Dino Battaglia v European Commission (1253/79)

law://eu/cjeu/1979/c-1253-79/para_5@2026-11-12

2.In its defence, the Commission observes that, as regards the instances of lack of consultation, neither the Economic and Social Committee nor the Court of Auditors are institutions within the meaning of the Treaties and accordingly the Council was not legally obliged to seek their opinions. Moreover, Regulation No 3085/78 was not adopted pursuant to Article 110 of the Staff Regulations and as such falls exclusively within the purview of the Council; it must not be viewed as a general provision for giving effect to the Staff Regulations within the meaning of Article 110; the twofold consultation provided for in that article is not therefore required in this case.As regards the allegation of insufficient consultation, the Commission observes that the applicant's view would be well founded if, after a first proposal from the Commission was put forward and before the Council adopted any decision on it, a quite new proposal was submitted, that is to say one concerning other matters or making substantial amendments (cf. a contrario Case 41/69 ACF Chemiefarm [1970] ECR 661). In the same way, the consultation procedure provided for in Article 10 of the Staff Regulations does not have to be repeated every time a minor alteration is made. In this case, by a communication of 30 November 1978 the Commission informed the Council of its desire that Article 1 of the initial proposal of April 1977 be re-worded. A comparison with the last-mentioned text shows clearly that the new provisions do not amount to a substantial amendment. The nub of the amendment to the Staff Regulations is merely the abandonment of the old IMF parities and replacement of them by updated parities whereby every official is still entitled to the same total remuneration in the currency of the place of his employment. That would have been the result obtained if the rates had been updated by application of the European unit of account. That is in fact the result obtained by the updating of the rates under the procedure finally adopted. In the case of transfers, updating on the basis of the European unit of account of the exchange rates to be applied to such transactions involved an increase in the cost thereof to an extent equivalent to that resulting from the application of Regulation No 3085/78. In fact, the exchange rates used for implementation of the general budget of the Communities as at 1 July 1978 were strictly related to the value of the currencies considered (Belgian franc on the one hand, other currencies on the other) with respect to the European unit of account on the same date.The Parliament was certainly not led into error but acted in full knowledge of the circumstances. It is in fact quite clear from its opinion that it was perfectly aware that the proposal for updating of the rates related also to transfers and that the consequence thereof would be an increase in the cost of such transactions when the country of destination was one with a strong currency. Nevertheless, its opinion was that it was “appropriate ... to abandon the exchange ratios introduced in 1965,” since the proposed updating would not have the result of “affecting the rights of staff.” It is wrong to claim that the assurances given regarding the “financial neutrality” of the operation extended also to the consequences of the updating of the rates for transfers.As regards the breach of general principles, the defendant considers that the applicant's criticisms are totally without foundation. The applicant deduces from the concept of “vested rights” an opinion contrary to the case-law of the Court (cf. Case 28/74 cited above in which it was held that “an official cannot in any case claim a vested right unless the facts giving rise to that right arose under a particular set of Staff Regulations prior to the amendment decided upon by the Community authority”). That ruling is the logical consequence of the view that the official's relationship is governed not by contract but by regulations (cf. Opinion of Mr Advocate General Gand in Case 20/68 Pasetti-Bombardella [1969] ECR 235, p. 250). It also forms the corollary of the principle that administrative measures must not be retroactive. The “advantages lawfully acquired” by the applicant- are fully safeguarded as regards the favourable exchange conditions granted in respect of transfers made on or before 1 April 1979. On the other hand, it is no longer possible to speak of a “vested right” to have those same favourable conditions maintained in force when the event giving rise to the right to make transfers arose after the Staff Regulations were amended.In order to prove an unfavourable change in the fundamental conditions of such a kind as to influence the applicant's decision to agree to be bound by the Staff Regulations, it must also be shown on what grounds the applicant relied, when he entered the service in 1964, to perceive in the transfer system then in force an “exchange guarantee” for the benefit of officials so as to safeguard them for all time from the effects of such fluctuations as might occur in the monetary parities and from the increased cost to which such fluctuations might give rise with regard to the financial obligations assumed by the staff in any particular Member State (cf. Opinion of Mr Advocate General Dutheillet de Lamothe in Joined Cases 63 to 75/70 Bode [1971] ECR 549, p. 557). The true reason for the transfer facilities regulated by that provision must be seen in the light of the historical context of the preparatory work on the texts of the Staff Regulations in 1961 when exchange control was often very strict and yet officials of different nationalities had to be allowed freely to honour their financial commitments in their countries of origin or in the countries where their families resided.Subsequently, as a result of the new situation in which currencies “float”, it became in practice easy to take improper advantage of the ratio legis of Article 17 of Annex VII, since transfers of a part of officials' remuneration, although within the limits laid down in a “code of good conduct” established in June 1974, became a means of obtaining “strong currencies” at a rate much lower than the market rate, with consequent adverse effects on the Community budget.The staff could not have been under any misapprehension any more than the Parliament as to the practical repercussions on transfers of the updating of exchange rates. An administrative circular distributed in May 1978 drew attention to “the disappearance of certain advantages now available” in that area and indicated that the transfers would thereafter be made on the basis of the value of the European unit of account, giving an example of the results of the calculations. It was therefore out of the question to conclude that the operation would be absolutely neutral from the financial point of view, since the object was to eliminate unjustified advantages in the future.As regards the alleged discrimination between officials and pensioners, the Commission contends that in fact the only legal principle applicable is that there must be no arbitrary discrimination, that is to say discrimination for which there are no objective grounds, and that the principle of equality is not applicable. The situation of pensioners, taken into account in Article 4 of Regulation No 3085/78, is not the same as nor even comparable with that of officials who arrange for transfers to be made. Inıthe case of pensioners the new system has entailed a sharp reduction, from one month to the next, which may be as much as half the amount in lire previously obtained from resale of the amount paid in Belgian francs or German marks in respect of the pension. On the other hand, in the case of serving officials, the increase in the amount of funds required for the transfers is nowhere near that proportion since at the most only 35% of remuneration may be transferred. In extreme cases, those of transfers to Germany of 35% of the remuneration for March of an official employed in Italy, the increased cost of the transfer might at the most be around 25% of the total remuneration for April.As regards the circular laying down detailed arrangements for transfers of part of the emoluments of officials (Administrative Notice No 230), it was not intended to avoid an increase in the cost for certain officials of making such transfers and it did not in fact do so; its object was to enable all officials to continue to transfer the same nominal amount of foreign currency as previously. The applicant therefore has nothing to gain by criticizing that provision, which is not in any way detrimental to him.The Commission is opposed to the adoption of any compensatory measures which, according to the applicant, should be based on the general duty of assistance which is incumbent upon the defendant. The latter has shown that such a wide definition of the duty of assistance conflicts with the fact that the employment relationship is governed by regulations. It would appear that an incorrect view of the concept of “vested rights” is at the root of the matter. Article 24 of the Staff Regulations may not therefore be relied upon for that purpose (cf. the opinion cited above in Joined Cases 63 to 65/70) and the result of its being so relied upon would be to render ineffectual the power of the authority responsible for the Staff Regulations to enact with immediate effect provisions adopting those regulations to economic realities.

Dino Battaglia v European Commission (1253/79)

Dino Battaglia v European Commission (1253/79)

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