JUDGMENT OF THE CIVIL SERVICE TRIBUNAL

(First Chamber)

16 January 2007

Case F-126/05

Andrea Borbély

v

Commission of the European Communities

(Officials – Reimbursement of expenses – Installation allowance – Daily subsistence allowance – Travel expenses on taking up an appointment – Place of recruitment – Unlimited jurisdiction)

Application: brought under Articles 236 EC and 152 EA, in which Mrs Borbély seeks, first, annulment of the Commission’s decision refusing her the benefit of the daily subsistence allowance and the installation allowance, and reimbursement of the travel expenses incurred when she took up her appointment, and, secondly, an order directing the Commission to pay those allowances and reimburse the abovementioned travel expenses.

Held: The decision of the Commission of 2 March 2005 is annulled in so far as it refuses to grant the applicant the installation allowance provided for in Article 5(1) of Annex VII to the Staff Regulations and the daily subsistence allowance provided for in Article 10(1) of that Annex. The Commission is ordered to pay the applicant, in accordance with the rules of the Staff Regulations in force, those allowances plus default interest, from the dates on which they were payable respectively and up to the date of their payment, at the rate set by the European Central Bank for its main refinancing transactions, as applicable during the relevant period, increased by two points. The action as to the remainder is dismissed. Each party is ordered to bear its own costs.

Summary

1. Officials – Reimbursement of expenses – Installation allowance – Daily subsistence allowance

(Staff Regulations, Annex VII, Arts 5 and 10; Council Regulation No 723/2004)

2. Officials – Reimbursement of expenses – Travel expenses from the place of recruitment to the place of employment

(Staff Regulations, Annex VII, Arts 4, 5, 7(1)(a) and 10)

3. Officials – Actions – Subject-matter – Direction to the administration – Unlimited jurisdiction – Claim for payment

(Staff Regulations, Art. 91(1); Annex VII, Arts 5 and 10)

1. The removal by Regulation No 723/2004 amending the Staff Regulations of Officials of the European Communities and the Conditions of Employment of other servants of the European Communities of the first alternative condition of Article 5 of Annex VII to the Staff Regulations, which made the granting of the installation allowance subject to recognition of the right to the expatriation allowance, can at the most be interpreted as meaning that the legislature wished to restore equality as regards the conditions for the grant of the installation allowance between all those taking up an appointment at a Community institution after having lived or worked in the territory of the State in which that institution is situated. From now on, persons who worked for a State or international organisation prior to taking up an appointment in the Community civil service must, in the same way as other Communities officials, prove that they fulfil the single condition set out in the new version of Article 5 of Annex VII to the Staff Regulations, which is that they must have had to change their place of residence in order to satisfy the requirements of Article 20 of the Staff Regulations. However, that similar treatment of two categories of officials does not in any way imply that the legislature also wished to amend the actual content of the condition in question, which is formulated in precisely the same terms in both the former and the latter versions of Article 5 of Annex VII to the Staff Regulations. The term ‘residence’ must therefore always be understood to mean the centre of interests of the official or other servant.

Actual residence constitutes one factor which, among others, determines the centre of an official’s interests. Such an approach is borne out by the objective of Article 5 of Annex VII to the Staff Regulations, which the amendment of the conditions for the grant of the installation allowance has not changed and was not intended to change, which was to make up for the expenses associated with the situation of an established official who passes from a precarious status to a permanent status and must therefore enable himself to live in and become integrated into his place of employment in a permanent and lasting manner for an indeterminate but substantial period of time. Consequently, having a temporary residence, inter alia for professional purposes, at the place where the institution of employment is located does not necessarily conflict with the aim of the installation allowance, which reflects constraints to which persons whose centre of interests is in their place of posting are not normally subject.

The same is true concerning the objective of the daily subsistence allowance, which is intended to make up for the expense and inconvenience occasioned by the precarious situation of a probationary official, particularly where he must retain his previous residence at the same time. This applies a fortiori because the condition requiring a change of residence under Articles 5 and 10 of Annex VII to the Staff Regulations must be interpreted in the same way.

(see paras 44, 47-49)

See:

T-74/95 Monteiro da Silva v Commission [1996] ECR-SC I‑A‑583 and II‑1559, paras 63 and 64; T-137/95 Mozzaglia v Commission [1996] ECR-SC I‑A‑619 and II‑1657, para. 57; T-132/97 Collins v Committee of the Regions [1998] ECR‑SC I‑A‑469 and II‑1379, para. 41; T-251/02 E v Commission [2004] ECR‑SC I‑A‑359 and II‑1643, para. 100; T-283/03 Recalde Langarica v Commission [2005] ECR-SC I‑A‑235 and II‑1075, para. 176

2. In order to take account of the purpose of Article 7(1)(a) of Annex VII to the Staff Regulations, which is to make the Community employer bear the travel expenses incurred by the official in travelling to his place of employment from his place of recruitment, the search for the centre of the official’s interests, which determines his habitual residence and thereby his place of recruitment, must, in the same way as the means of determining habitual residence for the purposes of applying Article 4 of Annex VII to the Staff Regulations, confer particular importance on the official’s actual residence, in particular the place where he was working at the time of taking up the appointment. The official would thus not incur such expenses where, regardless of the centre of his interests for the purpose of Articles 5 and 10 of Annex VII to the Staff Regulations, he, when taking up the appointment, was already in the place of his future posting, inter alia for professional reasons.

The same would apply even if the future official had been absent from his former place of employment for a short period prior to taking up the appointment, for example, by making use of the annual leave entitlement to return to the country of his centre of interests. The expenses which he would subsequently incur in order to return to the place where he had been working which, in addition, would also be the place where he would be employed by a Community institution, could not give rise to a reimbursement under Article 7(1)(a) of Annex VII to the Staff Regulations. The reimbursement of those expenses, generated by the official himself, is not in conformity with the objective of that provision.

(see paras 66-68)

See:

C-452/93 P Magdalena Fernández v Commission [1994] ECR-SC I‑4295, para. 22

T-63/91 Benzler v Commission [1992] ECR II‑2095, paras 23 and 24; Monteiro da Silva, paras 70 and 71; T-28/98 J v Commission [1999] ECR-SC I‑A‑185 and II‑973, para. 47; T-299/02 Dedeu i Fontcuberta v Commission [2005] ECR-SC I‑A‑303 and II‑1377, para. 77

3. The Community judicature cannot, without encroaching on the prerogatives of the administrative authority, issue directions to a Community institution by ordering it to take the measures necessary for the enforcement of a judgment by which a decision is annulled. However, in disputes of a financial character, the Community judicature has unlimited jurisdiction under the second sentence of Article 91(1) of the Staff Regulations, allowing it to order the defendant institution to pay specified amounts together with default interest, where appropriate.

In an application for annulment of a refusal to grant the applicant the benefit of the installation allowance and the daily subsistence allowance, the head of claim seeking an order for the administration to pay the amounts due for those two allowances together with default interest is sufficiently precise and must be declared admissible even if the applicant has not submitted any calculation of the amounts claimed, since those can be directly and objectively ascertained by applying two clear and indisputable parameters, namely the applicant’s basic monthly salary and whether or not he qualifies for the household allowance, at the time of and during the relevant periods for the purpose of each of the provisions setting out those allowances.

(see paras 71-72)

See:

T-94/92 X v Commission [1994] ECR-SC I‑A‑149 and II‑481, para. 33; T-130/96 Aquilino v Council [1998] ECR-SC I‑A‑351 and II‑1017, para. 39; T-197/98 Rudolph v Commission [2000] ECR-SC I‑A‑55 and II‑241, paras 32 and 33; T‑29/01 Puente Martín v Commission [2002] ECR-SC I‑A‑157 and II‑833, para. 87; T-14/03 Di Marzio v Commission [2004] ECR-SC I‑A‑43 and II‑167, para. 63

JUDGMENT OF THE CIVIL SERVICE TRIBUNAL OF THE EUROPEAN UNION (First Chamber)

16 January 2007 ( )

(Officials – Reimbursement of expenses – Installation allowance – Daily subsistence allowance – Travel expenses on taking up an appointment – Place of recruitment – Unlimited jurisdiction)

In Case F‑126/05,

ACTION brought under Articles 236 EC and 152 EA,

Andrea Borbély, an official of the Commission of the European Communities, residing in Brussels (Belgium), represented by R. Stötzel, lawyer,

applicant,

v

Commission of the European Communities, represented by J. Currall and H. Kraemer, acting as Agents, with an address for service in Luxembourg,

defendant,

THE TRIBUNAL (First Chamber),

composed of H. Kreppel, President, H. Tagaras (Rapporteur) and S. Gervasoni, Judges,

Registrar: S. Boni, Administrator,

having regard to the written procedure and further to the hearing on 27 September 2006,

gives the following

Judgment

1 By application lodged by facsimile at the Tribunal Registry on 22 December 2005 (the original being lodged on 23 December 2005), Mrs Borbély seeks, first, the annulment of the decision of the Commission of the European Communities refusing her the benefit of the daily subsistence allowance and the installation allowance and reimbursement of the travel expenses incurred when she took up her appointment and, secondly, an order directing the Commission to pay those allowances and reimburse the abovementioned travel expenses.

Legal context

2 Article 5 of Annex VII to the Staff Regulations of Officials of the European Communities (‘the Staff Regulations’) provides:

‘1. An installation allowance equal to two months’ basic salary in the case of an official who is entitled to the household allowance, and equal to one month’s basic salary in other cases shall be paid to an established official who furnishes evidence that a change in the place of residence was required in order to satisfy the requirements of Article 20 of the Staff Regulations.

…

The installation allowance shall be weighted at the rate fixed for the place where the official is employed.

…

3. The installation allowance shall be calculated by reference to the official’s marital status and salary either on the effective date of his establishment or on the date of his transfer to a new place of employment.

The installation allowance shall be paid on production of documents establishing the fact that the official, together with his family if he is entitled to the household allowance, has settled at the place where he is employed

…’

3 Article 5(1) of Annex VII to the Staff Regulations, in the version applicable prior to 1 May 2004, had the following content:

‘An installation allowance equal to two months’ basic salary in the case of an official who is entitled to the household allowance or to one month’s basic salary in other cases shall be paid to an established official who qualifies for expatriation allowance or who furnishes evidence of having been obliged to change his place of residence in order to comply with Article 20 of the Staff Regulations.’

4 Article 7 of Annex VII to the Staff Regulations provides:

‘1. An official shall be entitled to reimbursement of travel expenses for himself, his spouse and his dependents actually living in his household:

(a) on taking up his appointment, from the place where he was recruited to the place where he is employed;

…

(c) …

Travel expenses shall also include the cost of seat reservations, transport of luggage and, where applicable, hotel expenses necessarily incurred.

2. The basis for calculating the reimbursement shall be the first-class rail fare on the shortest and most economical habitual route by rail between the place of employment and the place of recruitment or origin.

…

3. An official’s place of origin shall be determined when he takes up his appointment, account being taken of where he was recruited or the centre of his interests. …

… ’

5 Under Article 10 of Annex VII to the Staff Regulations:

‘1. Where an official furnishes evidence that a change in the place of residence is required in order to comply with Article 20 of the Staff Regulations, such official shall be entitled for a period specified in paragraph 2 of this Article to a subsistence allowance per calendar day as follows:

Official entitled to receive household allowance: EUR [34,55].

Official not entitled to the household allowance: EUR [27,86].

The above scale shall be reviewed each time remunerations are revised pursuant to Article 65 of the Staff Regulations.

2. The period in respect of which the daily subsistence allowance is granted shall be as follows:

(a) in the case of an official who is not entitled to the household allowance: 120 days;

(b) in the case of an official who is entitled to the household allowance: 180 days or, if the official is a probationer, the period of probation plus one month.

…

In no case shall the daily subsistence allowance be granted beyond the date on which the official moves in order to satisfy the requirements of Article 20 of the Staff Regulations.’

6 The Commission decision of 15 April 2004 adopting the General implementing provisions for giving effect to Article 7(3) of Annex VII to the Staff Regulations on determining the place of origin, (‘the GIP’), published in Administrative Notice No 57-2004 of 8 June 2004, provides in Article 2 thereof:

‘1. When officials take up their duties, their place of origin shall be assumed to be the place from where they are recruited.

If officials so request within one year of taking up their duties, and on production of appropriate documentary evidence, their centre of interests shall be determined as their place of origin, if the centre of interests is not the same as the place of recruitment.

2. For the purposes of applying this Decision:

– “place of recruitment” shall mean the place where an official was habitually resident at the time of recruitment. Places of temporary residence, e.g. for the purpose of study, military service, training periods or holidays, shall not be regarded as places of habitual residence;

– “centre of interests” shall mean the place where an official retains:

(a) his or her main family ties which, barring duly substantiated exceptions, shall at the choice of the official mean:

1.

– mother and father or either parent; failing that grandparents, or one grandparent; failing that parents-in-law, or either parent-in-law; failing that brothers and sisters;

or

– children, or one or more of them

or

2. the marital residence, on the dual condition that:

– it was their permanent joint residence prior to the entry into the service of the Communities of the first spouse to enter an Institution as a permanent official or as a member of the temporary, auxiliary or contract staff, and

– it consists of immovable property in which they have, or one of them has, heritable interests;

(b) heritable interests constituted by immovable property in the form of buildings;

(c) essential civic interests, both active and passive.

If all three criteria referred to in (a), (b) and (c) are not fulfilled by the same place, the official’s centre of interests shall be taken as the place where at least two of the three criteria are met or, failing that, the place where the official retains his or her main family ties, confined in this instance to the official’s father, mother or children.

3. If an official’s centre of interests cannot be established by means of the criteria listed in the second indent of paragraph 2, his or her place of recruitment shall be determined as the place of origin.

4. If officials move from one Community Institution to another, their place of origin shall continue to be that determined by the previous Institution.’

Background to the dispute

7 The applicant took up her appointment at the Commission on 1 March 2005 as a probationary official.

8 Previously, she had been employed by the Hungarian Ministry of Foreign Affairs from 1 February 1998 to 28 February 2005.

9 From January 2002, she was seconded to the Permanent Representation of Hungary to the European Union in Brussels as a diplomat. Her posting to Brussels was for a period of four years, namely, from 2 January 2002 to 31 December 2005. However, that posting finished prematurely on 28 February 2005, as a result of her recruitment by the Commission.

10 During her secondment, the applicant lived in a furnished apartment provided free of charge by the Hungarian Government. Following her recruitment by the Commission, she left that apartment and moved into an apartment which she rented at her own expense, the lease for which ran from 1 April 2005.

11 After the applicant took up her appointment, the competent department in the Commission, on the basis of information which she had given on the form provided for that purpose, established her place of origin and recruitment as Brussels and, on the basis of that decision, refused to grant her the daily subsistence allowance, the installation allowance and the reimbursement of travel expenses incurred on taking up that appointment. That decision, notified orally to the applicant on 2 March 2005, was confirmed by letter of 30 May 2005.

12 On 31 May 2005, the applicant brought the matter before the Appointing Authority by filing a complaint under Article 90(2) of the Staff Regulations seeking, first, annulment of the decision establishing her place of recruitment and of origin as Belgium, second, the establishment of her place of recruitment and of origin as Hungary, third, recognition of her entitlement to the daily subsistence allowance, to the installation allowance, to reimbursement of the travel expenses incurred when she took up her appointment and to extra annual leave, with an immediate payment of the due entitlements and, finally, recognition of any other rights that she would be entitled to as a consequence of the establishment of her place of recruitment and of origin as Hungary.

13 By email of 8 August 2005, the Appointing Authority informed the applicant that the part of the complaint concerning the establishment of her place of origin had been treated as a request under Article 90(1) of the Staff Regulations and the file had been forwarded to the relevant department as a request to change her place of origin which she considered to be Törökszentmiklós (Hungary) rather than Brussels. By decision of the unit ‘Administration of Individual Financial Entitlements’ of 23 August 2005, the applicant’s place of origin was changed to Törökszentmiklós, with effect from 1 March 2005.

14 Regarding the place of recruitment and the effects of its establishment as Brussels, the Appointing Authority rejected the applicant’s complaint by decision notified on 30 September 2005.

Procedure and forms of order sought

15 Upon hearing the report of the Judge-Rapporteur, the Tribunal, having considered a second exchange of written pleadings not to be necessary, decided under Article 7(3) of Annex I to the Statute of the Court of Justice to open the oral procedure after the filing of the defence.

16 By a letter of 4 July 2006, the Tribunal asked the parties, by way of the measures of organisation of procedure under Article 64 of the Rules of Procedure of the Court of First Instance of the European Communities, applicable mutatis mutandis to the Tribunal, under Article 3(4) of Council Decision 2004/752/EC, Euratom of 2 November 2004 establishing the European Union Civil Service Tribunal (OJ 2004 L 333, p. 7), to answer a number of questions and produce a number of documents. The time-limit, fixed initially at 26 July 2006, was extended until 25 August 2006. The parties complied with that request within the extended time-limit.

17 Under Article 65(a) of the Rules of Procedure of the Court of First Instance, the Tribunal, on 10 July 2006, ordered the applicant to make a personal appearance at the hearing set for 27 September 2006.

18 By letter of 28 August 2006, the applicant requested, under the second paragraph of Article 55(2) of the Rules of Procedure of the Court of First Instance, that the hearing be postponed until a later date for family reasons which prevented her from appearing in person on 27 September 2006.

19 By order of 7 September 2006, the Tribunal, taking the view that it had sufficient information from the replies and documents provided by the parties to comply with the measures of organisation decided upon on 4 July 2006 and having regard to the need to give judgment within a reasonable period on the action, revoked the order for personal appearance and maintained the hearing on the date scheduled.

20 The applicant claims that the Tribunal should:

– annul the Commission’s decision of 30 September 2005 in so far as it refuses to grant her the daily subsistence allowance provided for in Article 10(1) of Annex VII to the Staff Regulations, the installation allowance provided for in the first subparagraph of Article 5(1) of Annex VII to the Staff Regulations and reimbursement of travel expenses incurred on taking up her appointment, as provided for in Article 7(1)(a) of Annex VII to the Staff Regulations;

– order the Commission to pay her the daily subsistence allowance and installation allowance and reimburse her travel expenses on taking up her appointment, together with interest from the dates on which those amounts became payable pursuant to Annex VII to the Staff Regulations.

21 The Commission contends that the Tribunal should:

– dismiss the action;

– make an appropriate order as to costs.

The claims for annulment

22 It must first be noted that, even if formally directed against the rejection of the applicant’s complaint, the action has the effect of bringing before the Tribunal the decision adversely affecting the applicant against which the complaint was submitted (see, to that effect, Case 293/87 Vainker v Parliament [1989] ECR 23, paragraph 8, and Case F-100/05 Chatziioannidou v Commission [2006] ECR-SC I-A-0000 and II-0000, paragraph 24). The action must therefore be considered to be directed against the decision of 2 March 2005, confirmed by letter of 30 May 2005 (‘the contested decision’).

Arguments of the parties

23 The applicant maintains that the questions raised by her case have already been answered to the requisite legal standard in the judgment in Case T‑137/95 Mozzaglia v Commission [1996] ECR-SC I‑A‑619 and II-1657, in which it was held that a national expert on secondment in Brussels retained his residence in his country of origin and, on that basis, his appointment by the Commission and his posting to Brussels involved a change in his place of residence.

24 She next refers to the allowances and reimbursement in dispute, dealt with separately, starting with the daily subsistence allowance, and submits that the place of residence to be taken into account, in accordance with Mozzaglia v Commission, is the centre of the official’s interests, which is not necessarily the same as the place in which the official actually resided prior to being appointed. The applicant criticises the Commission for not having correctly assessed the specific facts of her case. She points out specifically in that connection that she remained in the permanent, indefinite, employment of the Hungarian Ministry of Foreign Affairs, by which she was also remunerated, whereas her secondment in Brussels was for a limited, pre-determined period and that she retained her residence and, as a diplomat, the centre of her interests, in Hungary, where her parents lived. The applicant also claims that she maintained her stable family and social ties in Hungary, where she frequently returned and where she intended to settle after her diplomatic secondment to Brussels had finished. It was with that end in view that she bought an apartment in Budapest in 2003, while in her place of secondment she merely lived in a furnished apartment provided by her Hungarian employer, to whom she furthermore had to return it shortly after taking up her appointment at the Commission. Having thus retained her residence in Hungary, she submits that she had to change her place of residence for the purpose of Article 10 of Annex VII to the Staff Regulations in order to comply with the requirement laid down in Article 20 of the Staff Regulations, while keeping temporarily, until the end of the precarious situation of the probationary period, her residence in Hungary, where she could none the less no longer live following her recruitment by the Commission in Brussels. Accordingly, she submits that she has met the conditions laid down by the provision in question.

25 As regards the right to the installation allowance, the applicant submits that, in the light of the case-law in Mozzaglia v Commission, as in the case of the daily subsistence allowance, it is sufficient for her to prove a change in her place of residence without having to show the actual expenses incurred. None the less, she submits that the installation allowance would have compensated for the financial consequences connected with her recruitment and for the fact that she had, on that basis, lost the right reserved to members of her country’s diplomatic service to live in her previous accommodation.

26 Lastly, concerning the travel expenses connected with taking up her appointment, the applicant identifies her place of recruitment as being the place where she was habitually resident which, in her case, and for the reasons set out regarding the two disputed allowances, could not be in Brussels, where she was resident temporarily, but was, rather, in Hungary, where she had her centre of interests.

27 In her replies to the questions raised by the Tribunal, the applicant first explained that, after her appointment to the Commission, she did not relocate from Hungary to Brussels so as to avoid the risk of a costly process, since her place of residence had been fixed in Brussels by the unit ‘Administration of Individual Financial Entitlements’. She also provided information on the apartments she rented in Hungary between 1998 and 2003 and on the apartment which she had bought there in 2003, specifying that she retained the exclusive use of the latter. She attached to her response bills relating to that apartment, proving her outlays in acquiring household equipment and in respect of gas and electricity consumption. In addition, the applicant submitted a summary of her flights to Budapest during the relevant period, showing her frequent visits to her country of origin. Concerning the household allowance paid by her Hungarian employer in respect of her cohabitation with her spouse in Brussels, the applicant replied that she had relinquished this and had not received it since August 2003, that is to say, nearly one year and a half before her recruitment by the Commission, since her spouse was no longer living with her in Brussels.

28 The defendant’s arguments concern, first, the installation allowance, and in particular the amendment made by Council Regulation (EC, Euratom) No 723/2004 of 22 March 2004 amending the Staff Regulations of Officials of the European Communities and the Conditions of Employment of other servants of the European Communities (OJ 2004 L 124, p. 1) to Article 5 of Annex VII to the Staff Regulations, which provides for that allowance. That amendment consists in removing the first alternative condition required by the Community legislature for entitlement to that allowance, namely, that the interested party must qualify for the expatriation allowance. Since that amendment, qualification for the expatriation allowance does not automatically entail qualification for the installation allowance. The defendant contends that it would be a misinterpretation of the amendment to Article 5 of Annex VII to the Staff Regulations to continue to interpret the concept of residence, as laid down by the provision relating to the condition for the grant of the installation allowance, in accordance with the case‑law developed hitherto. It submits that the decisive factor for the purpose of entitlement to that allowance should be the actual place of residence. As a result, the defendant considers to be irrelevant the facts put forward by the applicant to prove that the centre of her interests, and consequently her residence within the meaning of Article 5 of Annex VII to the Staff Regulations, was in Hungary and not in Brussels when she was appointed. Thus, her arguments cannot be supported by the purchase of an apartment in Hungary, the temporary nature of her accommodation in Brussels, or the fact that she was staying in a furnished dwelling provided by the diplomatic services there but which she had to give up after her appointment by the Commission. As regards, specifically, the circumstances of the applicant’s installation in Brussels, the defendant disputes the claim that taking up her appointment at the Commission caused her specific expense for which the installation allowance should provide compensation or, in any event, higher expenses than those which any person working in Brussels would have incurred

29 Concerning the travel expenses incurred as a result of the applicant taking up her appointment, the defendant submits that their payment is dependent on the place of recruitment, the concept of the centre of interests being irrelevant for the application of Article 7(1)(a) of Annex VII to the Staff Regulations. That provision in fact only applies to the situation where the place of the posting is not the place of recruitment.

30 As regards the daily subsistence allowance, the defendant refers to its arguments relating to the installation allowance and adds that, according to case-law, the daily subsistence allowance is subject to an extra requirement, namely that the interested party has had to maintain two residences simultaneously and that, furthermore, as a result of his appointment to a Community institution, has been unable to continue to live where he formerly resided. Therefore, the fact that the applicant bought an apartment in Budapest without, however, ever having lived there, is not relevant with regard to that extra requirement.

31 In response to the requests from the Tribunal on the basis of Article 65 of the Rules of Procedure of the Court of First Instance, the defendant provided the wording of certain General Implementing Provisions concerning the allowances and reimbursement provided for in Section 3 of Annex VII to the Staff Regulations and explained the conditions under which it grants those allowances to persons appointed probationary officials who have been employed previously by the Communities as other staff.

Findings of the Court

The installation allowance and the daily subsistence allowance

32 It is settled case-law that the word ‘residence’ used in the provisions setting out the conditions for the grant of the allowances provided for in Articles 5 and 10 of Annex VII to the Staff Regulations must be construed as referring to the centre of interests of the official concerned (Case T‑33/95 Lozano Palacios v Commission [1996] ECR‑SC I‑A‑575 and II-1535, paragraph 47; Case T‑74/95 Monteiro da Silva v Commission [1996] ECR-SC I‑A‑583 and II‑1559, paragraph 47; and Mozzaglia v Commission, paragraph 40).

33 It has been held specifically that that term refers to the place where the interested party has established and intends to maintain the permanent or habitual centre of his or her interests and that it also implies, irrespective of the purely quantitative element of the time spent by the person concerned in a particular country, not only the actual fact of living in a given place, but also the intention of thereby achieving the continuity which stems from a stable way of life and from the course of normal social relations (Case T‑29/01 Puente Martín v Commission [2002] ECR-SC I‑A‑157 and II‑833, paragraph 60, relating to Article 5 of Annex VII to the Staff Regulations).

34 The applicant is claiming the allowances in dispute pursuant to that case-law, submitting that, notwithstanding her secondment to Brussels from 2 January 2002 to 28 February 2005, she had not moved the centre of her interests to that city, but had maintained it in Budapest.

35 The defendant contends, however, that the abovementioned case-law relied on by the applicant is no longer applicable since the amendment of Article 5 of Annex VII to the Staff Regulations made by the 2004 reform.

36 In those circumstances, it is necessary to first consider whether the Commission’s position is well founded and, if not, to establish the centre of the applicant’s interests. Next, and so far as the request relating to travel expenses is concerned, the Tribunal will determine the applicant’s place of recruitment.

– The consequences of the amendment of Article 5 of Annex VII to the Staff Regulations on the case-law which treats the concept of residence as equivalent to the applicant’s centre of interests

37 The defendant submits that the purpose of the amendment made to Article 5 of Annex VII to the Staff Regulations, which consisted in the removal of the first alternative condition required to be granted the installation allowance, was to limit the grant of that allowance solely to officials or staff for whom taking up an appointment at a Community institution involved a change in their actual place of residence.

38 Before that amendment, qualification for the expatriation allowance automatically entailed qualification for the installation allowance. It is true that the expatriation allowance was not granted to officials who, before taking up their appointment in a Community institution, lived or worked for a period in the State in which that institution was situated. However, there was an exception to that rule which could be claimed by people who worked on behalf of a State or an international organisation. For that group, the fact that they had lived or worked in the State of their future Community posting, be it until the day before taking up their appointment as probationary officials, was not taken into account. They thus had the right to receive the expatriation allowance and, as a result, the installation allowance, notwithstanding the fact that their actual place of residence had not changed.

39 Under the new regime, the expatriation allowance is clearly dissociated from the installation allowance. Qualification for the former does not entail qualification for the latter. As a result, international diplomats and officials who, in the event of being appointed by a Community institution established in the same city as their previous employer, are entitled to the expatriation allowance, as before the entry into force of Regulation No 723/2004, nevertheless will not be able to claim the installation allowance on that sole basis. They must, like other probationary officials, meet a single condition, consisting in proving that they have had to change their place of residence in order to comply with the requirements of Article 20 of the Staff Regulations, that is, reside in the place where they are employed or at no greater distance therefrom than is compatible with the proper performance of their duties.

40 The Commission submits that that amendment is misinterpreted where residence continues to be deemed equivalent to the centre of the official’s interests. In so far as the postings of diplomats and international officials are, in the vast majority of cases, temporary, they can argue that the centre of their interests is always in their country of origin.

41 The Commission’s arguments cannot be upheld.

42 First, the references made by the Commission to the legislature’s intention and to the purpose of the amendment to Article 5 of Annex VII to the Staff Regulations are not substantiated by any evidence derived from the travaux préparatoires. None of the recitals to Regulation No 723/2004 contains any particular indication as to the reasons for that amendment.

43 Secondly, the interpretation advocated by the Commission is based in actual fact on the premiss that each official can only have a single place of residence prior to his or her appointment. However, the Court of First Instance has, on several occasions and, in particular, quite recently, accepted the possibility of there being two residences, the first being the habitual residence and the second being the place of the main professional activity (Case T‑251/02 E v Commission [2004] ECR-SC I‑A-359 and II-1643, paragraph 73, and Case T‑259/04 Koistinen v Commission [2006] ECR-SC I-A-0000 and II-0000, paragraph 38). There are no grounds for believing that the purpose or effect of the amendment to Article 5 of Annex VII to the Staff Regulations was to also render inoperative that case-law, which, moreover, corresponds to a situation which is increasingly common in practice.

44 Thirdly, it must be stated that having regard in particular to the two considerations above, the removal of the first alternative condition of Article 5 of Annex VII to the Staff Regulations can at the most be interpreted as meaning that the legislature wished to restore equality as regards the conditions for the grant of the installation allowance between all the persons taking up an appointment at a Community Institution after having lived or worked in the State in which that institution is situated. From now on, those persons who worked for a State or international organisation prior to taking up an appointment in the Community civil service must, in the same way as other Community officials, prove that they fulfil the single condition set out in the new version of Article 5 of Annex VII to the Staff Regulations. However, that similar treatment of two categories of officials does not in any way imply that the legislature also wished to amend the actual content of the condition in question, which is formulated in precisely the same terms in both the former and the latter versions of Article 5 of Annex VII to the Staff Regulations.

45 Furthermore, and in contrast to the Commission’s contention, the effect of retaining the case-law on the concept of residence within the meaning of Article 5 of Annex VII to the Staff Regulations is not to reinsert in that provision the first alternative condition of the legislation, as applicable prior to 1 May 2004. That would fail to have regard to the amendment made to that wording. Although diplomatic postings are, as a general rule, temporary, the same does not necessarily apply to international officials, since some international organisations guarantee their officials permanent or even life-long positions. In any event, the temporary nature of a posting does not in any way predetermine the centre of interests of the person in that posting. There is no barrier to a person making a specific place the centre of their interests for the purpose of the Community case-law, notwithstanding the temporary nature of his or her posting to that place. It is for the authorities to examine on a case-by-case basis, in accordance with criteria identified in the case-law, whether officials whom it appoints have indeed moved the centre of their interests to the place of their Community posting

46 Admittedly, such an assessment on a case-by-case basis, which furthermore concerns an issue which includes elements of subjectivity, constitutes an additional workload for the authorities. However, that finding is not an argument capable of supporting the interpretation advocated by the Commission. If the legislature had in fact intended as the defendant argues, it would not have restricted the amendment of Article 5 of Annex VII to the Staff Regulations to merely removing the first alternative condition but, having regard to the settled case-law on the concept of residence, it would also have extended it to the second alternative condition. In that situation, the wording of that condition, which is now the only condition for the grant of the installation allowance, should have been amended to give it the meaning which the Commission seeks to attribute to it by specifying, for example, that the change in the place of residence required concerns the actual place of residence.

47 Accordingly, whilst the removal of the first alternative condition of Article 5 of Annex VII to the Staff Regulations, as applicable prior to 1 May 2004, does show the legislature’s intention to restrict the number of those entitled to the installation allowance and, inter alia, to deny some officials or staff who have previously lived or worked in the State where they are to be posted as Community officials an automatic right to that allowance, it does not follow that the legislature intended any actual residence in that State, inter alia temporary residence, in particular for professional reasons, to become a circumstance leading inevitably to the parties concerned being denied that allowance. Actual residence constitutes one factor which, among others, determines the centre of the official’s interests.

48 Such an approach is borne out by the objective of Article 5 of Annex VII to the Staff Regulations, which the amendment of the conditions for the grant of the allowance concerned has not and was not intended to change, which was to make up for the expenses associated with the situation of a duly established official who passes from a precarious status to a permanent status and must therefore enable himself to live in and become integrated into his place of employment in a permanent and lasting manner for an indeterminate but substantial period of time (Monteiro da Silva v Commission, paragraph 63). Consequently, having a temporary residence in Brussels, inter alia for professional purposes, does not necessarily conflict with the aim of the installation allowance, which reflects constraints to which persons whose centre of interests is in their place of posting are not normally subject. The same is true concerning the objective of the daily subsistence allowance, which is to compensate for the expenses and inconvenience occasioned by the precarious situation of a probationary official, in particular where he must retain his previous residence at the same time (order in Case T‑132/97 Collins v Committeeof the Regions [1998] ECR-SC I-A-469 and II-1379, paragraph 41). This applies a fortiori because, under case-law, the condition at issue must be interpreted in the same way in the context of Articles 5 and 10 of Annex VII to the Staff Regulations (Monteiro da Silva v Commission, paragraph 64; Mozzaglia v Commission, paragraph 57; E v Commission, paragraph 100; and Case T‑283/03 Recalde Langarica v Commission [2005] ECR-SC I-A-235 and II-1075, paragraph 176).

49 In the light of the foregoing, the Tribunal concludes that the case-law cited in paragraphs 32 and 33 above is not affected by the amendment of Article 5 of Annex VII to the Staff Regulations. The word ‘residence’ must therefore still be construed as referring to the centre of the official’s or staff member’s interests.

– The centre of the applicant’s interests

50 There is no doubt that the centre of the applicant’s interests, for the purpose of the case-law relating to the conditions for the grant of the installation allowance and the daily subsistence allowance, was, at least between 1 February 1998 and 31 December 2001, fixed in Budapest.

51 On 1 February 1998, the applicant took up an appointment at the Ministry of Foreign Affairs in Budapest where, subsequently, she rented an apartment. The assumption must be that her personal life also took place in Budapest and, indeed, the town where her parents lived, Törökszentmiklós, is relatively close to the Hungarian capital.

52 It is true that she was then seconded to Brussels, to the Permanent Representation of Hungary to the European Union. That secondment was for a period of four years and commenced on 2 January 2002.

53 Since she took up her appointment at the Commission on 1 March 2005, the question arises whether, following her secondment to Brussels, that city had also become, prior to that date, the centre of her interests for the purpose of the Community case-law.

54 To answer that question, the Tribunal has taken account of all the facts put before it, inter alia those included in the applicant’s reply, dated 25 August 2006, to its questions to her, the accuracy of which, as the Commission explicitly conceded at the hearing, was not disputed. In the light of those facts, the Tribunal concludes that Brussels had not become the centre of the applicant’s interests.

55 It notes, first, that, notwithstanding her secondment to Brussels, the applicant retained until May 2003 the apartment which she rented in Budapest at 80 Izabella Street, which she then left for another at 8 Varfok Street, inhabited until October 2003, when she acquired an apartment in the same city at 15 Ferenc Boulevard. Thus, throughout her secondment to Brussels she kept a dwelling in Budapest, for which she incurred expenses, inter alia rent until September 2003, then, from October 2003, the usual expenses required of property owners and expenses for household equipment and consumption, for example, of gas and electricity, in respect of which she has provided documentary evidence.

56 Secondly, the applicant did not only have the right to make use of those apartments in her capacity as the tenant or property owner, but she claims, without it being disputed by the defendant, that she also stayed in them quite regularly, which is borne out by a summary from the Malev airline company which she produced in her reply to the Tribunal’s questions, which notes regular journeys between Brussels and Budapest until the end of 2004.

57 The frequent nature of her trips to Budapest also demonstrates, thirdly, that it was there rather than in Brussels that her personal life took place, admittedly within the limits of the constraints imposed by her work.

58 Against that background, the circumstance that the applicant acquired immovable property in Budapest and indeed started to equip it, her statements in that regard being backed up by certain supporting documents, is not irrelevant, contrary to the Commission’s contention. Indeed, by the acquisition, equipping and inhabitation of that apartment, albeit within the limits of the constraints imposed by her work in Brussels, she continued her residence in Budapest, commenced at the latest in 1998. Those factual considerations are furthermore supported by the two facts that she not only failed to make a similar acquisition in Brussels, but lived there in a furnished apartment provided by the Hungarian Government.

59 Fourthly, the Tribunal notes that, although from the time of her posting in Brussels in 2002 the applicant received an allowance amounting to 25% of her salary by virtue of her cohabitation with her spouse in that city, she has not been entitled to that allowance since August 2003 on the ground that their married life took place primarily outside that city, in Budapest and Hanover, where her husband’s employment was based.

60 In those circumstances, the Tribunal is led to the conclusion that the applicant did not move the centre of her interests to Brussels after taking up her appointment at the Commission on 1 March 2005.

61 That conclusion is reinforced by comparisons with the facts of other cases relating to the allowances and reimbursement at issue, in particular those cited by the Commission in support of its arguments.

62 Specifically, the Tribunal has not found any significant difference between the applicant’s case and that of the national experts on secondment, whom the Court of First Instance recognised as being entitled to the installation allowance and the daily subsistence allowance once they were appointed as probationary officials. Contrary to what the Commission contends, the applicant, just before taking up her appointment at the Commission, ‘inhabited’ an apartment in Budapest, in the same way as Ms Mozzaglia and Ms Monteiro da Silva inhabited apartments in their cities of origin. Both the applicant and those two national experts had the right to enjoyment of the property as owners or tenants and accordingly incurred expenses there. In addition, they returned there regularly, although it is not possible, in either of the cases, to establish exactly how frequent their return visits to their cities of origin were.

63 The Tribunal further finds that this situation is to be distinguished from that set out in Lozano Palacios v Commission, in which the Court of First Instance held that the interested party had not maintained the centre of her interests in her country of origin on the ground, among others, that she was subletting the apartment that she had kept there and did not have any fixed place of residence in Spain. In this case, the applicant not only retained her former rented residence in Budapest, but also acquired a new residence there, in addition incurring expenses to equip it with the fittings needed to inhabit the premises regularly, such as a washing machine for example.

64 Additional support in favour of the argument of the applicant can be derived from the judgment in Case T‑132/95 Gammeltoft v Commission [1996] ECR-SC I‑A‑611 and II‑1633. In that case, brought by a Danish member of the temporary staff who, prior to taking up his appointment at the Commission, had worked in the same city as a national expert on secondment and then as a member of the auxiliary staff, the Court of First Instance ruled that the interested party had maintained the centre of his interests in his country of origin, despite the fact that he had moved with his family to Brussels and sublet his apartment in Denmark.

65 It follows from the foregoing that, for the purposes of the application of Articles 5 and 10 of Annex VII to the Staff Regulations, the applicant’s residence before she took up her appointment at the Commission on 1 March 2005 was in Budapest. Since she had been required to change it to Brussels in order to comply with the requirements of Article 20 of the Staff Regulations, while moreover having retained her residence in Hungary during the precarious period of her probation, she was entitled to both the installation allowance and the daily subsistence allowance. Therefore, the first branch of the forms of order sought by the applicant should be granted and the contested decision annulled in so far as it refuses her those allowances.

The reimbursement of travel expenses on taking up an appointment

66 In contrast to its ruling above regarding the installation allowance and the daily subsistence allowance, the Tribunal takes the view that the Commission was fully entitled to refuse to apply for the applicant’s benefit Article 7(1)(a) of Annex VII to the Staff Regulations, which provides for reimbursement of an official’s travel expenses on taking up an appointment, from the place where he or she was recruited to the place where he or she is employed. Case-law (Case T‑63/91 Benzler v Commission [1992] ECR II‑2095, paragraphs 23 and 24; Monteiro da Silva, paragraphs 70 and 71; and Case T‑28/98 J v Commission [1999] ECR‑SC I‑A‑185 and II‑973, paragraph 47) defines the official’s place of recruitment as ‘the place where the official was habitually resident at the time of recruitment’, that is to say, a definition which is not precisely the same as the straightforward residence referred to in Articles 5 and 10 of Annex VII to the Staff Regulations and which must be interpreted in the light of the objective of Article 7(1)(a) of the Annex. Clearly, that provision is intended to make the Community employer bear the travel expenses which the official has had to incur in order to reach his future posting. However, the fact remains that an official cannot incur such expenses where, regardless of the centre of his interests for the purpose of Articles 5 and 10 of Annex VII to the Staff Regulations, he, when taking up the appointment, was already in the place of the future posting, inter alia for professional reasons.

67 It is true that the Community judicature most frequently interprets the concept of habitual residence in the same way as that of residence, referred to in Articles 5 and 10 of Annex VII to the Staff Regulations, treating it as equivalent to the centre of the official’s interests (J v Commission, paragraph 47). However, the concept of the centre of the official’s interests can be interpreted in various ways depending on the type of allowances provided for in the Staff Regulations. The defendant itself accepts that the centre of the applicant’s interests, as a determining factor of her place of origin, is in Hungary, although for the purposes of the application of Articles 5 and 10 of Annex VII to the Staff Regulations, it locates it in Brussels. Therefore, in order to take account of the objective of Article 7(1)(a) of Annex VII to the Staff Regulations, the search for the centre of the applicant’s interests, which determines his habitual residence and thereby place of recruitment, must, in the same way as the means of determining habitual residence for the purposes of applying Article 4 of Annex VII to the Staff Regulations (Case C‑452/93 P Magdalena Fernández v Commission [1994] ECR I‑4295, paragraph 22; Case T‑299/02 Dedeu i Fontcuberta v Commission [2005] ECR-SC I-A-303 and II-1377, paragraph 77) confer particular importance on the actual residence of the interested party, in particular the place where he was working at the time of taking up the appointment.

68 The same would apply even if the future official had been absent from his former place of employment for a short period prior to taking up the appointment, for example, by making use of the annual leave entitlement to return to the country of his centre of interests. The expenses which he would subsequently incur in order to return to the place where he had been working which, in addition, would also be the place where he would be employed by a Community institution, could not give rise to a reimbursement under Article 7(1)(a) of Annex VII to the Staff Regulations. The reimbursement of those expenses, generated by the official himself, is not in conformity with the objective of that provision as set out above.

69 In the light of the foregoing, it must be stated that the applicant, who was employed on a full-time basis in Brussels at the time she received the employment offer from the Commission with regard to a posting in that city, and after that date, and who, according to the flight summary she produced, returned to Budapest on 23 February 2005 to come back to Brussels four days later, cannot claim the benefit of Article 7(1)(a) of Annex VII to the Staff Regulations.

70 Accordingly, the claims for annulment must be rejected in so far as they are directed against the Commission’s decision not to reimburse the applicant’s travel expenses on taking up her appointment.

The claims seeking an order that the Commission pay the applicant the allowances at issue and the travel expenses on taking up her appointment

71 It is settled case-law that the Community judicature cannot, without encroaching on the prerogatives of the administrative authority, issue directions to a Community institution by ordering that institution to take the measures necessary for the enforcement of a judgment by which a decision is annulled (Case T‑94/92 X v Commission [1994] ECR-SC I‑A‑149 and II‑481, paragraph 33, and Case T‑14/03 Di Marzio v Commission [2004] ECR‑SC I‑A‑43 and II‑167, paragraph 63). However, in disputes of a financial character, the Tribunal has unlimited jurisdiction, pursuant to the second sentence of Article 91(1) of the Staff Regulations, which allows it to order the defendant institution to pay specific amounts plus interest where appropriate (Case T‑130/96 Aquilino v Council [1998] ECR-SC I‑A‑351 and II‑1017, paragraph 39, and Case T‑197/98 Rudolph v Commission [2000] ECR-SC I‑A‑55 and II‑241, paragraph 32).

72 That conclusion is not invalidated by the fact that the applicant has not submitted any calculation of the amounts claimed for the two allowances in respect of which the Tribunal has granted the claims for annulment. The installation allowance provided for in Article 5 of Annex VII to the Staff Regulations corresponds to the basic monthly salary to which the interested party is entitled at the time of his appointment as an established official or to double that amount where, at the time of that appointment, he was entitled to the household allowance, while the amount of the daily subsistence allowance and the period during which the interested party is entitled to it are set out by Article 10 of Annex VII to the Staff Regulations, here also according to whether he receives the household allowance. It follows that the amount of those allowances can be directly and objectively ascertained in accordance with two clear and indisputable parameters, namely the applicant’s basic monthly salary and whether or not he qualifies for the household allowance, at the time of and during the relevant periods for the purpose of each of the provisions setting out those allowances. That head of claim is therefore sufficiently precise and must be declared admissible (Rudolph v Commission, paragraph 33, and Puente Martín v Commission, paragraph 87).

73 Since the decision refusing the applicant the benefit of those two allowances is annulled, it follows that the defendant must be ordered to pay the applicant, in accordance with the rules of the Staff Regulations in force, those allowances plus default interest, from the dates on which they were payable respectively and up to the date of their payment, at the rate set by the European Central Bank for its main refinancing transactions, as applicable during the relevant period, increased by two points (see Puente Martín v Commission, paragraph 88, and Case T‑22/01 Efthymiou v Commission [2003] ECR-SC I‑A‑177 and II‑891, paragraph 45).

Costs

74 As held by the Tribunal in Case F‑16/05 Falcione v Commission [2006] ECR-SC I-A-0000 and II-0000, paragraphs 77 to 86, until such time as the Rules of Procedure of the Tribunal and, in particular, the specific provisions relating to costs, enter into force, the Rules of Procedure of the Court of First Instance alone fall to be applied.

75 Under Article 87(2) of the Rules of Procedure of the Court of First Instance, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

76 Since the applicant has not submitted any claim as regards the burden of costs, each party is to bear its own costs (Joined Cases T‑68/89, T‑77/89 and T‑78/89 SIV and Others v Commission [1992] ECR II‑1403, paragraph 376).

On those grounds,

THE TRIBUNAL (First Chamber)

hereby:

1. Declares that the decision of the Commission of the European Communities of 2 March 2005 is annulled in so far as it refuses to grant the applicant the installation allowance provided for in Article 5(1) of Annex VII to the Staff Regulations and the daily subsistence allowance provided for in Article 10(1) of that Annex;

2. Orders the Commission of the European Communities to pay the applicant, in accordance with the rules of the Staff Regulations in force, those allowances plus default interest, from the dates on which they were payable respectively and up to the date of their payment, at the rate set by the European Central Bank for its main refinancing transactions, as applicable during the relevant period, increased by two points;

3. Dismisses the action as to the remainder;

4. Orders each party to bear its own costs.

Kreppel Tagaras Gervasoni

Delivered in open court in Luxembourg on 16 January 2007.

W. Hakenberg H. Kreppel

Registrar President