1 THE PURPOSE OF THE ACTION IS THE ANNULMENT OF ARTICLES 1 TO 4 OF COUNCIL REGULATION NO 2647/72 ( OJ L 283, 20 . 12 . 1972, P . 1 ) ADJUSTING THE SALARIES AND PENSIONS OF THE OFFICIALS OF THE EUROPEAN COMMUNITIES AND OF THE OTHER SERVANTS OF THESE COMMUNITIES, TO THE EXTENT TO WHICH THESE ARTICLES FIX SCALES OF SALARIES AND OTHER GRANTS AND ALLOWANCES BY ADJUSTING THEM, ON THE BASIS OF AN INCREASE IN PURCHASING POWER LIMITED TO 2.5 PER CENT;
2 BY ARTICLE 65 ( 1 ) OF THE STAFF REGULATIONS, THE COUNCIL SHALL EACH YEAR REVIEW THE REMUNERATIONS OF THE OFFICIALS AND OTHER SERVANTS : " IN THE LIGHT OF A REPORT BY THE COMMISSION AND BASED ON A JOINT INDEX PREPARED BY THE STATISTICAL OFFICE OF THE EUROPEAN COMMUNITIES IN AGREEMENT WITH THE NATIONAL STATISTICAL OFFICES OF THE MEMBER STATES : THE INDEX SHALL REFLECT THE SITUATION AS AT 1 JULY IN EACH OF THE COUNTRIES OF THE COMMUNITIES ". THE OBJECT OF THIS REVIEW IS THUS TO DETERMINE WHETHER, AS PART OF THE SOCIAL AND ECONOMIC POLICY OF THE COMMUNITIES, REMUNERATIONS SHOULD BE ADJUSTED . FOR SEVERAL YEARS, THE COUNCIL AND THE COMMISSION, WITH THE COLLABORATION OF THE ORGANIZATIONS REPRESENTING THE STAFF, HAVE CARRIED OUT THE NECESSARY ADJUSTMENTS . IT IS ADMITTED THAT THESE ADJUSTMENTS MUST SEEK NOT ONLY TO ADJUST SALARIES IN RELATION TO THE INCREASE IN THE COST OF LIVING, BUT EQUALLY, TO GIVE OFFICIALS AND SERVANTS THE BENEFIT OF THE INCREASES IN THE LEVEL OF INCOMES RECORDED IN THE COMMUNITY . AS THE CALCULATION OF THE INCREASE IN INCOMES ENGENDERED DIFFICULTIES EACH YEAR BETWEEN THE ORGANIZATIONS REPRESENTING THE STAFF AND THE INSTITUTIONS CONCERNED, BY A DECISION OF 14 DECEMBER 1970 THE COUNCIL INVITED THE COMMISSION TO SUBMIT TO IT " A DOCUMENT WHICH MIGHT BE USED AS THE STARTING POINT FOR A THOROUGH STUDY, TO BE UNDERTAKEN TOGETHER, OF THE WORKING METHODS TO BE USED FOR THE APPLICATION OF ARTICLE 65 OF THE STAFF REGULATIONS ".
3 IN IMPLEMENTATION OF THIS DECISION THE COMMISSION, IN COLLABORATION WITH THE ORGANIZATIONS REPRESENTING THE STAFF, SUBMITTED PROPOSALS TO THE COUNCIL SUBSTITUTING, IN CONNECTION WITH THE INCREASE IN PURCHASING POWER IN REAL TERMS, FOR THE " JOINT INDEX " REFERRED TO IN ARTICLE 65 ( 1 ), SUB-PARAGRAPH 1, AND THE SO-CALLED " SPECIFIC " INDEX DERIVED FROM THE ALTERATION IN SALARIES OF THE NATIONAL PUBLIC SERVICES PREVIOUSLY USED A SINGLE INDEX DERIVED FROM " THE TOTAL EMOLUMENTS PER HEAD ". IT CONCLUDED BY POINTING OUT THAT THESE PROPOSALS MIGHT WELL ENTAIL THE ADJUSTMENT OF ARTICLES 64 AND 65 OF THE STAFF REGULATIONS . ON THE REJECTION OF THESE PROPOSALS BY THE COUNCIL, CHIEFLY BECAUSE THEY DEPARTED FROM THE FRAMEWORK OF ARTICLE 65, THE COMMISSION PROPOSED A MEANS OF ADJUSTMENT IN THE LIGHT OF THE ARITHMETICAL MEAN BETWEEN TWO INDICES, THE ONE DERIVED FROM THE ALTERATION IN SALARIES IN THE PUBLIC SERVICES IN THE MEMBER STATES IN THE COURSE OF THE PRECEDING YEAR AND THE OTHER FROM THE TOTAL EMOLUMENTS PER HEAD IN THE PUBLIC SERVICES IN THE SAME MEMBER STATES .
4 ON 20 AND 21 MARCH 1972, THE COUNCIL DECIDED TO APPLY, AS AN EXPERIMENT AND FOR A PERIOD OF THREE YEARS, A " SYSTEM OF ADJUSTING REMUNERATIONS ", INVOLVING RECOURSE TO THE SAID TWO INDICES FOR THE RISE IN THE PURCHASING POWER OF REMUNERATIONS . IT EMERGES FROM THE MINUTES OF THESE PROCEEDINGS THAT THE COUNCIL, REJECTING THE AUTOMATIC APPLICATION OF THE ARITHMETICAL MEAN BETWEEN THE TWO INDICES WHICH WERE ADOPTED, DEFINED THEIR OPERATION AS FOLLOWS : " DECISION EACH YEAR BY THE COUNCIL IN THE LIGHT OF THESE TWO INDICES . IN THE COURSE OF THE THIRD YEAR, THIS METHOD OF CALCULATION SHALL BE CHECKED BY A THOROUGH STUDY OF THE TOTAL NATIONAL EMOLUMENTS AND THE TOTAL COMMUNITY EMOLUMENTS, TO VERIFY THE VALIDITY OF THE SYSTEM AND TO CARRY OUT ANY NECESSARY STRUCTURAL ADJUSTMENTS ".
5 IN THE REPORT WHICH THE COMMISSION PRESENTED TO THE COUNCIL ON 27 SEPTEMBER 1972 IN IMPLEMENTATION OF ARTICLE 65 OF THE STAFF REGULATIONS, THE COMMISSION FINDING THAT THE TWO INDICES RESPECTIVELY DISCLOSED, AS AT 1 JULY 1972, AN INCREASE IN THE PURCHASING POWER OF NATIONAL SALARIES OF 3.6 PER CENT AND 3.9 PER CENT, PROPOSED A GROSS REAL INCREASE OF COMMUNITY REMUNERATIONS EQUAL TO THE ARITHMETICAL MEAN OF THE SAID INDICES, VIZ . 3.75 PER CENT . HOWEVER, BY THE CONTESTED REGULATION THE COUNCIL ESTABLISHED THE INCREASE IN SALARIES REFERABLE TO THE INCREASE IN PURCHASING POWER AT 2.5 PER CENT, THAT IS TO SAY, BELOW THE LOWER INDEX . THE APPLICANT MAINTAINS THAT IN FAILING TO INCREASE THE SALARIES AT LEAST TO THE LEVEL OF THE LOWER INDEX, VIZ . 3.6 PER CENT, THE COUNCIL HAS INFRINGED ARTICLE 65 OF THE STAFF REGULATIONS IN CONJUNCTION WITH THE DECISION OF 21 MARCH 1972 . WHILST DECLARING THAT IN ADOPTING THE DISPUTED REGULATION IT FELT BOUND " BY THE SYSTEM ADOPTED ON 21 MARCH 1972 ", THE COUNCIL, WITHOUT ITSELF FORMALLY RAISING THE PLEA, SUGGESTS THAT THE COURT SHOULD DECIDE OF ITS OWN MOTION " WHETHER THIS SYSTEM CONSTITUTES A RULE OF LAW ". A - ON THE NATURE AND EFFECT OF THE DECISION OF 21 MARCH 1972
6 THE NATURE AND EFFECT OF THE DECISION OF 21 MARCH 1972 MUST BE APPRAISED WITHIN THE FRAMEWORK OF THE COUNCIL' S IMPLEMENTATION OF THE TASK ASSIGNED TO IT BY ARTICLE 65 OF THE STAFF REGULATIONS . BY THAT PROVISION, THE COUNCIL SHALL EACH YEAR REVIEW THE REMUNERATIONS PAID BY THE COMMUNITIES, IN THE LIGHT OF A REPORT DRAWN UP BY THE COMMISSION . FURNISHED WITH THIS REPORT, THE COUNCIL IS CALLED UPON TO " CONSIDER " THE QUESTION OF A POSSIBLE ADJUSTMENT OF REMUNERATION WITHIN THE CONTEXT OF THE ECONOMIC AND SOCIAL POLICIES OF THE COMMUNITIES, OF WHICH THE POLICY WITH REGARD TO THE EMOLUMENT OF THE COMMUNITY SERVICES FORMS PART . IN CONSEQUENCE OF THIS CONSIDERATION, BY PARAGRAPH 3 OF THE SAME ARTICLE, THE COUNCIL SHALL " ACT " ON THE PROPOSAL OF THE COMMISSION .
7 THIS PROVISION THUS LEAVES TO THE COUNCIL THE CHOICE OF THE MEANS AND FORMS BEST SUITED TO CARRY OUT AN EMOLUMENTS POLICY IN CONFORMITY WITH THE CRITERIA LAID DOWN BY ARTICLE 65 . THE COUNCIL, WHICH IS RESPONSIBLE FOR THE ORGANIZATION OF THE STAFF, MAY, AS PART OF THE MEANS OF IMPLEMENTATION OF ARTICLE 65, INCORPORATE PROCEDURES OF COLLECTIVE BARGAINING, SIMILAR TO THOSE PRACTISED IN THE MEMBER STATES, ACCORDING TO THEIR VARIOUS METHODS . THE COUNCIL IS FREE TO DIVIDE UP THE DECISION-MAKING PROCESS INTO SUCCESSIVE PHASES, IN ACCORDANCE WITH A PRACTICE USUAL IN THE COMMUNITY, AND TO DECIDE CERTAIN QUESTIONS OF PRINCIPLE FIRST, IN ORDER TO FACILITATE THE APPLICATION OF SUBSEQUENT IMPLEMENTING MEASURES .
8 THERE IS NO DOUBT THAT IN DECIDING ON THE ACT OF 21 MARCH 1972, THE COUNCIL HAD GONE BEYOND THE STAGE OF PREPARATORY CONSIDERATION AND HAD ENTERED ON THE PHASE OF DECISION-MAKING . THE COUNCIL ACTED, ON THE PROPOSAL OF THE COMMISSION, FOLLOWING CONSULTATIONS BETWEEN THE LATTER AND THE ORGANIZATIONS REPRESENTING THE STAFF . BOTH THE ANTECEDENTS AND THE TERMS OF THE DECISION TAKEN MAKE IT CLEAR THAT THE COUNCIL INTENDED TO BIND ITSELF TO OBSERVE FIXED CRITERIA, IN THE WORKING OUT OF SUBSEQUENT MEASURES RELATIVE TO THE PERIODIC DETERMINATION OF REMUNERATIONS . THIS INTENTION SHOWS ITSELF PARTICULARLY IN THE PROVISIONS WHEREBY THE SYSTEM ESTABLISHED BY THE DECISION " SHALL BE APPLIED " AS AN EXPERIMENT AND FOR A PERIOD OF THREE YEARS, FROM THE AFFIRMATION THAT " IT IS WITHIN THE FRAMEWORK OF THE PROVISIONS OF THE PRESENT ARTICLE 65 OF THE STAFF REGULATIONS ", FROM THE STATEMENT OF AN " OPERATIVE DATE " AND FINALLY FROM THE INSERTION OF AN EXPRESS RESERVATION BY WHICH THE APPLICATION OF THE NEW METHOD FOR AN EXPERIMENTAL PERIOD " CANNOT GIVE RISE TO VESTED RIGHTS ". IN THE COURSE OF THE ORAL PROCEDURE, MOREOVER, THE COUNCIL REPEATEDLY EMPHASIZED THAT IT ACKNOWLEDGED ITSELF TO BE BOUND BY THIS ACT, THAT IT STILL INTENDED TO RESPECT IT, AND THAT THE DISAGREEMENT TURNED EXCLUSIVELY ON THE INTERPRETATION OF THE DECISION .
9 IT APPEARS, THEREFORE, THAT BY ITS DECISION OF 21 MARCH 1972, 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 .
10 TAKING ACCOUNT OF THE PARTICULAR EMPLOYER-STAFF RELATIONSHIP WHICH FORMS THE BACKGROUND TO THE IMPLEMENTATION OF ARTICLE 65 OF THE STAFF REGULATIONS, AND THE ASPECTS OF CONSULTATION WHICH ITS APPLICATION INVOLVED, THE RULE OF PROTECTION OF THE CONFIDENCE THAT THE STAFF COULD HAVE THAT THE AUTHORITIES WOULD RESPECT UNDERTAKINGS OF THIS NATURE, IMPLIES THAT THE DECISION OF 21 MARCH 1972 BINDS THE COUNCIL IN ITS FUTURE ACTION . WHILST THIS RULE IS PRIMARILY APPLICABLE TO INDIVIDUAL DECISIONS, THE POSSIBILITY CANNOT BY ANY MEANS BE EXCLUDED THAT IT SHOULD RELATE, WHEN APPROPRIATE, TO THE EXERCISE OF MORE GENERAL POWERS . FURTHERMORE, THE ADJUSTMENT EACH YEAR OF REMUNERATIONS PROVIDED FOR IN ARTICLE 65 ONLY CONSTITUTES AN IMPLEMENTING MEASURE OF AN ADMINISTRATIVE RATHER THAN A LEGISLATIVE NATURE, AND IS WITHIN THE FRAMEWORK OF THE COUNCIL' S APPLICATION OF THAT PROVISION .
11 THE CIRCUMSTANCE THAT ARTICLE 65 BY ENDOWING THE COUNCIL WITH A WIDE POWER OF APPRAISAL WITH REGARD TO THE ECONOMIC AND SOCIAL POLICY OF THE COMMUNITIES, REQUIRES IT TO TAKE ACCOUNT OF ALL POSSIBLE RELEVANT FACTORS, DOES NOT PREVENT IT FROM PRE-DETERMINING, UNDER CERTAIN CIRCUMSTANCES AND CONDITIONS, IN A FIRST STAGE AND FOR A LIMITED TIME, THE FRAMEWORK OF, AND THE FACTORS TO BE TAKEN INTO ACCOUNT IN, ITS DECISION . IN THIS RESPECT, TO JUSTIFY ITS NEW ATTITUDE, THE COUNCIL HAS INVOKED THE RISKS OF INFLATION WHICH HAVE BEEN AGGRAVATED IN THE INTERVAL BETWEEN THE TIME WHEN THE DECISION WAS ADOPTED AND THE PASSING OF THE CONTESTED REGULATION . FURTHERMORE, IT APPEARS THAT ALL THE RELEVANT FACTORS HAD ALREADY BEEN CONSIDERED, BOTH IN THE COURSE OF THE PREPARATORY STUDIES AND IN THE PROCEEDINGS PRIOR TO THE DECISION OF 21 MARCH 1972 . FURTHER, NEITHER THE MINUTES OF THE COUNCIL' S PROCEEDINGS OF 5, 6 AND 8 DECEMBER 1970 NOR THE RECITALS OF THE CONTESTED REGULATION, ESTABLISH CIRCUMSTANCES SUFFICIENT TO JUSTIFY THE ABANDONMENT, AFTER NINE MONTHS, OF THE SYSTEM WHICH THE COUNCIL HAD BOUND ITSELF TO RESPECT . THERE IS REASON TO CONSIDER THAT THIS SYSTEM, BY ITS VERY NATURE HAS A SLOWING-DOWN EFFECT, SINCE IT PROVIDES FOR THE ADJUSTMENT OF THE REMUNERATION OF THE OFFICIALS AND OTHER SERVANTS OF THE COMMUNITY ONLY AFTER A FINDING THAT NATIONAL REMUNERATIONS HAVE ALREADY INCREASED, AND SINCE, WITHIN THE FRAMEWORK OF ARTICLE 65 THIS ADJUSTMENT IS ONLY MADE ONCE A YEAR, AT A FIXED INTERVAL . IN THE CIRCUMSTANCES, THE COUNCIL HAS FAILED TO FOUND THE CONTESTED REGULATION ON GROUNDS SUFFICIENT TO JUSTIFY IT IN DEPARTING FROM ITS PRIOR UNDERTAKINGS . B - ON THE SCOPE OF THE DECISION OF 21 MARCH 1972
12 THE DEFENDANT CLAIMS THAT THE DECISION OF 21 MARCH 1972 DOES NOT HAVE THE SCOPE ATTRIBUTED TO IT BY THE APPLICANT WITH REGARD TO THE LIMITS WHICH IT IMPOSES ON THE EXERCISE OF THE DISCRETIONARY POWER WHICH ARTICLE 65 CONFERS ON THE COUNCIL . THE DEFENDANT STATES IN THIS RESPECT THAT THE DECISION TAKEN EACH YEAR ON THE LEVEL OF REMUNERATIONS MUST BE, IN ACCORDANCE WITH THE DECISION OF 21 MARCH 1972, " IN THE LIGHT OF " THESE TWO INDICES, WHICH IMPLIES THAT THEY ARE ONLY NORMS OF REFERENCE . THESE INDICES THUS CONSTITUTE IMPORTANT POINTS OF APPRAISAL BUT THEY MAY BE CALLED IN QUESTION BY TAKING OTHER FACTORS ENVISAGED BY ARTICLE 65 INTO CONSIDERATION .
13 THE USE OF THE WORDS " IN THE LIGHT OF " IS CHIEFLY TO BE EXPLAINED BY THE CIRCUMSTANCE THAT, IN ORDER TO REMAIN WITHIN THE FRAMEWORK OF ARTICLE 65, THE REFERENCE TO A SINGLE INDEX, PROPOSED BY THE COMMISSION, WAS REPLACED BY A REFERENCE TO TWO INDICES AND, FURTHER, FOR THE PROPOSAL OF THE COMMISSION TO RETAIN THE ARITHMETICAL MEAN OF THESE TWO INDICES THERE WAS SUBSTITUTED THE DECISION TO DEPART FROM THIS AUTOMATIC APPLICATION BY MAINTAINING A BRACKET WITHIN WHICH THE COUNCIL WOULD BE FREE TO APPRAISE AT WHAT LEVEL THE INCREASE IN REMUNERATION SHOULD BE FIXED . WHILE THE USE OF THESE TERMS, TOGETHER WITH THE STATEMENT THAT THESE TWO INDICES SHALL BE TAKEN INTO ACCOUNT, DEMONSTRATES THE DESIRE OF THE COUNCIL TO CREATE A MARGIN OF APPRAISAL BETWEEN THESE FIGURES, THAT EXPRESSION DOES NOT HAVE THE WIDE SCOPE WHICH THE DEFENDANT ATTRIBUTES TO IT, WHICH WOULD NULLIFY THE OBLIGATORY EFFECT FOUND ABOVE . IT FOLLOWS THAT IN FIXING THE INCREASES PROVIDED FOR IN ARTICLES 1 TO 4 OF THE CONTESTED REGULATION BELOW THE LEVEL ESTABLISHED BY THE LOWER INDEX CALCULATED IN CONFORMITY WITH THE DECISION OF 21 MARCH 1972, VIZ . 3.6 PER CENT, THE COUNCIL HAS VIOLATED THE RULE RELATING TO THE PROTECTION OF LEGITIMATE CONFIDENCE IN THE IMPLEMENTATION OF ARTICLE 65 OF THE STAFF REGULATIONS .
14 THESE ARTICLES 1 TO 4 MUST THEREFORE BE DECLARED VOID .
15 HOWEVER, TO AVOID DISCONTINUITY IN THE SYSTEM OF REMUNERATION, THE SECOND PARAGRAPH OF ARTICLE 174 OF THE TREATY SHOULD BE APPLIED SO THAT THE ARTICLES DECLARED VOID SHALL CONTINUE TO HAVE EFFECT UNTIL THE COUNCIL PASSES A NEW REGULATION IN CONSEQUENCE OF THE PRESENT JUDGMENT .