1.

In view of that situation the Council first suspended the application of Regulation No 3177/76 for such persons as had suffered reductions in their net salaries (Report of the Working Party on Staff Regulations to the Permanent Representatives Committee of 24 June 1977, p. 2, Annex 1 to the defence).

Consequently the Commission, on the occasion of the annual review of salaries, proposed that tax grades should be indexed for the benefit of the Communities in order in future to compensate for the consequences of incorporating weightings. The Council only partially adopted that proposal by restricting, in Article 9 of Regulation No 2859/77 of 19 December 1977 adjusting the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (Official Journal L 330 of 23 December 1977, p. 1), this measure to the period from 1 July 1977 to 30 June 1978.

2.

In May 1978 in its proposal for a Council regulation adjusting weightings the Commission recommended the definitive adoption of the formula, which the previous year had had only provisional approval, for the incorporation of weightings by indexing the tax grades. At the same time in order to take account of that change in the procedure for adjusting remuneration it proposed to insert a new subparagraph (d) in II 6 of the Decision of 29 June 1976.

The Council agreed to those amendments: on 26 June 1978 the Decision of 29 June 1976 was supplemented as proposed by the Commission and Regulation No 1461/78 adjusting the weightings (Official Journal L 176 of 30 June 1978, p. 1) was adopted; Article 2 thereof applies weightings for Belgium and Luxembourg to the tax grades without any limitation of time.

Article 9 of council Regulation No 3084/78 of 21 December 1978 concerning the annual adjustment of salaries and weightings (Official Journal L 369 of 29 December 1978, p. 1) corresponds to Article 9 of Regulation No 2859/77.

3.

On 30 May 1979 the Commission submitted to the Council a proposal for a regulation from which, after certain drafting improvements, Regulation No 160/80 emerged.

After apparently difficult discussions about that proposal and the proposal for the annual adjustment of salaries a general tendency among the Member States eventually developed for the simultaneous adoption of both proposals. That enabled the new “purged” salary scales to be taken as a basis for the salary adjustments to be decided on following the annual review of salaries with effect from 1 July 1979 (report of the Chairman of the Committee of Permanent Representatives to the Council of 17 December 1979, Annex 6 to the defence).

The objective was achieved on the adoption of Regulations Nos 160 and 161/80 on 21 January 1980.

1.

Council Regulation No 160/80 of 21 January 1980 (Official Journal L 20 of 26 January 1980, pp. 1 and 2) is concerned with amending the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities. That regulation was adopted on the basis of the second subparagraph of Article 24 (1) of the Treaty establishing a single Council and a single Commission of the European Communities of 8 April 1965.

Article 1 purges the basic salary scales by removing the distortions caused by Regulation No 3177/76. The amounts contained in the revised scales are therefore lower than those in Regulation No 3084/78. The calculation of future salary adjustments is to be based on them.

Article 2 of the regulation concerns only persons whom the distortions benefited. It provides that no part of the amounts paid during the period between 1 July 1979, from which date the regulation was to have effect, and 27 January 1980 when it was to enter into force shall be required to be repaid (Article 2 (1) (a)).

It provides in particular (Article 2 (1) (b) and (c)) transitional measures intended increasingly to absorb the distortions without actually reducing the amounts paid to persons “whose entitlements are reduced by reason of Article 1”. For such persons the remuneration paid on 30 June 1979 is the basis for calculating the salaries (Article 2 (1) (b)) and the allowances to which Article 2 (1) (c) refers and which according to the Commission's explanation to the Working Party on the Staff Regulations cover accident insurance payments, settlement allowances and re-settlement allowances (Report of the Working Party on the Staff Regulations to the Committee of Permanent Representatives on 20 November 1979, p. 4 of Annex 5 to the defence). Not only are the salaries of those concerned maintained at their former level but they may also rise to a small extent (last part of Article 2 (1) (b)).

Those rules of calculation are applicable only until such time as the salaries and allowances calculated on the basis of the scales from which distortions have been eradicated reach the level of the salaries and allowances calculated on the basis of the scales applicable on 30 June 1979 and, as far as salaries are concerned, for a maximum period of six years; the authority for this as regards salaries is Article 2 (2) and for other allowances the last part of Article 2 (1) (c).

According to the Commission however those rules have never been applied to some 95% of the persons affected (statement of the Commission's representative mentioned in the report of the Chairman of the Committee of Permanent Representatives to the Council of 17 December 1979, Annex 6 to the defence).

Article 3 of the regulation finally stipulates the date from which it shall enter into force (the day following its publication in the Official Journal, that is 27 January 1980) and from when it shall apply (1 July 1979).

2.

The reason why Article 2, which I have just explained, has been applied only to a small class of persons is that directly after Regulation No 160/80 was adopted the Council, in reliance in particular on Articles 64, 65 and 82 of the Staff Regulations, adopted Regulation No 161/80 (Official Journal L 20 of 26 January 1980, p. 5); that resulted in the salaries and allowances, on the basis of the “purged” scales established by Article 1 of Regulation No 160/80, being adjusted to correspond with the increase in the cost of living on the one hand and the increase in the actual net incomes of national civil servants during the reference period from 1 July 1978 to 30 June 1979 on the other hand. The same applied to the weightings applicable to those salaries. At the same time Article 13 of Regulation No 161/80 repealed Regulation No 3084/78, Regulation No 1793/79, which adjusted the weightings in August 1979, and Regulation No 160/80, with the exception of Article 2 thereof.

In that way the vast majority of persons affected by Regulations Nos 160 and 161/80 received increases in their net remuneration in spite of the reductions in their basic salaries as a result of the “purging of the salary scales”.

1.

According to the second paragraph of Article 173 of the EEC Treaty proceedings which are not instituted by the Member States, the Council or the Commission are admissible only if instituted by the applicant against a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the applicant.

The admissibility of the proceedings brought by Mr Giuffrida and Mr Campogrande against Regulation No 160/80 depends on whether that measure is in fact a regulation or rather a decision within the meaning of Article 189 of the EEC Treaty. Under the second paragraph thereof the test for distinguishing between a regulation and a decision is to ascertain whether the measure in question has general application or not (Case 162/78 Hans-Otto Wagner v Commission [1979] ECR, p. 3487, paragraph 17).

2.

Regulation No 160/80 has three articles.

Article 3 is not in question: it determines the date from which it applies and when it enters into force.

Article 1 is clearly of a legislative nature: it replaces the tables of monthly salaries of officials and other servants as laid down in Regulation No 3084/78 by the tables contained in the annex to Regulation No 160/80. Consequently it “applies to objectively determined situations and produces legal effects with regard to categories of persons regarded generally and in the abstract” (Case 101/76 Koninklijke Scholten Honig NV v Council and Commission [1977] ECR at p. 808, paragraph 21). That must apply all the more in so far as the “purged” tables contained in the annex to Regulation No 160/80 provided the basis for the computation of the tables contained in Regulation No 161/80 and thus applied to all officials and other servants for the future.

Thus I consider it unnecessary to inquire whether that provision is of direct and individual concern to the applicants.

3.

Quite apart from the question whether or not Article 2 has the characteristics of a regulation and is of direct and individual concern to the persons it affects there is, in my opinion, another reason why any action in respect thereto is inadmissible. It arises from the fact that if that provision, assuming that it has applied or will be applied to the applicants, were declared to be void, their position would not be improved since it is not that provisions but Article 1 of the regulation which partially prevented salary increases.

If there were no Article 2, then the persons affected by Regulations Nos 160 and 161/80 to whom Article 2 applied in conjunction with those two measures would suffer reductions even in their net remuneration. The provision is therefore in the applicants' interests and they have no interest in its annulment; for that reason alone an application for a declaration that the provision is void is inadmissible.

To summarize the above-mentioned considerations, it is apparent that no provision in Regulation No 160/80 is open to a direct application for a declaration that it is void by other than the privileged applicants referred to in the first paragraph of Article 173 of the EEC Treaty. The position can be no different for the regulation viewed as a whole.

For that reason I shall discuss the merits of the application only as a subsidiary issue.

1.

In their view when it adopted the measure of June 1976 and the implementing Regulation No 3177/76, the Council should have known that the incorporation of the weightings thereby effected would lead to distortions in the net remuneration even if only because the previous experiments, although to a much smaller extent, had led to similar effects (for example, the incorporation of a weighting of 122 for Brussels in 1969, answer of the applicants to the first question of the Court, p. 2, first paragraph; the incorporation of a weighting of 128 in 1972, reply, p. 11, second paragraph).

The applicants further refer to two documents which date from the time after Regulation No 3177/76 entered into force, when the Council was trying to remove the distortions, and from which it is apparent that the Council was aware of the advantages which the procedure ultimately chosen involved for certain officials. The two documents are the statement of reasons contained in the Commission's draft proposal of 18 July 1977 for the amendment of Regulation No 3177/76 (Annex 1 to the reply) and the memorandum of the Directorate-General for Personnel and Administration of the Commission of 8 November 1977 with the minutes of the conciliation meeting of 28 October 1977 concerning the 1977 report on the annual review of salaries (Annex 2 to the reply).

The applicants infer from this that in adopting the measure of 29 June 1976 and Regulation No 3177/76 the Council intended to take a policy decision on salaries favouring heads of families and recipients of expatriation allowances. They say that such a decision is in no way surprising since in connexion with decisions on the adjustment of salaries the Council always stresses that it wishes in particular to benefit those categories of officials.

2.

In its answer the Council refers to the fact that it foresaw the possibility of difficulties such as have arisen here. That is moreover the reason why in the measure of 29 June 1976 it inserted a review clause. In the Council's view that provision cannot, however, mean that the distortions which have arisen were intended.

3.

At the hearing we learned from the Council's agent that as early as 1976 the Council would have preferred to introduce the procedure favoured at the time by the staff representatives, which the Council adopted in the following year but that the opposition of certain Member States prevented this.

In my view the Council's preference for indexing the taxation grades and the incorporation of the review clause show that it was aware of the risks of the system it had introduced. It clearly knew that it was inevitable that distortions would arise to some extent automatically. It had, however, not expected on the one hand the extent of those distortions and on the other the losses in certain cases.

I do not therefore think that it has been proved that the Council, in adopting the measure of 29 June 1976 and the implementing regulation of 21 December 1976, was fully aware of the circumstances and appreciated the full extent of the advantages which would arise. Clear indication of what was involved could be expected only after the first ascertainment and payment of remuneration following the adoption of Regulation No 3177/76.

1.

Since the Council was aware that incorporation of the weightings into the basic salary scales must lead to distortions by increasing the basic salaries without indexing the taxation grades it cannot, in the applicant's view, maintain that the choice of that method of incorporation, with the negative effects thereby entailed, was due to an error of judgment on its part. In those circumstances the choice adopted could be due only to a conscious policy of benefiting officials with family commitments and those in receipt of expatriation allowances. It follows that those benefiting from the method selected ought to have been able to count on its being maintained. That expectation was all the more justified in that the Council did not change this method either within the period of two months laid down in the third paragraph of Article 173 of the EEC Treaty or within the period of a year provided for in Article 65 of the Staff Regulations for the review of salaries.

2.

In my view that cannot be correct. On the one hand we have found when considering the first submission that it was exaggerated to claim that the Council intended that distortion should arise. On the other hand, the account of the facts leading to the present application has clearly shown that the Council tried to correct the distortions after it had become aware of the reductions in certain cases and the extent of the distortions.

In particular the applicants cannot rely on their expectation of the maintenance of the method of incorporating the weightings adopted in 1976 since as early as 1977 the method advocated by them in the previous year was chosen.

Moreover, if I understand them correctly, they are challenging not so much any change in the system but rather the retroactive nature of the change and, in their view, the defective procedure by which it was made.

1.

In my view an infringement of vested or personal rights is conceivable here only in two cases. It would be possible to speak of an obvious infringement of the rights to their remuneration acquired by those concerned on the basis of Regulation No 3177/76 and the following regulations if a demand had been made for the repayment of the amounts paid to those favoured by these provisions. That possibility, however, has never been considered.

The second conceivable case of an infringement of vested rights would have consisted in a retroactive alteration of the method laid down in the measure of 29 June 1976 by means of regulations implementing the altered method which would have led to changes in the basic salary scales whereby there would have been adverse effects upon the net remuneration of officials.

2.

That event, like the first, has not occurred. In particular the contested regulation contains no alteration of the method adopted in 1976 for adjusting remuneration. As we have already observed, that alteration was made in 1978 in such a way that the distortions caused by the incorporation of new weightings were removed. The regulation was intended simply to remove the origin of the distortions, that is the incorporation of the weighting of 148.7 in Regulation No 3177/76.

Apart from that the system introduced on 21 January 1980 has in my view no retroactive effect. It is true that the basic salary scales in the annex to the contested regulation (which entered into force on 27 January 1980) applied with effect from 1 July 1979 and they were lower than those which were in force on 30 June 1979 but it should not be overlooked that Article 1 of Regulation No 160/80 which refers to those scales was already on the day of its entry into force repealed by Article 1 of Regulation No 161/80. The effect of that provision again is, as we have already observed, more favourable in 95% of cases than Regulation No 3084/78 which applied until 30 June 1979. In so far as that is not the case, Article 2 of Regulation No 160/80 ensures that the more favourable financial entitlements applicable on 30 June 1979 should continue.

Nor can it be objected to this that such a view is possible only if Regulations Nos. 160 and 161/80 are treated as a single entity. In my view they cannot in fact be considered separately. It is clear that the annual adjustment of remuneration for 1979 was to be used as an occasion at the same time “to purge the salary tables”. That made it possible, by virtue of the positive consequences of the salary adjustment effected by Regulation No 161/80, to do even more than merely compensate for the negative effects of the revision of salaries by Regulation No 160/80.

Since there has been neither a demand for repayment of amounts already paid nor a reduction in net remuneration there can be no question of an infringement of vested rights.

1.

The first part of that submission relates to the fact that the opinion of the European Parliament of 18 January 1980 was disregarded by the Council when it adopted Regulation No 160/80 on 21 January.

According to the second paragraph of Article 24 (1) of the Merger Treaty of 8 April 1965 that provision, like every regulation causing the amendment of the Staff Regulations, should have been adopted only after consultation with the Parliament.

2.

The applicants base the second part of their submission on the disregard by the Council of the Joint Declaration of the European Parliament, the Council and the Commission on 4 March 1975 (published in the Official Journal C 89 of 22 April 1975, p. 1).

3.

In the last part of the submission the applicants allege that the Council disregarded the procedure for consultation between representatives of the staff and the Council.