Opinion of Mr Advocate General Capotorti

Mr President,

Members of the Court,

1. The three cases which form the subject-matter of my opinion today arise from actions brought by former Community officials in response to the unfavourable impact on their respective pensions of Council Regulations (EEC) Nos 3085/78 and 3086/78 of 21 December 1978. I would recall that those regulations have amended the monetar)' parities to be used in applying the Staff Regulations and the weightings inherent in the salaries and pensions of officials and other servants of the Communities. This has, amongst other things, had adverse effects on the level of some pensions and particularly on those paid in Belgian francs to officials who have settled in Member States with a weak currency.

2. In my opinion of 14 May 1981, I analvsed the various problems stemming from Regulations (EEC) Nos 3085/78 and 308Ó/78. I would therefore refer to that analysis as regards the legislative background against which these disputes, amongst others, are to be viewed. I propose to consider in this opinion only the provisions which are directly or indirectly concerned with the pension scheme.

3. There can be no doubt that the three cases in question, 117/80, 164/S0 and 167/80 may be considered together so far as their substance is concerned because, by challenging the individual implementing measures, all the applicants raise in essence the question whether Regulations (EEC) Nos 3085/76 and 3086/78 are applicable to them. I would add that objections levelled against those regulations by Mr Grogan, Mr De Pascale and Mr Curtis are largely the same. According to the applicants, the provisions on the basis of which their respective pensions have been paid at a reduced rate, as from October 1979, are invalid on several grounds, in particular:

4. The infringement of essential procedural requirements occurred, according to the applicants, in two ways: the procedure for the adoption of the regulations in question was unlawful (in particular, for failure to consult the European Parliament, the Court of Justice, the Economic and Social Committee, the Court of Auditors, the Staff Regulations Committee and the Staff Committee) and the statement of the reasons on which the regulations were based was inadequate. I have already examined those objections in my opinion of 14 May 1981, to which I have already referred, and I expressed the view that the procedure for the adoption of the two regulations was quite lawful. It should be said, however, that at the time 1 had taken account of the provisions in question because of their effect on the cost of transfers by Community officials of pan of their remuneration to other countries. Therefore I should now reconsider the alleged formal defects referred to above, particularly in the light of the amendments made to the pension scheme.

As regards the failure to consult the European Parliament, I would point out to begin with that consultation was mandatory onlv ir the case of Regulation (EEC)' No 3085/78 which amended two provisions of the Staff Regulations, namely Article 62 and Article 17 of Annex VII. In accordance with Article 24 of the Treaty establishing a Single Council and a Single Commission of the European Communities and having regard to the second paragraph of Article 10 of the Staff Regulations, the European Parliament must be consulted on any proposal for the revision of the Staff Regulations. However, there was no need to consult the Parliament in the case of Regulation (EEC) No 3086/78 since it merely laid down measures to give effect to certain provisions of the Staff Regulations, in particular those relating to weightings.

On what argument is the contention based that the Parliament was not consulted? The applicants (and in particular Counsel for Mr De Pascale) argue in the first place that the proposal to amend the Staff Regulations which was submitted to the Parliament was substantially different from the text subsequently adopted on 21 December 1978, that is to say the proposal submitted by the Commission to the Council on 1 April 1977 (see Official Journal C 99, 22 April 1977, p. 5) for a Council Regulation introducing the European unit of account into.the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities. In their opinion, the new proposal submitted in 1978 should have been the subject of a separate consultation. On this point, I should like to refer to the views which I expressed in my opinion of 14 May 1981 (paragraph 20) and to repeat that the technical solution evolved by Regulation No 3085/78, consisting in the adoption for the payment of salaries and pensions to officials of the exchange rates used for the Community budget instead of the European unit of account has not altered in economic terms the arrangements for the payment of pensions in a currency other than Belgian francs. In other words, the same adverse impact produced by the new parities (accompanied by new weightings) on the levels of certain pensions would have occurred even if the European unit of account had been introduced.

The applicants (and in particular Counsel for Mr Curtis) state in addition that the Commission provided the Parliament with insufficient and misleading information when, in 1977, it transmitted to the latter its initial proposal for the amendment of the Staff Regulations with the assurance that its new system of exchange rates would not entail reductions in the financial treatment of officials.

In general terms, I would observe that the Commission, merely by submitting its proposals for legislative measures to the Parliament, enables the latter to carry out its advisor)' function. Accordingly, I believe it is necessary to dismiss the idea that the explanations provided by the Commission and its projections concerning the effects and the implications of a given proposal (or the absence of sufficient explanations or projections) may play such a predominant role as to deprive the Parliament of the opportunity to express a valid opinion on the text before it. Evidently, it is for the institution consulted to assess the effects of a legislative measure on the basis of the proposal transmitted to it. If it fails to anticipate certain consequences, such failure can in no way constitute a procedural defect. It should be remembered, furthermore, that the Parliament possesses the technical means for investigating the scope and the repercussions of the proposals on which it is called upon to give its opinion. Rule 39 (4)of the European Parliament's Rules of Procedure lays down, in the text adopted on 12 March 1979, that any committee may, with the agreement of the Bureau of Parliament, instruct one or more of its members to proceed on a study or fact-finding mission and Rule 40 (2) provides that in addition to the Commission and the Council, any other person (obviously experts) may be invited to attend and to speak at a meeting.

Having clarified that preliminary matter, I believe it would be useful to examine the applicant's contention, referred to above, in order to determine whether it is correct: in other words, whether, and if so, how far, the Commission misled the Parliament as regards the effects of its proposal on which Regulation No 3085/78 is based to the extent of preventing it from realizing that in the case of some pensioners, that proposal would have serious adverse consequences.

Two facts are beyond dispute. First, Commissioner Tugendhat's failure to refer to the problem in question when the proposal for Regulation No 3085/78 was the subject of a parliamentary debate. At the sitting on 7 July 1977, he pointed out that the aim of the new svstem was to achieve financial neutralitv (Supplement to the Official Journal, No 219, July 1977, Repon of the Proceedings from 4 to 8 July 1977, p. 3C3) without referring to the effects of that svstem on the level of pensions and, in particular, on the position of pensioners residing in Member States with a weak currency who had asked for their pensions to be paid in Belgian francs. Secondly, the assurances given by the Commission that its proposal would in no way prejudice officials and other servams as regards the true value of their salaries, pensions and allowances. Those assurances were referred to by Mr Cointat in the repon submitted by him on behalf of the Committee on Budgets (Doc. 218/77 of 7 July 1977, EP 41.101/def, point 13), and in the preamble to the Resolution in which the European Parliament expressed its opinion on the Commission's proposal (Official Journal C 183, 1 August 1977, p. 55, fifth recital).

Other circumstances show, however, that the effects of the new system on the level of a certain category of pensions were brought to the Parliament's attention. Mr Cointat's report is supplemented by Annex I which contains a table illustrating a Comparison between pensions calculated in accordance with the provisions of the Staff Regulations in force (in 1977) and in accordance with the proposal for a regulation of the Council COM(77)43/def.. That table examines the position of retired officials residing in countries with a weak currency who have elected, pursuant to Article 45 of Annex VIII to the Staff Regulations, to have their pensions paid in the currency of the country of residence and explains that as far as they are concerned the new system would not lead to a reduction in pensions. However, paragraph (b) of the accompanying explanatory notes states that there will no longer be any advantage to be gained from opting, pursuant to Article 45 of Annex VIII to the Staff Regulations, for payment [of pensions] in currencies other than that of the country of residence. The adverse effects of the new system on the level of pensions awarded to retired officials residing in countries with a high rate of inflation who elected to receive payment in Belgian francs were thus pointed out by the rapponeur of the Committee on Budgets. It is appropriate to add that the Parliament was well aware of the parallel adjustment of the geographical weightings and of the repercussions which it would have. Mr Cointat in fact explains at point 10 of his repon that weightings should be adjusted in such a way as to serve, in accordance with the original intention, as a factor which takes into account increases in the cost of living and not as a factor to correct exchange parities. The same concepts were subsequently incorporated in the European Parliament's abovementioned resolution. The fourth recital of that resolution in fact states inter alia that following the introduction of the European unit of account, weightings will no longer be required to correct exchange parities and will hencefonh be used principally to take account of increases in the cost of living, as originally intended.

In my opinion, certain passages in the statement made by Mr Lange in the parliamentary debate in question are also significant. In commenting on the information supplied by the Commission concerning the implications of the proposal to amend the method of calculating salaries and pensions, he referred to the tables which illustrate the amounts paid to former officials in the same grade, set out on page 13 (pensions table) and on page 14 (table on voluntary termination of service) of the Cointat repon, and pointed out that the new amounts took account of the differences in purchasing power between the various currencies (see the aforesaid minutes of the proceedings of the European Parliament from 4 to 8 July 1977, p. 302) and he also alluded to the distortions made possible by the previous system when he stated ... manipulations of the kind which took place in the past when units of account were still based on the 1965 rate, are no longer possible ...; at the time curious manipulations of the various currencies took place with consequences which were not particularly desirable.

Finally, I should like to state that the absence of a debate in depth on that particular aspect of the reform is not surprising. To begin with, the new svstem was genuinely neutral in the case of a large number of pensions, namely those paid in Belgian francs to pensioners residing in Belgium or in Luxembourg or in other Member States with a strong currency and all pensions paid in local currency to pensioners residing in countries other than Belgium or Luxembourg. In spite of the adjustment of the parities and weightings, pensioners within those categories have received the same pension, in terms of purchasing power, which they were paid before the entry into force of the new system. Secondly, the previous system which permitted pensioners residing in countries with a high rate of inflation to obtain pensions which were far higher than those paid to pensioners residing in Belgium or in Luxembourg was manifestly an absurdity, the lawfulness of which (at least as far as observance of the principle of equality is concerned) is open to serious doubts.

Counsel for Mr Curtis has alleged that the failure to consult the Court of Justice constituted a defect. That criticism is based on the idea that the Court was consulted on a proposal for a regulation which was substantially different from the text adopted in 1978 and that consequently fresh consultation was essential. That grievance does not differ from the one similar in content raised in connection with the consultation of the European Parliament. 1 will therefore confine myself to repeating that were no differences between the proposal submitted to the competent institutions for their opinion in 1977 and the one adopted in 1978 such as to necessitate a repetition of the consultation procedure.

The applicants (and in particular Counsel for Mr Curtis and for Mr De Pascale) maintain that Regulation (EEC) No 3085/78 has also been vitiated by the failure to consult the Economic and Social Committee and the Court of Auditors. They rely on Article 24 of the Merger Treaty which provides that the Council shall, acting by a qualified majority on a proposal from the Commission and after consulting the other institutions concerned, lay down the Staff Regulations of Officials ... and the Conditions of Employment of Other Servants ... (emphasis added). The reference to the other institutions concerned which are to be consulted before any rules of the Staff Regulations are laid down or amended includes, according to the applicants, the Economic and Social Committee and the Court of Auditors.

I cannot share that view. In my opinion of 14 May 1981, I have already criticized and rejected the argument that the word institutions, which in the Treaties establishing the Communities is used exclusively to refer to the Council, the Commission, the Parliament and the Coim of Justice, was in this case meant to indicate all the bodies which employ staff within the framework of the Communities. I explained that such an interpretation would do violence to the letter of the provision and is justified neither by consideration of the Treaties as a whole nor by reference to the objectives of the said Article 24 and I added that I considered it reasonable that only the Community institutions stricto sensu should be endowed with a role of particular importance in the adoption and amendment of the Staff Regulations. I should like to confirm that opinion in the present cases also because the parties have not adduced any arguments which might induce me to revise the views which I expressed at the time.

Counsel for Mr De Pascale has endeavoured to rely on the adjective concerned accompanying the noun institutions. All the institutions which employ staff should be regarded as concerned in the context of Article 24. Therefore, since the Economic and Social Committee and the Court of Auditors also employ their own staff they should be treated on an equal footing with the institutions stricto sensu which are designated as such in the Treaties. That argument is, in my opinion, untenable. It has the drawback of attributing excessive importance to the adjective concerned, going so far as to assume that a given interpretation of the word makes it possible to nullify the technical significance of the word institutions which can be deduced from the text of the Treaties. Instead, it seems to me that, referring to consultation of the institutions concerned, Article 24 has taken into account cases of provisions in the Staff Regulations the scope of which is limited to one or only some of the institutions. That is illustrated by the provisions of Title VIII of the Staff Regulations (Special provisions applicable to officials in the scientific or technical sen-ices of the Communities). That title, as is explained in the first paragraph of Article 92, contains the special provisions applicable to officials of the Communities who occupy posts in the field of nuclear science calling for scientific or technical qualifications and who are paid from appropriations in the research and investment budget. Clearly, any amendment of the provisions of that title could not be of any concern to the Court of Justice which does not employ for the exercise of its institutional powers technical staff within the category described. Consequently, there is no need to consult the Court on the basis of Article 24 in the case of proposals to amend the Staff Regulations which relate to the aforesaid provisions. The expression institutions concerned is therefore capable of being interpreted in accordance with the criterion that, with respect to certain provisions of the Staff Regulations, the number of institutions to be consulted in the event of amendment may be limited. That interpretation strikes me as greatly to be preferred because it has the advantage of not interfering with the technical significance of the word institutions in the context of the Treaties and at the same time of observing the literal significance of the word concerned, regard being had to the fact that the interest of each institution in being consulted depends on the content of the provisions to be amended.

Counsel for Mr De Pascale has relied upon another argument, pointing out that in the Act concerning the Conditions of Accession of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Nonhern Ireland to the European Communities and the Adjustments to the Treaties, Pan Two of Title I (Provisions governing the institutions) lays down rules on adjustments to the Treaties by reference to the four institutions stricto sensu as well as to other bodies, namely the Economic and Social Committee, the ECSC Consultative Committee and the Scientific and Technical Committee. That is said to demonstrate that, as far as primary provisions are concerned — for the provisions of the Act of Accession in addition to those of the Treaties establishing the Communities fall within that category — the Economic and Social Committee is regarded as an institution.

However, that argument does not stand up to critical assessment. In the first place, the heading Provisions governing the institutions does not necessarily mean provisions relating to the institutions. It is more reasonable to interpret it as meaning provisions relating to institutional aspects, that is to say, the organizational structures of the Communities. The correction of this interpretation is confirmed by the fact that Title I itself also contains, as we have seen, provisions relating to the ECSC Consultative Committee and to the Scientific and Technical Committee. It is quite excessive to take the view that those two committees, which have a limited and specific role in the Community organization, can be described as institutions in the same way as the Commission, the Parliament, the Council and the Court of Justice.

Secondly, it is necessary to recall the recent amendment of Article 1 of the Staff Regulations bv Council Regulation (EEC) No 1376/77 of 21 June 1977, consisting in the addition of a second paragraph which lays down that save as otherwise provided for, the Economic and Social Committee and the Court of Auditors shall, for the purpose of these Staff Regulations, be treated as institutions of the Communities (emphasis added). As I observed in my opinion of 14 May 1981, that demonstrates that when the Community legislature intended certain bodies to be treated as Community institutions, it did so by recourse to express provisions and confined the effects of those provisions to a particular legislative context. It follows, in the absence of specific provisions, that when the primar) or secondary sources of law speak of institutions they refer to the bodies considered as such by the Treaties.

In my opinion, therefore, the failure to consult the Economic and Social Committee and the Court of Auditors does not affect the validity of Regulation (EEC) No 3085/78.

As regards the failure to consult the Staff Regulations Committee, which Counsel for Mr De Pascale complains of in general terms, I would recall that the second paragraph of Article 1C of the Staff Regulations provides that that committee (consisting of representatives of the institutions of the Communities and representatives of their Staff Committees) shall be consulted by the Commission on any proposal for the revision of the Staff Regulations. Thai rule should undoubtedly have been to be applied to Regulation (EEC) No 3085/78 which has as its subject-matter & number of amendments to the Staff Regulations. Indeed, in the preamble to the regulation it is formally noted that the opinion in question has been gnen The applicants object that the subicn matter of that opinion was a propova. tor amendment substantially different from the text adopted in December Fresh consultation should therefore ha f taken place on the latter text. Thr umr argument has been advanced in rr.aiiv to the alleged failure to consult thr I a liament and the Court of Justice. I i uM therefore refer to the observation nur I made when I considered those t o issues.

The legal position is different in the case of Regulation (EEC) No 3086/78. In my opinion of 14 May I have already stated that the function of that regulation is to implement the provisions of the Staff Regulations on weightings... [and] therefore in the hierarchy of the sources of Community law it occupies a subordinate position in relation to the Staff Regulations. In those circumstances, it was unnecessary to consult the Staff Regulations Committee. We have seen that Article 10 of the Staff Regulations concerns exclusively proposals for the revision of the Staff Regulations. I observed, in my opinion of 14 May, that the obligation to consult the Staff Regulations Committee could not even be inferred from Article 110 of the Staff Regulations which provides that the general provisions for giving effect... (to the Staff Regulations) shall be adopted by each institution after consulting its Staff Committee and the Staff Regulations Committee provided for in Article 10. At the time, I pointed out that Article 110 refers to the general provisions which it falls to each institution to adopt in order to give effect to the Staff Regulations... whereas [the] regulation ... contains provisions which are intended to be applied in the same way in relation to the staff of all the institutions. I have not changed my mind and therefore I do not consider it necessary to devote any more time to this issue.

As regards the failure to consult the Staff Committee, another alleged defect which Counsel for Mr De Pascale complains of, it is again necessary to turn to Article 110 of the Staff Regulations which requires that committee to be consulted before the adoption of those general implementing measures which every institution must take in its own area of responsibility. However, there is no legal basis for stating that such consultation is necessary in the case of Regulations (EEC) Nos 3085 and 3086. The former contains provisions amending the Staff Regulations while the latter contains implementing provisions intended to be applied in the same wav to the members of staff of all the institutions.

Counsel for Mr Curtis contends that essential procedural requirements have also been infringed as a result of the absence of a sufficient statement of the reasons upon which Regulations (EEC) Nos 3085/78 and 3086/78 are based. That objection strikes me as being as unfounded as the previous ones. In the second recital of the preamble to Regulation (EEC) No 3085/78 it is stated that it has become necessary to amend the provisions of the Staff Regulations concerning the monetary parities used in application of the Staff Regulations. That statement, though concise, is in mv opinion sufficient for the purposes of compliance with the obligation to state the reasons on which a measure is based, laid down by Article 190 of the EEC Treaty, especially because, as I have already observed in my opinion of 14 May 1981, it must be viewed in relation to the opinions expressed by the institutions consulted, which are referred to in the preamble. As far as Regulation (EEC) No 3086/78 is concerned, the reasons on which it is based strike me as being equally sufficient. I would repeat in that connection the observation which I made in my earlier opinion, namely that its sole recital refers to the amendment made to the provisions of the Staff Regulations concerning monetary parities and the resultant need to adjust the weightings applicable to salaries and pensions.

5. Now it is time to consider the alleged infringements of general principles which are said to vitiate Regulations (EEC) Nos 3085/78 and 3086/78. The applicants contend in the first place that there has been an infringement of the principle that vested rights must be respected — to the detriment of all those retired officials who, under the former system, declared that they were residing in a country with a weak currency and at the same time asked for their pension to be paid in Belgian francs — because from that principle they derive their right to be paid the same amount as that which they received until the entry into force of the new system. In other words, they assume that at the time when the procedures for payment were changed, they had already definitively acquired the right to receive a pension of the same amount as that paid to them until that date and which the administration was not empowered to reduce.

6. Another principle relied upon by the applicants, which is more specific in content, consists in the prohibition of any reduction in pensions.

7. All the applicants also object to the new system governing the payment of pensions on the ground that it infringes the principle of legitimate expectation. It would appear that former officials who enjoyed for many years the twofold benefit of payment in a strong currency and of the application of a high weighting expected to retain that benefit permanently. The amendments made by the Council in 1978 prejudiced their expectation and are therefore alleged to be unlawful.

8. According to the applicants, Mr De Pascale and Mr Grogan, Regulations (EEC) Nos 3085/78 and 3086/78 are also invalid because they infringe the principle of equality. In that connection, they observe in the first place that under the system introduced by those regulations, the amount of each pension is not proportionate to the number of contributions paid. The fact that payment of the same number of contributions may result in the award of different pensions and vice versa is contrar)' (this is asserted in particular by Counsel for Mr Grogan) to the principle of equality. I have already had occasion to state that the pensions paid by the Community are not contributory in nature but are based on the Staff Regulations. Thai factor remains constant, regardless of Regulations (EEC) Nos 3085/67 and 3086/78. Therefore the fact that pensions are not proportionate to the contributions paid cannot be regarded as constituting discrimination.

9. Counsel for Mr De Pascale also contends that the reduction of certain pensions brought about by Regulations (EEC) Nos 3085/78 and 3086/78 runs counter to the Staff Regulations to such an extent as to influence the former officials concerned to become subiect to the Staff Regulations. That reasoning restates the argument of the so-called attempt to undermine the fundamental conditions of the employment relationship, which I have already refuted in my opinion of 14 May 1981. In practice, that argument may perhaps be tenable in connection with a contractual system of employment relationships but certainly not in connection with a system governed by the Staff Regulations such as that established for Community officials.

10. The applicants Mr Curtis and Mr Grogan have inferred that Regulation (EEC) No 3086/78 is vitiated by a misuse of powers inasmuch as the new weightings have been fixed without taking into account the changes which have occurred in the cost of living and therefore without reference to the conditions laid down by Article 65 (2) of the Staff Regulations. Thus, by acting in the way the Council thus used the instrument of weightings for purposes other than those specifically provided for by Anieles 64 and 65 of the Staff Regulations.

11. The applicants, Mr Grogan and Mr De Pascale, contend that Regulations (EEC) Nos 3085/78 and 3086/78 are vitiated by the infringement of certain rules of secondary legislation, in particular the provisions of the Staff Regulations concerning weightings (Anieles 64, 65 (2) and 82) and the provision which requires the administration to assist its own officials (Article 24).

12. On the basis of all the foregoing considerations, I propose that the Court dismiss the applications brought by Mr Vincent Grogan and Mr Luigi De Pascale against the Commission and by Mr Dunstan Curtis against the European Parliament, by documents lodged at the Registry on 27 May 1980, 14 July 1980 and 18 July 1980 respectively.

1 Translated from the Italian.