European Commission v Council of the European Union.
Date: 2010-11-24
55. It follows from the wording of Article 65(1) of the Staff Regulations that that provision confers discretion on the Council in the annual review of the level of remuneration (see, to that effect, Case 81/72 Commission  v Council , paragraphs 7 and 11, and Case 59/81 Commission  v Council , paragraphs 20 to 22 and 32).
62. Both the adoption of the Staff Regulations and all the amendments made to them, and in particular the insertion of Annex XI, have been effected by a regulation, an act which, as stated in the second paragraph of Article 288 TFEU, is binding in its entirety. The Court has already held, as regards a provision of Annex VIII to the Staff Regulations, that the Staff Regulations laid down by Regulation No 259/68 possess all the characteristics set out in the second paragraph of Article 189 of the EEC Treaty (to which the second paragraph of Article 288 TFEU now corresponds) and are binding in their entirety (see Case 137/80 Commission  v Belgium  [1981] ECR 2393, paragraph 7).
64. As is apparent from Case 81/72 Commission  v Council , paragraphs 3 and 4; Case 70/74 Commission v Council  [1975] ECR 795, paragraph 7; and Case 59/81 Commission  v Council , paragraph 8, the Council decided, first of all, in 1972, to apply, as an experiment and for a period of three years, a system of adjustment of remuneration involving recourse to two specific indices, while rejecting the automatic application of an arithmetical mean between the two indices which were adopted. In the light of that approach, the Court held that, by its decision, the Council, acting within the framework of the powers relating to the remunerations of the staff conferred on it by Article 65 of the Staff Regulations, assumed obligations which it has bound itself to observe for the period it has defined (see Case 81/72 Commission v Council , paragraphs 8 and 9; Case 70/74 Commission  v Council , paragraphs 20 to 22; and Case 59/81 Commission v Council , paragraph 8).
65. In 1976, the Council adopted a new method for adjusting remuneration, as is apparent from Case 59/81 Commission  v Council , paragraphs 9 to 13. Subsequently, another method of adjusting remuneration was laid down for a period of 10 years by Council Decision 81/1061/Euratom, ECSC, EEC of 15 December 1981 amending the method of adjusting the remuneration of officials and other servants of the Communities (OJ 1981 L 386, p. 6).
68. That framework, which restricts the Council’s discretion resulting from Article 65 of the Staff Regulations, is justified inter alia in the light of the objectives of ensuring a degree of medium‑term stability and avoiding discussions and recurrent difficulties, in particular between the organisations representing the staff and the institutions concerned, as to whether and to what extent an adjustment is justified or necessary (see, to that effect, Case 81/72 Commission  v Council , paragraph 2). In that regard, the first recital in the preamble to Decision 81/1061 and the second and third recitals in the preamble to Regulation No 3830/91 had already indicated that that framework restricting the Council’s discretion was intended to maintain harmonious relations between the European institutions and their officials and other staff.
71. It follows that, by adopting Annex XI to the Staff Regulations, the Council, by a unilateral decision, bound itself, for the period of validity of that annex, in the exercise of its discretion under Article 65 of the Staff Regulations, to comply with the criteria laid down exhaustively in Article 3 of that annex. The reasoning followed by the Court in Case 81/72 Commission  v Council , paragraph 9, and Case 70/74 Commission  v Council , paragraphs 20 to 22, applies mutatis mutandis  to the regulation introducing Annex XI to the Staff Regulations, which the Council adopted under Article 65a of the Staff Regulations. In those circumstances, the Council is not entitled to rely, in the context of Article 3, on a discretion going beyond the criteria laid down in that article.
77. In order not to nullify the binding effect of Annex XI to the Staff Regulations, and in particular Articles 3 and 10 of that annex (see, by analogy, Case 81/72 Commission  v Council , paragraph 13), and in the absence of other provisions of that annex relating to the possible effect of an economic crisis on the adjustment of remuneration, it must be held that, for the period of application of that annex, the procedure laid down in Article 10 thereof constitutes the only means of taking account of an economic crisis in the adjustment of remuneration and therefore of disapplying the criteria laid down in Article 3(2) of that annex.
80. In addition, the Commission must observe the duty of cooperation in good faith between the institutions, recognised by the case‑law (see, inter alia, Case 204/86 Greece v Conseil  [1988] ECR 5323, paragraph 16, and Case C‑29/99 Commission  v Council  [2002] ECR I‑11221, paragraph 69) and, since the entry into force of the Treaty of Lisbon, expressly enshrined in the second sentence of Article 13(2) TEU. Finally, as set out in Article 241 TFEU, the Council may request the Commission to undertake any studies the Council considers desirable for the attainment of the common objectives, and to submit to it any appropriate proposals. However, prior to the adoption of the contested regulation, the Council did not, in contrast to 1994 (see Commission report SEC(94) 1027 final of 27 June 1994, point I, p. 3), send any formal request to the Commission calling on it to discharge its duties resulting from Article 10 of Annex XI to the Staff Regulations.