Court of Justice of the European Communities (including Court of First Instance Decisions)

(Appeals Officials Remuneration Expatriation allowance Condition laid down by Article 4(1)(a), second indent, of Annex VII to the Staff Regulations Concept of 'work done for another State')

In Case C-10/06 P,

APPEAL under Article 56 of the Statute of the Court of Justice, brought on 5 January 2006,

Rafael de Bustamante Tello, represented by R. García-Gallardo Gil-Fournier, D. Domínguez Pérez and A. Sayagués Torres, abogados,

applicant,

the other party to the proceedings being:

Council of the European Union, represented by M. Simm and D. Canga Fano, acting as Agents,

defendant at first instance,

composed of K. Lenaerts, President of the Chamber, G. Arestis, R. Silva de Lapuerta, J. Malenovský (Rapporteur) and T. von Danwitz, Judges,

Advocate General: Y. Bot,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 22 March 2007,

after hearing the Opinion of the Advocate General at the sitting on 7 June 2007,

gives the following

1. By his appeal, Mr de Bustamante Tello seeks the annulment of the judgment of the Court of First Instance of the European Communities in Case T-368/03 de Bustamante Tello v Council [2005] ECR-SC I'A'321 and II'1439 ('the judgment under appeal'), dismissing his action for annulment of the decision of the Council of the European Union of 28 July 2003 refusing to grant him the expatriation allowance provided for by Article 4(1) of Annex VII to the Staff Regulations of Officials of the European Communities ('the Staff Regulations') and the allowances associated with it ('the contested decision').

Legal context

2. The first sentence of Article 69 of the Staff Regulations, in the version applicable at the time of the contested decision, lays down that the expatriation allowance is equal to 16% of the total amount of the basic salary plus household allowance and dependent child allowance to which the official is entitled.
3. Article 4(1) of Annex VII to the Staff Regulations provides for payment of the expatriation allowance:

'(a) to officials:

who are not and have never been nationals of the State in whose territory the place where they are employed is situated,

and

who during the five years ending six months before they entered the service did not habitually reside or carry on their main occupation within the European territory of that State. For the purposes of this provision, circumstances arising from work done for another State or for an international organisation shall not be taken into account.

...'

Facts

4. The factual background to the dispute was summarised by the Court of First Instance in paragraphs 3 to 9 of the judgment under appeal as follows:

'3 The applicant, a Spanish national, worked in Brussels from 2 December 1991 to 31 July 1996 for the Instituto de fomento de la Región de Murcia (institute for the development of the Region of Murcia, 'INFO'), a body governed by public law of the Autonomous Community of the Region of Murcia (Comunidad Autónoma de la Región de Murcia), whose Brussels office is entrusted inter alia with following the Community legislation and programmes of interest to that autonomous community. From 2 December 1991 to 31 October 1993, he worked for INFO under a trainee contract and from 1 November 1993 until August 1996 under an employment contract of indefinite duration.

4 Between August 1996 and December 2002 the applicant worked in Brussels, still under a contract of indefinite duration concluded with INFO, as director of the Oficina de la Comunidad Autónoma de la Región de Murcia ante las Comunidades europeas (office of the Autonomous Community of the Region of Murcia attached to the European Communities 'ORM'), an administrative body of the Autonomous Community of the Region of Murcia entrusted with the management of its interests within the Community institutions.

5 The applicant accepts that at the time of the performance of his duties for INFO and ORM he resided in Brussels for professional reasons. However, the parties disagree as to the place of habitual residence and the centre of interests of the applicant during that period.

6 On 1 January 2003, the applicant entered the service of the Council as an official. The period of five years referred to in the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations for the purposes of payment of the expatriation allowance, termed 'the reference period', was, in the present case, between 1 July 1997 and 30 June 2002.

7 On 24 January 2003, the Personnel and Administration directorate of the general secretariat of the Council sent him his individual record sheet on entering the service. That sheet indicated that he was not entitled to the expatriation allowance or the allowances associated with it.

8 On 10 April 2003 the applicant lodged a complaint under Article 90(2) of the Staff Regulations against that administrative record sheet.

9 By letter of 28 July 2003, the deputy Secretary-General of the Council adopted a decision expressly rejecting the applicant's complaint. That decision stated that the applicant was refused the expatriation allowance and the allowances associated with it on the ground that he had habitually resided and carried on his main occupation in Brussels for the five years ending six months before his entry into service within the meaning of Article 4(1)(a) of Annex VII to the Staff Regulations. Moreover, the appointing authority took the view that the professional activities of the applicant for INFO and ORM could not be considered to be 'work done for another State' within the meaning of the exception laid down in Article 4 and that, therefore, the periods concerned could not be disregarded.'

The procedure before the Court of First Instance and the judgment under appeal

5. By application lodged at the Registry of the Court of First Instance on 4 November 2003, the applicant brought an action seeking the annulment of the contested decision.
6. By the judgment under appeal the Court of First Instance dismissed the applicant's action. It thus rejected the three pleas in law relied on by the applicant, alleging breach of Article 4(1)(a) of Annex VII to the Staff Regulations, an error of assessment of the facts and breach of the principle of equal treatment.
7. As regards the first plea, the Court of First Instance took the view, in paragraph 27 of the judgment under appeal, that the question to be answered was whether the work done by the applicant in Brussels, for ORM, had to be considered to be work done for another State within the meaning of the second indent of Article 4(1)(a) of Annex VII.
8. In rejecting that plea, the Court of First Instance first observed, in paragraph 30 of the judgment under appeal, that it is apparent from the general scheme of the EC and EA Treaties that the term 'Member State', for the purposes of the institutional provisions, refers only to government authorities of the Member States and cannot include the governments of regions or autonomous communities, irrespective of the powers they may have.
9. In paragraph 31 of the judgment under appeal, the Court of First Instance went on to hold, essentially, that the provisions of the Staff Regulations employ precise wording and there is no reason to extend their scope by analogy to situations to which they do not expressly refer. Finally, it pointed out, in paragraph 32 of the judgment, that the legislature chose the word 'State' although, at the time when the Staff Regulations were adopted, Member States with a federal or regional structure, such as the Federal Republic of Germany, already existed alongside the States with a centralised internal structure. It inferred from that that if the Community legislature had wanted to introduce political subdivisions or local authorities into that article, it would have done so expressly.
10. The Court of First Instance therefore concluded, in paragraph 33 of the judgment under appeal, that the term 'State' used in Article 4 of Annex VII to the Staff Regulations relates only to the State as a legal person and unitary subject of international law and its government bodies.
11. The Court of First Instance inferred, in paragraph 34 of the judgment under appeal, that the expression 'work done for another State', used in Article 4 of Annex VII to the Staff Regulations, must be interpreted as not referring to work done for governments of political subdivisions of a State.
12. In paragraphs 36 to 43 of the judgment under appeal the Court of First Instance also rejected several arguments relied on by the applicant.
13. In paragraph 36 it rejected the applicant's argument based on the existence of an autonomous meaning of 'State' in Community law which encompassed decentralised bodies. In paragraphs 37 and 38 the arguments based on the autonomous communities' own powers in the Spanish legal order and the terms of a decision of the Tribunal Constitucional of 26 May 1994 were rejected. In paragraphs 39 to 41 the Court of First Instance rejected arguments to the effect that the applicant was covered by the same health insurance and tax schemes as the staff working in the Permanent Representation of the Kingdom of Spain to the European Union in Brussels. Finally, in paragraphs 42 and 43, it rejected the applicant's argument based on the participation of representatives of the autonomous communities in the consultative committees of the Commission.
14. In order to reject the second plea in the action, alleging an error in the assessment of the facts by the Council, the Court of First Instance made the point, in paragraph 63 of the judgment under appeal, that during the reference period the applicant habitually lived and carried on his main occupation in Brussels.
15. Finally, in paragraphs 71 to 74 of the judgment under appeal, the Court of First Instance held that the third plea relied on by the applicant in support of his action, alleging breach of the principle of equal treatment, could not be upheld on the ground that no breach of that principle had been established.
16. As regards the claim for the grant of the allowances associated with the expatriation allowance, the Court of First Instance held, in paragraph 76 of the judgment under appeal, that, as it had held that the applicant was not entitled to receive the expatriation allowance, that claim should be rejected.

Forms of order sought in the appeal

17. By his appeal, the appellant claims that the Court should:

annul the judgment under appeal, remit the case back to the Court of First Instance, and

order the Council to pay the costs both at first instance and on appeal.

18. The Council contends that the Court should:

dismiss the appeal as inadmissible or, in the alternative, as unfounded;

order the appellant to pay the costs of these proceedings.

The appeal

Arguments of the parties

19. By his single plea the appellant complains that the Court of First Instance made an error of law in misinterpreting the expression 'circumstances arising from work done for another State' used in the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations. The plea is in two separate parts.
20. First, the appellant points out that the Court of First Instance interpreted the exception provided for by the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations strictly. In so doing, the Court of First Instance departed from previous case-law, notably from its judgment in Case T-4/92 Vardakas v Commission [1993] ECR II-357, paragraph 34, in which it was held that, as an exception to an exception, that provision must be interpreted broadly.
21. Secondly, the appellant alleges that that exception was provided for in order to take account of the fact that the persons it concerns cannot be deemed to have established a lasting tie with the State in which they are employed due to the temporary nature of the secondment in that State.
22. The judgment under appeal, by excluding from the scope of that exception work done for the Member State concerned through the intermediary of the autonomous communities, disregarded the reason why that provision was laid down and, moreover, created discrimination between officials who provided services to that State through the intermediary of the central administration, in a permanent representation, whose right to the expatriation allowances is recognised (Case T-72/04 Hosman-Chevalier v Commission [2005] ECR II-3265, paragraph 40), and those who provided their services through the intermediary of the administration of an autonomous community. In both situations the official has not established lasting ties with the State where he is employed before entering the service of the Communities because of the temporary nature of his secondment in that State. What matters ultimately is whether or not the links established by the official with his State of employment are of a lasting nature.
23. Finally, contrary to what the Court of First Instance held in paragraph 33 of the judgment under appeal, that wide interpretation does not lead to all public bodies with separate legal personality being considered to be 'States'. The scope of such an interpretation is limited to bodies with responsibilities in Community matters, as in the case of the autonomous communities, and has the merit of being in harmony with other provisions of the EC Treaty, such as those on State aid or public procurement.
24. In its defence, the Council contends, as its main claim, that the appeal is inadmissible, arguing that the appellant does not indicate clearly the parts of the judgment under appeal which he seeks to have annulled or the specific legal arguments relied on in support of his claim. The appellant confines himself to repeating the pleas and arguments put before the Court of First Instance and thus seeks to obtain a mere rehearing of the action brought at first instance.
25. As regards the substance, the Council contends, first, that the appellant's plea concerning the restrictive interpretation of the exception laid down by the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations and the failure to respect the position adopted by the Court of First Instance in its judgment in Vardakas v Commission is raised out of context and in breach of settled case-law according to which the Community law provisions conferring entitlement to financial benefits must be strictly interpreted (Case T-498/93 Dornonville de la Cour v Commission [1994] ECR-SC I-A-257 and II-813, paragraph 38).
26. Moreover the interpretation of the expression 'work done for another State' put forward by the appellant is contrary to the settled case-law of the Court of Justice, according to which the term 'Member State', for the purposes of the institutional provisions, refers only to government authorities of the Member States and cannot include the governments of regions or autonomous communities, irrespective of the powers they may have. The Council argues on that basis that, if the contrary were true, it would undermine the institutional balance provided for by the Treaties.
27. Second, as regards the alleged failure to respect the ratio legis and the context of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, the Council contends that the position of the Court of First Instance is perfectly consistent with the institutional balance provided for by the Treaties. On the other hand, if the argument of the appellant were upheld that would result in the extension of the term State not only to autonomous communities or to other comparable regional powers, but also to municipal or local authorities and public undertakings, with unpredictable consequences.

Findings of the Court

Admissibility

28. In accordance with the Court's case-law, an appeal is inadmissible if, without even including an argument specifically identifying the error of law allegedly vitiating the decision under appeal, it merely repeats or reproduces verbatim the pleas in law and arguments previously submitted to the Court of First Instance. By contrast, provided that the appellant challenges the interpretation or application of Community law by the Court of First Instance, the points of law examined at first instance may be discussed again in the course of an appeal. Indeed, if an appellant could not thus base his appeal on pleas in law and arguments already relied on before the Court of First Instance, an appeal would be deprived of part of its purpose (see, to this effect, Case C-229/05 P PKK and KNK v Council [2007] ECR I-439, paragraph 32, and the case-law cited).
29. In this case, it is clear from paragraphs 19 to 23 of this judgment that this appeal does not simply comprise a verbatim reproduction of the pleas and arguments contained in the application at first instance and that the appellant has indicated precisely what are the contested points of the order he seeks to have annulled and the arguments on the basis of which he considers the Court of First Instance's legal assessment to be incorrect.
30. By the two parts of the single plea in law relied on in support of his appeal, the appellant seeks to call into question the assessment made by the Court of First Instance as regards the exception laid down by the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, which it interpreted strictly in breach of both its ratio legis and its context.
31. Accordingly, the plea of inadmissibility raised by the Council must be dismissed and the merits of the appeal must be examined.

Merits

32. In order to deal with the plea raised by the appellant it is necessary to rule on the question whether, in interpreting the term 'work done for another State' used in the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, the Court of First Instance made an error of law.
33. According to settled case-law, the purpose of the expatriation allowance provided for by Article 69 of the Staff Regulations, the conditions for granting which are set out in Article 4(1) of Annex VII to those regulations, and where the expression 'work done for another State' appears, is to compensate officials for the extra expense and inconvenience of taking up employment with the Communities if they have been thereby obliged to change their residence and move to the country of employment and to integrate themselves in a new environment. The concept of expatriation also depends on the personal position of an official, that is to say, on the extent to which he is integrated in his new environment, which is demonstrated for example, by habitual residence or by the pursuit of his main occupation (see Case C-452/93 P Magdalena Fernández v Commission [1994] ECR I-4295, paragraph 20, and Case C-424/05 P Commission v Hosman-Chevalier [2007] ECR I-0000, paragraph 35).
34. The grant of the expatriation allowance is thus intended to correct actual instances of inequality arising between officials who are completely integrated into the society of the country of employment and those who are not (Commission v Hosman-Chevalier, paragraph 36).
35. An official who, whilst residing or carrying on an occupation within the European territory of the State in which his place of employment is situated during the five years ending six months before he entered the service, worked for another State or for an international organisation is also in such a situation of expatriation (Commission v Hosman-Chevalier, paragraph 37).
36. The performance of work 'for another State or an international organisation' has the effect of preserving a specific tie of the party concerned linking him to that other State or that international organisation, thereby hindering the creation of a lasting tie to the country of employment and thus his sufficient integration in the society of the country of employment (Commission v Hosman-Chevalier, paragraph 38).
37. In that regard, there is nothing in the provisions of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations to suggest that work done 'for another State' is necessarily work done for a Member State of the European Union. That conclusion is not invalidated by the fact that, in practice, future officials of the Union work, in the vast majority of cases, for a Member State and not for a non-Member State.
38. Where non-Member States are also involved, reference should be made, in order to interpret the term 'State' as used in the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, to public international law which governs relations between Member States and non-Member States.
39. Even if the distribution of responsibilities at intra-State level varies according to the institutional make-up of each State, that State must be considered to be a unitary subject of public international law. In the light of that approach, it is essential that the State be represented, vis-à -vis other States and international organisations, by a system of a single diplomatic representation, which reflects the unitary nature of the State concerned, at international level.
40. The Court has held in that connection that, although it is not essential, in order for the official concerned to be considered to have worked for 'another State', that he should have been employed by the central administration of that State, his functional integration within the permanent representation of that State constitutes a decisive factor (see, to that effect, Commission v Hosman-Chevalier, paragraph 42).
41. The Court held in paragraph 43 of its judgment in Commission v Hosman-Chevalier that the special status of the person concerned, as a member of the staff of a permanent representation, resulted in her having a specific tie linking her to the Member State concerned. That privileged status, which allowed her to enjoy various privileges and immunities under the Vienna Convention of 18 April 1961 on Diplomatic Relations, in itself creates an obstacle which prevents the person concerned from forming a lasting tie linking her to the State to which she was posted and, consequently, from integrating to the requisite degree in the society of that country.
42. The foregoing arguments are moreover borne out by a compelling argument based on one of the documents on the court file. In reply to a question from the Court of First Instance in the course of measures of organisation of the procedure, the Kingdom of Spain explained, without being contradicted on that point, that the integration of officials in the permanent representation of that Member State and their accreditation with the Belgian authorities resulted in their retaining their legal residence in their Member State of origin and that, as they were not registered with the municipal authorities of the Kingdom of Belgium, they are not considered by the competent authorities to be resident in that Member State.
43. Such circumstances are also liable to prevent such officials from integrating in the Member State to which they are posted to the requisite degree and, therefore, they are liable to contribute to the situation of expatriation in which such officials find themselves.
44. In that regard, the appellant complains, as stated in paragraph 22 of this judgment, that the Court of First Instance discriminates between officials who worked for a State through the intermediary of the central administration in a permanent representation, whose entitlement to the expatriation allowance is recognised, and those who worked through the intermediary of the administration of an autonomous community.
45. However, the question whether work was done for the State through the intermediary of its central administration or the administration of an autonomous community does not constitute, contrary to the appellant's contention, the relevant criterion to take into account for the purposes of granting the expatriation allowance.
46. Both those who work for a State through the intermediary of its central administration and those who work for an autonomous community through its administration must be considered to be in a situation of expatriation within the meaning of Article 4(1) of Annex VII to the Staff Regulations, as long as they are formally integrated into the permanent representation of that State.
47. In the present case, it is common ground that, during the reference period, the appellant did not work for the Spanish central administration and nor was she formally integrated in the permanent representation of the Kingdom of Spain to the European Union.
48. In those circumstances, the appellant's argument based on breach of the principle of equal treatment can only be rejected.
49. Moreover, by way of example, it must be observed that, in Spain, under the agreement on the department for matters falling within the remit of the autonomous communities within the permanent representation of the Kingdom of Spain to the European Union and on the participation of the autonomous communities within the working groups of the Council of the European Union, adopted by the Spanish Government on 9 December 2004 within the framework of the Conferencia para Asuntos con las Comunidades Europeas, even if that agreement did not exist at the time of the facts of this case and is thus not applicable to it, at least two posts of adviser on matters relating to the autonomous communities in that representation are occupied by officials of the autonomous communities with responsibilities at intra-State level but integrated into that permanent representation.
50. Accordingly, where, for the purposes of interpretation of the expression 'work done for another State' used in the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, the only fact to be considered relevant is that the work is done within a permanent representation of a State, it follows that the Court of First Instance has not committed any error of law, in paragraph 34 of the judgment under appeal, in interpreting that expression as not referring to work done for governments of political subdivisions of States.
51. It follows from all the foregoing considerations that the appeal must be dismissed.

Costs

52. Under the first subparagraph of Article 69(2) of the Rules of Procedure, applicable to appeal proceedings by virtue of Article 118 thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. In accordance with Article 70 of those rules, in disputes between the Communities and their servants, the institutions are to bear their own costs. Nevertheless, it follows from the first indent of the second paragraph of Article 122 of the Rules of Procedure that Article 70 does not apply to appeals brought by an official or any other servant of an institution against that institution. As the Council asked for an order for costs against the appellant and the appellant was unsuccessful he must be ordered to pay the costs.

On those grounds, the Court (Fourth Chamber) hereby:

1. Dismisses the appeal;

2. Orders Mr de Bustamante Tello to pay the costs.

[Signatures]

---

* Language of the case: Spanish.