1.

Let me briefly preface my remarks.

The subject-matter of the action is — as we have seen — the refusal of the Council, expressed in the Decision of July 1974, to undertake any salary adjustment for the previous years. In the Commission's view this refusal is illegal, because both in 1972 and in 1973 the salaries were wrongly fixed. This arises from the fact that the joint specific index for the appropriate period for both the said years was defective due to an incorrect fixing of the relevant Italian index. The Italian specific index did not completely reflect the variation in the purchasing power of the salaries of Italian officials during the appropriate period 1971/1972, because it did not take account of a large part of the grants paid to the officials. It is true these grants were taken into account in the reference period 1972/1973, but the fact could not be disregarded that the resulting specific index showed not only the increase in the purchasing power of the reference period 1972/1973 but also partly that of the previous years.

On the basis of this argument and the factors brought to light in the action, however, the conclusion must be reached at the outset that, even if the Commission is right in its criticism, at the most the salary decision for 1972 will be affected but not that for 1973.

In 1972 the decision on salaries — as we have seen — kept closely to the specific index (3.6 %), while the total emoluments index (3.9 %) was not taken into account. When it is shown, therefore, that for the appropriate period a higher Italian specific index and therefore a higher joint specific index is to be taken as a basis (the influence of the Italian index is approximately 28 %), then the salary decision for this period will certainly be affected.

In 1973 the salary decision was taken on the basis of a specific index of 7.3 % and a total emoluments index of 3.2 %. It was 3.3 % and thus kept quite close to the total emoluments index. When, due to the reduction of the Italian specific index (which partly reflected the salary variation of earlier years), it was necessary to reduce the joint specific index for this period, this would obviously have no effect on the salary decision taken, which was based on the total emoluments index.

Accordingly, in view of the objections brought by the Commission, it can only be a question of inquiring whether the fixing of the salaries based on the 1971/1972 period must be revised.

2.

The arguments so far have already made clear that the dispute is whether the salary variation of a Member State, namely Italy, has been sufficiently taken into account for the 1971/1972 period in the salary decision for 1972. The Commission takes the view that this is not the case and it opines that two objections may be made to the Council:

If these considerations show that there are considerable doubts in the way of the restrictive interpretation of the Council, then such impression must be strengthened if the examination is extended to other parts of the Decision of March 1972, if its background and obvious purpose are considered and if we look at the spirit, which is apparent from other acts of the Council.

To begin with it is a fact that the application of the method of assessing the increase in salaries laid down in the 1966 note led to increasing tensions between the Council and the staff, which found expression in the side effects known to all of us. Obviously this was due in no small measure to the fact that the Council was paying less and less regard to the supplementary factors in the right to remuneration, such as the allowances now in question. The complaints of the staff were thus directed to the manner in which the joint index was made up and not so much to the way it was applied The Decision of March 1972 was, obviously intended to remedy this awkward development. It was the result of an understanding with the staff and was intended to secure the necessary peace in the Communities' service. In this respect, however, it can be said at the outset that the only reasonable interpretation of this decision is one which allows appropriate account to be taken of certain service emoluments outside the actual payment of salaries.

Further, if the Decision of March 1972 is looked at as a whole, then this too provides weighty indications in support of the wide interpretation now suggested.

In particular it is material that the decision does not simply take account of the method formerly used to establish the index of public salaries in the Member States, but is quite clearly intended to introduce certain improvements. Contrary to the opinion of the Council, this is not mainly the creation of a second index, namely the total emoluments index, and the check which it provides. In the light of the development described, such an index does not amount to a substantial improvement, for the Council is, as we have seen, completely free in the exercise of its discretion to disregard this index. Moreover the wording of the decision makes it quite clear that the improvements relate to the specific index and moreover to its computation — the Commission has shown this in a careful analysis.

In the Decision of March 1972, under the heading ‘Indicateur spécifique’, and after the catchword ‘ameliorations’ there is reference inter alia to;

Finally it is stated: ‘Il est entendu qu'une information complète des représentants du personnel au sujet des elements statistiques relatifs à cet indicateur sera assurée par la Commission.’

In my opinion it cannot be denied that there is something to be said for concluding from these factors that there was a duty in fixing the specific index to take account — to describe it thus — of factors in the right to remuneration other than the actual payment of salary. The Commission rightly refers to the fact that these rules obviously intend an annual examination of the factors which are to be taken account in the specific index, for otherwise the Council would have expressly laid down that only payments of salary are to be taken into account. It was rightly stated that there would be no necessity for the complex review provided if it were only a question of taking account of payments to all officials and finding whether the information from Member States was correct in this respect. With regard to the necessity to keep the staff completely informed about the actual variation in the salary situation in the Member States on the one hand, and with regard to the object of the Decision of March 1972 in bringing peace on the other hand, it was also rightly stressed that it was not to be assumed that after this decision it would not be necessary to take account of additional factors in the right to remuneration.

The analysis as a whole of the method of fixing the specific index thus compels the recognition that there is a clear stressing — as I have previously stated — of other factors in the right to remuneration in the Decision of March 1972 and in particular in the paragraph concerned with the specific index. Looked at in this light it is moreover also understandable that the total heading was changed by the inclusion of the word ‘Purchasing power’ and thus expression was given to the fact that as true as possible a picture of the variation of the salary situation in the Member States was sought.

Finally — as already stated — there must not be left out of account the spirit of the decision, to which the neutral advisers brought in by the Council have referred in their opinion which was ultimately in favour of the staff. It has certainly considerable weight in the interprétation of decisions which are the result of an understanding with the staff and which have the object of securing peace. It will become clear how this spirit is to be understood if the Decision of the Council of 18 and 19 December 1972 is considered, in which it is stated:

‘Le Conseil estime que le règlement du 12 décembre 1972 ne préjuge pas de l'interprétation de sa decision du 21 mars 1972 sur le système d'ajustement pour les remunerations et confirme que celui-ci s'inscrit dans le cadre d'une politique tendant a garantir, a moyen terme, une evolution des remunerations des fonctionnaires européens parallèle à celle, relevée en moyenne, pour les traitements des fonctions publiques nationales.’

This can only reasonably mean taking into account as far as possible all essential factors in the national system of remuneration, and in view of the Council's discretion according to the judgment of the Court of Justice, all the factors not only in the total emoluments index but also in the specific index.

For all these reasons there is to be inferred from the Decision of March 1972 an obligation in preparing the specific index to take account not only of payments of salary as such and allowances to all officials but also other factors in the salary system if they are common and significant. In this connexion the Commission has attempted a narrower definition, referring to the amounts paid to a representative group of officials for services appertaining to their normal duties. This definition is illuminating but probably unnecessary in the present case. For the purpose of judging the matter the fact should be sufficient that in respect of the allowances which concern us here a declaration was made to the Italian Parliament on the amendment of the Italian system of remuneration that it was not a matter, on the whole, of allowances for particular services but amounts paid for purposes of adjustment Moreover it is known — even the Council admits this — that the greater part of the allowances in question has been incorporated into the salary or into a special allowance, which certainly has to be taken into account in the specific index, that is a correction of the Italian system of remuneration has taken place permitting conclusions to be drawn as to the nature of the grants and allowances previously paid.

To summarize, it must therefore be found that the failure to take into account the said other factors in the Italian system of remuneration for the reference period 1971/1972 has led to an incorrect Italian specific index, that is one that is too low, and therefore the Community index, to which Italy contributes 28 %, was incorrect. Since the rules mentioned have to be respected in fixing the specific index, if the index is found to be incorrect there is an obligation to correct it subsequently. From this arises the obligation to correct the salary adjustment of that time, for it is beyond dispute that the salaries for 1972 were fixed very close to the specific index and the higher total emoluments index was left out of account. The refusal of the Council to undertake a retrospective salary adjustment is thus contrary to law and must be reversed.

How the Council subsequently undertakes the requisite salary adjustment need not be gone into in detail now. This is rather a matter for the Council in implementing any judgment of annulment by the Court of Justice.

3.

This could actually conclude consideration of the case. I will not however conclude without mentioning a subsidiary matter which would apply if there is found not to have been any disregard of the Decision of March 1972 in preparing the specific index for the reference period 1971/1972.

This subsidiary point necessarily arises in my view after what has become clear in the action on the background and spirit of the Decision of March 1972. From this it appears quite out of the question that the matter which is at the centre of this dispute, namely the failure to take into account a large part of the grants and allowances paid to the Italian officials, has no effect at all on the salary adjustment.

I would think that in the event of discovery of such an error an influence would at least have to be admitted on the decision which the Council has to take in accordance with the Decision of March 1972 within the limits of the two said indices; more precisely: in such a case one cannot proceed on the basis that the decision is completely unfettered. If, then, it is shown that an index (in this case the specific index) is obviously not representative, the decision should be affected to the extent that the other index, that is the total emoluments index, which contains all the factors in question, should have greater effect. It would also be conceivable to make a proper adjustment by having more regard to the specific index in 1973, when the specific index no longer contained the defect which is known. Since however the salary decision for 1972 — as already mentioned — was based on the specific index, while that of 1973 was based on the total emoluments index, there would have been, if the matter is looked at in this way, a duty on the Council to undertake a subsequent salary adjustment and in consequence to declare unlawful its refusal to come forward with an unobjectionable decision.

I would however like once more to stress that this is only an alternative point and that primarily I am of the opinion that the Decision of the Council of June 1974 should be annulled because the Council refused to correct the specific index for the reference period 1971/72.

4.

On these premises, my conclusion is as follows:

The action brought by the Commission against the Council is wellfounded. The refusal contained in the Decision of the Council of 21-23 July 1974 to undertake a salary adjustment should be declared void. No ruling on costs need be made since none is asked for.