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

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

In Case C-424/05 P,

APPEAL under Article 56 of the Statute of the Court of Justice, lodged on 29 November 2005,

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

appellant,

the other party to the proceedings being:

Sonja Hosman'Chevalier, represented by J.'R. García'Gallardo Gil'Fournier, A. Sayagués Torres, and D. Dominguez Pérez, abogados,

applicant at first instance,

composed of A. Rosas, Presidents of the Chamber, A. Tizzano, J. Malenovský (Rapporteur), U. Lõhmus and A. à Caoimh, Judges,

Advocate General: P. Mengozzi,

Registrar: B. Fülöp, Administrator,

having regard to the written procedure and further to the hearing on 13 September 2006,

after hearing the Opinion of the Advocate General at the sitting on 15 March 2007,

gives the following

1. In its appeal, the Commission of the European Communities asks the Court of Justice to set aside the judgment of the Court of First Instance of the European Communities of 13 September 2005 in Case T-72/04 Hosman'Chevalier v Commission [2005] ECR II-3265 ('the judgment under appeal'), by which it annulled the decisions of the Commission of 8 April 2003 and 29 October 2003 refusing to pay Ms Hosman'Chevalier an expatriation allowance and an installation allowance.

Legal context

2. Article 69 of the Staff Regulations of Officials of the European Communities ('the Staff Regulations'), in the version applicable to the present case, 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;

(b) to officials who are or have been nationals of the State in whose territory the place where they are employed is situated but who during the 10 years ending at the date of their entering the service habitually resided outside the European territory of that State for reasons other than the performance of duties in the service of a State or of an international organisation.

...'

Facts of the case

4. The factual background to the dispute was summarised by the Court of First Instance in paragraphs 4 to 10 of the judgment under appeal:

-4. The applicant, an Austrian national, studied and worked in Austria until 14 May 1995. From 15 May 1995 to 17 March 1996 she worked in Belgium for the Verbindungsbüro des Landes Tirol, the Liaison Office for the Land Tirol, located in Brussels.

5. From 18 March 1996 to 15 November 2002, the applicant was a member of staff of the Permanent Representation of the Republic of Austria to the European Union in Brussels [('the Permanent Representation of the Republic of Austria')]. As such, she worked, first, for the Verbindungsstelle der Bundesländer ('the VB'), the Länder Liaison Office and, then, for the Österreichischer Gewerkschaftsbund ('the OGB'), the Austrian Federation of Trade Unions.

6. On 16 November 2002, the applicant took up her duties at the Commission as an official. The 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, known as 'the reference period', were fixed between 16 May 1997 and 15 May 2002.

7. By memorandum of 8 April 2003, the applicant was informed by the Directorate'General for Personnel and Administration of the Commission that she could not be granted payment of the expatriation allowance.

8. On 7 July 2003, the applicant submitted a complaint, under Article 90(2) of the Staff Regulations, about that memorandum of 8 April 2003. By email of 14 August 2003 and by fax of 11 September 2003, she sent two additions to that complaint.

9. By memorandum of 29 October 2003, brought to the applicant's attention on 3 November 2003, the appointing authority rejected the applicant's complaint.

10. According to that decision the applicant was refused the expatriation allowance and the allowances associated therewith primarily on the ground that the work that she did in Brussels during the reference period could not be considered 'work done for another State' within the meaning of the exception laid down in Article 4(1)(a) of Annex VII to the Staff Regulations. The appointing authority considered that, although it was true that the VB was located on the premises of the Permanent Representation of the Republic of Austria, it was nevertheless an independent and distinct entity set up by the Länder and responsible for defending their interests and not those of the Bund (Federal State). As regards the OGB, the documents sent by the applicant and, in particular, her contract of employment made no reference to a link of any kind with the Republic of Austria. This was the reason why the work done for the OGB could not be classed as work done for that State either.'

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 20 February 2004, Ms Hosman'Chevalier brought an action for annulment of the Commission decision of 29 October 2003 refusing to pay her the expatriation allowance and the allowances associated therewith.
6. By the judgment under appeal, the Court of First Instance held that the action sought not only the annulment of the Commission decision of 29 October 2003, but also the annulment of that of 8 April 2003. The Court of First Instance proceeded to annul those decisions.
7. The Court of First Instance upheld the second plea in law raised by Ms Hosman'Chevalier, which alleged infringement of Article 4(1)(a) of Annex VII to the Staff Regulations.
8. According to the Court of First Instance, the issue to be determined was whether the work which Ms Hosman'Chevalier was required to do for the Permanent Representation of the Republic of Austria during the reference period was to be considered as work done for a State within the meaning of Article 4(1)(a) of Annex VII to the Staff Regulations. In addition, the Court of First Instance stated that the term 'State' used in that article relates only to the State as a legal person and unitary subject of international law and its government bodies.
9. The Court of First Instance stated at the outset, at paragraph 30 of the judgment under appeal, that it was not disputed that work done for bodies such as the Permanent Representation of a Member State to the European Union or the embassies of a State was to be considered to be work done for a State within the meaning of Article 4(1)(a) of Annex VII to the Staff Regulations.
10. At paragraphs 31 to 36 of the judgment under appeal, the Court of First Instance set out the various factors which led it to hold that Ms Hosman'Chevalier was a member of staff of the Permanent Representation of the Republic of Austria, that she was subject to the supervisory authority of the ambassador, a permanent representative of the Republic of Austria to the European Union, and that her status was the same as that of the other members of staff assigned to that representation.
11. The Court of First Instance inferred from this that the work which Ms Hosman'Chevalier did at the Permanent Representation of the Republic of Austria throughout the reference period was to be regarded as work done for that State.
12. At paragraphs 38 to 41 of the judgment under appeal, the Court of First Instance subsequently dismissed the Commission's argument that Ms Hosman'Chevalier, although working for the Permanent Representation of the Republic of Austria, worked not for that State, but for the VB and OGB, bodies not responsible for defending the interests of the State.
13. At paragraph 42 of the judgment under appeal, the Court of First Instance on the contrary accepted that it is sufficient that a person works for a body which is part of the State in the sense referred to, such as a permanent representation, in order to fall fully within the exception laid down in Article 4(1)(a) of Annex VII to the Staff Regulations, regardless of the particular and specific functions carried out by that person within that body. If this were not the case it would be necessary to carry out a detailed analysis of the tasks and functions performed from the point of view of national law, which would be contrary to the requirement of a uniform application of Community law and the principle of equality. That is all the more so since it is the exclusive role of every Member State to organise its services as it deems most appropriate and to thus determine the objectives and functions it assigns to its officials and employees.
14. The Court of First Instance therefore concluded from that that Ms Hosman'Chevalier fulfilled the conditions laid down by Article 4(1)(a) of Annex VII to the Staff Regulations, thus entitling her to be paid the expatriation allowance.
15. At paragraph 51 of the judgment under appeal, the Court of First Instance held that, since the installation allowance provided for by Article 5(1) of Annex VII to the Staff Regulations was payable to an official fulfilling the conditions for payment of the expatriation allowance, Ms Hosman'Chevalier was justified in claiming payment of that installation allowance. The Court of First Instance did not, however, find that she was entitled to payment of the daily subsistence allowance, for the reasons set out at paragraph 52 of the judgment under appeal.

Procedure before the Court

16. In the present appeal, the Commission claims that the Court should:

set aside the judgment under appeal and refer the case back to the Court of First Instance;

order Ms Hosman'Chevalier to pay the costs of the proceedings, including her own costs in the proceedings before the Court of First Instance.

17. Ms Hosman'Chevalier contends that the Court should:

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

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

The appeal

Arguments of the parties

18. By its single plea in law, the Commission complains that the Court of First Instance erred in law in its application of the provisions of Article 4(1)(a) of Annex VII to the Staff Regulations relating to the grant of the expatriation allowance by misinterpreting the concept of 'work done for another State' to which those provisions refer.
19. According to the Commission, it is clear from a series of facts taken into consideration at paragraphs 31 to 36 and 42 of the judgment under appeal that the Court of First Instance considered, wrongly, that, in order for the condition of work done for another State, as established by those provisions, to be fulfilled, it was sufficient that the person concerned was integrated into the functional and/or organisational context of a body of that State, such as a permanent representation to the European Union.
20. The Commission asserts, conversely, that that condition must be interpreted as meaning that there must be a direct legal tie linking the person concerned and the State at issue and that that tie cannot consist solely of the fact that the person concerned is integrated into the context indicated.
21. According to the Commission, the derogation provided for by the last sentence of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, according to which the officials concerned are entitled to the expatriation allowance, is justified inasmuch as they cannot be deemed to have established a lasting tie with the country in which they are employed (Case 246/83 De Angelis v Commission [1985] ECR 1253, paragraph 13). Moreover, that underlying purpose specifically presupposes that the person concerned has a direct tie to another State or to an international organisation by virtue of a statutory and/or contractual relationship. Such a relationship alone is liable to imply a right on the part of the other State or international organisation to call on that person to work for a limited period within the territory of the State in which is situated the place of his subsequent employment ('the country of employment') as an official of the European Communities.
22. The Commission states that the last sentence of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations is an exception to the conditions of grant of the expatriation allowance and should therefore, as such, be interpreted strictly. Furthermore, since it also concerns a provision governing a financial benefit, a strict interpretation is called for (see Joined Cases 146/81, 192/81 and 193/81 BayWaand Others [1982] ECR 1503, paragraph 10, Case T-41/89 Schwedler v Parliament [1990] ECR II-79, paragraph 23, confirmed on appeal by Case C-132/90 P Schwedler v Parliament [1991] ECR I-5745).
23. In addition, the Court of First Instance's interpretation of the last sentence of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations at paragraphs 31 to 36 and 42 of the judgment under appeal deviates from its own case'law, according to which a direct legal tie with the State is required (see Case T-190/03 Olesen v Commission [2005] ECR'SC I'A-181 and II-805, paragraphs 49 to 51; Case T-205/02 Salvador García v Commission [2005] ECR'SC I'A-285 and II-1311, paragraph 55; Case T-83/03 Salazar Brier v Commission [2005] ECR'SC I'A-311 and II-1407, paragraph 45; Case T-298/02 Herrero Romeu v Commission [2005] ECR II-4599 and ECR'SC I'A-295 and II-1349, paragraph 41, and Case T-368/03 De Bustamante Tello v Council [2005] ECR'SC I'A-321 and II-1439, paragraph 42).
24. Moreover, according to the case'law of the Court of First Instance, as regards the provision concerning 'work done for [...] an international organisation', a direct legal tie with the international organisation at issue has also been required (see Case T-43/93 Lo Giudice v Parliament [1995] ECR'SC I'A-57 and II-189, paragraph 36, and Case T-127/00 Nevin v Commission [2002] ECR'SC I'A-149 and II-781, paragraph 51). It would be inconsistent, even arbitrary, to require such a direct legal tie for one part of the exception, but not for the other.
25. The Court of First Instance failed, in the view of the Commission, to investigate whether there was a direct legal tie linking Ms Hosman'Chevalier and the Republic of Austria. In the present case, no such legal tie existed, given that the person concerned was employed during the reference period by the VB and the OGB in turn.
26. Ms Hosman'Chevalier contends that the appeal should be declared inadmissible, maintaining that the Commission is, in fact, seeking to obtain a new assessment of the facts from the Court.
27. As to the substance, Ms Hosman'Chevalier contends that, in establishing the existence of a legal tie linking the person concerned and the State, without necessarily requiring that that tie be direct, the action of the Court of First Instance is compliant with Community law.
28. From the moment that work for a permanent representation such as that here at issue is considered to be work for a State, the condition that there be a legal tie linking Ms Hosman'Chevalier and the State is satisfied.
29. In that respect, the case'law of the Court of First Instance is not formalistic and the existence of such a tie does not imply strictly or in itself the existence of a 'legal' tie of dependency. That tie may be established in the light of the individual circumstances of each case. Thus, in the present case, from the moment at which it was clear from the court file that Ms Hosman'Chevalier was one of the staff of the Permanent Representation of the Republic of Austria, it was not necessary to go any further, or to demonstrate expressly the existence of a legal or other tie.

Findings of the Court

Admissibility

30. It is necessary to point out that, under Article 225(1) EC and the first paragraph of Article 58 of the Statute of the Court of Justice, an appeal is only possible on grounds relating to the infringement of rules of law, to the exclusion of any assessment of the facts.
31. According to those provisions, the Court of First Instance has exclusive jurisdiction, first, to establish the facts, except where the substantive inaccuracy of its findings is apparent from an examination of the documents which were submitted to it and, second, to assess those facts. When the Court of First Instance has established or assessed the facts, the Court of Justice has jurisdiction under Article 225 EC to review the legal characterisation of those facts by the Court of First Instance and the legal conclusions it has drawn from them (see, inter alia, Case C-284/98 P Parliament v Bieber [2000] ECR I-1527, paragraph 31, and Case C-270/99 P Z v Parliament [2001] ECR I-9197, paragraph 37).
32. In the present case, it must be noted that the Commission does not dispute that Ms Hosman'Chevalier was a member of the staff of the Permanent Representation of the Republic of Austria during the reference period. In support of its appeal, the Commission merely asserts that this fact was not such as to entitle the party concerned to the expatriation allowance, on the ground that no direct legal tie existed linking her and the Republic of Austria.
33. Thus, contrary to Ms Hosman'Chevalier's contentions, the Commission's appeal relates not to the assessment of the facts but to their legal characterisation. Ms Hosman'Chevalier's plea of inadmissibility must therefore be rejected.

Substance

34. In order to address the plea in law raised by the Commission, it is necessary to examine the concept of 'work done for another State' in the light of all the provisions of Article 4(1)(a) of Annex VII to the Staff Regulations which govern the grant of the expatriation allowance and of which that concept forms part.
35. As the Court has consistently held, the purpose of the expatriation allowance 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. Furthermore, 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 main occupation pursued (see Case 201/88 Atala-Palmerini v Commission [1989] ECR 3109, paragraph 9, and Case C-452/93 P Magdalena Fernández v Commission [1994] ECR I-4295, paragraph 20).
36. 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.
37. It is clear from the last sentence of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations that the Community legislature necessarily intended to treat as also being in such a situation of expatriation 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.
38. The Community legislature accordingly concluded that the performance of that work 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 (see, to that effect, Case 1322/79 Vutera v Commission [1981] ECR 127, paragraph 8, and De Angelis v Commission, paragraph 13).
39. In the country to which the official concerned was posted, the other States are represented by embassies or diplomatic missions and by permanent representations to international organisations, as follows from the rules of customary international law, codified in particular by the Vienna Convention of 18 April 1961 on Diplomatic Relations and the Vienna Convention of 14 March 1975 on the Representation of States in their Relations with International Organisations of a Universal Character.
40. Consequently, the concept of 'State' referred to by the last sentence of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations necessarily includes the permanent representation of a Member State to the European Union, something which, moreover, has not been challenged in the context of the appeal.
41. Therefore, the members of the staff of such a permanent representation, including its administrative and technical staff, must, since they are part of the structures of that representation, be considered to be working for the Member State concerned and, consequently, to be in a situation of 'expatriation' under the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations.
42. In the present case, as the Court of First Instance found, Ms Hosman'Chevalier, although not employed by the Austrian central administration, was a member of staff of the Permanent Representation of the Republic of Austria, was subject to the supervisory authority of its ambassador and had the same status as other officials posted to that representation. It is also clear from the judgment under appeal that, as such, she was accorded various privileges and immunities, namely, in particular, an exemption from regional taxes on property. In those circumstances, she must be regarded as having worked for the Austrian State.
43. Ms Hosman'Chevalier's special status, as described in the foregoing paragraph, resulted in her having a specific tie linking her to the Republic of Austria. The very existence of the latter prevents her from forming a lasting tie linking her to the country to which she was posted and, consequently, from integrating to the requisite degree in the society of that country.
44. Thus, in the light of the underlying purpose of the last sentence of the second indent of Article 4(1)(a) of Annex VII to the Staff Regulations, the Court of First Instance was fully entitled, at paragraph 42 of the judgment under appeal, to hold that, for Ms Hosman'Chevalier to be entitled to the expatriation allowance, it was sufficient for her to have worked for the Permanent Representation of the Republic of Austria, regardless of the particular and specific functions she carried out within that body.
45. Consequently, the Commission's argument that entitlement to the expatriation allowance is conditional on the existence of a direct legal tie linking the person concerned and the State at issue is wholly unfounded.
46. Such an interpretation is, moreover, consistent with the autonomy enjoyed by the Member States in the internal organisation of their permanent representations. As the Advocate General has pointed out at point 89 of his Opinion, it is for the Member State to determine which bodies will form part of its permanent representation and to identify the public interests which the various bodies coexisting with the permanent representation must promote in relations with the Community institutions.
47. In view of the foregoing, it must be held that the Court of First Instance did not err in law when it found, at paragraph 47 of the judgment under appeal, that it was necessary to annul the decisions of the Commission of 8 April 2003 and 29 October 2003 inasmuch as they refused to pay Ms Hosman'Chevalier the expatriation allowance.
48. It follows from all of the foregoing that the Commission's appeal must be dismissed as unfounded.

Costs

49. Under Article 69(2) of the Rules of Procedure, applicable to the procedure on appeal by virtue of Article 118, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since Ms Hosman'Chevalier has applied for costs and the Commission has been unsuccessful in its plea in law, the Commission must be ordered to pay the costs.

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

1. Dismisses the appeal;

2. Orders the Commission of the European Communities to pay the costs.

[Signatures]

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* Language of the case: French.