JUDGMENT OF THE COURT OF FIRST INSTANCE (Second Chamber)

7 July 1998

Joined Cases T-116/96, T-212/96 and T-215/96

Italo Teichini and Others

v

Commission of the European Communities

‛Officials — Pensions — Weighting — Determination — Exchange rate — Retroactive adjustment’

Full text in Italian   II-947

Application for:

first, annulment of the applicants' pension statements in respect of the period from 1 July 1995 to 31 December 1995 inclusive, in so far as they apply with retroactive effect the weighting fixed for Italy at 81.7 by Council Regulation (EC, Euratom, ECSC) No 2963/95 of 18 December 1995 adjusting the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (OJ 1995 L 310, p. 1) and, second, adjustment of the statements in question and damages.

Decision:

Applications dismissed.

Abstract of the Judgment

The applicants, former officials of the Commission employed in Brussels, live in Italy and all receive a pension, either an old-age pension (Mr Telchini and Mr Gillet) or an invalidity pension (Mr Palermo). Their pensions are paid in Belgian francs into their bank accounts in Belgium, since each of the applicants has elected, under Article 45 of Annex VIII to the Staff Regulations of Officials of the European Communities (Staff Regulations), to have his pension paid in the currency of the country where the institution to which he belonged has its seat.

On 18 December 1995 the Council adopted Regulation (EC, Euratom, ECSC) No 2963/95 adjusting the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (OJ 1995 L 310, p. 1) (Regulation No 2963/95). That regulation entered into force on 23 December 1995 and replaced Council Regulation (ECSC, EC, Euratom) No 3161/94 of 19 December 1994 adjusting, from 1 July 1994, the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (OJ 1994 L 335, p. 1) (Regulation No 3161/94), which had established a weighting of 94.2 for Italy.

Article 6(1) of Regulation No 2963/95 fixes, with effect from 1 July 1995, a weighting of 81.7 for Italy, which is applicable to pensions pursuant to paragraph (3) of that article.

In the pension statements for January 1996 the Commission applied that weighting to the payments made to the applicants, then, with effect from February 1996, it began to recover, in instalments over six months, the overpayments received by them between 1 July 1995 and 31 December 1995.

The applicants noted that the amounts of their pensions were reduced owing to the application of the new weighting and the retroactive recovery of part of the amounts received during the second half of 1995 and, on 22 February, 2 April and 29 May 1995 respectively, they lodged complaints under Article 90(2) of the Staff Regulations. They were notified of express decisions rejecting their complaints on 22 July and 17 and 21 September 1996 respectively.

The claim that the Court should order that the pension statements in question be adjusted (Case T-116/96)

Admissibility

It is not for the Community judicature, in the context of an application for judicial review, to dictate to the institution which adopted the contested act the measures which the judgment should entail. It must confine itself to referring the matter back to the institution concerned, in so far as, according to Article 176 of the EC Treaty, it is the institution from which the act which is annulled emanated that must take the necessary measures to implement the judgment (paragraph 25).

See: T-285/94 Pfloeschnerv Commission [1995] ECRSC II-889, para. 22

It follows that the applicant's claim that the Commission should be ordered to adjust the pension statements to the amounts allegedly due to him is inadmissible (paragraph 26).

Claims for annulment

First plea, alleging the manifestly erroneous nature of the calculation of the weighting

1. Admissibility of the plea in Case T-116/96

The intervener questions the admissibility of the first plea in Case T-l 16/96 on the ground that the applicant did not raise it in his complaint.

If it is not to be declared inadmissible, a plea raised before the Community judicature must have first been raised in the administrative procedure, so that the appointing authority has been in a position to know in sufficient detail the criticisms made by the person concerned against the contested decision. Accordingly, although the claims submitted to the Court can only have the same subject-matter as those set out in the complaint and can only contain heads of claim based on the same matters as those relied on in the complaint, those heads of claim may be developed before the Community judicature by means of pleas and arguments which need not necessarily appear in the complaint but must be closely linked to it (paragraph 32).

See: T-57/89 Alexandrakis v Commission [1990] ECR II-143, paras 8 and 9; T-262/94 Baiwir v Commission [1996] ECRSC II-739, paras 40 and 41

In the present case the applicant's plea, as he argues, does in fact constitute the development of a point raised at the stage of the complaint, alleging the improper application of a reduced weighting. It follows that this plea is admissible (paragraphs 33 and 34).

2. Substance

— First limb, alleging a breach of Article 64 of the Staff Regulations

In order to ensure that all officials' remuneration has the same purchasing power, whatever their place of employment, the first paragraph of Article 64 of the Staff Regulations provides that an official's remuneration expressed in Belgian francs is to be weighted at a rate above, below or equal to 100%, depending on living conditions in the various places of employment. The second paragraph of Article 64 and Article 65 of the Staff Regulations provide that the weighting for Brussels and Luxembourg is to be 100 and, for the other countries, is to be determined by the Council acting by a qualified majority on a proposal from the Commission (paragraph 45).

As regards the pensions referred to in Articles 77 to 81a of the Staff Regulations, which include the retirement and invalidity pensions paid to former officials, the second subparagraph of Article 82(1) of the Staff Regulations provides that they are to be weighted at the rate fixed for the country where the recipient proves he has his residence. Although it does not refer expressly to Article 64 of the Staff Regulations, which is applicable to the remuneration of officials, Article 82 of the Staff Regulations none the less refers to the weighting fixed for each country, which is precisely established on the basis of the criteria set out in that article (paragraph 46).

See: Pfloeschnerv Commission, cited above, para. 48

In the present case the applicants claim that the weighting fixed for Italy by Regulation No 2963/95 is contrary to Article 64 of the Staff Regulations, on the ground that the rules for calculating the weighting are based on a criterion not found in that article, namely a relationship between economic parities and exchange rates (paragraph 47).

Regulation No 2963/95 is a Regulation implementing the Staff Regulations, expressly based on Articles 63 to 65a and 82 of the Staff Regulations and on Annex XI thereto, and for that reason may not, by virtue of the principle of the hierarchy of legal rules, depart from the principles set out in those provisions. It is therefore legal that Article 6(1) ofthat regulation should fix a weighting for Italy, applicable to pensions pursuant to Article 6(4), calculated on the basis of the relationship between, on the one hand, economic parity between Brussels, the reference town, and the capital of the Member State concerned and, on the other, the official exchange rate of its currency referred to in the second paragraph of Article 63 of the Staff Regulations, namely the exchange rate used for the implementation of the general budget of the European Communities on 1 July of the year in question, in that it guarantees on that date equivalence of purchasing power between pensions paid in Brussels, weighted by 100%, and those paid in Italy (paragraphs 48 and 49 and 51 to 55).

See: C-30/96 P Abello and Others v Commission [1998] ECR I-377; T-536/93 Bender v Commission [1994] ECRSC II-777, paras 32 and 33; T-544/93 and T-566/93 Abello and Others v Commission [1995] ECRSC II-815, para. 40

As regards the objection of illegality raised in Cases T-212/96 and T-215/96 against the provisions of Annex XI to the Staff Regulations, this was only raised by the applicants at the stage of their replies. According to the first subparagraph of Article 48(2) of the Rules of Procedure, no new plea in law may be introduced in the course of the proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. In the present case the provisions of Annex XI to the Staff Regulations cannot be regarded as matters which have come to light in the course of the procedure and which would justify raising the present objection of illegality after the time-limit for doing so has expired (paragraphs 57 to 59).

See: T-12/94 Daffix v Commission [1997] ECRSC II-l 197, para. 116, and the case-law cited therein

It follows from all these factors that the first limb of the first plea must be rejected (paragraph 61).

— Second limb of the first plea, alleging a breach of the second paragraph of Article 63 and the fourth subparagraph of Article 82( 1 ) of the Staff Regulations and of Article 45 of Annex VIII thereto

According to the fourth subparagraph of Article 82(1) of the Staff Regulations, ‘[pjensions expressed in Belgian francs shall be paid in one of the currencies referred to in Article 45 of Annex VIII to the Staff Regulations in the manner provided for in the second paragraph of Article 63 of the Staff Regulations’. Article 45 of Annex VIII to the Staff Regulations provides that beneficiaries of a pension may elect to be paid in the currency either of their country of origin or of the country where the institution to which the official belonged has its seat, in this case Belgian francs. The second paragraph of Article 63 of the Staff Regulations states that ‘[r]emuneration paid in a currency other than Belgian francs shall be calculated on the basis of the exchange rates used for the implementation of the general budget of the European Communities on 1 July [of the year in question] ’. Contrary to what the applicants claim, those provisions cannot affect the principles applicable to the calculation of the weightings as defined in Articles 64 to 65a and Article 82 of the Staff Regulations and in Annex XI thereto.

Article 45 of Annex VIII to the Staff Regulations, which provides that beneficiaries may elect to have their pensions paid in the currency either of their country of origin or of their country of residence or of the country where the institution to which the official belonged has its seat, and to which the fourth paragraph of Article 82(1) refers, covers only the detailed rules for payment of benefits. It follows that the applicants' election of the currency in which their benefits are to be paid cannot constitute an obstacle to the application to their pensions of the weighting fixed for Italy, where they live, in accordance with the second paragraph of Article 82(1) of the Staff Regulations, and determined on the basis of the relationship between economic parity for Italy and the official exchange rate of its currency referred to in the second paragraph of Article 63 of the Staff Regulations, namely the exchange rate used for the implementation of the general budget of the European Communities on 1 July of the year in question (paragraphs 70 and 71).

See: 127/80 Grogmi v Commission [1982] ECR 869, paras 14 and 15

As regards the claim by the applicant in Case T-l 16/96 that a ‘double conversion’ operation has been carried out, it is sufficient to point out that the contested pension statement, expressed in Belgian francs, states, in the column headed ‘rate’, an exchange rate of ‘1.0000000’, so that the amount actually paid only took account of the weighting fixed for Italy (paragraph 73).

It follows from these factors that the second limb of the first plea must be rejected (paragraph 74).

Second plea, alleging a breach of the principle of the protection of legitimate expectations and established rights

An official may not rely on the principle of the protection of legitimate expectations in order to challenge the legality of a new provision in the Staff Regulations, especially in an area whose subject-matter is undergoing constant change according to changes in the economic climate, such as that of the fixing of weightings affecting officials' pensions, in the absence of precise assurances on the part of the administration (paragraphs 83 to 85 and 131).

See: 33/87 Cliristianos v Court of Justice [1988] ECR 2995, para. 23; T-98/92 and T-99/92D/ Marzio and Lebede} s Commission [1994] ECRSC II-541, para. 68; T-177/95 Barrata and Others v Commission [1996] ECRSC II-1451, para. 47

The provisions of Annex VIII to the Staff Regulations draw a clear distinction between the establishment of the ‘right to a pension’ covered in Chapter 2 of the annex and the ‘payment of benefits’ governed by Articles 45 and 46 of the annex. Although they affect the payment of benefits within the meaning of the latter articles, changes in the amounts actually paid to recipients which result solely from the effect of exchange rates and weightings do not have the effect of encroaching upon the applicants' pension rights as determined in accordance with Chapter 2 of the annex, which continues to serve as the basis for the calculation of the benefits actually paid (paragraphs 89 and 90).

See: Grogan v Commission, cited above, paras 14 and 15; 164/80 De Pascale v Commission [1982] ECR 909, paras 16 and 17; 167/80 Curtis v Parliament [1982] ECR 931, paras 16 and 17

It follows that the second plea is not well founded and must therefore be rejected (paragraph 92).

Fourth plea, alleging a breach of the principle of equality of treatment

The principle of equality of treatment is guaranteed to those in receipt of a pension in that the applicable weightings are designed to ensure that all former officials receive benefits which have the same purchasing power, whatever their place of residence. For that purpose, the second subparagraph of Article 82(1) of the Staff Regulations requires that pensions are to be weighted at the rate fixed for the country where the recipient proves he has his residence. Without prejudice to the provisions on the fixing of specific weightings for certain places, the pensions paid to recipients residing in the same country must therefore have the same weighting applied to them, irrespective of the election made by those persons under Article 45 of Annex VIII to the Staff Regulations as regards the currency in which the pensions are to be paid. The election of the country of residence as reference criterion for the purpose of evaluating the living conditions and purchasing power of recipients of pensions is justified by the fact that the concept of residence, within the meaning of Article 82 of the Staff Regulations, must be taken to mean the place where the former official has actually established his centre of interests and therefore the place where he is deemed to incur his expenditure. Consequently, although the amount of a pension may in theory represent a different purchasing power depending on the country in which the person concerned chooses to incur expenditure, such a circumstance cannot amount to a breach of the principle of equality of treatment which Article 82 of the Staff Regulations is specifically designed to guarantee (paragraphs 101 to 109).

See: 284/87 Schäfleinv Commission [1988]ECR4475, para. 9; Pfloesclmerv Commission, cited above, para. 47

As regards, furthermore, the allegation that no account was taken of the rate of inflation in Italy in calculating the weighting in issue, in so far as a higher weighting was fixed for other Member States with a stronger currency, it is sufficient to observe that the applicants misunderstand the precise mechanisms for calculating the weightings as laid down in Article 3(5) of Annex XI to the Staff Regulations and based on the relations between economic parities and exchange rates (paragraph 110).

Consequently, the fourth plea must be rejected (paragraph 111).

Third plea, alleging the illegal nature of the retroactive recovery

Although as a general rule the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected. That is the position in the case of Regulation No 2963/95. The purpose to be achieved by adopting that regulation, namely respect for the equivalence of purchasing power, demanded that it have a retroactive effect, in so far as it is only possible to detect a change in the cost of living after it has taken place (paragraphs 129 and 130).

See: C-368/89 Cmpo/rø/ii[1991] ECR I-3695, para. 17; C-301/90 Commission v Council [1992] ECR I-221; Barrala and Others v Commission, cited above, paras 45 and 46

The applicants were advised with all the requisite diligence of the possibility that sums paid after 1 July 1995 might be recovered retroactively. The fact that they did not know the precise amount of the sums which would be recovered is irrelevant, since such an amount can only be determined after the event, after the Council has adopted the new weightings at the end of the year, in accordance with Article 3(1) of Annex XI to the Staff Regulations (paragraph 136).

The complaint alleging a breach of the principle of equality of treatment is equally unfounded (paragraph 138).

The argument that the recovery complained of should have been spread over twelve months must be rejected. The argument raised by the applicant in Case T-212/96, alleging that his invalidity pension is in danger of being reduced, must also be rejected (paragraphs 142 and 143).

It follows from all these factors that the third plea must be rejected.

Operative part:

The applications are dismissed.