agreement the situation as at 1 July in each of the with the national statistical departments of countries of the Communities. the Member Sutes, the joint indexes

Every five years the Statistical Office of the ' . . . in order that the rule contained in European Communities shall verify, in Article 64 of the Staff Regulations to the agreement with the statistical departments effect that account must be taken of living of the Member States, whether the ratios conditions in the various "places of between weightings accurately reflect employment" may be observed, that purchasing power equivalences between expression must be understood as meaning salaries paid to staff serving in the capitals not only the capitals of the Member States of the Member States. but the exact places where the duties of a sufficiently large number of officials and other employees of the Communities are performed.' Such a check shall be made for other places of employment when objective factors suggest that there is a danger of considerable distortion in relation to dau recorded in the capital of the country In that series of judgments the Court held concerned.' that the Community institutions should have fixed a specific weighting for the staff employed at the Joint Research Centre at Ispra in the province of Varese, where the cost of living was 2.76% higher than in 7. The provisions of Articles 64 and 65 of Rome. the Staff Regulations have been the subject of considerable litigation. The relationship between the two provisions was described by the Court in the following terms in Case 194/80 Benassi v Commission [1981] ECR The subject-matter of die action 2815:

' . . . the function of the weighting mentioned 9. Before dealing with the substance of the in Article 64 of the Staff Regulations is to case it is necessary to deal with a ensure that the remuneration of all officials preliminary point raised by the Council has the same purchasing power, whatever concerning the nature of the contested act. their place of employment. On the other The Council criticizes the Commission for hand, the weighting mentioned in Article 65 seeking the annulment of Regulation is a means available to the Council for No 2258/90 in so far as it omits to establish adjusting the remuneration of all officials a specific weighting for Munich. The and servants of the Communities.' Council observes that, although the

Commission's original proposal included a Commission's proposal, was obliged to fix a specific weighting for Munich, that pan of specific weighting for Munich. the proposal was severed in the course of the legislative procedure and was put forward in the form of a separate proposal. That severance took place because it became apparent that, without it, the entire proposal was in danger of being rejected. According to the Council, the action for annulment should be directed against the decisión to reject the separate proposal concerning the Munich weighting, rather than against the regulation finally adopted. 11. It may be noted that the Council has In support of its contention the Council not raised any objection to the adduces the draft minutes of the 1423rd Commission's proceeding by way of an session of the Council which clearly refer to action for annulment under Article 173 of two separate proposals. The Council the Treaty, even though the action is essen- concedes that the alleged defect in the tially based on the Council's failure to act, framing of the action is not such as to for which a remedy under Article 175 might render the action inadmissible, but it have seemed more appropriate. In my view,

10. The Council's objection need not detain far as it omits a particular provision, any us long. It is clear that the Commission objection could only be purely formal; in proposal that led ultimately to the adoption substance, the issue is the same whether a of Regulation No 2258/90 provided for the regulation is unlawful by reason of fixing of a specific weighting for Munich including, or by reason of omitting, a and that by the time die legislative particular provision. In the present case, the procedure came to fruition that part of the contested regulation, which applies to all proposal had vanished without trace. The Community servants, is alleged to moment when, and the reasons why, the discriminate against those employed at reference to a specific weighting for Munich Munich. Whether it does so by a specific ceased to have a place in the draft regu- provision, or by the absence of a specific lation have no bearing on the issue before provision, is of no account; in either event, the Court and it little matters whether the in my view, the regulation itself can be chal- action for annulment is directed against the lenged. It is therefore, in my view, open to failure to include such a weighting in the the Court to entertain such an action under regulation adopted or the failure to provide Article 173 of the Treaty and, if the action for it in a separate instrument. The only is well founded, to declare the regulation issue before the Court is whether the void in so far as it fails to include the Council, having been seised of the provision in issue. Nor is it entirely novel to

15. The parties are also in agreement that The substance of the action the second of the two criteria is satisfied in the present case. On that point there is indeed little room for argument. Price surveys carried out by the Statistical Office 12. The Commission pleads four separate of the European Communities, in submissions: (a) breach of Article 64 of the cooperation with the Statistisches Staff Regulations, (b) breach of the obli- Bundesamt, showed that at the end of 1987 gation to state the reasons on which the the cost of living in Munich was 8% higher contested measure was based, (c) breach of than in Bonn, which was then, and rules that the Council had imposed on itself continued to be at the material time for the and (d) breach of the general principle of purposes of this case, the capital of the non-discrimination. Federal Republic. The Commission points out that specific weightings have recently been introduced for Culham, namely a weighting of 99.3 compared with 103.9 for 13. Since Article 64 is founded on the London, and for Berlin, namely a weighting principle of non-discrimination (its object of 109 compared with 99.3 for Bonn. being to ensure that the remuneration of Moreover, in Roumengous Carpentier and officials has the same purchasing power the related judgments the Court held that a irrespective of their place of employment), it difference of 2.76% was sufficient to justify seems logical to consider the first and fourth the fixing of a specific weighting. Nothing submissions jointly. turns, in my view, on the fact that the Court there referred to Article 65(2) of the Staff Regulations and not, as might have been expected, to Article 64. 14. The Commission infers from the legis- lation and case-law cited earlier (paragraphs 4 to 8) that two conditions must be satisfied before it becomes necessary to fix a specific weighting for a place of employment other 16. The dispute between the parties centres than a capital: on the application of the first of the two criteria referred to above, namely the requirement that a sufficiendy large number of officials or other servants of the (a) a sufficiently large number of officials Community must be employed in a place or other servants of the Community before it becomes necessary to fix a specific must be employed there; weighting for that place. Both parties refer to an administrative pracúce according to which the presence of 50 officials or other servants has been considered sufficient to (b) (here I paraphrase) there must be a justify fixing a specific weighting. I shall significant différence in the cost of refer to that practice as 'the 50 persons living. rule'. Although in the present case there

were at the material time only 16 officials particularly large discrepancy in the cost of and other servants of the Community living may justify the fixing of a specific employed in Munich, the Commission none weighting even though less than 50 servants the less considered the fixing of a specific of the Community will be affected by it (at weighting for Munich justified because the least where the weighting will in fact be weighting would also apply to approxi- applied to other persons, such as teachers at mately 100 teachers at the European School the European School, in such a way as to

It does not appear that their salaries would be affected by a weighting fixed for Community officials, but the Commission considers their presence in Munich to be relevant, from die point of view of the sta- tistical population to be taken into account, because their consumption habits resemble 18. The Council argues that, even if the 50 those of Community officials and they thus persons rule was never formally established ensured that there was a large enough as a rule of law, it none the less constituted sample of persons with the appropriate a practice recognized by both the earning characteristics to enable a cost- institutions and had been relied on by the of-living survey to be carried out. Commission when rejecting complaints lodged by officials based in Munich. According to the Council, the Commission failed to put forward any convincing argument for departing from the established practice in the present case.

But the establish whether the cost of living at one Council questions whether it is possible to place of employment is significandy higher ensure perfect equality of treatment in such than in the capital. The Commission argues a field. It suggests, citing the Opinion of that the two criteria — namely, the number Advocate General Capotorti in Roumengous of persons employed in a particular place Carpentier and the related cases [(1982] and the extent to which the cost of living at ECR 4379 at p. 4412-3), that the that place exceeds the cost of living in the Community legislature is merely obliged to capital — must be examined joindy. A ensure 'substantial and reasonable equiva-

22. The 50 persons rule seems to have been extracted by the Commission (and accepted by the Council) from the Court's judgments in Roumengous Carpentur and the related cases. There, it will be recalled, the Court 20. The Commission also seeks to rely on held that the reference to 'places of the presence b Munich of the staff of the employment' b Article 64 of the Staff European Patent Office, on the ground that Regulations must be interpreted as meanbg their salaries and consumption patterns are 'not only the capitals of the Member States comparable to those of Community but the exact places where the duties of a servants. They thus ensured the presence b sufficiently large number of officials and Munich of a sufficiently large statistical other employees of the Communities are population to enable the cost of livbg for performed'. Even though the rule has Community servants to be measured apparently been applied by the Commission

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OPINION OF MR JACOBS —CASE C-30I/90

and the Council for almost a decade and an individual official's right to invoke the has been invoked as a ground for rejecting principle of equality of treatment should be complaints lodged by officials, I do not dependent on his suffering the misfortune of think that it can be regarded as being in any discrimination in the company of at least 49 way binding on the Community legislature. other officials strikes me as untenable. It constitutes nothing more than a practice which the institutions may, or indeed must, depart from if the circumstances so require.

I-238

COMMISSION v COUNCIL

be legitimate to ignore a relatively small circumstances, they cease to be valid when it difference where very few persons are is in fact known that there is a large affected, nevertheless there must come a discrepancy in the cost of living. point where the variation is so great that it cannot be tolerated, regardless of the number of persons affected. Conclusion

27. It follows that the Commission is 26. In the present case it is common ground entitled to succeed, without its being that the cost of living was 8% higher in necessary to examine the second and third Munich than in Bonn. The result is that the submissions, and that the contested regu- 16 officials posted to Munich were 8% lation should be declared void in so far as it worse off, in terms of purchasing power, omitted to fix a specific weighting for than officials posted to Bonn, Brussels, Munich. The supplementary claim for a Luxembourg or any other place for which a declaration that the provisions of the regu- specific weighting was fixed. Given the size lation continue to have effect until the of that discrepancy, the Council was in my adoption of a new regulation is in my view view obliged to prevent those 16 officials superfluous. If the Court merely annuls the from suffering severe discrimination by regulation in so far as it omits a particular fixing a specific weighting for Munich. provision, then logically the provisions While arguments based on the dispropor- enacted by the regulation will in any case tionate administrative burden entailed by continue to have effect. Finally, it may be having to carry out cost-of-living surveys noted that, since neither of the parties has for a comparatively small number of persons asked for costs, the appropriate order is that might carry some weight in ordinary they should bear their own.