1 BY APPLICATIONS LODGED AT THE COURT REGISTRY ON 14 JANUARY 1980 , MR BATTAGLIA AND MRS COCCO , OFFICIALS OF THE COMMISSION OF THE EUROPEAN COMMUNITIES EMPLOYED AT ISPRA ( ITALY ), BROUGHT ACTIONS PRIMARILY FOR THE ANNULMENT OF THE COMMISSION ' S DECISION ALTERING THE METHOD OF CALCULATING THE MONTHLY AMOUNTS PAYABLE BY THEM IN REIMBURSEMENT OF BUILDING LOANS THE SUBJECT OF AGREEMENTS BETWEEN THE APPLICANTS AND 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 AND 16 NOVEMBER 1972 , THE APPLICANTS ENTERED INTO AGREEMENTS WITH THE COMMISSION UNDER WHICH THEY RECEIVED FROM THE COMMISSION LOANS OF BFR 750 000 AND BFR 640 000 RESPECTIVELY INTENDED TO FINANCE THE CONSTRUCTION OF THEIR DWELLING HOUSES .
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 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 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 THAT DECISION WAS NOTIFIED TO THE APPLICANTS WHO DID NOT , HOWEVER , APPLY FOR A REDUCTION OF THEIR PRINCIPAL DEBT .
14 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 , 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 BATTAGLIA ' S SALARY STATEMENT FOR MARCH 1979 SHOWED A REPAYMENT OF BFR 4 281 , CONVERTED INTO LIT 53 512 . IN RESPECT OF APRIL , THE SAME AMOUNT IN BELGIAN FRANCS WAS CONVERTED INTO LIT 78 590 . DURING THE SAME PERIOD , MRS COCCO ' S MONTHLY REPAYMENT , NAMELY BFR 3 483 , AFTER CONVERSION INTO LIRE , CHANGED FROM LIT 43 537 TO LIT 63 943 .
15 MR BATTAGLIA LODGED A COMPLAINT PURSUANT TO ARTICLE 90 OF THE STAFF REGULATIONS AGAINST THE CONVERSION OF LIRE INTO BELGIAN FRANCS IN ACCORDANCE WITH THE NEW PROCEDURE . HIS COMPLAINT DREW NO RESPONSE . MRS COCCO FOR HER PART DID NOT LODGE A COMPLAINT .
16 THESE ACTIONS ARE BROUGHT PURSUANT TO ARTICLE 20 OF THE AGREEMENT BY VIRTUE OF WHICH THE PARTIES UNDERTAKE TO SUBMIT TO THE COURT ANY DISPUTE WHICH MIGHT ARISE BETWEEN THEM REGARDING THE VALIDITY , INTERPRETATION OR PERFORMANCE OF THE AGREEMENT .
17 THE APPLICANTS MAINTAIN THAT THE PARITY EMPLOYED FOR CONVERSION OF THE AMOUNT OF THE LOAN INTO ITALIAN LIRE AND FOR THE CONVERSION OF LIRE INTO BELGIAN FRANCS FOR THE MONTHLY REPAYMENTS SHOULD BE THAT NOTIFIED TO THE INTERNATIONAL MONETARY FUND AND USED FOR THE ADVANCE OF THE LOAN AND THAT THE COMMISSION WAS NOT ENTITLED UNILATERALLY TO ADOPT ANOTHER PARITY .
18 THE APPLICANTS SEEK TO CORROBORATE THEIR 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 , THESE TRANSACTIONS DO NOT FALL WITHIN THE HEADING OF PARTIAL TRANSFERS OF REMUNERATION . ' '
19 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 APPLICANTS ' VIEW IS THAT THE 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 .
20 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 .
21 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 .
22 THE APPLICANTS ' 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 .
23 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 .
24 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 .
25 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 APPLICANTS THAN MERE APPLICATION OF THE PARITY FOR THE LIRA WITHIN THE EUROPEAN MONETARY SYSTEM .
26 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 ). ' '
27 IT SHOULD IN ADDITION BE EMPHASIZED THAT THE APPLICANTS DO NOT IN ANY WAY MAINTAIN THAT THEY HAVE DEDUCED FROM THOSE LETTERS ANY CONSQUENCES WHICH MIGHT CHANGE THEIR SITUATION .
28 FINALLY IT SHOULD BE NOTED THAT THE COMMISSION STATED IN ITS DEFENCE THAT IT WAS PREPARED IN THE CASE OF THE APPLICANTS TO REDUCE THE DEBT IN QUESTION IN 1975 , WHICH WOULD HAVE RESULTED IN A REDUCTION AS FROM APRIL 1979 OF THE NOMINAL AMOUNT OF THE MONTHLY PAYMENT IN BELGIAN FRANCS PAYABLE BY THEM . IN VIEW OF THE PRINCIPLES UNDERLYING THAT STATEMENT , THE COURT ( FIRST CHAMBER ) TAKES NOTE OF THAT FACT .
29 IT APPEARS FROM ALL THE FOREGOING CONSIDERATIONS THAT THE VIEW PUT FORWARD BY THE APPLICANTS IN SUPPORT OF THEIR CLAIMS CANNOT BE UPHELD AND THAT ACCORDINGLY THE APPLICATIONS MUST BE DISMISSED .
30 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS .
31 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 . IN THIS CASE THAT PROVISION SHOULD BE APPLIED BY ANALOGY .