CELEX: 62006FJ0054
Language: en
Date: 2007-06-19
Title: Judgment of the Civil Service Tribunal (First Chamber) of 19 June 2007. # John Davis and Others v Council of the European Union. # Public service - Officials. # Case F-54/06.

JUDGMENT OF THE CIVIL SERVICE TRIBUNAL
      (First Chamber)
      19 June 2007
      Case F-54/06
      John Davis and Others
      v
      Council of the European Union 
      (Civil service – Officials – Pensions – Weightings – Retirement after the entry into force of the version of the Staff Regulations applicable from 1 May 2004 – Application of weightings calculated on the basis of the average cost of living in the country of residence of retired officials
         – Transitional scheme – Abolition of weightings for pension rights acquired after the entry into force of the version of the Staff Regulations applicable
         from 1 May 2004)
      
      Application: brought under Articles 236 EC and 152 EA, in which Mr Davis and three other Council officials seek annulment of the Council’s
         decisions determining their pension entitlements, on the grounds that the portion of their pension entitlement acquired after
         30 April 2004 is not multiplied by a weighting, and that the weighting by which the portion of their pension entitlement acquired
         before 1 May 2004 is multiplied differs from that by which the remuneration of officials of the European Communities in active
         employment in the United Kingdom or Denmark is multiplied.
      
      Held: The action is dismissed. Each party is ordered to bear its own costs.
      
      Summary
      1.      Officials – Pensions – Weighting – Abolished for pension entitlements acquired after the entry into force of Regulation No
            723/2004 
      (Staff Regulations, Art. 82(1); Annex XIII, Art. 20; Council Regulation No 723/2004)
      2.      Officials – Pensions – Weighting – Abolished for pension entitlements acquired after the entry into force of Regulation No
            723/2004 
      (Staff Regulations, Art. 82(1); Annex XIII, Art. 20; Council Regulation No 723/2004)
      3.      Officials – Pensions – Weighting – Abolished for pension entitlements acquired after the entry into force of Regulation No
            723/2004 
      (Staff Regulations, Art. 82(1))
      4.      Freedom of movement for persons – Worker – Definition – Official of the Communities – Included – Retired official of the Communities
            – Not included 
      (Arts 18 EC and 39 EC)
      5.      Citizenship of the European Union – Right to move and reside freely in the territory of the Member States – Retired officials
            of the Communities 
      (Art. 18 EC; Staff Regulations, Art. 82(1))
      1.      The principle of equal treatment is not breached provided that differences in treatment between different categories of officials
         are justified on the basis of objective and reasonable criteria and that the differences are proportionate to the aim pursued
         by the differential treatment in question.
      
      As regards the abolition of weightings for pension entitlements acquired after 1 May 2004, effected by Regulation No 723/2004
         amending the Staff Regulations of Officials and the Conditions of Employment of Other Servants, the difference in treatment
         between officials who retired after the reform of the Staff Regulations came into force and those who retired a few months
         before it, in so far as only the latter’s pensions are weighted in their entirety, is consistent with the principle of equal
         treatment. That difference is justified on the basis of an objective and reasonable criterion, namely whether officials retired
         before or after the reform of the Staff Regulations came into force. Furthermore, the difference in treatment also meets the
         requirement that it should be proportionate to the aims pursued by that reform of the Staff Regulations, since despite the
         fact that the former category of officials retired after the date when the reform of the Staff Regulations came into force,
         all of their entitlements acquired before that date continue to be multiplied by weightings and, moreover, by the same weightings
         as those applicable to officials who retired before that date. Those findings are borne out by the consideration that the
         legislature did not adopt rules with a negative effect solely on pension rights acquired after 1 May 2004, but also rules
         with a negative effect on pension rights acquired before that date, by gradually replacing, over a transitional period up
         to 30 April 2008, capital weightings with country weightings, which are less favourable to pensioners.
      
      The difference in treatment cannot, a fortiori, be regarded as arbitrary or manifestly inappropriate discrimination in the
         light of the aims pursued by the reform of the Staff Regulations. It is only where such discrimination exists that a plea
         based on infringement of the principle of equal treatment and non-discrimination, raised against measures taken in a field
         in which the legislature has discretionary power, as in the case of changes to the pensions system, can be allowed.
      
      (see paras 64, 74-75)
      See: 
      T-11/03 Afari v ECB [2004] ECR-SC I‑A‑65 and II‑267, para. 65
      
      F‑43/05 Chassagne v Commission [2007] ECR-SC I-A-1-000 and II-A-1-000, para. 91
      
      2.      In a field in which the legislature has discretionary power, as in the case of changes to the pensions system, the Court,
         in its review of observance of the principle of equal treatment and non‑discrimination, is confined to determining that the
         institution concerned has not applied arbitrary or manifestly inappropriate distinctions.
      
      The legislature did not exceed those limits when it abolished all weightings for pension rights acquired after 1 May 2004,
         pursuant to Regulation No 723/2004 amending the Staff Regulations of Officials and the Conditions of Employment of Other Servants.
         There is no higher principle of Community law guaranteeing Community pensioners ‘equal treatment in terms of purchasing power’,
         but a general principle of equal treatment and non‑discrimination which it was for the legislature to implement using the
         method and means it deemed most appropriate. Given the legislature’s discretionary power concerning changes to the pensions
         system, the Council was perfectly entitled to adopt a system designed to implement the principle of equal treatment and non-discrimination
         by abolishing weightings and ensuring that officials paying the same contribution would receive the same nominal pension,
         which is, moreover, generally the case with pension schemes in other international organisations. It was justified in considering
         that European integration made weightings less and less necessary, and that pensioners would increasingly choose to establish
         their residence in their former country of employment or in a State other than their country of origin; the Council was also
         entitled to take account of the desire to avoid both fraud and expensive and difficult procedures for verifying pensioners’
         actual place of residence.
      
      The legislature is also free to change the Staff Regulations by adopting provisions which are less favourable for the officials
         concerned than the previous ones, and that freedom cannot be fettered by invoking the principle of equality of purchasing
         power. However, where officials have acquired entitlements, the legislature must fix a transitional period of sufficient length
         to prevent, in the context of the pensions scheme, the rules for the payment of acquired pensions from being amended in an
         unexpected way. Even if that protection extends to officials who retired after the reform of the Staff Regulations came into
         force, it would cover only the rights they acquired before that reform came into force.
      
      (see paras 65, 78, 80-82)
      See:
      T-13/97 Losch v Court of Justice [1998] ECR-SC I‑A‑543 and II‑1633, paras 113, 121 and 122; T-164/97 Busacca and Others v Court of Auditors [1998] ECR-SC I‑A‑565 and II‑1699, paras 49, 58 and 59; T-112/96 and T-115/96 Séché v Commission [1999] ECR-SC I‑A‑115 and II‑623, paras 127 and 132; 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; T-184/00 Drouvis v Commission [2003] ECR-SC I‑A‑51 and II‑297, para. 57, confirmed by judgment of 29 April 2004 in C-187/03 P Drouvis v Commission, not published in the ECR; T-135/05 Campoli v Commission [2006] ECR-SC I-A-2-297 and II-A-2-1527, paras 71, 72, 78, 79, 85, 87, 97 and 105
      
      F‑43/05 Chassagne v Commission [2007] ECR-SC I-A-1-000 and II-A-1-0000, para. 62
      
      3.      The abolition of weightings for pension entitlements acquired after 1 May 2004, effected by Regulation No 723/2004 amending
         the Staff Regulations of Officials and the Conditions of Employment of Other Servants, does not infringe the principle of
         equal treatment and non-discrimination in respect of pensioners residing in a Member State with a high cost of living as compared
         with pensioners living in a Member State with a lower cost of living. The same conclusion applies for pensioners not resident
         in Belgium as compared with those resident there.
      
      Firstly, if that abolition of weightings leads to differences in terms of purchasing power between pensioners, depending on
         whether they are resident in countries with a high or low cost of living, such differences are based on an objective and reasonable
         criterion, namely the equal amount of contributions paid by the officials during their career, and secondly, at least during
         the first years when the new pension system applies, those differences are proportionate to the aims pursued by the reform
         of the Staff Regulations. During those years, those officials who retired after the reform of the Staff Regulations came into
         force will have acquired the vast majority of their pension entitlements and will consequently be given overall coefficients
         which are fairly similar to those they would have received if the reform of the Staff Regulations had retained the weightings
         system. It is only if, contrary to the Council’s expectations, the differences in the cost of living between Member States
         persisted in future that the difference in treatment between pensioners taking up residence in places where the cost of living
         is high and those taking up residence in places where it is low could, given the absence of weightings on a substantial proportion
         of the pension entitlements, and should the Council fail to take corrective measures, prove disproportionate to the aims pursued
         by the reform of the Staff Regulations.
      
      Similarly, on the basis of the same considerations and taking account of the legislature’s discretionary power as regards
         changing the pensions system, the consequences of abolishing the weightings cannot constitute arbitrary or manifestly inappropriate
         discrimination in the light of the aims pursued by the reform of the Staff Regulations.
      
      (see paras 84-87)
      4.      An official of the European Communities has the status of a migrant worker, and as a Community national working in a Member
         State other than his State of origin he does not lose his status of worker within the meaning of Article 39(1) EC through
         occupying a post within an international organisation, even if the rules relating to his entry into and residence in the country
         in which he is employed are specifically governed by an international agreement. However, Community pensioners cannot rely
         on the principles of freedom of movement and freedom of establishment, which are mainly designed for the pursuit of an economic
         activity, but only on Article 18 EC, which guarantees Community nationals the right to move and reside freely within the territory
         of the Member States.
      
      (see paras 96-98)
      See:
      389/87 and 390/87 Echternach and Moritz [1989] ECR 723, para. 11; C-293/03 My [2004] ECR I‑12013, para. 37; C-185/04 Öberg [2006] ECR I‑1453, para. 12
      
      5.      Article 18 EC guarantees Community nationals the right to move and reside freely within the territory of the Member States,
         a right which stems directly from the status of citizen of the European Union conferred by Article 17 EC, which is destined
         to be the fundamental status of nationals of the Member States. Subject to the limitations and conditions laid down in the
         Treaty and in secondary legislation, Article 18 EC may, in itself, create for citizens of the European Union rights which
         are enforceable by them. That provision could thus, in the absence of any specific rule on the subject, form the basis of
         a right for retired Community officials to establish themselves in the Member State of their choice.
      
      The right to freedom of movement is compromised not just by measures consisting of direct prohibitions and restrictions, but
         also by measures dissuading those concerned from establishing themselves in another Member State. However, it cannot be inferred
         from Article 18 EC that there is a positive obligation for the Community legislature to grant recipients of Community pensions
         a financial supplement in the form of weightings designed to compensate for the higher cost of living in a Member State where
         the pensioner wishes to establish himself; since there can be no question of unequal treatment compared with other Community
         pensioners who have chosen to establish themselves in the same Member State, the disadvantages involved in residing in that
         State, which stem from general and objective situations liable to affect any pensioner or any other person establishing themselves
         in the same State, are the consequence of the choice of place of residence freely made by the person concerned after taking
         into consideration all the advantages and disadvantages of that choice, and cannot under any circumstances be regarded as
         implied obstacles to freedom of movement.
      
      (see paras 98-100)
      See:
      C-177/94 Perfili [1996] ECR I‑161, paras 17 to 19; C-413/99 Baumbast and R [2002] ECR I‑7091, paras 82, 84 and 86; C-148/02 Garcia Avello [2003] ECR I‑11613, paras 21 to 24; C-403/03 Schempp [2005] ECR I‑6421, paras 45 to 47; C-137/04 Rockler [2006] ECR I‑1441, paras 17 to 19; C-192/05 Tas-Hagen and Tas [2006] ECR I‑10451; C-520/04 Turpeinen [2006] ECR I‑10685, para. 13; C-208/05 ITC [2007] ECR I‑181, paras 31 and 33; C‑150/04 Commission v Denmark [2007] ECR I‑1163, paras 41 to 45