Judgment of the Court (First Chamber) of 1 July 1982. - Helmut Knoeppel v Commission of the European Communities. - Officials - Building loans. - Case 618/79 A.



European Court reports 1982 Page 02407



Summary

Parties

Subject of the case

Grounds

Decision on costs

Operative part



Keywords

CASE 618/79 A

1 . OFFICIALS - BUILDING LOANS - AMOUNT EXPRESSED IN BELGIAN FRANCS - REPAYMENT IN THE CURRENCY OF THE COUNTRY WHERE THE PROPERTY TO BE FINANCED IS SITUATED - EXCHANGE RATE APPLICABLE - EXCHANGE RATE DEFINED IN ARTICLE 63 OF THE STAFF REGULATIONS - TRANSFERS MADE PURSUANT TO ARTICLE 17 OF ANNEX VII TO THE STAFF REGULATIONS - UPDATING OF THE EXCHANGE RATE DURING THE TERM OF THE LOAN AGREEMENT - APPLICATION OF THE NEW EXCHANGE RATE TO THE SUBSEQUENT MONTHLY REPAYMENT INSTALMENTS

( STAFF REGULATIONS , ART . 63 AND ANNEX VII , ART . 17 ; COUNCIL REGULATIONS NOS 3085/78 AND 3086/78 )

2.OFFICIALS - BUILDING LOANS - AMOUNT EXPRESSED IN BELGIAN FRANCS - REPAYMENT IN THE CURRENCY OF THE COUNTRY WHERE THE PROPERTY TO BE FINANCED IS SITUATED - EXCHANGE RATE APPLICABLE - EXCHANGE RATE DEFINED IN ARTICLE 63 OF THE STAFF REGULATIONS - ADJUSTMENT OF REMUNERATION DURING THE TERM OF THE LOAN AGREEMENT - REPLACEMENT OF UPDATING OF THE EXCHANGE RATE BY ADJUSTMENT OF THE WEIGHTING - APPLICATION OF THE NEW EXCHANGE RATE TO THE SUBSEQUENT MONTHLY REPAYMENT INSTALMENTS - CANCELLATION OF AGREEMENT NOT JUSTIFIED THEREBY

( STAFF REGULATIONS , ARTS 63 AND 65 ; COUNCIL REGULATIONS NOS 3085/78 AND 3086/78 )

Summary

1 . WHERE IN A BUILDING LOAN AGREEMENT ENTERED INTO BETWEEN AN OFFICIAL OF THE EUROPEAN COMMUNITIES AND THE COMMISSION THE AMOUNT OF THE LOAN IS EXPRESSED IN BELGIAN FRANCS AND WHERE THE MONTHLY REPAYMENTS ARE MADE IN THE CURRENCY OF THE COUNTRY WHERE THE PROPERTY TO BE FINANCED IS SITUATED , THE AMOUNTS IN FOREIGN CURRENCY TRANSFERRED IN ORDER TO REPAY THE LOAN MUST BE CONVERTED INTO BELGIAN FRANCS ON THE BASIS OF THE PARITY RULING ON THE DATE OF THE TRANSFER , IT IS CONSONANT , ON THE ONE HAND , WITH THE PROVISIONS OF THE AGREEMENT , WHICH DOES NOT PROVIDE FOR A FIXED PARITY THROUGHOUT THE PERFORMANCE THEREOF BUT FOR THE VARIOUS PARITIES WHICH MIGHT APPLY SUCCESSIVELY AND , ON THE OTHER HAND , WITH THE FACT THAT THE BENEFICIARY OF THE LOAN IS AN OFFICIAL , FOR THE EXCHANGE RATE TO BE THE RATE FIXED AS A REFERENCE PARITY IN ARTICLE 63 OF THE STAFF REGULATIONS AND FOR THE MONTHLY TRANSFERS TO BE MADE IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 17 OF ANNEX VII THERETO . IN THE PERFORMANCE OF A LOAN AGREEMENT CONCLUDED BEFORE THE ENTRY INTO FORCE OF REGULATIONS NOS 3085/78 AND 3086/78 AMENDING INTER ALIA THE PROVISIONS OF ARTICLE 63 OF THE STAFF REGULATIONS AND OF ARTICLE 17 OF ANNEX VII THERETO , THE COMMISSION IS THEREFORE CORRECT TO APPLY TO THE MONTHLY REPAYMENTS FALLING DUE AFTER THE ENTRY INTO FORCE OF THE REGULATIONS IN QUESTION THE EXCHANGE RATE RESULTING FROM APPLICATION OF THE UPDATED PARITIES AND OF THE NEW VERSION OF ARTICLE 17 .

2 . THE STAFF REGULATIONS MAKE PROVISION FOR THE ADAPTATION OF THE REMUNERATION OF OFFICIALS IN THE VARIOUS PLACES OF EMPLOYMENT BY ADJUSTMENT OF THE WEIGHTING IN ORDER TO TAKE INTO ACCOUNT CHANGES IN THE COST OF LIVING IN THOSE VARIOUS PLACES ON THE ONE HAND AND , ON THE OTHER , BY ALTERATION OF THE PARITIES UNDER ARTICLE 63 OF THE STAFF REGULATIONS IN ORDER TO TAKE INTO ACCOUNT FLUCTUATIONS OF EXCHANGE RATES .

THE FACT THAT IT IS SUBSEQUENTLY SOUGHT TO ACHIEVE THAT ADAPTATION , WHICH WAS PREVIOUSLY EFFECTED BY MEANS OF ADJUSTMENT OF THE WEIGHTING , BY THE UPDATING OF THE PARITIES REFERRED TO IN ARTICLE 63 OF THE STAFF REGULATIONS , DOES NOT JUSTIFY CANCELLATION OF A BUILDING LOAN AGREEMENT PURSUANT TO WHICH THE OFFICIAL HAS PREVIOUSLY HAD THE BENEFIT OF AN ADVANTAGEOUS EXCHANGE RATE , AS A RESULT OF THE PROCEDURE FOR ADJUSTING THE WEIGHTING . IN FACT , THE OFFICIAL SUFFERS NO LOSS IN TERMS OF EXCHANGE RATES FROM THE UPDATING OF THE PARITIES REFERRED TO IN THE STAFF REGULATIONS WHICH IS NOT OFFSET BY AN INCREASE IN HIS REMUNERATION EXPRESSED IN NATIONAL CURRENCY .

Parties

IN CASE 618/79 A

HELMUT KNOEPPEL , AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES AT THE ISPRA JOINT RESEARCH CENTRE , ITALY , RESIDING AT 116 VIA MATTEOTTI , CADREZZATE , VARESE , ITALY , REPRESENTED BY B . POTTHAST AND H.-J . RUBER , RECHTSANWALTE , COLOGNE , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF V . BIEL , 18A RUE DES GLACIS ,

APPLICANT ,

V

COMMISSION OF THE EUROPEAN COMMUNITIES , REPRESENTED BY J . PIPKORN , A MEMBER OF ITS LEGAL DEPARTMENT , ACTING AS AGENT , WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF O . MONTALTO , JEAN MONNET BUILDING , KIRCHBERG ,

DEFENDANT ,

Subject of the case

APPLICATION IN THE TERMS SET OUT IN THE APPLICANT ' S CONCLUSIONS ,

Grounds

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 24 DECEMBER 1979 , MR KNOEPPEL , AN OFFICIAL OF THE COMMISSION OF THE EUROPEAN COMMUNITIES EMPLOYED IN ISPRA ( ITALY ), BROUGHT AN ACTION PURSUANT TO ARTICLE 91 OF THE STAFF REGULATIONS OF OFFICIALS PRIMARILY FOR THE ANNULMENT OF THE COMMISSION ' S DECISION ALTERING THE METHOD OF CALCULATING THE MONTHLY AMOUNTS PAYABLE BY HIM IN REIMBURSEMENT OF A BUILDING LOAN GRANTED TO HIM BY THE DEFENDANT .

2 BY DECISION OF 2 MARCH 1970 CONCERNING THE USE OF SUMS AVAILABLE UNDER THE ECSC BUDGET ITEM ' ' PENSION FUNDS ' ' , THE COUNCIL AUTHORIZED THE COMMISSION TO SET ASIDE 40% OF THE SUMS IN QUESTION FOR THE GRANT OF BUILDING LOANS TO OFFICIALS OF THE COMMUNITIES .

3 BY DECISION OF 17 JUNE 1971 , THE COMMISSION ADOPTED THE NECESSARY IMPLEMENTING PROVISIONS , ARTICLE 9 OF WHICH IN PARTICULAR PROVIDED THAT ' ' LOANS COVERED BY THIS PROVISION SHALL BE EXPRESSED IN BELGIAN FRANCS . THE PAYMENTS IN RESPECT THEREOF SHALL BE MADE IN THE CURRENCY OF THE COUNTRY IN WHICH THE PROPERTY TO BE FINANCED IS SITUATED , ON THE BASIS OF THE PARITY RULING AT THE TIME OF THE PAYMENT ' ' .

4 ON 23 DECEMBER 1971 , THE APPLICANT ENTERED INTO AN AGREEMENT WITH THE COMMISSION UNDER WHICH HE RECEIVED A LOAN OF BFR 750 000 FROM THE COMMISSION INTENDED TO FINANCE THE CONSTRUCTION OF A DWELLING HOUSE .

5 BY VIRTUE OF ARTICLE 4 OF THE AGREEMENT , THE BORROWER UNDERTAKES TO REPAY THE AMOUNT OF THE LOAN IN MONTHLY INSTALMENTS DUE ON THE 15TH DAY OF EACH MONTH IN ACCORDANCE WITH THE TABLE ATTACHED TO THE AGREEMENT . THE TABLE , DRAWN UP IN DUPLICATE AND SIGNED BY BOTH PARTIES , CONSTITUTES AN INTEGRAL PART OF THE AGREEMENT .

6 BY VIRTUE OF ARTICLE 5 OF THE AGREEMENT THE BORROWER IRREVOCABLY INSTRUCTS THE COMMISSION TO DEDUCT OR CAUSE TO BE DEDUCTED FOR TRANSFER TO THE COMMISSION BY THE COMMUNITY INSTITUTION BY WHICH HE IS OR MAY BE EMPLOYED IN THE FUTURE , ON THE 15TH DAY OF EACH MONTH , FROM HIS MONTHLY SALARY OR ANY OTHER EMOLUMENT , THE MONTHLY INSTALMENT SHOWN IN THE REPAYMENT TABLE REFERRED TO IN ARTICLE 4 .

7 ARTICLE 15 OF THE AGREEMENT PROVIDES THAT ANY TRANSFER MADE BY THE BORROWER TO THE LENDER BY WAY OF EARLY REPAYMENT OR IN PAYMENT OF MONTHLY INSTALMENTS IS TO BE MADE IN BELGIAN FRANCS OR IN THE CURRENCY OF THE COUNTRY IN WHICH THE PROPERTY TO BE FINANCED IS SITUATED AND IN WHICH THE LOAN WAS ADVANCED . THE CURRENCY OF THE LOAN IS TO BE CONVERTED INTO BELGIAN FRANCS ON THE BASIS OF THE PARITY RULING ON THE DATE OF THE TRANSFER .

8 IN THE TABLE REFERRED TO IN ARTICLE 4 OF THE AGREEMENT THE AMOUNT OF THE LOAN , THE MONTHLY INSTALMENT , THE MONTHLY INTEREST , THE MONTHLY REPAYMENT OF PRINCIPAL AND THE PRINCIPAL OUTSTANDING ARE EXPRESSED IN BELGIAN FRANCS .

9 THE AMOUNT OF THE LOAN WAS CONVERTED INTO ITALIAN LIRE ON THE BASIS OF BFR 1 = LIT 12.50 , THE PARITY NOTIFIED TO THE INTERNATIONAL MONETARY FUND ON 1 JANUARY 1965 WHICH AT THAT TIME WAS USED AS THE BASIS FOR CALCULATION OF THE REMUNERATION OF OFFICIALS IN ACCORDANCE WITH ARTICLE 63 OF THE STAFF REGULATIONS . CORRESPONDINGLY , THE SUMS LENT WERE REPAID ( LIKEWISE ON THE BASIS OF THE ABOVE-MENTIONED EXCHANGE RATE ) BY MEANS OF DEDUCTIONS MADE BY THE COMMISSION AS LENDER FROM THE MONTHLY REMUNERATION OF THE OFFICIAL .

10 THE SYSTEM OPERATED AS FOLLOWS : THE OFFICIAL ' S BASIC SALARY , TO WHICH THE WEIGHTING WAS APPLIED ( FOR EXAMPLE BFR 100 000 BY ITALIAN WEIGHTING 157.8 IN MARCH 1979 ) WAS REDUCED BY THE AMOUNT OF THE MONTHLY REPAYMENT INSTALMENT IN RESPECT OF THE BUILDING LOAN ( FOR EXAMPLE BFR 5 000 ) AND , IN THIS EXAMPLE , THE NET REMUNERATION BECAME BFR 152 800 , WHICH WAS CONVERTED INTO ITALIAN LIRE AT THE RATE OF BFR 1 = LIT 12.50 .

11 ON 25 JULY 1975 THE COMMISSION DECIDED ' ' IN ORDER TO RESOLVE THE DIFFICULTIES ARISING FROM THE FLUCTUATION OF EXCHANGE RATES ' ' TO AMEND ARTICLE 9 OF THE IMPLEMENTING PROVISIONS OF 17 JUNE 1971 ; AS A RESULT , FOR LOAN AGREEMENTS ENTERED INTO AFTER THAT DATE BOTH THE LOANS AND THE REPAYMENTS WERE TO BE MADE EXCLUSIVELY IN BELGIAN FRANCS .

12 ARTICLE 2 ( 1 ) OF THE DECISION PROVIDES AS FOLLOWS :

' ' ( A ) A BORROWER WHO RECEIVED A LOAN IN THE CURRENCY OF THE COUNTRY IN WHICH THE PROPERTY IS SITUATED AT A RATE OTHER THAN THE AVERAGE RATE FOR THAT CURRENCY IN THE BRUSSELS FOREIGN EXCHANGE MARKET ON THE DAY OF PAYMENT MAY - WITHIN A PERIOD OF TWO MONTHS FROM THE DATE OF NOTIFICATION OF THIS DECISION - APPLY FOR A REDUCTION OF HIS PRINCIPAL DEBT TO THE EXTENT TO WHICH HE HAS SUFFERED FINANCIAL LOSS AS A RESULT OF THE FACT THAT REPAYMENT IS TO BE MADE IN BELGIAN FRANCS .

( B)TO DETERMINE THE NEW PRINCIPAL DEBT , THE AMOUNTS PAID TO THE BORROWER IN FOREIGN CURRENCY SHALL BE CONVERTED INTO BELGIAN FRANCS AT THE RATE SPECIFIED IN SUBPARAGRAPH ( A ). FROM THE AMOUNT THUS OBTAINED THERE SHALL BE DEDUCTED THE REPAYMENTS MADE UP TO THE DATE OF THE DECISION TO REDUCE THE DEBT . IF THOSE REPAYMENTS WERE MADE IN THE CURRENCY OF THE COUNTRY IN WHICH THE PROPERTY IS SITUATED , THEY SHALL ALSO BE CONVERTED INTO BELGIAN FRANCS AT THE RATE SPECIFIED IN SUBPARAGRAPH ( A ).

( C)ALL REPAYMENTS TO BE MADE AFTER THE DECISION TO REDUCE THE DEBT SHALL BE MADE IN BELGIAN FRANCS . ' '

13 BY LETTER OF 21 AUGUST 1975 THAT DECISION WAS NOTIFIED TO THE APPLICANT . THE LETTER CONTAINED THE STATEMENT : ' ' IN THE EVENT OF REDUCTION OF THE DEBT , ALL REPAYMENTS MADE SUBSEQUENTLY ARE TO BE MADE IN BELGIAN FRANCS . YOU MAY THEREFORE NO LONGER MAKE ANY ADVANCE REPAYMENT IN THE CURRENCY IN WHICH THE LOAN WAS MADE . ' '

14 BY DECLARATION OF 1 SEPTEMBER 1975 THE APPLICANT SOUGHT A REDUCTION OF BFR 150 694 IN HIS PRINCIPAL DEBT ( THE AMOUNT SPECIFIED IN THE LETTER OF 21 AUGUST 1975 ). THE REDUCTION WAS GRANTED BY THE COMMISSION , WITH A CONSEQUENT REDUCTION IN THE MONTHLY REPAYMENTS EXPRESSED IN BELGIAN FRANCS .

15 AFTER THAT REDUCTION WAS MADE , THE COMMISSION CONTINUED UNTIL 31 MARCH 1979 TO MAKE TRANSFERS IN RESPECT OF THE MONTHLY INSTALMENTS PAYABLE BY THE APPLICANT BY CONVERTING INTO BELGIAN FRANCS THE AMOUNT TRANSFERRED IN LIRE , ADOPTING THE PARITY REFERRED TO IN ARTICLE 63 OF THE STAFF REGULATIONS .

16 FOLLOWING THE ENTRY INTO FORCE OF COUNCIL REGULATIONS NOS 3085/78 AND 3086/78 OF 21 DECEMBER 1978 ( OFFICIAL JOURNAL L 369 , PP . 6 AND 8 ) WHICH AMENDED INTER ALIA THE PROVISIONS OF ARTICLE 63 OF THE STAFF REGULATIONS CONCERNING MONETARY PARITIES AND OF ARTICLE 17 OF ANNEX VII CONCERNING TRANSFERS , THE COMMISSION APPLIED , AS THE PARITY FOR CONVERSION INTO BELGIAN FRANCS OF THE ITALIAN LIRE DEDUCTED IN RESPECT OF THE MONTHLY REPAYMENT , THE RATE RESULTING FROM APPLICATION OF THE ' ' UPDATED PARITIES ' ' AND FROM THE NEW VERSION OF ARTICLE 17 OF ANNEX VII . MR KNOEPPEL ' S SALARY STATEMENT FOR MARCH 1979 SHOWED A REPAYMENT OF BFR 3 402 , CONVERTED INTO LIT 42 525 . IN RESPECT OF APRIL , THE SAME AMOUNT IN BELGIAN FRANCS WAS CONVERTED INTO LIT 62 454 .

17 ON 27 MARCH 1979 THE APPLICANT LODGED A COMPLAINT PURSUANT TO ARTICLE 90 OF THE STAFF REGULATIONS AGAINST THE APPLICATION OF REGULATIONS NOS 3085/78 AND 3086/78 TO THE REPAYMENT OF LOANS . THAT COMPLAINT WAS REJECTED ON 12 JULY . BY A SECOND COMPLAINT DATED 11 JULY 1979 THE APPLICANT CONTESTED HIS SALARY STATEMENT FOR APRIL . THAT COMPLAINT WAS REJECTED BY LETTER OF 28 SEPTEMBER 1979 .

18 THE APPLICANT ADVANCES VARIOUS ARGUMENTS IN SUPPORT OF HIS ACTION . IN HIS VIEW , IT APPEARS FROM THE AGREEMENT THAT , FOR THE CONVERSION INTO BELGIAN FRANCS OF AMOUNTS IN LIRE INTENDED FOR REPAYMENT OF THE LOAN , THE EXCHANGE RATE TO BE APPLIED SHOULD BE THAT ADOPTED FOR THE CONVERSION INTO LIRE OF THE AMOUNT OF THE LOAN AND THAT ANY CHANGE IN THAT RATE IS UNACCEPTABLE . BY UNILATERALLY CHANGING THE PARITY USED FOR CONVERSION , THE COMMISSION BROKE THE AGREEMENT .

19 THE APPLICANT REFERS TO ARTICLE 9 OF THE IMPLEMENTING PROVISIONS OF 17 JUNE 1971 WHICH STATES : ' ' LOANS COVERED BY THIS PROVISION SHALL BE EXPRESSED IN BELGIAN FRANCS . THE CORRESPONDING PAYMENTS SHALL BE MADE IN THE CURRENCY OF THE COUNTRY WHERE THE PROPERTY TO BE FINANCED IS SITUATED , ON THE BASIS OF THE PARITY RULING AS AT THE TIME OF THE PAYMENT . ' ' ACCORDING TO THE APPLICANT THE EXPRESSION ' ' THE CORRESPONDING PAYMENTS ' ' COMPREHENDS NOT ONLY THE PAYMENTS OF PRINCIPAL MADE BY THE COMMISSION BUT ALSO THE REPAYMENTS TO BE MADE BY THE BORROWER . IN CONSEQUENCE , THE PARITY TO BE APPLIED FOR CONVERSION OF THE REPAYMENTS OUGHT TO BE THE SAME AS THAT ADOPTED FOR THE ADVANCE OF THE LOAN .

20 THE APPLICANT SEEKS TO CORROBORATE HIS VIEW BY REFERENCE TO A LETTER DATED 21 MARCH 1977 ADDRESSED BY THE DIRECTOR-GENERAL OF PERSONNEL AND ADMINISTRATION OF THE COMMISSION TO MR R . LUBEK , VICE-CHAIRMAN OF THE ISPRA STAFF COMMITTEE , IN WHICH HE STATES :

' ' FINALLY , I WOULD INFORM YOU THAT THE REPAYMENTS OF LOANS IN RESPECT OF WHICH THE BORROWERS HAVE NOT APPLIED FOR THE BENEFIT OF THE REDUCTION OF DEBT PROVIDED FOR IN THE DECISION OF 25 JULY 1975 ARE TO BE MADE AT THE SAME RATE AS THAT USED FOR THE GRANT OF THE LOAN ITSELF , NAMELY LIT 100 = BFR 8 . IN SUCH CASES , THOSE TRANSACTIONS DO NOT FALL WITHIN THE HEADING OF PARTIAL TRANSFERS OF REMUNERATION . ' '

21 THE APPLICANT ALSO REFERS TO THE COMMISSION ' S REPLY GIVEN ON 29 JUNE 1972 TO A QUESTION RAISED BY MR BERMANI , A MEMBER OF THE EUROPEAN PARLIAMENT , AS FOLLOWS :

' ' THE PROBLEM RAISED BY THE HONOURABLE MEMBER HAS BEEN CONSIDERED BY THE COMMISSION .

THE CORRECT APPLICATION OF ARTICLE 9 OF THE IMPLEMENTING PROVISIONS FOR THE GRANT OF BUILDING LOANS TO OFFICIALS OF THE EUROPEAN COMMUNITIES REQUIRES FIXED OFFICIAL PARITIES . MOREOVER , THE DETERMINATION OF NEW OFFICIAL PARITIES , WHICH MUST BE EXPECTED SOON , WOULD BRING TO AN END THE DIFFICULTIES REFERRED TO BY THE HONOURABLE MEMBER .

FOR REPAYMENT OF THE LOANS , THE OPPORTUNITY TO CHOOSE THE CURRENCY ENSURES THAT THE BORROWER IS PROTECTED AGAINST POSSIBLE FLUCTUATIONS OF EXCHANGE RATES FROM TIME TO TIME .

THE COMMISSION IS , HOWEVER , CONSIDERING THE SPECIAL PROBLEMS WHICH HAVE ARISEN DURING THE TRANSITIONAL PERIOD THROUGH WHICH INTERNATIONAL MONETARY RELATIONS ARE AT PRESENT PASSING . ' '

22 IT APPEARS FROM THE FILE ON THE CASE THAT THE EXCHANGE RATE USED FOR THE CONVERSION OF THE AMOUNT OF THE LOAN INTO ITALIAN LIRE WAS THE PARITY NOTIFIED TO THE INTERNATIONAL MONETARY FUND IN 1965 WHICH , AT THE TIME OF THE LOAN , WAS THE REFERENCE PARITY DETERMINED IN ARTICLE 63 OF THE STAFF REGULATIONS . IN ESSENCE THE APPLICANT ' S VIEW IS THAT THAT SAME RATE MUST BE USED THROUGHOUT THE DURATION OF THE AGREEMENT FOR THE CONVERSION INTO BELGIAN FRANCS OF THE FUNDS TRANSFERRED TO THE COMMISSION TO REPAY THE LOAN BY MEANS OF THE MONTHLY INSTALMENTS PROVIDED FOR IN THE AGREEMENT .

23 THE COMMISSION CONTENDS ON THE OTHER HAND THAT THE EXCHANGE RATE TO BE USED FOR THAT CONVERSION MUST BE THE ONE FIXED AS A REFERENCE PARITY IN ARTICLE 63 OF THE STAFF REGULATIONS AND THAT THE MONTHLY TRANSFERS MAY BE MADE PURSUANT TO THE PROVISIONS OF ARTICLE 17 OF ANNEX VII TO THE STAFF REGULATIONS , WHICH ENABLES OFFICIALS REGULARLY TO TRANSFER PART OF THEIR EMOLUMENTS THROUGH THE INSTITUTION BY WHICH THEY ARE EMPLOYED IN THE CURRENCY OF CERTAIN OTHER MEMBER STATES .

24 IN PURSUANCE OF THAT INTERPRETATION OF THE AGREEMENT , THE COMMISSION CONVERTED THE AMOUNTS IN LIRE TRANSFERRED TO REPAY THE LOAN IN QUESTION INTO BELGIAN FRANCS ACCORDING TO THE PARITY REFERRED TO IN ARTICLE 63 OF THE STAFF REGULATIONS UNTIL THE ENTRY INTO FORCE OF REGULATIONS NOS 3085/78 AND 3086/78 . AS FROM 1 APRIL 1979 IT ALSO BASED ITS CALCULATIONS FOR CONVERSION OF THE MONTHLY PAYMENTS ON THE RATES LAID DOWN IN THE STAFF REGULATIONS , AS AMENDED BY REGULATIONS NOS 3085/78 AND 3086/78 , AND APPLIED THE PROVISIONS OF ARTICLE 17 OF ANNEX VII TO THE STAFF REGULATIONS IN ITS AMENDED VERSION . IT CLAIMS THAT THAT METHOD OF MAKING THE TRANSFERS CONFORMS WHOLLY WITH THE AGREEMENT .

25 THE APPLICANT ' S VIEW IS UNTENABLE . IT DISREGARDS THE FACT THAT , ACCORDING TO THE PROVISIONS OF THE AGREEMENT ITSELF , THE FUNDS TRANSFERRED IN ORDER TO PAY THE MONTHLY INSTALMENTS WERE TO BE CONVERTED ON THE BASIS OF THE PARITY IN FORCE ON THE DATE OF THE TRANSFER , THAT IS TO SAY ON THE DATE OF EACH TRANSFER . THE AGREEMENT DID NOT PROVIDE FOR A FIXED PARITY TO APPLY THROUGHOUT ITS DURATION BUT RATHER FOR VARIOUS PARITIES WHICH MIGHT APPLY SUCCESSIVELY DURING THE TERM OF THE AGREEMENT .

26 IT SHOULD BE RECALLED THAT ALL THE RECIPIENTS OF LOANS WERE OFFICIALS OF THE EUROPEAN COMMUNITIES AND THAT THE AGREEMENT PROVIDED THAT REPAYMENTS WERE TO BE MADE TO THE COMMISSION BY THE INSTITUTION IN WHICH THEY WERE EMPLOYED . IT WAS CONSONANT WITH THAT SITUATION THAT THE PARITY TO WHICH THE AGREEMENT REFERRED SHOULD BE THE PARITY ADOPTED FOR CALCULATION OF THE BORROWER ' S REMUNERATION , THAT IS TO SAY THE PARITY PROVIDED FOR IN ARTICLE 63 OF THE STAFF REGULATIONS .

27 IN CONSEQUENCE OF THE EVENTS IN THE MONEY MARKETS WHICH OCCURRED IN AND AFTER 1971 , THE PARITY NOTIFIED TO THE INTERNATIONAL MONETARY FUND FOR THE LIRA CEASED TO BE VALID . FOR A TIME , THE LIRA FLOATED FREELY . FINALLY , WITH THE INTRODUCTION OF THE EUROPEAN MONETARY SYSTEM , A NEW EXCHANGE RATE , WHICH MIGHT FLUCTUATE WITHIN CERTAIN LIMITS , WAS DETERMINED FOR THE CURRENCIES OF THE MEMBER STATES WHICH PARTICIPATED IN THE SYSTEM .

28 THE PRACTICE ADOPTED BY THE COMMISSION , NAMELY THE APPLICATION TO THE TRANSFERS MADE TO REPAY THE LOANS IN QUESTION OF THE PROVISIONS OF ARTICLE 17 OF ANNEX VII TO THE STAFF REGULATIONS AS NEWLY WORDED , ENTAILS THE RESULT THAT THE CONVERSION RATE IS MORE FAVOURABLE TO THE APPLICANT THAN MERE APPLICATION OF THE PARITY FOR THE LIRA WITHIN THE EUROPEAN MONETARY SYSTEM .

29 AS REGARDS THE LETTER OF 21 MARCH 1977 FROM THE DIRECTOR-GENERAL OF PERSONNEL AND ADMINISTRATION , IT SHOULD BE POINTED OUT THAT IT WAS WRITTEN IN REPLY TO A QUESTION FROM MR LUBEK CONCERNING CONDUCT ON THE PART OF THE COMMISSION WHICH HE REGARDED AS CONSTITUTING A UNILATERAL CHANGE OF THE AGREEMENT . IN ANY CASE , SEVERAL MONTHS LATER , THE SAME DIRECTOR-GENERAL SENT THE APPLICANTS A COMMUNICATION IN THE FOLLOWING TERMS , WHICH LEFT NO ROOM FOR ANY ERROR AS TO MAINTENANCE OF THE EXCHANGE RATE IN FORCE AT THAT TIME :

' ' BORROWERS WHOSE AGREEMENT WAS SIGNED BEFORE 25 JULY 1975 HAVE HAD AN OPPORTUNITY TO CHOOSE BETWEEN TWO COURSES OF ACTION :

( 1 ) REDUCTION OF THEIR PRINCIPAL DEBT BY AN AMOUNT CORRESPONDING TO THE DIFFERENCE BETWEEN THE AMOUNT OF THE LOAN AT THE OFFICIAL RATE AND THAT AMOUNT AT THE MARKET RATE ON THE DAY OF PAYMENT . AS A RESULT , ANY EARLY REPAYMENT UNDER ARTICLE 8 OF THE LOAN AGREEMENT AND EVERY MONTHLY PAYMENT ( SEE THE LAST SENTENCE OF THE FIRST PARAGRAPH AND THE THIRD PARAGRAPH OF ARTICLE 6 OF THE AGREEMENT ) MUST HENCEFORTH BE MADE EXCLUSIVELY IN BELGIAN FRANCS , CONTRARY TO WHAT IS STIPULATED IN ARTICLE 15 OF THE LOAN AGREEMENT ;

( 2)MAINTENANCE OF THEIR PRINCIPAL DEBT , WHICH IS THE POSITION IN YOUR CASE . AS A RESULT , YOU ARE ENTITLED , AS STATED IN ARTICLE 15 OF YOUR LOAN AGREEMENT , TO CHOOSE THE CURRENCY ( BELGIAN FRANCS OR THE CURRENCY USED FOR THE ADVANCE OF THE LOAN ) TO BE USED IN THE CASE OF :

EARLY REPAYMENT UNDER ARTICLE 8 OF THE AGREEMENT ;

MONTHLY PAYMENTS PURSUANT TO ARTICLE 6 OF THE AGREEMENT ( FIRST AND THIRD PARAGRAPHS ).

IT SHOULD HOWEVER BE NOTED THAT ANY CONVERSION INTO BELGIAN FRANCS WILL BE MADE ON EACH OCCASION ON THE BASIS OF THE PARITY RULING ON THE DATE OF EACH TRANSFER , WHICH AT THE PRESENT TIME IS AS FOLLOWS :

BFR 1 = LIT 12.50 ,

FF 1= BFR 9.00 ,

UKL 1= BFR 120.00 .

AS REGARDS REPAYMENT BY DEDUCTIONS FROM SALARY ( SEE ARTICLE 5 OF THE AGREEMENT ) IT IS IN ALL CASES MADE IN BELGIAN FRANCS , THE SALARY ALSO BEING EXPRESSED IN BELGIAN FRANCS .

( 3)FOR BORROWERS WHO DID NOT TAKE THE BENEFIT OF THE REDUCTION IN 1975 ( AS IN YOUR CASE ), THOSE DEDUCTIONS ARE NOT TO BE REGARDED AS TRANSFERS OF A PART OF YOUR REMUNERATION .

HOWEVER , THE EXCHANGE RATE ADOPTED IS THE SAME AS THAT USED FOR THE ADVANCE OF THE LOAN ( SEE PARAGRAPH ( 2 ) ABOVE );

( 4)NO GUARANTEE CAN BE GIVEN REGARDING MAINTENANCE OF THE EXCHANGE RATE AT PRESENT ADOPTED BY THE COMMISSION FOR THE CONVERSION INTO BELGIAN FRANCS OF THE PAYMENTS REFERRED TO IN PARAGRAPH ( 2 ) ABOVE OR OF THE DEDUCTIONS FROM REMUNERATION REFERRED TO IN PARAGRAPH ( 3 ). ' '

30 AS REGARDS THE REPLY GIVEN TO MR BERMANI ' S QUESTION , IT SHOULD BE NOTED THAT THE COMMISSION ENVISAGED THAT NEW OFFICIAL PARITIES WOULD BE FIXED IN THE NEAR FUTURE AND THAT NO GUARANTEE WAS GIVEN THAT THE PARITIES WOULD REMAIN UNCHANGED .

31 IT SHOULD IN ADDITION BE EMPHASIZED THAT THE APPLICANT DOES NOT IN ANY WAY MAINTAIN THAT HE HAS DEDUCED FROM THOSE LETTERS OR FROM THE ANSWER GIVEN ANY CONSEQUENCES WHICH MIGHT CHANGE HIS SITUATION .

32 THE APPLICANT MAINTAINS THAT REGULATIONS NOS 3085/78 AND 3086/78 TOOK EFFECT RETROACTIVELY BY CHANGING THE PARITY TO BE APPLIED FOR THE PURPOSES OF AN AGREEMENT ENTERED INTO BEFORE THE DATE OF THOSE REGULATIONS AND THAT IN THE PRESENT CASE NO VALID GROUNDS EXIST TO JUSTIFY SUCH RETROACTIVE EFFECT .

33 IT APPEARS , HOWEVER , FROM THE CONSIDERATIONS SET FORTH ABOVE THAT THAT VIEW CANNOT BE UPHELD . THE COMMISSION HAS ALWAYS USED THE PARITY REFERRED TO IN ARTICLE 63 OF THE STAFF REGULATIONS . AS FROM APRIL , IT APPLIED THE PARITY REFERRED TO IN THE AMENDED VERSION OF THAT SAME ARTICLE . IT APPEARS FROM ARTICLE 15 OF THE AGREEMENT THAT IT WAS NOT ENVISAGED THAT THE PARITY SHOULD REMAIN UNCHANGED THROUGHOUT THE CURRENCY OF THE AGREEMENT . IT CANNOT THEREFORE BE ASSERTED THAT BY APPLYING THE NEW PARITY THE COMMISSION FAILED TO ACT IN ACCORDANCE WITH THE AGREEMENT . REGULATIONS NOS 3085/78 AND 3086/78 HAD NO RETROACTIVE EFFECT AND THE COMMISSION MERELY APPLIES THEM AS FROM THE DATE ON WHICH THEY ENTERED INTO FORCE .

34 THE APPLICANT ALSO MAINTAINS THAT THE COMMISSION COULD HAVE DEDUCTED THE MONTHLY REPAYMENTS IN BELGIAN FRANCS BEFORE PAYING HIM IN LIRE THE BALANCE OF HIS REMUNERATION , WHICH WOULD HAVE BEEN MORE FAVOURABLE FOR HIM . BY NOT DOING SO THE COMMISSION FAILED TO DISCHARGE ITS OBLIGATION TO ASSIST ITS OFFICIALS .

35 THAT COMPLAINT CANNOT BE ACCEPTED . THE APPLICANT HAS PUT FORWARD NO ARGUMENT CAPABLE OF PROVING THAT THE PROCEDURE PROPOSED BY HIM , IF CAPABLE OF IMPLEMENTATION BY THE COMMISSION , WOULD HAVE BEEN MORE FAVOURABLE FOR HIM . ON THE CONTRARY , DEDUCTION IN BELGIAN FRANCS OF THE AMOUNT OF THE MONTHLY PAYMENTS WOULD HAVE EXPOSED THE APPLICANT TO THE RISK OF HIS BEING DEPRIVED OF THE BENEFIT NOW ACCRUING TO HIM FROM THE FACT THAT THE TRANSFERS MADE IN ACCORDANCE WITH THE PROCEDURE UNDER ARTICLE 17 OF ANNEX VII TO THE STAFF REGULATIONS ARE SUBJECTED TO A MULTIPLIER IN THE FORM OF A WEIGHTING FOR THE COUNTRY OF TRANSFER ( IN APRIL 1979 , 100 ) DIVIDED BY THAT OF THE COUNTRY IN WHICH THE OFFICIAL IS EMPLOYED ( IN APRIL 1979 , 70.3 ). AS A RESULT OF THAT OPERATION IN APRIL 1979 A TRANSFER OF BFR 1 COST ONLY LIT 18.35 INSTEAD OF MORE THAN LIT 26 AT THE MARKET RATE .

36 THE APPLICANT CLAIMS IN THE ALTERNATIVE THAT THE AMOUNT IN LIRE OF THE MONTHLY REPAYMENT INSTALMENTS SHOULD BE CALCULATED ON THE BASIS OF AN EXCHANGE RATE CORRESPONDING TO THE EXCHANGE RATE APPLIED TO THE ADVANCE OF THE LOAN AT THE TIME OF THE UPDATING . HE ADMITS THAT THOSE OFFICIALS WHO AT THAT TIME AVAILED THEMSELVES OF THE OPPORTUNITY TO UPDATE THEIR CONTRACTS OBTAINED A HIGHER EXCHANGE RATE FOR THE ADVANCE OF THE LOAN BY REASON OF THE FACT THAT THE PRINCIPAL AMOUNT OF THE LOAN WAS REDUCED . HE IS THEREFORE PREPARED TO PAY OFF HIS LOAN AT THAT HIGHER EXCHANGE RATE .

37 THAT CLAIM DISREGARDS THE FACT THAT THE COMMISSION IS ENTITLED UNDER THE AGREEMENT TO USE THE PARITY IN FORCE FOR THE PURPOSES OF THE STAFF REGULATIONS AT THE TIME OF EACH SUCCESSIVE TRANSFER FOR THE CONVERSION INTO BELGIAN FRANCS OF THE MONTHLY REPAYMENT INSTALMENTS AND THAT THE EFFECT OF THE APPLICANT ' S PROPOSAL WOULD BE TO DEPRIVE THE COMMISSION OF A RIGHT WHICH IS CONFERRED ON IT BY THE AGREEMENT ITSELF . THAT ALTERNATIVE CLAIM MUST THEREFORE BE DISMISSED .

38 THE APPLICANT MAINTAINS FINALLY THAT THE COMMISSION SHOULD HAVE ADOPTED TRANSITIONAL PROVISIONS IN HIS FAVOUR WHEN THE PARITY RESULTING FROM REGULATIONS NOS 3085/78 AND 3086/78 WAS APPLIED . HE ASSERTS THAT , IN THE ABSENCE OF SUCH PROVISIONS , THE DISADVANTAGE SUFFERED BY HIM AS A RESULT OF THE CHANGE OF PARITY IS SO GREAT THAT HE SHOULD BE ALLOWED THE OPTION OF REPUDIATING THE EXISTING CONTRACT AND REPAYING THE MONEY RECEIVED AT THE RATE APPLIED FOR THE ADVANCE OF THE LOAN , WITHIN A PERIOD OF THREE YEARS FOLLOWING THE DECISION OF THE COURT .

39 IT IS UNDERSTANDABLE THAT THE APPLICANT , HAVING HAD THE BENEFIT FOR MANY YEARS OF A FAVOURABLE EXCHANGE RATE , CONSIDERS HIMSELF PREJUDICED BY THE APPLICATION AS FROM 1979 OF THE UPDATED RATES . HOWEVER , THE ADVANTAGEOUS RATE OF WHICH THE APPLICANT HAD THE BENEFIT UNTIL 1979 IS MERELY THE CONSEQUENCES OF THE FACT THAT THE COUNCIL , INSTEAD OF ADAPTING THE PARITIES UNDER THE STAFF REGULATIONS TO THE MARKET RATES , USED WEIGHTINGS IN ORDER TO COMPENSATE FOR THE FLUCTUATION OF CERTAIN CURRENCIES .

40 IN FACT , THE STAFF REGULATIONS MAKE PROVISION FOR THE ADAPTATION OF THE REMUNERATION OF OFFICIALS IN THE VARIOUS PLACES OF EMPLOYMENT BY TWO DIFFERENT METHODS , NAMELY ON THE ONE HAND BY ADJUSTMENT OF THE WEIGHTING ACCORDING TO CHANGES IN THE COST OF LIVING IN THOSE VARIOUS PLACES AND , ON THE OTHER HAND , BY ALTERATION OF THE PARITIES UNDER ARTICLE 63 OF THE STAFF REGULATIONS IN ORDER TO TAKE INTO ACCOUNT THE FLUCTUATIONS OF EXCHANGE RATES . IN THE CASE OF DEVALUATION OF THE CURRENCY OF THE PLACE OF EMPLOYMENT , THE REMUNERATION OF AN OFFICIAL CALCULATED IN BELGIAN FRANCS BUT PAID IN NATIONAL CURRENCY MUST BE INCREASED ACCORDINGLY . THE RESULT SHOULD BE THAT THE APPLICATION OF THE PARITIES PROVIDED FOR BY THE STAFF REGULATIONS FOR THE CONVERSION INTO BELGIAN FRANCS OF A NATIONAL CURRENCY SHOULD NOT CAUSE AN OFFICIAL ANY LOSS BY VIRTUE OF EXCHANGE RATES WHICH IS NOT OFFSET BY AN INCREASE IN HIS REMUNERATION AS EXPRESSED IN NATIONAL CURRENCY , WHILST THE COMMISSION RECEIVES ONLY THE EXACT AMOUNT IN BELGIAN FRANCS OF THE MONTHLY REPAYMENTS AND CANNOT OBTAIN ANY BENEFIT THEREFROM .

41 IN THE RESULT , EVEN IF THE UPDATING OF THE PARITIES AS FROM 1979 HAD THE EFFECT OF DEPRIVING THE APPLICANT OF THE BENEFIT OF THE ADVANTAGEOUS RATE WHICH HE HAD PREVIOUSLY ENJOYED IT CANNOT BE REGARDED AS A CIRCUMSTANCE JUSTIFYING TERMINATION OF THE CONTRACT .

42 IT APPEARS FROM ALL THE FOREGOING CONSIDERATIONS THAT THE VIEW PUT FORWARD BY THE APPLICANT IN SUPPORT OF HIS CLAIMS CANNOT BE UPHELD AND THAT ACCORDINGLY THE APPLICATION MUST BE DISMISSED .

Decision on costs

COSTS

43 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS .

44 HOWEVER , UNDER ARTICLE 70 OF THE RULES OF PROCEDURE COSTS INCURRED BY THE INSTITUTIONS IN PROCEEDINGS BY SERVANTS OF THE COMMUNITIES ARE TO BE BORNE BY THOSE INSTITUTIONS .

Operative part

ON THOSE GROUNDS ,

THE COURT ( FIRST CHAMBER )

HEREBY :

1 . DISMISSES THE APPLICATION ;

2 . ORDERS THE PARTIES TO BEAR THEIR OWN COSTS .