JUDGMENT OF THE CIVIL SERVICE TRIBUNAL

(First Chamber)

4 December 2008

Case F-6/08

**Jessica Blais**

**v**

**European Central Bank (ECB)**

(Civil service – ECB staff – Remuneration – Expatriation allowance – Conditions set out in Article 17 of the ECB conditions of employment – Applicant ordered to pay the costs – Requirements of fairness – Article 87(2) of the Rules of Procedure)

**Application:**brought under Article 36.2 of the Protocol on the Statute of the European System of Central Banks and of the European Central
Bank, annexed to the EC Treaty, in which Ms Blais seeks annulment of the decision of the European Central Bank of 15 August
2007, confirmed by the decision of its President of 8 November 2007, refusing to grant her the expatriation allowance.

**Held:**The action is dismissed. The applicant is to pay, in addition to her own costs, half the costs of the European Central Bank.
The European Central Bank is to pay half of its own costs.

**Summary**

1.      *Officials – Staff of the European Central Bank – Remuneration – Expatriation allowance – Conditions for granting – Officials
who are nationals of the Member State of their place of employment*

*(Staff Regulations, Annex VII, Art. 4(1); Conditions of Employment for Staff of the European Central Bank, Art. 17, first
para.)*

2.      *Officials – Staff of the European Central Bank – Remuneration – Expatriation allowance – Conditions for granting – Officials
who are nationals of the Member State of their place of employment*

*(Staff Regulations, Annex VII, Art. 4(1); Conditions of Employment for Staff of the European Central Bank, Art. 17)*

3.      *Officials – Staff of the European Central Bank – Remuneration – Expatriation allowance – Conditions for granting – Officials
with dual nationality who are nationals of the Member State of their place of employment*

*(Conditions of Employment for Staff of the European Central Bank, Art. 17)*

4.      *Procedure – Costs – Responsibility – Taking into account of requirements of fairness*

*(Rules of Procedure of the Civil Service Tribunal, Art. 87(2))*

1.      In line with Article 4(1) of Annex VII to the Staff Regulations, Article 17 of the Conditions of Employment for Staff of the
European Central Bank makes the granting of an expatriation allowance conditional on a negative habitual residence requirement,
namely a staff member’s not having habitually resided within the State where he is employed during a given period prior to
taking up his duties. That period is defined differently depending on whether or not the staff member concerned is, or has
been, a national of the State in whose territory his place of employment is located. Under Article 17(i) of the Conditions
of Employment, members of staff who are not and never have been nationals of the State in whose territory their place of employment
is situated are entitled to the expatriation allowance unless they have habitually resided or carried out their main occupation
in the territory of that State for the entire five-year period ending six months before they entered the service of the ECB.
However, under Article 17(ii) of the Conditions of Employment, members of staff who are or have been nationals of the State
in whose territory their place of employment is situated are entitled to the expatriation allowance only if they have habitually
resided outside the territory of that State for the entire 10-year period ending at the date of their entering the service
of the ECB.

The fundamental purpose of the expatriation allowance laid down in the provisions of Article 4(1) of Annex VII to the Staff
Regulations is to compensate for the extra expense and the inconvenience of taking up permanent employment in a country with
which the official has established no lasting ties, or no longer has lasting ties, before his entry into service. The same
also applies, by analogy, to members of the staff of the European Central Bank. That is why any interpretation of Article
17 of the Conditions of Employment which would exclude staff members in that position from the benefit of the expatriation
allowance would disregard the purpose of the expatriation allowance. That would be the case if the entry into service referred
to in Article 17(ii) of the Conditions of Employment were interpreted as only being able to refer to entry into service as
a member of staff. Since that provision requires the person concerned to have established his habitual residence outside his
country of employment for the entire reference period, it would be sufficient for a member of staff covered by Article 17(ii),
that is to say, who is or has been a national of the country of employment, to have had a fixed-term contract of less than
one year prior to his recruitment for that member of staff, having been obliged to transfer his habitual residence to the
country of his place of employment before entering into service, to be automatically deprived of the possibility of obtaining
the expatriation allowance even if he had not habitually resided in the country of employment for the 10 years preceding his
recruitment as a short-term member of the contract staff.

Consequently, the entry into service referred to in the provisions of Article 17(ii) of the Conditions of Employment must
be interpreted as the first entry into service at the European Central Bank regardless of the employment contract concluded
by the person concerned with the ECB.

(see paras 54, 55, 72, 75)

See:

330/85 *Richter* v *Commission* [1986] ECR 3439, para. 6

T-4/92 *Vardakas* v *Commission* [1993] ECR II‐357, para. 39; T‐72/94 *Diamantaras* v *Commission* [1995] ECR-SC I‐A‐285 and II‐865, para. 48

2.      In determining whether a person is entitled to the expatriation allowance, the place of habitual residence referred to in
Article 17 of the Conditions of Employment for Staff of the European Central Bank, by analogy with Article 4(1) of Annex VII
to the Staff Regulations, corresponds to the place in which the person concerned has established, with the intention that
it should be of a lasting character, the permanent or habitual centre of his interests. The requirement that a person must
not be or have been habitually resident in his country of employment must be assessed taking account of all the relevant facts
in the case. The concept of expatriation depends on the individual situation of the person concerned, and in particular whether,
although a national of the Member State of his place of employment, he has actually broken off his social and occupational
ties with that country by completely transferring his habitual residence outside the territory of that State in the long term.

Actual residence, occupation and personal ties are the main criteria for determining the place of residence.

It may not be inferred from the mere fact that a person is resident in a country in order to complete university studies and
undergo professional training that he intends to move the permanent centre of his interests to that country. On the other
hand, the fact that a person has moved to a country to join his partner, that he is renting accommodation in which to live
with that partner and that he is carrying on an occupation under a fixed-term employment contract permits the inference that
he has transferred the habitual centre of his interests to that country.

(see paras 87, 88, 90-91)

See:

*Richter* v *Commission*, para. 6

T-90/92 *Magdalena Fernández* v *Commission* [1993] ECR II‐971, paras 27 to 30; T-299/02 *Dedeu i Fontcuberta* v *Commission* [2005] ECR-SC I‐A‐303 and II‐1377, para. 77; T-259/04 *Koistinen* v *Commission* [2006] ECR-SC I‐A‐2‐177 and II‐A‐2‐879; T-473/04 *Asturias Cuerno* v *Commission* [2007] ECR-SC I‐A‐2‐0000 and II‐A‐2‐0000, para. 74

F-120/05 *Kyriazis* v *Commission* [2007] ECR-SC I‐A‐1‐0000 and II‐A‐1‐0000, para. 50

3.      Given that the purpose of the expatriation allowance is to compensate for the extra expense and inconvenience of taking up
permanent employment in a country with which the official has established no lasting ties before his entry into service, the
difference in treatment provided for in Article 17 of the Conditions of Employment for Staff of the European Central Bank,
which disadvantages staff members who are nationals of their country of employment, may only be justified on the basis of
the presumption that a person’s nationality is strong evidence that he has many close ties with the country of which he is
a national. Within the scope of its discretion in this field, the Executive Board of the European Central Bank is entitled
to infer from the above that staff members who are nationals of their country of employment, even those who have been obliged
to change residence as a result of their entry into service, do not incur the extra expense and inconvenience for which the
expatriation allowance is intended to compensate, or at the very least not at the same level of intensity as staff members
who are not nationals of that country, and must therefore, as a general rule, not receive that allowance. It is also entitled
to make any exceptions to that non-payment rule subject to strict conditions, in particular that the person must not have
had any habitual residence in the country of employment for a 10-year period prior to entering into service.

It is for the Executive Board, in exercising the wide discretion it enjoys in this field, to determine the conditions in which
nationals of their country of employment may be regarded as expatriates in that country. The criterion set out in Article
17 of the Conditions of Employment, that the staff member must not have resided in his country of employment for a 10-year
period prior to entering into service, does not appear to be inappropriate or unreasonable. The same criterion was applied
by the Community legislature in Article 4 of Annex VII to the Staff Regulations for the grant of the expatriation allowance
to Community officials.

Moreover, the European Central Bank is entitled, also in view of its wide discretion, to subject persons with dual nationality
to the common rules in order to reserve the benefit of the expatriation allowance, payable pursuant to Article 17(ii) of the
Conditions of Employment, to those who have actually been expatriated to the State to which they are posted. Thus Article 3.7.4
of the Bank’s Staff Rules may, for the application of Article 17(ii) of the Conditions of Employment, lawfully place a staff
member with two nationalities, including that of the State in whose territory his place of employment is situated, on the
same footing as a staff member who is a national only of that State.

(see paras 102, 106-107)

See:

F-7/06 *B* v *Commission* [2007] ECR-SC I‐A‐1‐0000 and II‐A‐1‐0000, para. 39 and the case-law cited therein

4.      Under Article 87(2) of the Rules of Procedure of the Civil Service Tribunal, if equity so requires, the Tribunal may decide
that an unsuccessful party is to pay only part of the costs or even that he is not to be ordered to pay any.

Factors which might justify the application of that provision are the conduct of the institution, the amount of money involved
in the dispute, the solid nature of the applicant’s arguments, and the amount of costs he incurred in the light of his resources
and professional situation.

(see paras 111-116)