## j2006-4 ## Source details **Canonical URL:** [j2006-4](https://www.imf.org/-/media/files/imfat/j2006-4.pdf) ## Other formats - [Markdown version](/-/media/files/imfat/j2006-4.pdf.md) - [Structured JSON version](/-/media/files/imfat/j2006-4.pdf.json) --- ### Overview of the proceeding - On June 7, 2006, the Administrative Tribunal of the International Monetary Fund, composed of Judge Stephen M. Schwebel, President, and Judges Nisuke Ando and Michel Gentot, Associate Judges, met to adjudge a Motion for Dismissal of the Applications as Moot in the case brought against the International Monetary Fund by seven of its staff members. - Applicants, in identical Applications, contest as arbitrary and an abuse of discretion the IMF Executive Board’s January 24, 2005 decision expanding the range of discretion that it may exercise in setting the annual compensation of the staff of the Fund. - On December 6, 2005, the Administrative Tribunal denied a Motion by the Fund for Summary Dismissal of the Applications in Baker et al., Applicants v. International Monetary Fund, Respondent (Admissibility of the Applications), IMFAT Judgment No. 2005-3 (December 6, 2005), concluding that the Applications were not “clearly inadmissible” under Rule XII and rejecting the Fund’s contention that Applicants had failed to meet the threshold requirement of Article II, Section 1(a) of the Tribunal’s Statute that a staff member may only challenge the legality of an administrative act “adversely affecting” him. - On April 14, 2006, the IMF Executive Board took another decision in respect of the compensation of the staff of the Fund that differs from the decision of January 24, 2005. On April 17, 2006, Respondent filed the pending Motion for Dismissal of the Applications as Moot. - Upon filing of the Motion for Dismissal as Moot, the pleadings on the merits were suspended; the case before the Tribunal is limited to the question of the mootness of the pending Applications. ### Procedural history and filings - Applicants filed their Applications with the Administrative Tribunal on April 25, 2005. - The Fund’s Answer on the merits was filed on January 23, 2006. - Applicants’ Reply was filed on March 21, 2006 and, following supplementation in accordance with Rule IX, para. 5, was transmitted to Respondent on March 31, 2006. - On April 17, 2006, Respondent filed a Motion for Dismissal of the Applications as Moot; the Motion was supplemented on April 18, 2006 and transmitted to Applicants on April 19, 2006. - Applicants responded on May 25, 2006 with an Objection to the Motion, which was transmitted to the Fund. - In accordance with Rule XII, para. 2, upon the filing of the Motion for Dismissal of the Applications as Moot, the exchange of pleadings on the merits was suspended; the instant consideration is confined to the question of alleged mootness. ### Background and prior compensation system changes - The Fund and the World Bank adopted a revised compensation system for their staffs in 1989. - During 1998-2000, the Fund’s compensation system was extensively reviewed to further staffing objectives and ensure Fund salaries remained appropriately related to markets in which it competes for staff. - The Executive Board annually decides on the adjustment needed to align the Fund’s salary structure with comparator markets. - In January 2005, the Executive Board decided to modify the compensation system again; that January 24, 2005 modification is the subject of the Applications. ### Notification and subsequent adjustments - The Executive Board’s January 24, 2005 decision was announced to staff by email, which explained that: - the amendments expanded the circumstances in which management and the Executive Board can exercise discretion in setting the annual salary increase; - judgment on the size of the structural increase could be exercised when the payline for the Fund falls within the 10-20 percent testing range for international competitiveness as well as when it falls outside the testing range; - the extent of such discretion within the testing range is constrained and must continue to be based on evaluation of factors bearing on international competitiveness; and - no consideration had yet been given to whether or how such discretion would be exercised in determining the salary increase for that year. - Following the January 24, 2005 decision, the Managing Director announced that two errors had been discovered in the comparator data utilized in the 2004 compensation review. The correction placed the 2004 U.S.-indicated increase within the testing range. - On March 30, 2005, the Executive Board approved a supplementary increase in the Fund’s salary structure of two percentage points, with effect from May 1, 2004. - That retroactive adjustment placed the Fund’s 2004 salary structure two percentage points higher relative to the U.S. comparator, increasing the base for the 2005 market comparison and lowering the amount of increase indicated by the U.S. market for 2005. Accordingly, the structural increase called for by the amended compensation system, as approved in the 2005 compensation round, did not differ from the increase that would have been called for under the prior system. ### Text of the contested January 24, 2005 decision (Adopted January 24, 2005; EBAP/05/9, Sup. 1, 1/21/05) - Paragraph 1: an evaluation of international competitiveness shall be conducted in all cases where the structural salary increase indicated by the U.S. comparator market would position the Fund’s payline 10 percent to 20 percent above the payline indicated by the combined French/German comparator market. - Paragraph 2: the purpose of that evaluation is to allow determination of whether any adjustment to the structural salary increase indicated by the U.S. comparator market is warranted and the nature and extent of such adjustment; factors include the level of the indicated Fund payline within the 10-20 percent margin above the French/German payline, recent recruitment and retention experience, and exchange rate and tax developments. - Paragraph 3: if a downward adjustment is applied that would position the Fund’s payline at less than 20 percent above the combined French/German payline, the resulting Fund payline cannot be less than the higher of (a) a level equal to 10 percent above the combined French/German payline, and (b) a level resulting from a percentage structural salary increase at least equal to the percentage increase in the Washington metropolitan area CPI for the 12-month period ending the preceding January. ### April 14, 2006 Executive Board decision and its scope (EBAP/06/38, March 31, 2006; adopted April 14, 2006) - The April 14, 2006 decision expressly “... supersedes all previous decisions concerning the staff compensation system.” - That decision adopts paragraphs 4 - 52 of EBAP/06/38 (March 31, 2006). The introductory paragraphs state: - Paragraph 4: the revised compensation system sets a three-year review cycle for annual compensation reviews: - (i) in the first year of each cycle, comparator-based reviews will take into account full comparisons of compensation levels in the designated comparator markets for Grades A9-B2 and A1-A8 and other relevant considerations, including, in the case of Grades A9-B2, the assessment of international competitiveness; and - (ii) in the intervening years, the structural adjustments will be based on an index of private and public sector salary increases in the United States. Taking into account each year’s approved adjustment to the salary structure, resources will be allocated annually for individual, performance-related merit increases. - Paragraph 5: similar features to the existing system will be present but require modification because they will operate within a different overall framework, including new level comparisons between each Fund grade and the corresponding compensation rate in comparator markets and the possibility of grade-by-grade adjustments; and the evaluation of international competitiveness will take place in the context of a broader comparator market review. - Paragraph 6: it is intended that the provisions would become effective upon approval by the Executive Board and would govern the 2006 and subsequent annual compensation reviews. - The Tribunal must determine whether the April 14, 2006 decision leaves the controversy justiciable by effectively re-enacting the element of the January 24, 2005 decision that Applicants say “adversely affected” them. ### Respondent’s contentions on mootness - The Applications have been rendered moot by the adoption of a comprehensive new compensation system by the Executive Board’s April 14, 2006 decision, which expressly “... supersedes all previous decisions concerning the staff compensation system.” - Applicants’ pleadings on the merits demonstrate that the gravamen of their challenge relates to the specific context in which the January 24, 2005 decision was taken. - The only relief sought by Applicants, rescission of the January 24, 2005 decision, had been realized before that decision had had a tangible effect on the compensation of Applicants. No other form of remedy would be appropriate, and adjudication would have no legal value. - The April 14, 2006 decision fundamentally revises the compensation system and does not re-enact the same decision without change in substance. - Although the new compensation system contains elements of discretion regarding downward adjustments similar to those introduced in January 2005, these elements will operate in a different context and have been modified. - The presence of a similar but not identical feature allowing discretion should not be construed as essentially re-enacting the challenged decision. ### Applicants’ contentions on mootness - Although the April 14, 2006 decision states it “... supersedes all previous decisions concerning the staff compensation system,” the Executive Board continues to reserve to itself the element of discretion that Applicants have challenged. - Applicants challenge the Executive Board’s exercise of discretion with regard to amendments that would render a rules-based system into an “ad hoc” system; therefore, rescission of January 24, 2005 is not the only matter to be decided or the sole relief to be granted. - A Tribunal determination that the January 24, 2005 decision was invalid would have legal value by setting limits on the Executive Board’s discretion and preventing exercise of discretion inconsistent with a rules-based compensation system. - The discretion regarding downward adjustments is preserved in the new system and thus a re-occurrence of the Executive Board’s action could reasonably be expected. - The new system contains the very element of discretion that existed in the old system, the exercise of which could cause the same harm feared by Applicants—the erosion of their salaries to a level that is undercompetitive. - The Applications meet the three-prong test for review on the basis that the matter is “capable of repetition yet evading review”: - a. there is a reasonable expectation that the same Applicants could be subjected to the same action again; - b. if the issue were to arise again it is likely to evade review because of the time it would take to obtain a decision from the Tribunal; and - c. there is a reasonable expectation that the Executive Board could exercise discretion in a similar manner in the future. ### Tribunal’s preliminary determination on the Motion’s propriety - Applicants contended Respondent’s interpretation of Rule XII to permit a Motion to Dismiss at this juncture is dilatory and not in good faith. - Rule XII was adopted pursuant to Article X, Section 2(d) of the Tribunal’s Statute, which provides that the Rules of Procedure shall include a provision concerning “summary dismissal of applications without disposition on the merits.” Rule I, para. 2 states the Rules are subject to the Tribunal’s Statute. - The Tribunal finds Respondent’s Motion is not baseless given that the April 14, 2006 decision by its terms “... supersedes all previous decisions concerning the staff compensation system.” The Tribunal does not consider the Motion to fail to demonstrate good faith or to be otherwise inappropriate. - The express supersession is not dispositive, because Applicants raise a substantial objection that the Applications may nonetheless retain justiciability; that objection must be considered. ### Central mootness issue and resolution approach - The principal issue for the Tribunal at this stage is whether the Executive Board’s April 14, 2006 decision renders moot the pending Applications. - Resolution requires determining whether the April 14, 2006 decision essentially re-enacts the element of the contested January 24, 2005 decision by which Applicants contend they were “adversely affected.” ### Tribunal findings on effect, supersession, and suitable remedy - The Tribunal accepts that both the January 2005 and April 2006 decisions contain and sustain provisions affording the Fund a wider discretion in respect of salary adjustments. - The Tribunal finds the January 24, 2005 decision has been superseded by the comprehensive new compensation system approved by the Executive Board on April 14, 2006. - Consequence of supersession: - The holding that the January 2005 decision could have effects in 2006 “no longer obtains.” - The contested decision no longer has any “present effect.” See Baker, para. 21. - The primary relief sought by Applicants—rescission of the January 2005 decision—has “essentially already occurred.” - The Tribunal cannot quash a decision that has already been rescinded. - The particular circumstances in which the January 2005 decision was taken “no longer obtain,” and there is “no point in addressing the question of whether the Executive Board had the authority to amend the rules at the time that it did and in the terms that it did” when the Board later revised the governing rules. - On residual discretionary elements: - The April 2006 scheme retains elements of discretion regarding downward adjustments. - Applicants and other staff members “retain their right to bring fresh Applications challenging that scheme.” - Practical and procedural considerations: - If the Motion to Dismiss were denied, only the Respondent’s Rejoinder would remain to be filed on the merits, leaving the Tribunal to adjudicate elements of a superseded compensation scheme without submissions addressing the April 14, 2006 system actually in force. - The Tribunal prefers to consider the 2006 system actually in force and is prepared to do so “as expeditiously as its Rules permit.” - The Tribunal rejects Applicants’ contention that granting the Motion would allow the Fund to evade review of the April 2006 scheme, noting the Board’s adoption of different systems is infrequent and Applicants or others retain the right to bring a case concerning the April 2006 decision. ### Costs and remedial disposition - Article XIV, Section 4 of the Statute provides that if the Tribunal concludes an application is well-founded in whole or in part, it may order reasonable costs be borne by the Fund; however, that provision “does not contemplate an award of costs in the absence of a decision on the merits of an Application.” - The Tribunal awarded costs to Applicants insofar as they relate to the earlier phase of the proceedings: Applicants prevailed with respect to denial of the Fund’s earlier Motion for Summary Dismissal (Baker et al. v. International Monetary Fund, IMFAT Judgment No. 2005-3 (December 6, 2005)). - Costs awarded: fee sum of $4,200 for fees incurred in preparing Applicants’ Objection to the earlier Motion. ### Formal decision (UNANIMOUS) and signatories - The Administrative Tribunal of the International Monetary Fund unanimously decides: 1. The Motion for Dismissal of the Applications as Moot is granted. 2. The Fund shall pay Applicants the reasonable costs of their legal representation incurred in the preparation of their successful Objection to the Fund’s earlier Motion for Summary Dismissal in the sum of $4,200. - Signatories and date: - Stephen M. Schwebel, President - Nisuke Ando, Associate Judge - Michel Gentot, Associate Judge - Celia Goldman, Registrar - Washington, D.C. June 7, 2006 *Administrative Tribunal of the International Monetary Fund — Judgment and decision text as reproduced in the supplied content.* ### Introduction ### Introduction ### Overview of the proceeding - On June 7, 2006, the Administrative Tribunal of the International Monetary Fund, composed of Judge Stephen M. Schwebel, President, and Judges Nisuke Ando and Michel Gentot, Associate Judges, met to adjudge a Motion for Dismissal of the Applications as Moot in the case brought against the International Monetary Fund by seven of its staff members. - Applicants, in identical Applications, contest as arbitrary and an abuse of discretion the IMF Executive Board’s January 24, 2005 decision expanding the range of discretion that it may exercise in setting the annual compensation of the staff of the Fund. - On December 6, 2005, the Administrative Tribunal denied a Motion by the Fund for Summary Dismissal of the Applications, in Baker et al., Applicants v. International Monetary Fund, Respondent (Admissibility of the Applications), IMFAT Judgment No. 2005-3 (December 6, 2005), concluding that the Applications were not “clearly inadmissible” under Rule XII and rejecting the Fund’s contention that Applicants had failed to meet the threshold requirement of Article II, Section 1(a) of the Tribunal’s Statute that a staff member may only challenge the legality of an administrative act “adversely affecting” him. - On April 14, 2006, the IMF Executive Board took another decision in respect of the compensation of the staff of the Fund that differs from the decision of January 24, 2005. On April 17, 2006, Respondent filed the pending Motion for Dismissal of the Applications as Moot. - Upon filing of the Motion for Dismissal as Moot, the pleadings on the merits were suspended; the case before the Tribunal is limited to the question of the mootness of the pending Applications. ### Procedure ### Procedural history and filings - Applicants filed their Applications with the Administrative Tribunal on April 25, 2005. - Following issuance of the Baker Judgment, the Fund’s Answer on the merits was filed on January 23, 2006. - Applicants’ Reply was filed on March 21, 2006 and, following supplementation in accordance with Rule IX, para. 5, was transmitted to Respondent on March 31, 2006. - On April 17, 2006, Respondent filed a Motion for Dismissal of the Applications as Moot; the Motion was supplemented on April 18, 2006 and transmitted to Applicants on April 19, 2006. - Applicants responded on May 25, 2006 with an Objection to the Motion, which was transmitted to the Fund. - In accordance with Rule XII, para. 2, upon the filing of the Motion for Dismissal of the Applications as Moot, the exchange of pleadings on the merits was suspended; the instant consideration is confined to the question of alleged mootness. ### Factual Background of the Case ### Background and prior compensation system changes - The Fund and the World Bank adopted a revised compensation system for their staffs in 1989. During 1998-2000, the Fund’s compensation system was extensively reviewed to further staffing objectives and ensure Fund salaries remained appropriately related to markets in which it competes for staff. - The Executive Board annually decides on the adjustment needed to align the Fund’s salary structure with comparator markets. In January 2005, the Executive Board decided to modify the compensation system again; that January 24, 2005 modification is the subject of the Applications. ### Notification and subsequent adjustments - The Executive Board’s January 24, 2005 decision was announced to staff by email, which explained that: the amendments expanded the circumstances in which management and the Executive Board can exercise discretion in setting the annual salary increase; judgment on the size of the structural increase could be exercised when the payline for the Fund falls within the 10-20 percent testing range for international competitiveness as well as when it falls outside the testing range; the extent of such discretion within the testing range is constrained and must continue to be based on evaluation of factors bearing on international competitiveness; and no consideration had yet been given to whether or how such discretion would be exercised in determining the salary increase for that year. - Following the January 24, 2005 decision, the Managing Director announced that two errors had been discovered in the comparator data utilized in the 2004 compensation review. The correction placed the 2004 U.S.-indicated increase within the testing range. - On March 30, 2005, the Executive Board approved a supplementary increase in the Fund’s salary structure of two percentage points, with effect from May 1, 2004. - That retroactive adjustment placed the Fund’s 2004 salary structure two percentage points higher relative to the U.S. comparator, increasing the base for the 2005 market comparison and lowering the amount of increase indicated by the U.S. market for 2005. Accordingly, the structural increase called for by the amended compensation system, as approved in the 2005 compensation round, did not differ from the increase that would have been called for under the prior system. ### Text of the contested January 24, 2005 decision - The January 24, 2005 decision (Adopted January 24, 2005; EBAP/05/9, Sup. 1, 1/21/05) included: - Paragraph 1: an evaluation of international competitiveness shall be conducted in all cases where the structural salary increase indicated by the U.S. comparator market would position the Fund’s payline 10 percent to 20 percent above the payline indicated by the combined French/German comparator market. - Paragraph 2: the purpose of that evaluation is to allow determination of whether any adjustment to the structural salary increase indicated by the U.S. comparator market is warranted and the nature and extent of such adjustment; factors include the level of the indicated Fund payline within the 10-20 percent margin above the French/German payline, recent recruitment and retention experience, and exchange rate and tax developments. - Paragraph 3: if a downward adjustment is applied that would position the Fund’s payline at less than 20 percent above the combined French/German payline, the resulting Fund payline cannot be less than the higher of (a) a level equal to 10 percent above the combined French/German payline, and (b) a level resulting from a percentage structural salary increase at least equal to the percentage increase in the Washington metropolitan area CPI for the 12-month period ending the preceding January. ### April 14, 2006 Executive Board decision - On April 14, 2006, the IMF Executive Board adopted another decision in respect of staff compensation which expressly “... supersedes all previous decisions concerning the staff compensation system.” - That decision adopts paragraphs 4 - 52 of EBAP/06/38 (March 31, 2006). The introductory paragraphs state: - Paragraph 4: the revised compensation system sets a three-year review cycle for annual compensation reviews: (i) in the first year of each cycle, comparator-based reviews will take into account full comparisons of compensation levels in the designated comparator markets for Grades A9-B2 and A1-A8 and other relevant considerations, including, in the case of Grades A9-B2, the assessment of international competitiveness; and (ii) in the intervening years, the structural adjustments will be based on an index of private and public sector salary increases in the United States. Taking into account each year’s approved adjustment to the salary structure, resources will be allocated annually for individual, performance-related merit increases. - Paragraph 5: similar features to the existing system will be present but require modification because they will operate within a different overall framework, including new level comparisons between each Fund grade and the corresponding compensation rate in comparator markets and the possibility of grade-by-grade adjustments; and the evaluation of international competitiveness will take place in the context of a broader comparator market review. - Paragraph 6: it is intended that the provisions would become effective upon approval by the Executive Board and would govern the 2006 and subsequent annual compensation reviews. - The Tribunal must determine whether the April 14, 2006 decision leaves the controversy justiciable by effectively re-enacting the element of the January 24, 2005 decision that Applicants say “adversely affected” them. ### Summary of Parties’ Principal Contentions ### Respondent’s contentions on mootness - The Applications have been rendered moot by the adoption of a comprehensive new compensation system by the Executive Board’s April 14, 2006 decision, which expressly “... supersedes all previous decisions concerning the staff compensation system.” - Applicants’ pleadings on the merits demonstrate that the gravamen of their challenge relates to the specific context in which the January 24, 2005 decision was taken. - The only relief sought by Applicants, rescission of the January 24, 2005 decision, had been realized before that decision had had a tangible effect on the compensation of Applicants. No other form of remedy would be appropriate, and adjudication would have no legal value. - The April 14, 2006 decision fundamentally revises the compensation system and does not re-enact the same decision without change in substance. - Although the new compensation system contains elements of discretion regarding downward adjustments similar to those introduced in January 2005, these elements will operate in a different context and have been modified. - The presence of a similar but not identical feature allowing discretion should not be construed as essentially re-enacting the challenged decision. ### Applicants’ contentions on mootness - Although the April 14, 2006 decision states it “... supersedes all previous decisions concerning the staff compensation system,” the Executive Board continues to reserve to itself the element of discretion that Applicants have challenged. - Applicants challenge the Executive Board’s exercise of discretion with regard to amendments that would render a rules-based system into an “ad hoc” system; therefore, rescission of January 24, 2005 is not the only matter to be decided or the sole relief to be granted. - A Tribunal determination that the January 24, 2005 decision was invalid would have legal value by setting limits on the Executive Board’s discretion and preventing exercise of discretion inconsistent with a rules-based compensation system. - The discretion regarding downward adjustments is preserved in the new system and thus a re-occurrence of the Executive Board’s action could reasonably be expected. - The new system contains the very element of discretion that existed in the old system, the exercise of which could cause the same harm feared by Applicants—the erosion of their salaries to a level that is undercompetitive. - The Applications meet the three-prong test for review on the basis that the matter is “capable of repetition yet evading review”: - a. there is a reasonable expectation that the same Applicants could be subjected to the same action again; - b. if the issue were to arise again it is likely to evade review because of the time it would take to obtain a decision from the Tribunal; and - c. there is a reasonable expectation that the Executive Board could exercise discretion in a similar manner in the future. ### Consideration of the Issues ### Preliminary issue on propriety of the Motion - Applicants contend Respondent’s interpretation of Rule XII to permit a Motion to Dismiss at this juncture is dilatory and not in good faith. - Rule XII was adopted pursuant to Article X, Section 2(d) of the Tribunal’s Statute, which provides that the Rules of Procedure shall include a provision concerning “summary dismissal of applications without disposition on the merits.” Rule I, para. 2 states the Rules are subject to the Tribunal’s Statute. - The Tribunal finds Respondent’s Motion is not baseless given that the April 14, 2006 decision by its terms “... supersedes all previous decisions concerning the staff compensation system.” The Tribunal does not consider the Motion to fail to demonstrate good faith or to be otherwise inappropriate. - The express supersession is not dispositive, because Applicants raise a substantial objection that the Applications may nonetheless retain justiciability; that objection must be considered. ### Central mootness issue - The principal issue for the Tribunal at this stage is whether the Executive Board’s April 14, 2006 decision renders moot the pending Applications. - Resolution requires determining whether the April 14, 2006 decision essentially re-enacts the element of the contested January 24, 2005 decision by which Applicants contend they were “adversely affected.” *Administrative Tribunal of the International Monetary Fund — Introduction to the proceedings concerning Baker et al. v. International Monetary Fund (Applications filed April 25, 2005; motions and judgments referenced dated January 23, 2006; March 21, 2006; March 31, 2006; December 6, 2005; January 24, 2005; March 30, 2005; April 14, 2006; April 17, 2006).* ### 18. In the earlier Baker ### j2006-4 - 18. In the earlier Baker ### Background and threshold for admissibility - The Administrative Tribunal in the earlier Baker Judgment concluded Applicants were “adversely affected” for purposes of maintaining their Applications pursuant to Article II, Section 1(a of the Statute on the ground that the contested decision had “some present effect” on the Applicants’ position (although for the reasons elaborated above it had no financial impact in the 2005 compensation round) and that “[t]hat effect is inherent in the wider discretion that the Executive Board has assumed in respect of salary adjustments which, in the absence of further action by the Executive Board, will be applied in 2006.” (Para. 21.) - The Tribunal relied on Rule XII of the Rules of Procedure: an application may be summarily dismissed only “if it is clearly inadmissible.” - The Tribunal cited ILOAT precedent (Ayoub (No. 2), ILOAT Judgment No. 986 (1989); Aelvoet (No. 6), ILOAT Judgment No. 1712 (1998)) to support the principle that an international civil servant need not await realization of an adverse decision if a reasonable presumption exists that the decision will bring injury: “The decision must have some present effect on the complainant’s position.” ### Respondent’s and Applicants’ opposing positions on the effect of the new compensation system - Respondent’s position: - Acknowledges the new compensation system contains elements of discretion regarding downward adjustments “similar to” those introduced in January 2005. - Argues those elements “will operate in a different context and, as a result, have been modified.” - Asserts that “the fact that the new system includes a similar—but not identical – feature allowing the exercise of discretion should not be misconstrued as essentially reenacting the challenged decision.” (Respondent’s Motion, pp. 6-7.) - Applicants’ position: - Argue their challenge to the January 24, 2005 decision goes directly to the Executive Board’s exercise of discretion with regard to amendment to the “rules-based” compensation system. - Maintain that “A determination by the Tribunal that the January 2005 decision was invalid would have legal value as it would set the limits of the Board’s discretion in again arbitrarily amending the compensation system and prevent the Board from exercising discretion in a manner that is inconsistent with a rules based compensation system.” (Applicants’ Objection, p. 4.) ### Tribunal’s findings on effect, supersession, and appropriate remedy - The Tribunal accepts that both the January 2005 and April 2006 decisions contain and sustain provisions affording the Fund a wider discretion in respect of salary adjustments. - The Tribunal finds the January 24, 2005 decision has been superseded by the comprehensive new compensation system approved by the Executive Board on April 14, 2006. - Consequence of supersession: - The holding that the January 2005 decision could have effects in 2006 “no longer obtains.” - The contested decision no longer has any “present effect.” See Baker, para. 21. - The primary relief sought by Applicants—rescission of the January 2005 decision—has “essentially already occurred.” - The Tribunal cannot quash a decision that has already been rescinded. - The particular circumstances in which the January 2005 decision was taken “no longer obtain,” and there is “no point in addressing the question of whether the Executive Board had the authority to amend the rules at the time that it did and in the terms that it did” when the Board later revised the governing rules. - On residual discretionary elements: - The April 2006 scheme retains elements of discretion regarding downward adjustments. - Applicants and other staff members “retain their right to bring fresh Applications challenging that scheme.” - Practical and procedural considerations: - If the Motion to Dismiss were denied, only the Respondent’s Rejoinder would remain to be filed on the merits, leaving the Tribunal to adjudicate elements of a superseded compensation scheme without submissions addressing the April 14, 2006 system actually in force. - The Tribunal prefers to consider the 2006 system actually in force and is prepared to do so “as expeditiously as its Rules permit.” - The Tribunal rejects Applicants’ contention that granting the Motion would allow the Fund to evade review of the April 2006 scheme, noting the Board’s adoption of different systems is infrequent and Applicants or others retain the right to bring a case concerning the April 2006 decision. ### Costs and remedial disposition - Article XIV, Section 4 of the Statute provides that if the Tribunal concludes an application is well-founded in whole or in part, it may order reasonable costs be borne by the Fund; however, that provision “does not contemplate an award of costs in the absence of a decision on the merits of an Application.” - The Tribunal nevertheless awarded costs to Applicants insofar as they relate to the earlier phase of the proceedings: Applicants prevailed with respect to denial of the Fund’s earlier Motion for Summary Dismissal (Baker et al. v. International Monetary Fund, IMFAT Judgment No. 2005-3 (December 6, 2005)). - Costs awarded: fee sum of $4,200 for fees incurred in preparing Applicants’ Objection to the earlier Motion. ### Formal decision (UNANIMOUS) - The Administrative Tribunal of the International Monetary Fund unanimously decides: 1. The Motion for Dismissal of the Applications as Moot is granted. 2. The Fund shall pay Applicants the reasonable costs of their legal representation incurred in the preparation of their successful Objection to the Fund’s earlier Motion for Summary Dismissal in the sum of $4,200. - Signatories and date: - Stephen M. Schwebel, President - Nisuke Ando, Associate Judge - Michel Gentot, Associate Judge - Celia Goldman, Registrar - Washington, D.C. June 7, 2006 --- _Source: https://www.imf.org/-/media/files/imfat/j2006-4.pdf_