Judgment_paragraph 2. · Roger Buyl and Others v European Commission (817/79)

2.In its defence, the Commission observes with regard to the infringement of essential procedural requirements, that the applicants' 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 Chemiefarma [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. They would have been the result obtained if the rates had been updated by application of the European Unit of Account. This 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 exchage 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.As regards the breach of general principles, the defendant considers that the applicants' criticisms are totally without foundation. The applicants educe 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, at p. 250). It forms the corollary of the principle that administrative measures must not be retroactive. The “advantages lawfully acquired” by the applicants 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.Before the rule of protection of legitimate expectation may be relied upon, the authority concerned must have entered into commitments, that is to say “assumed obligations which it has bound itself to observe” (cf. Case 81/72 Commission v Council [1973] ECR 575). At no time, and in particular since they entered the service, has the defendant given the applicants an undertaking not to change the conditions of the Staff Regulations governing the employment relationship, in particular as far as the detailed arrangements for transfers are concerned. Moreover, it could not have validly given such an undertaking, in vieı of the fact that the contract of service and the rights and duties flowing therefrom are governed by regulations. It is thus pointless for the applicant to maintain that the draftsmen of the Staff Regulations intended to introduce, by means of Article 17 of Annex VII, 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, at 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 freely allowed 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.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 or even comparable with that of officials who arrange for transfers to be made. In the 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 percentage since at the most only 35% of remuneration may be transferred. In extreme cases, those of transfers to Germany of 35% of 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. In the applicants' case, the highest increase in the cost of the transfers did not exceed, in relative terms, 5.62% of the total remuneration for April.With regard to the Staff Regulations the Council has indeed a “discretionary power” and, where there is discretionary power, there can be no question of restricted authority. Since it is clearly acknowledged that no superior rule of law requires the Council to maintain in perpetuity the IMF parities for transfers, it is easy to dispose of statements to the effect that the institutions exceeded their restricted authority when no restriction in fact ever existed in this sphere. Having regard to the case-law of the Court, the Commission can find no grounds to conclude that the amendments made by the Council to Article 63 of the Staff Regulations and Article 17 of Annex VII thereto might constitute a misuse of its powers. Being entitled to adapt the Staff Regulations to “economic realities” (Case 28/74 [1975] ECR 463) the Council, on the contrary, attained the objective which it pursued (updating of the rates) witıout misusing its powers. The updating of the rates was not carried out, by improper means, within the context of the annual adjustment of remuneration, which is referred to not in Council Regulation No 3085/78 but in Regulation No 3084/78 of 21 December 1978 adjusting the remuneration and pensions of Officials and Other Servants of the European Communities and the weightings applied thereto (Official Journal 1978 L 369, p. 1).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. No assurance was ever given on behalf of the Commission (through an “authorized person”) to the effect that there would be no increase in the cost of transfers, since such a guarantee would interfere with the work of nationalization with a view to adapting the Staff Regulations to the economic realities.