JUDGMENT OF THE COURT OF FIRST INSTANCE (Second Chamber)

13 December 2004

Case T-251/02

E

v

Commission of the European Communities

(Officials – Remuneration – Expatriation allowance – Daily subsistence allowance – Installation allowance – Reimbursement of travel expenses on taking up employment and removal expenses – Place of recruitment – Articles 4, 5, 7, 9 and 10 of Annex VII to the Staff Regulations – Action for annulment – Action for damages)

Full text in French II - 0000

Application: first, for annulment of the appointing authority’s decision of 29 August 2001 fixing the applicant’s place of origin and of recruitment as Brussels and refusing to grant her the expatriation allowance, installation allowance, daily subsistence allowance, and travel and removal expenses relating to her taking up her employment and, second, for payment of compensation and interest for late payment.

Held: The action is dismissed. The parties are to pay their own costs.

Summary

1. Officials – Remuneration – Expatriation allowance – Conditions for granting – No habitual residence or main occupation in the Member State of employment during the reference period – Definition

(Staff Regulations, Annex VII, Art. 4(1))

2. Officials – Remuneration – Grant of allowances and benefits under Annex VII to the Staff Regulations – Circumscribed powers of the competent authority – Scope of judicial review

(Staff Regulations, Annex VII, Arts 4, 5, 7, 9 and 10)

3. Officials – Remuneration – Expatriation allowance – Conditions for granting – Distinction made between circumstances arising from work done for another State or for an international organisation and those arising from work done while on secondment by a private institution – Breach of the principle of equal treatment – None

1. Article 4(1) of Annex VII to the Staff Regulations must be interpreted as adopting the official’s habitual residence prior to taking up employment as the essential criterion for the grant of the expatriation allowance.

The place of habitual residence is that in which the official concerned has established, with the intention that it should be of a lasting character, the permanent or habitual centre of his interests. However, for the purposes of determining habitual residence, all the factual circumstances which constitute such residence must be taken into account.

Any interpretation which would exclude from the benefit of the expatriation allowance any official who had had his habitual residence or carried on his main occupation in the country of his future place of employment for only part of the reference period would disregard the fundamental purpose of the expatriation allowance, which 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 tie before his entry into the service.

(see paras 53-54, 70)

See: C-452/93 P Magdalena Fernández v Commission [1994] ECR I-4295, para. 22; T-18/91 Costacurta Gelabert v Commission [1992] ECR II-1655, para. 42, and the case-law cited therein; T-72/94 Diamantaras v Commission [1995] ECR‑SC I-A-285 and II-865, para. 48; T-28/98 J v Commission [1999] ECR-SC I-A-185 and II-973, para. 32

2. The provisions of Annex VII to the Staff Regulations do not allow the competent authority any discretion as to whether or not to grant the allowances and benefits for which they provide, but confers on it circumscribed powers, in so far as the mandatory wording of those provisions makes it clear that the authority is bound to grant the allowance or benefit in question if it finds that the conditions laid down by the provision in question are satisfied. It follows that, where it examines the facts relied on by the competent authority and the characterisation of those facts by that authority in order to answer the question whether the conditions to which the grant of those allowances and benefits is subject are fulfilled, the Community Court has a full power of review.

(see para. 118)

See: T-302/01 Birkhoff v Commission [2003] ECR-SC I-A-245 and II-1185, para. 38

3. Since the fixing of the conditions for entitlement to payment of the expatriation allowance falls within the discretion of the Community institutions, the principle of non-discrimination or equality of treatment would be disregarded only if Article 4(1)(a) of Annex VII to the Staff Regulations entailed a differentiation which was arbitrary or manifestly inappropriate in relation to its objective, which 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 tie before his entry into the service.

In the light of that objective, differentiation between circumstances arising from work done for another State or for an international organisation and those arising from work done by a seconded employee for a private institution cannot be considered arbitrary or manifestly inappropriate. The exception provided for by Article 4(1)(a) of Annex VII in favour of an official who during the reference period resided in the country of employment where he was in the service of another State or of an international organisation is explained precisely by the fact that under those circumstances he cannot be deemed to have established a lasting tie with the country in which he is employed. The fact that the application of the categories of Article 4 of Annex VII may doubtless give rise to marginal cases in which officials find that payment of the expatriation allowance is denied to them when their circumstances are close to those defined by that article does not imply that the provisions of that article contain arbitrary differentiation. Thus the decision of the legislature to limit the presumption of an absence of lasting ties to circumstances arising from work done for another State or for an international organisation cannot be considered to be such differentiation.

(see paras 124-126)

See: 1322/79 Vutera v Commission [1981] ECR 127, paras 8 and 9; Diamantaras v Commission, cited above, para. 48; T-164/97 Busacca and Others v Court of Auditors [1998] ECR-SC I-A-565 and II-1699, paras 48 and 49; J v Commission, cited above, para. 32; T-94/01, T-152/01 and T-286/01 Hirsch and Others v ECB [2003] ECR-SC I-A-1 and II-27, para. 51