CELEX: 62008TJ0390
Common foreign and security policy
Restrictive measures against the Islamic Republic of Iran to prevent nuclear proliferation
Freezing of funds
Actions for annulment
Judicial review
Misuse of powers
Equal treatment
Proportionality
Right to property
Rights of defence
Right to effective judicial protection
Obligation to state reasons
Competence of the Community

Background to the case
The applicant, Bank Melli Iran, is an Iranian commercial bank owned by the Iranian State.
Restrictive measures taken against the Islamic Republic of Iran
This case falls within the ambit of the body of restrictive measures introduced in order to apply pressure on the Islamic Republic of Iran to end proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems (‘nuclear proliferation’).
The origin of the regime at issue is to be found in the United Nations. On 23 December 2006, the United Nations Security Council (‘the Security Council’) adopted Resolution 1737 (2006), the annex to which lists a series of persons and entities involved in nuclear proliferation whose funds and economic resources (‘funds’) were to be frozen. The list contained in the annex to Resolution 1737 (2006) has subsequently been updated by several resolutions, in particular by Security Council Resolution 1747 (2007) of 24 March 2007. The applicant has not, however, been the subject of any fund-freezing measures adopted by the Security Council.
So far as the European Union is concerned, Resolution 1737 (2006) was given effect by Council Common Position 2007/140/CFSP of 27 February 2007 concerning restrictive measures against Iran (
OJ 2007 L 61, p. 49
). Article 5(1)(a) thereof provides for the freezing of all funds belonging to the persons and entities designated in Resolution 1737 (2006), in subsequent resolutions or pursuant to them, and also all funds and economic resources owned, held or controlled, directly or indirectly, by those persons or entities. Article 5(1)(b) of Common Position 2007/140 provides, moreover, that those measures are to apply to entities considered by the Council of the European Union to be engaged in, directly associated with, or providing support for nuclear proliferation. According to Article 7(2) of Common Position 2007/140, the list of persons or entities to whom and to which the fund-freezing measures apply, by virtue of Article 5(1)(b) of that common position, is to be established and amended by the Council, acting by unanimity.
In so far as the powers of the European Community are concerned, Resolution 1737 (2006) was given effect by Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (
OJ 2007 L 103, p. 1
), adopted on the basis of Articles 60 EC and 301 EC and the content of which is substantially the same as that of Common Position 2007/140. Thus, Article 7(1) of Regulation No 423/2007 provides for the freezing of the funds of the persons and entities designated in Resolution 1737 (2006), and of all funds and economic resources owned, held or controlled by those persons or entities. Article 7(2) of that regulation lays down the same provisions with regard, in particular, to the entities identified by the Council in accordance with Article 5(1)(b) of Common Position 2007/140 as being engaged in, directly associated with or providing support for nuclear proliferation. The entities to which a measure freezing funds pursuant to Article 7(2) of Regulation No 423/2007 applies are listed in Annex V to that document.
By way of derogation from Article 7 of Regulation No 423/2007, Articles 9 and 10 thereof authorise the competent authorities of the Member States, in essence, to release frozen funds in order, inter alia, to enable entities listed in Annex V to honour obligations arising from contracts concluded before the fund-freezing measure was adopted and to cover essential expenses.
Article 15(2) of Regulation No 423/2007 provides, first, that the Council, acting by qualified majority, is to establish, review and amend the list in Annex V in full accordance with the determinations made by the Council pursuant to Article 5(1)(b) of Common Position 2007/140 and, secondly, that the list in Annex V is to be reviewed at regular intervals and at least every 12 months.
Article 15(3) of Regulation No 423/2007 requires the Council to state individual and specific reasons for decisions taken pursuant to Article 15(2) of that regulation, and to make them known to the entities concerned.
Furthermore, under paragraph 10 of Security Council Resolution 1803 (2008) of 3 March 2008, the Security Council called upon ‘all States to exercise vigilance over the activities of financial institutions in their territories with all banks domiciled in Iran, in particular with Bank Melli and Bank Saderat, and their branches and subsidiaries abroad, in order to avoid such activities contributing to [nuclear proliferation]’.
Measures affecting the applicant
On 23 June 2008, the Council adopted Common Position 2008/479/CFSP amending Common Position 2007/140 concerning restrictive measures against Iran (
OJ 2008 L 163, p. 43
). By virtue of the annex to Common Position 2008/479, the applicant was included among the entities covered by the freezing of funds in accordance with Article 5(1)(b) of Common Position 2007/140. The freezing of the applicant’s funds was continued in Council Common Position 2008/652/CFSP of 7 August 2008 amending Common Position 2007/140 (
OJ 2008 L 213, p. 58
).
On the same day, the Council adopted Decision 2008/475/EC implementing Article 7(2) of Regulation No 423/2007 concerning restrictive measures against Iran (
OJ 2008 L 163, p. 29
; ‘the contested decision’). As set out in paragraph 4 of Table B in the annex to the contested decision, the applicant was entered in the list in Annex V to that regulation, with the consequence that its funds were frozen.
The Council gave the following reasons:
‘Providing or attempting to provide financial support for companies which are involved in or procure goods for Iran’s nuclear and missile programmes (AIO, SHIG, SBIG, AEOI, Novin Energy Company, Mesbah Energy Company, Kalaye Electric Company and DIO). Bank Melli serves as a facilitator for Iran’s sensitive activities. It has facilitated numerous purchases of sensitive materials for Iran’s nuclear and missile programmes. It has provided a range of financial services on behalf of entities linked to Iran’s nuclear and missile industries, including opening letters of credit and maintaining accounts. Many of the above companies have been designated by [Security Council] Resolutions 1737 and 1747.’
Procedure and forms of order sought
By application lodged at the Registry of the Court of First Instance on 18 September 2008, the applicant brought this action. By separate documents lodged at the Court Registry on the same day, the applicant applied, under Article 76a of the Rules of Procedure of the Court of First Instance, for the case to be decided under an expedited procedure and also applied for interim measures, seeking suspension of the operation of paragraph 4 of Table B in the annex to the contested decision so far as it was concerned.
By decision of 14 October 2008, the Court of First Instance (Second Chamber) granted the application for the case to be resolved under an expedited procedure, pursuant to Article 76a of the Rules of Procedure, authorising the Member States intervening in the proceedings to submit their statements in intervention.
By order of the President of the Court of First Instance of 15 October 2008, the application for interim measures submitted by the applicant was dismissed and the costs reserved.
By documents lodged at the Registry of the Court of First Instance on 20 October and 13 and 18 November 2008, respectively, the United Kingdom of Great Britain and Northern Ireland (‘the United Kingdom’), the French Republic and the Commission of the European Communities applied to intervene in the case in support of the Council. By orders of 12 November and 8 and 11 December 2008, the President of the Second Chamber of the Court of First Instance granted them leave to intervene.
The defence was lodged on 5 November 2008. Statements in intervention were lodged by the United Kingdom and the French Republic on 4 December 2008 and 5 January 2009, respectively.
On 4 February 2009, the applicant applied to the Court for leave to place in the file certain additional documents concerning its relations with the entities designated in the contested decision, on the ground that the documents in question could not have been produced at an earlier stage of the proceedings. That request was granted by decision of the Second Chamber of the Court of 17 February 2009.
On 5 May 2009, the Second Chamber of the Court decided to open the oral procedure without any prior measures of inquiry. It also decided to ask the applicant to answer certain questions in writing, a request with which the applicant complied within the period prescribed by the Court.
At the hearing held on 3 June 2009, the parties presented their oral arguments and answered the oral questions asked by the Court.
In its application, the applicant claims that the Court should:
—
primarily, annul paragraph 4 of Table B in the annex to the contested decision so far as it concerns the applicant, its subsidiaries and branches;
—
or, in the alternative, declare that Articles 7(2) and 15(2) of Regulation No 423/2007 are inapplicable to this case;
—
in any event, order the Council to pay the costs.
At the hearing, the applicant first withdrew its second head of claim, stating that the plea of illegality raised against Articles 7(2) and 15(2) of Regulation No 423/2007 must be considered to be a claim seeking annulment of the contested decision for want of a legal basis. Secondly, it withdrew its first head of claim seeking annulment of the contested decision in so far as the latter concerned its subsidiaries.
The Council contends that the Court should:
—
dismiss the application;
—
order the applicant to pay the costs.
The United Kingdom and the Commission contend that the Court should dismiss the action.
The French Republic contends that the Court should dismiss the action and order the applicant to pay the costs.
Law
The applicant has put forward preliminary observations relating to the Court’s jurisdiction to review the lawfulness of the contested decision. Its heads of challenge on the substance may be grouped in five pleas in law: the first alleging infringement of essential procedural requirements, of the EC Treaty, of the rules of law relating to its application and of Article 7(2) of Common Position 2007/140, misuse of power and want of a legal basis for the contested decision; the second, breach of the principle of equal treatment; the third, breach of the principle of proportionality and of the right to property; the fourth, breach of the rights of the defence, of the right to effective judicial protection and of Article 15(3) of Regulation No 423/2007; and the fifth, that the Community lacked competence.
The Council, supported by the interveners, contests the substance of the pleas in law raised by the applicant.
The Court considers that, before it broaches the pleas in law raised by the applicant, it is necessary to examine the relevance of the documents produced by the latter on 4 February 2009.
The relevance of the documents produced by the applicant on 4 February 2009
The documents produced on 4 February 2009 consist of three statements made by the applicant’s general manager and by the representatives of its branches in Paris (France) and Hamburg (Germany), summarising the applicant’s business relations with the entities designated in the contested decision. In reply to a question asked at the hearing, the applicant explained that those documents had at first been produced in order to establish that the fund-freezing measure applied to it was unwarranted, the relations it had with the entities designated in the contested decision having been limited. Then, according to the applicant, those statements also provide support for its third plea in law, for they make it clear, on the one hand, that the freezing of its funds was not necessary in order to attain the objective pursued by the Council and, on the other, that that objective could have been attained by less restrictive means. Lastly, the documents concerned were also relevant to the fourth plea in law, because they illustrate the difficulties confronting the applicant in being obliged to supply ‘negative proof’, for it had not had access to the items of evidence relied on by the Council, assuming that such exist.
It is to be noted that the application contains no plea challenging the Council’s finding that the applicant has provided financial support for nuclear proliferation, even though that finding forms the basis of the contested decision so far as it concerns the applicant and, in consequence, could have been raised as soon as the action was brought, if necessary with the clarification that additional evidence would be produced as soon as it was available. Again on the assumption, in this context, that that plea was raised for the first time at the hearing, it must be rejected as inadmissible by virtue of Article 48(2) of the Rules of Procedure, the applicant not even having claimed that it relied on matters of law or of fact which came to light during the procedure. In those circumstances, the documents produced on 4 February 2009 cannot be taken into consideration in determining whether the applicant’s relations with the entities designated in the contested decision justified the freezing of its funds.
The same conclusion applies with regard to the relevance of the documents concerned in the examination of the third plea in law. In its application, Bank Melli Iran does no more than maintain that the contested decision was disproportionate in that it went beyond the obligations and recommendations formulated by the Security Council in Resolution 1803 (2008). On the other hand, it has not relied on any head of claim whatsoever challenging the extent of its business relations with the designated entities, as that extent is defined in the contested decision. In so far as the applicant did not, moreover, argue at the hearing that such claims were based on matters of law or of fact that had come to light in the course of the procedure, it follows from Article 48(2) of the Rules of Procedure that they would amount to a new plea in law which would in any event be inadmissible. There is, therefore, no need to take into account the documents produced on 4 February 2009 in the examination of the third plea in law either.
As to the fourth plea in law, the applicant in fact argued in its application that, in order to bring its action before the Court, it was required to adduce ‘negative evidence’ that it did not provide support for nuclear proliferation which is particularly difficult, even impossible, to establish. In consequence, the documents produced on 4 February 2009 may be taken into account in that context.
The rigour of the judicial review
Arguments of the parties
The applicant argues that the lawfulness of any legislation adopted by the Community institutions, including legislation giving effect to a resolution of the Security Council, is subject to full review by the Community judicature within the complete system of legal remedies established by the EC Treaty.
The Council does not deny that the Court has jurisdiction to review the lawfulness of the contested decision. It observes, however, that it enjoys a broad degree of latitude in respect of the matters to be taken into consideration with a view to the adoption of economic or financial restrictive measures.
Findings of the Court
With regard to the rigour of the judicial review, two kinds of matters must be distinguished within Regulation No 423/2007. On the one hand, the articles of that regulation lay down general rules defining the procedures for giving effect to the restrictive measures that it introduces. On the other hand, Annex V to Regulation No 423/2007, which lists the entities to which the fund-freezing measures adopted pursuant to Article 7(2) of the regulation apply, represents a body of measures applying those general rules to specific entities.
So far as the general rules defining the procedures for giving effect to the restrictive measures are concerned, the Council has broad discretion as to what to take into consideration for the purpose of adopting economic and financial sanctions on the basis of Articles 60 EC and 301 EC, consistent with a common position adopted on the basis of the common foreign and security policy (CFSP). Because the Community Courts may not, in particular, substitute their assessment of the evidence, facts and circumstances justifying the adoption of such measures for that of the Council, the review carried out by the Court of the lawfulness of decisions to freeze funds must be restricted to checking that the rules governing procedure and the statement of reasons have been complied with, that the facts are materially accurate, and that there has been no manifest error of assessment of the facts or misuse of power. That limited review applies, especially, to the Council’s assessment of the considerations of appropriateness on which such decisions are based (see, by analogy, Case
T-228/02
Organisation des Modjahedines du peuple d’Iran
v
Council
[2006] ECR II-4665
, (‘
OMPI
’), paragraph 159).
With regard to the review of the lawfulness of the decision by which an entity is entered in the list in Annex V to Regulation No 423/2007 by virtue of Article 7(2) thereof, it is for the Court to ascertain whether, having regard to the pleas for annulment raised by the entity concerned or raised by the Court of its own motion, in particular, the case in point corresponds to one of the four situations covered by Article 7(2)(a) to (d) of Regulation No 423/2007. That implies that the judicial review of the lawfulness of the decision in question extends to the assessment of the facts and circumstances relied on as justifying it, and to the evidence and information on which that assessment is based. The Court must likewise ensure that the rights of the defence are observed and that the requirement of a statement of reasons is satisfied and also, where applicable, that the overriding considerations relied on exceptionally by the Council in disregarding those rights are well founded (see, by analogy,
OMPI
, paragraph 36 above, paragraph 154).
In the instant case, the head of claim alleging want of a legal basis for the contested decision amounts to a challenge to the lawfulness of some of the general rules laid down by Regulation No 423/2007. In consequence, in examining that head of claim, it is appropriate to apply the restricted review described in paragraph 36 above. Moreover, because those pleas in law call in question the lawfulness of the decision by which the applicant was included in the list in Annex V to Regulation No 423/2007, the considerations set out in paragraph 37 above apply to them.
The first plea in law: infringement of essential procedural requirements, of the EC Treaty, of the rules of law relating to its application and of Article 7(2) of Common Position 2007/140, misuse of power and want of a legal basis for the contested decision
Arguments of the parties
The applicant maintains that Regulation No 423/2007, on which the contested decision is based, has three legal bases, namely Articles 60 EC and 301 EC, and also Common Position 2007/140. It goes on to stress that, according to Article 15(2) of Regulation No 423/2007, the list of entities to which the fund-freezing measures apply by virtue of Article 7(2) of that regulation is to be established by the Council acting by qualified majority. In contrast, Article 7(2) of Common Position 2007/140 requires the list of persons or entities to which the fund-freezing measures apply by virtue of Article 5(1)(b) of Common Position 2007/140 to be established by the Council acting unanimously.
In this context, the applicant argues that, when a measure has several legal bases laying down different voting procedures, it is the strictest procedure that must be followed. It infers that the Council, inasmuch as it did not observe the rule of unanimity laid down in Article 7(2) of Common Position 2007/140 when it adopted the contested decision, infringed essential procedural requirements, the EC Treaty and the rules of law relating to the application of the Treaty. Furthermore, according to the applicant, the Council has by so doing misused its power, for it has failed to follow the procedure specially laid down by the EU Treaty in relation to the CFSP in order to adopt a decision with direct effect, a legal instrument unknown in that sphere.
The applicant adds that, because Article 15(2) of Regulation No 423/2007 provides for voting by a qualified majority, even though it gives effect to the CFSP, and because, therefore, it does not observe the procedural conditions laid down in Common Position 2007/140, it cannot constitute a valid legal basis for the contested decision. Likewise, Articles 15(2) and 7(2) of that regulation cannot constitute a valid legal basis for the contested decision either, because they have permitted the adoption of a fund-freezing measure affecting the applicant, although the latter was not designated in Resolution 1737 (2006), referred to in recital 6 in the preamble to Regulation No 423/2007, but was mentioned only in Resolution 1803 (2008).
Finally, the applicant argues that the judgment of the Court of Justice of 3 September 2008 in Joined Cases
C-402/05 P and C-415/05 P
Kadi and Al Barakaat International Foundation
v
Council and Commission
[2008] ECR I-6351
(‘
Kadi
’) has no bearing on this plea in law, for the decision at issue in the case in which that judgment was given was based on the threefold legal bases of Articles 60 EC, 301 EC and 308 EC and had, therefore, been adopted unanimously.
The Council, supported by the interveners, disputes the substance of the applicant’s arguments, maintaining that the appropriate voting rule, as determined by Articles 60 EC and 301 EC, which form the legal basis of the contested decision, was applied.
Findings of the Court
A preliminary point to note is that, contrary to the applicant’s arguments, the judgment in
Kadi
, paragraph 42 above, is wholly relevant in the circumstances of the case, for in it the Court of Justice ruled, in particular, on the ambit of Articles 60 EC and 301 EC. Thus, according to the Court, those provisions concern the adoption of measures vis-à-vis third countries, since that concept may include the rulers of such a country and also individuals and entities associated with or controlled, directly or indirectly, by them (
Kadi
, paragraph 42 above, paragraph 166).
It is a special feature of Articles 60 EC and 301 EC that they form a bridge between the actions of the Community involving economic measures under Articles 60 EC and 301 EC and the objectives of the EU Treaty in the sphere of external relations, including the CFSP (see, to that effect,
Kadi
, paragraph 42 above, paragraph 197). Articles 60 EC and 301 EC are provisions expressly envisaging that action by the Community may prove necessary in order to attain one of the objectives specifically assigned to the Union by Article 2 EU, namely the implementation of a common foreign and security policy.
That fact is, however, without prejudice to the coexistence of the Union and the Community as integrated but separate legal orders, or to the constitutional architecture of the pillars, as intended by the framers of the Treaties now in force (see, to that effect,
Kadi
, paragraph 42 above, paragraph 202). Consequently, even though an action by the Community under Articles 60 EC and 301 EC gives effect to one of the objectives of the Union, it is nevertheless undertaken on the basis of the Community pillar. The lawfulness of measures taken in that sphere, such as Regulation No 423/2007 and the measures implementing it, must therefore be assessed in relation to the conditions laid down by the rules of that pillar, including the appropriate voting rule.
It follows from the foregoing that, contrary to the applicant’s claims, Common Position 2007/140, which forms part of the second pillar of the Union, is not a legal basis for Regulation No 423/2007 or for the measures implementing it, which means that the voting rule applicable to the adoption of that common position and to its amendment is irrelevant. Indeed, the existence of a common position or of a joint action previously adopted in the sphere of the CFSP is simply a condition laid down by Article 301 EC, which also defines the voting rule applicable to the adoption of the measures taken to give it effect.
In the present case, it is not disputed that Regulation No 423/2007 and the contested decision were adopted by a qualified majority, in accordance with the rule laid down in Article 301 EC. Nor is it disputed that the adoption of that regulation was preceded by the unanimous adoption of Common Position 2007/140 or that the adoption of the contested decision was preceded by the unanimous adoption of Common Position 2008/479, by which the applicant’s name was entered in the list of entities to which the fund-freezing measure applied by virtue of Article 5(1)(b) of Common Position 2007/140. It is accordingly to be concluded that the conditions laid down by Article 301 EC have been complied with.
Consequently the applicant’s head of claim alleging failure to follow the applicable voting rule must be rejected.
With regard to the applicant’s other heads of claim, it is to be borne in mind that a measure is vitiated by misuse of powers only if it appears on the basis of objective, relevant and consistent evidence to have been taken with the exclusive or main purpose of achieving an end other than that stated or of evading a procedure specifically prescribed by the Treaty for dealing with the circumstances of the case (see Case
C-210/03
Swedish Match
[2004] ECR I-11893
, paragraph 75, and Case
T-158/99
Thermenhotel Stoiser Franz and Others
v
Commission
[2004] ECR II-1
, paragraph 164, and the case-law cited). In this case, the applicant has not adduced evidence suggesting that the Council, in adopting the contested decision, pursued any end other than that of stopping nuclear proliferation by freezing the funds of entities which it considered were engaged in, directly associated with, or provided support for the activities concerned, in accordance with the procedure laid down for that purpose by the EC Treaty and by Regulation No 423/2007.
Lastly, in so far as the applicant maintains that Articles 7(2) and 15(2) of Regulation No 423/2007 cannot constitute a valid legal basis for the contested decision because they allow the Council to adopt fund-freezing measures going beyond the measures adopted by the Security Council, it has to be pointed out that nothing in Article 60 EC or 301 EC permits the inference that the powers conferred on the Community by those provisions are limited to the implementing of measures decided by the Security Council. The Council was, therefore, competent to adopt not only Article 7(1) of Regulation No 423/2007, which gives effect to Resolution 1737 (2006) by ordering the freezing of the funds of the entities designated by it, but also Article 7(2) of that regulation, which permits the adoption of fund-freezing measures applying to other entities which, in the Council’s opinion, are directly associated with or provide support for nuclear proliferation.
In this context, it is, admittedly, true that recital 6 in the preamble to Regulation No 423/2007 requires the Council to exercise the power conferred on it by Article 7(2) of the regulation ‘in view of the objectives of [Resolution] 1737 (2006)’. The obligation to pursue the objectives of Resolution 1737 (2006) does not, however, in any way imply that Article 7(2) of Regulation No 423/2007 is to be implemented only in respect of entities referred to in restrictive measures adopted by the Security Council pursuant to that resolution. The lack of any measures taken by the Security Council or a specific position taken by the latter may, at the very most, be taken into consideration, with other relevant matters, in connection with the determination whether or not the conditions laid down by Article 7(2) of Regulation No 423/2007 have been satisfied.
Having regard to the foregoing, the first plea in law must be rejected.
The second plea in law: breach of the principle of equal treatment
Arguments of the parties
The applicant claims that it has been the subject of ‘arbitrary and unjustified discrimination’ inasmuch as although Security Council Resolution 1803 (2008) calls on the States to exercise vigilance with regard to all banks domiciled in Iran, in particular with Bank Melli and Bank Saderat, the applicant is the only Iranian bank to have had its funds frozen. It alleges that that unequal treatment of banks in absolutely identical circumstances has caused it considerable material and non-material damage.
The Council, supported by the interveners, challenges the validity of the applicant’s arguments, recalling that the fund-freezing measures in question in this case were adopted because it considered, after making an independent evaluation under the power conferred on it by Article 7(2) of Regulation No 423/2007, that the applicant provided support for nuclear proliferation.
Findings of the Court
According to the case-law, the principle of equal treatment, which constitutes a fundamental principle of law, prohibits comparable situations from being treated differently or different situations from being treated in the same way, unless such difference in treatment is objectively justified (Joined Cases
T-222/99, T-327/99 and T-329/99
Martinez and Others
v
Parliament
[2001] ECR II-2823
, paragraph 150).
As the Council argues, supported by the interveners, the determining criterion for the implementation of Article 7(2)(a) and (b) of Regulation No 423/2007, and so the comparative criterion applicable in order to determine whether there has been any breach of the principle of equal treatment, is whether the entity in question is engaged in or directly associated with or provides support for nuclear proliferation.
In the instant case, the applicant has been identified in the contested decision as an entity providing support for nuclear proliferation and, as concluded in paragraph 30 above, it has put forward no admissible plea in law to challenge the substance of that finding.
In those circumstances, even if the Council had in fact omitted to adopt measures freezing the funds of certain Iranian banks engaged in, directly associated with or providing support for nuclear proliferation, that fact cannot properly be put forward by the applicant, because the principle of equal treatment must be reconciled with the principle of legality, according to which no one may rely, to his own benefit, on an unlawful act committed in favour of another (Case
T-327/94
SCA Holding
v
Commission
[1998] ECR II-1373
, paragraph 160; Case
T-347/94
Mayr-Melnhof
v
Commission
[1998] ECR II-1751
, paragraph 334; and Case
T-23/99
LR AF 1998
v
Commission
[2002] ECR II-1705
, paragraph 367).
The second plea in law must therefore be rejected.
The third plea in law: breach of the principle of proportionality and of the right to property
Arguments of the parties
The applicant considers that the contested decision is disproportionate in that it orders the freezing of its funds, while Security Council Resolution 1803 (2008), to which the decision gives effect, merely requires the States to exercise vigilance with regard to its activities. The resolution neither required nor recommended freezing of the applicant’s funds, nor did it require the applicant to be treated differently from other banks domiciled in Iran. As a result, the contested decision is ‘incorrect’, in the applicant’s opinion, because it causes the applicant significant material and non-material damage, in particular, by unjustifiably and disproportionately restricting its right to property.
At the hearing, the applicant argued that the freezing of its funds was not necessary in order to attain the objective pursued by the Council, and that that objective could be attained by less restrictive means, such as empirical checking of transactions carried out or having them checked by an independent third party.
The Council, supported by the interveners, challenges the validity of the arguments put forward by the applicant, contending that it was necessary and opportune to freeze the latter’s funds in order to stop nuclear proliferation, given the support that the applicant had lent to undertakings engaged in it. Likewise, such a fund-freezing measure was justified and proportionate, having regard to the importance of maintaining international peace and security, no other measure being capable of ensuring that the objective pursued would be attained.
Findings of the Court
The first point to be noted here is that paragraphs 51 and 52 above make it clear that Article 7(2) of Regulation No 423/2007 confers on the Council autonomous power, the exercise of which is independent of the Security Council’s adoption of restrictive measures applying to the entities concerned. The object of Article 7(2) of the regulation and of the contested decision, adopted pursuant to that regulation, is not that of giving effect to resolutions of the Security Council, but only to ensure that the ends pursued by one of the resolutions in question, namely Resolution 1737 (2006), are attained by means of adopting autonomous restrictive measures.
So, contrary to what the applicant maintains, neither Article 7(2) of Regulation No 423/2007 nor the contested decision gives effect to Resolution 1803 (2008), which means that the content and objectives of that resolution are not a yardstick against which the compatibility of the contested decision with the principle of proportionality must be assessed.
According to the case-law, by virtue of the principle of proportionality, which is one of the general principles of Community law, the lawfulness of the prohibition of an economic activity is subject to the condition that the prohibitory measures should be appropriate and necessary in order to achieve the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (Case
C-331/88
Fedesa and Others
[1990] ECR I-4023
, paragraph 13). It is therefore in the light of those criteria that the applicant’s other arguments are to be examined.
It is first to be observed that the objective of Regulation No 423/2007 is to stop nuclear proliferation and its funding and so to bring pressure to bear on the Islamic Republic of Iran to put an end to the activities in question. Such an objective, which corresponds to those pursued by Resolution 1737 (2006) and falls within the more general ambit of efforts to maintain international peace and security, is legitimate.
Secondly, freezing the funds of entities regarded as engaged in, directly associated with or providing support for nuclear proliferation constitutes an appropriate measure necessary for the attainment of that objective. Such a measure is capable of ensuring that the funds of the entities concerned are no longer used to further nuclear proliferation. Moreover, as concluded in paragraphs 30 and 31 above, the applicant’s arguments that, on the one hand, it did not provide support for nuclear proliferation and that, on the other, the fund-freezing measure was on any view unnecessary in its particular case have been raised out of time and are, therefore, inadmissible.
Thirdly, it is also apparent from paragraph 31 above that the applicant has not put forward any admissible arguments relating to the existence of less restrictive measures making it possible to stop its funds from being used to further nuclear proliferation.
Fourthly, so far as concerns the disadvantages caused to the applicant and the restriction of its fundamental rights, including the right to property and the right to carry on economic activity, it may be observed that, according to settled case-law, those rights form an integral part of the general principles of law whose observance is ensured by the Community judicature. Respect for fundamental rights is thus a condition of the lawfulness of Community acts (see
Kadi
, paragraph 42 above, paragraph 284, and the case-law cited). Nevertheless, the case-law also makes it clear that fundamental rights are not absolute, and that their exercise may be subject to restrictions justified by objectives of public interest pursued by the Community. Any economic or financial restrictive measure has,
ex hypothesi
, consequences which affect the right to property and the freedom to pursue a trade or business, thereby causing harm, in particular to the entities carrying on the activities that the restrictive measures in question are designed to stop. The importance of the aims pursued by the legislation at issue is such as to justify negative consequences, even of a substantial nature, for some operators (see, to that effect, Case
C-84/95
Bosphorus
[1996] ECR I-3953
, paragraphs 21 to 23, and
Kadi
, paragraph 42 above, paragraphs 355 and 361).
In the instant case, the applicant’s freedom to carry on economic activity and its right to property are restricted to a considerable degree, on account of the adoption of the contested decision, for it may not, in particular, dispose of its funds situated within the territory of the Community or held by Community nationals, except by virtue of special authorisation, and its branches, domiciled in that territory, may not conclude new transactions with their customers. However, given the primary importance of maintaining international peace and security, the disadvantages caused are not inordinate in relation to the ends sought, especially because, first, those restrictions concern only part of the applicant’s assets and, secondly, Articles 9 and 10 of Regulation No 423/2007 provide for certain exceptions allowing the entities affected by fund-freezing measures to meet essential expenditure.
Having regard to the foregoing, the third plea in law must be rejected.
The fourth plea in law: breach of the rights of the defence, of the right to effective judicial protection and of the obligation to state reasons laid down in Article 15(3) of Regulation No 423/2007
Arguments of the parties
The applicant claims that, in breach of the rules stemming from the case-law of the Court of Justice, the Council at no time informed it of the evidence against it justifying the freezing of its funds, because the Council did not notify the contested decision to it. In addition, the Council did not specify what kind of financial support had been provided by the applicant or what part it had played, what products were concerned in the transactions in question or what entities, besides the eight entities designated, were involved. The Council thus did not permit the applicant to know the reasons why its funds had been frozen, when the Security Council required nothing of the States but mere vigilance.
The applicant adds that it has not had access to the evidence in the Council’s file and that it had not been given a hearing. It states that it did not make contact with the Council in order to be able to exercise its rights. In this regard, first, it claims that the legislative measures applicable do not provide for access to be given to the file or for a hearing to be organised, that fact being, in its view, contrary in itself to the principle of respect for the rights of the defence and so constituting a breach of the right to effective judicial protection. Secondly, the applicant states that efforts, made in this connection by its subsidiary in the United Kingdom, Melli Bank plc, addressed to the Council and certain Member States before the contested decision was adopted, proved fruitless, which led it to prefer to take legal action. Thirdly, it argues that, although the burden of proof is borne by the Council, the latter has not put before the Court any evidence to support the reasoning in the contested decision, so obliging the applicant to ‘prove a negative’, which is difficult, if not impossible, to do. Fourthly, the applicant maintains that it could not argue its point of view before the Council until it had checked one by one its relations with the entities designated in the contested decision. It did not prove possible to complete the checking process in question within the period prescribed for bringing an action.
The applicant considers that, inasmuch as the evidence used against it was not communicated to it and as it was unable to obtain access to the evidence in the Council’s file or to be heard, it was not in a position to make its point of view known to advantage which, in its opinion, amounts to a breach of its rights of defence, in particular of the right to be heard. For the same reason, it claims to be unable at present to exercise its right of action before the Court in satisfactory conditions, thus pleading also a breach of the right to effective judicial protection. It emphasises again, in this respect, that the Council may not justify those breaches by the need to attain a surprise effect, given that the Prime Minister of the United Kingdom had announced the freezing of its funds as long ago as 16 June 2008.
Lastly, the applicant maintains that the Council’s failure to give individual specific reasons to justify the.freezing of its funds, in comparison with the mere obligation to be vigilant imposed by the Security Council and with the treatment of the other banks domiciled in Iran, and the Council’s failure to let the applicant know those reasons also amount to breach of the obligation to state reasons laid down in Article 15(3) of Regulation No 423/2007.
The Council, supported by the interveners, challenges the merits of the applicant’s arguments. First, it contends that in this respect it satisfied the obligation to state reasons laid down in Article 15(3) of Regulation No 423/2007 by publishing the contested decision in the
Official Journal of the European Union
, which is available in particular on the internet on the very day of its appearance. According to the Council, that regulation does not call for individual notification, given that in some cases there is no known address allowing individual notification and that, in any event, ignorance of the law is no excuse. Furthermore, the grounds relied on in connection with the campaign against nuclear proliferation are less to the detriment of those concerned than are those concerned when similar measures are adopted in connection with the campaign against terrorism, which are individually notified.
Secondly, according to the Council, the publication of the contested decision in the Official Journal put the applicant in a position to be aware of the incriminating reasons, so that its rights of defence and its right to effective judicial protection were respected. In that regard, the Council stresses the fact that the applicant has not sought to have the measure freezing its funds reviewed, although such an opportunity has been provided for by the notice for the attention of those persons, entities and bodies that have been included by the Council in the list of persons, entities and bodies to which Article 7(2) of Regulation No 423/2007 applies (Annex V) (
OJ 2008 C 159, p. 1
).
Findings of the Court
In the first place, the claim relating to breach of the obligation to state reasons laid down in Article 15(3) of Regulation No 423/2007 must be examined. Because the various procedural rights at issue in this case are interdependent, the question whether sufficient reasons were made known to the applicant timeously has some bearing on all the heads of claim put forward under this plea in law.
The purpose of the obligation to state the reasons for an act adversely affecting a person, as provided for by Article 253 EC and, more particularly in this case, by Article 15(3) of Regulation No 423/2007 is, first, to provide the person concerned with sufficient information to make it possible to determine whether the measure is well founded or whether it is vitiated by an error which may permit its validity to be contested before the Community judicature and, secondly, to enable the latter to review the lawfulness of that measure. The obligation to state reasons therefore constitutes an essential principle of Community law which may be derogated from only for compelling reasons. The statement of reasons must therefore in principle be notified to the person concerned at the same time as the act adversely affecting him, for failure to state the reasons cannot be remedied by the fact that the person concerned learns the reasons for the act during the proceedings before the Community judicature. Furthermore, observance of the obligation to state reasons is all the more important in the case of an initial decision freezing an entity’s funds, because it constitutes the sole safeguard enabling the party concerned to make effective use of the legal remedies available to it to challenge the lawfulness of that decision, given that it has no right to be heard before the decision is adopted (see, to that effect and by analogy,
OMPI
, paragraph 36 above, paragraphs 138 to 140, and the case-law cited).
Unless, therefore, overriding considerations to do with the security of the Community or of its Member States or with the conduct of their international relations militate against the communication of certain matters (see, by analogy,
Kadi
, paragraph 42 above, paragraph 342), the Council is bound, by virtue of Article 15(3) of Regulation No 423/2007, to apprise the entity concerned of the actual specific reasons when it adopts a decision to freeze funds such as the contested decision. It must thus state the facts and points of law on which the legal justification of the measure depend and the considerations which led it to adopt it. So far as may be, those reasons must be communicated, either concomitantly with or as soon as possible after the adoption of the measure at issue (see, to that effect and by analogy,
OMPI
, paragraph 36 above, paragraphs 143 to 148, and the case-law cited).
The statement of reasons must, however, be appropriate to the measure at issue and the context in which it was adopted. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons is sufficient must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. In particular, the reasons given for a measure adversely affecting a person are sufficient if it was adopted in circumstances known to that person which enable him to understand the scope of the measure concerning him (
OMPI
, paragraph 36 above, paragraph 141, and the case-law cited).
As pointed out in paragraph 57 above, in order for Article 7(2)(a) and (b) of Regulation No 423/2007 to be set in motion, the entity concerned must be engaged in or directly associated with or must provide support for nuclear proliferation. In consequence, in addition to indicating the legal basis of the measure adopted, the obligation to state reasons by which the Council is bound relates precisely to that fact. On the other hand, contrary to what the applicant argues, the Council was not required to give reasons for its decision to go beyond the measures laid down by Resolution 1803 (2008), since it has been found in paragraph 65 above that the contested decision did not give effect to that resolution, nor was it required to treat the applicant differently from other Iranian banks.
In the instant case, the Council has stated, both in the title of the contested decision and in recital 2 in the preamble to the latter, that the measures taken were based on Article 7(2) of Regulation No 423/2007. It has also explained, in paragraph 4 of Table B in the annex to the contested decision, the specific individual reasons that led it to consider that the applicant provided support for nuclear proliferation. The Council mentioned, first, the kind of support lent by the applicant, namely providing financial services, including opening letters of credit and maintaining accounts, secondly, the activities linked to nuclear proliferation involved by those services, namely the purchase of sensitive materials, and, thirdly, the beneficiaries of the support provided by the applicant, that is to say, the eight entities designated by name.
In those circumstances, the Court considers that the statement of reasons for the contested decision with regard to the applicant is sufficient, in the light of the case-law cited in paragraphs 80 to 82 above and of the wording of Article 15(3) of Regulation No 423/2007.
In contrast, the Council’s assertion, supported by the interveners, that the obligation to apprise the applicant of the reasons was satisfied by the publication of the contested decision in the Official Journal cannot be accepted. A decision such as the contested decision, which adopts an amended version of Annex V to Regulation No 423/2007, produces its effects
erga omnes
, in that it is addressed to a body of addressees determined in a general and abstract manner, which are required to freeze the funds of the entities designated by name in the list in that annex. Such a decision, however, is not of an exclusively general nature, for the freezing of funds applies to entities designated by name, directly and individually concerned by the individual restrictive measures adopted in respect of them (see, to that effect and by analogy,
Kadi
, paragraph 42 above, paragraphs 241 to 244, and
OMPI
, paragraph 36 above, paragraph 98). Furthermore, the freezing of funds has considerable consequences for the entities concerned, for it may restrict the exercise of their fundamental rights. In the circumstances, given the need, referred to in paragraph 70 above, to ensure that those rights, both substantive and procedural, are respected, it must be considered that the Council is bound, in so far as may be possible, to apprise the entities concerned of the fund-freezing measures by making individual notification.
The arguments put forward by the Council are not such as to alter that conclusion. First, the fact that individual notification proves impossible in certain cases is without prejudice to the interest of those entities in receiving such notification and is therefore irrelevant in those cases in which the address of the entity concerned is known. Secondly, the rule that ignorance of the law is no defence cannot be relied on against the applicant, for in its regard the contested decision has the nature of an individual measure. Thirdly, the distinction drawn by the Council in relation to fund-freezing measures adopted in the campaign against terrorism is misplaced, for whether or not the reasons invoked are defamatory can be of relevance only if it should be necessary to determine whether the publication of the statement of reasons in the Official Journal was appropriate. On the other hand, the requirement of individual notification of fund-freezing measures stems from the fact that those measures affect the rights of the entities concerned individually and to a considerable extent. The effects of the fund-freezing measures adopted pursuant to Regulation No 423/2007 and of those adopted as part of the campaign against terrorism being comparable, in both cases the entities affected must be apprised of the measures adopted.
In the light of the foregoing, the Council must be considered not to have fulfilled its obligation, stemming from Article 15(3) of Regulation No 423/2007, to apprise the applicant of the grounds of the contested decision, inasmuch as it did not make individual notification, even though it is clear from the actual content of the decision that it knew the address of the applicant’s headquarters.
However, the annexes to the application for interim measures, lodged by the applicant in Case T-390/08 R, make it clear that by letter of 24 June 2008 the French banking commission informed the applicant’s branch in Paris of the adoption of the contested decision and of its publication in the Official Journal that same day. Thus the applicant was informed, timeously and officially, of the adoption of the contested decision, and that it might consult the statement of reasons for that decision in the Official Journal. What is more, it is apparent that it did actually consult the content of that decision, a copy of which is annexed to the application.
In those exceptional circumstances, it must be held that the fact that the Council did not apprise the applicant by individual notification of the statement of reasons for the contested decision did not have the effect of depriving the applicant of an opportunity of knowing, in good time, the reasons for the contested decision or of assessing the validity of the fund-freezing measure adopted in its regard. In consequence, the Council’s omission does not justify annulment of the contested decision.
In the second place, it may be recalled that, according to settled case-law, observance of the rights of the defence, especially the right to be heard, in all proceedings initiated against an entity which may lead to a measure adversely affecting that entity, is a fundamental principle of Community law which must be guaranteed, even when there are no rules governing the procedure in question (see, to that effect,
OMPI
, paragraph 36 above, paragraph 91, and the case-law cited).
The principle of observance of the rights of the defence requires the evidence adduced against the entity concerned to be communicated to it, in so far as possible, either concomitantly with or as soon as may be after the adoption of an initial decision to freeze its funds. However, overriding considerations to do with the safety of, or the conduct of the international relations of, the Community and of its Member States may militate against the communication of certain matters to the persons concerned (see, to that effect and by analogy,
Kadi
, paragraph 42 above, paragraph 342, and
OMPI
, paragraph 36 above, paragraphs 93 and 137).
Furthermore, inasmuch as an initial decision to freeze an entity’s funds, such as the contested decision, must be able to take advantage of a surprise effect, it is not a requirement that, before the decision at issue was adopted, the evidence adduced against the entity concerned should have been communicated to it or that that entity should be heard (see, to that effect and by analogy,
Kadi
, paragraph 42 above, paragraphs 338 to 341, and
OMPI
, paragraph 36 above, paragraphs 128 and 137).
In this connection, the claim that the need to achieve a surprise effect cannot be relied on because of the announcement allegedly made by the Prime Minister of the United Kingdom on 16 May 2008 must from the outset be rejected. The applicant has not established that that statement was actually made, nor has it even claimed that it was made on behalf of the Council, or of the Community.
When a decision is adopted pursuant to Article 7(2)(a) or (b) of Regulation No 423/2007, the communication of the inculpatory evidence must include the specific information or material in the file which shows that in the case of the entity concerned the conditions for implementing that provision have been satisfied (see, to that effect and by analogy,
OMPI
, paragraph 36 above, paragraph 126).
It follows from the findings made in paragraphs 84 to 90 above that in the circumstances of this case that requirement has been satisfied. Given, first, that sufficient reasons were given for the contested decision, secondly, that the applicant’s attention was timeously drawn by the French banking commission to the fact that the contested decision had been adopted and published, with its statement of reasons, in the Official Journal and, thirdly, that the applicant did actually consult that decision, it must be held that the applicant possessed sufficiently precise information with regard to the matters that had led the Council to consider that Article 7(2)(a) and (b) of Regulation No 423/2007 was applicable in the circumstances.
The applicant’s claim that the Council was required automatically to offer it access to the material in its file must be rejected. When sufficiently precise information has been communicated, enabling the entity concerned to make its point of view on the evidence adduced against it by the Council known to advantage, the principle of respect for the rights of the defence does not mean that the institution is obliged spontaneously to grant access to the documents in its file. It is only on the request of the party concerned that the Council is required to provide access to all non-confidential official documents concerning the measure at issue (see, to that effect and by analogy, Case
T-205/99
Hyper
v
Commission
[2002] ECR II-3141
, paragraphs 63 to 65, and the case-law cited). It would in fact be excessive to require spontaneous communication of the matters in the file, given that when a fund-freezing measure is adopted it is not certain that the entity concerned intends to check, by means of access to the file, the matters of fact supporting the allegations made against it by the Council.
As to the right to a hearing, the entity to which an initial decision to freeze its funds applies has the right to be heard by the Council after the decision concerned has been adopted. According to the case-law, the Council is not, however, required automatically to conduct a hearing, having regard to the opportunity the entities concerned also have of immediately bringing an action before the Court of First Instance (see, to that effect and by analogy,
OMPI
, paragraph 36 above, paragraphs 130 and 137). Moreover, it is to be observed that the Council adopted and published in the Official Journal, on the day the contested decision was published, the notice for the attention of those persons, entities and bodies that have been included by the Council in the list of persons, entities and bodies to which Article 7(2) of Regulation No 423/2007 applies (Annex V). That notice provides that the entities concerned may request reconsideration of the decision to include them in the list in Annex V to that regulation and therefore enables them to exercise effectively their right to a hearing.
It is clear from the foregoing that, in the instant case, the exercise of the right of access to the file and the right to a hearing was contingent upon the applicant’s having presented a request to the Council. In answer to a question asked by the Court, the applicant acknowledged that it had not presented any such request.
The arguments put forward by the applicant to explain that omission cannot be accepted. The claim that the legislation applicable provides no procedure for access to the file or for a hearing is incorrect so far as the right to be heard is concerned, as is made clear in paragraph 98 above. Moreover, while no express procedure for access to the file has been provided, it was recalled in paragraph 91 above that that fact is without prejudice to the Council’s duty to ensure that the rights of the defence are observed. On the assumption that the applicant’s argument is to be understood as a plea of illegality, it must, therefore, be rejected, for the lack of express provisions is without prejudice to the obligation to observe the rights of the defence, in particular the right to the communication of inculpatory evidence, which is also intended to allow the entity concerned to exercise the right to effective judicial protection (see paragraph 105 below).
The steps taken by the applicant’s subsidiary in the United Kingdom are likewise irrelevant, given that the subsidiary in question possesses independent legal personality, which means that it addressed the institutions and Member States in its own name and not on behalf of its parent company. Furthermore, as the applicant accepts, those steps were taken before the contested decision was adopted. It has been held in paragraph 93 above that, on any view, before the contested decision was adopted the applicant possessed no right to have communicated to it the evidence against it and no right to a hearing.
As regards the fact that the Council did not spontaneously produce the evidence supporting the statement of reasons for the contested decision, paragraphs 97 above and 107 below make it clear that it was not bound to do so, either before or after the present proceedings had been initiated.
Likewise, the applicant does not explain how the need to check one by one its relations with the entities designated in the contested decision stopped it seeking access to the Council’s file or requesting a hearing. On the contrary, those steps might have facilitated the research to be carried out, thanks to the documents consulted or the information obtained.
Having regard to the foregoing, it must be concluded that, the applicant having omitted to make such a request to the Council, the latter was not obliged to grant it access to the file or to conduct a hearing, which means that the claim alleging breach of the rights of the defence must be rejected.
In the third place, according to settled case-law, the principle of effective judicial protection is a general principle of Community law stemming from the constitutional traditions common to the Member States, which has been enshrined in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), this principle having furthermore been reaffirmed by Article 47 of the Charter of Fundamental Rights of the European Union, proclaimed in Nice on 7 December 2000 (
OJ 2000 C 364, p. 1
). The effectiveness of judicial review means that the Community authority in question is bound to communicate the grounds for freezing its funds to the entity concerned, so far as possible, either when that inclusion is decided on or, at the very least, as swiftly as possible after that decision in order to enable its addressees to exercise, within the periods prescribed, their right to bring an action. Observance of that obligation to communicate the grounds is necessary both to enable the persons to whom restrictive measures are addressed to defend their rights in the best possible conditions and to decide, with full knowledge of the relevant facts, whether there is any point in their applying to the Community judicature, and also to put the latter fully in a position in which it may carry out the review of the lawfulness of the Community measure in question which is its duty under the EC Treaty (see, to that effect and by analogy,
Kadi
, paragraph 42 above, paragraphs 335 to 337, and the case-law cited).
Paragraphs 84 to 90 and 96 above make it clear that the applicant had, in good time, sufficiently precise information about the freezing of its funds. Furthermore, not having requested access to the Council’s file, it is not justified in claiming that it was not granted such access. In addition, the Court considers that it is in a position fully to carry out its review. In those circumstances, it must be concluded that the applicant’s right to effective judicial protection has not been infringed by the Council.
In so far as the applicant also argues in this connection that during the proceedings before the Court the Council has not adduced any evidence in support of the grounds set out in the contested decision, it may be observed that it would be necessary to adduce such evidence only if the applicant had raised an admissible plea challenging the validity of the finding that it lent support to nuclear proliferation. In such circumstances, and without any need for the applicant to prove a negative, the Council is bound, in accordance with what has been explained in paragraph 37 above, to produce the evidence and information on which its assessment was based for them to be reviewed by the Community judicature. However, as is plain from paragraph 30 above, no such plea in law has been raised in this case. In consequence, the fact that the Council has not produced evidence cannot indicate a breach of the right to effective judicial protection and the head of claim relating thereto must therefore be rejected, and it is unnecessary to consider whether the documents produced on 4 February 2009 substantiate the allegation that in the circumstances of the case the applicant was required to prove a negative.
In the light of the foregoing, the fourth plea in law must be rejected.
The fifth plea in law: lack of competence
Arguments of the parties
The applicant maintains that the Council has no competence to impose ‘criminal sanctions’, such as the freezing of funds, under the EC Treaty. Consequently, when the Council froze the applicant’s funds by means of the contested decision and of Regulation No 423/2007, adopted by virtue of powers conferred by the EC Treaty, it overstepped its competence, misused its power and infringed essential procedural requirements and also the rules of the Treaty.
The Council, supported by the interveners, challenges the substance of the applicant’s arguments, emphasising that freezing of funds is not a criminal sanction.
Findings of the Court
It is to be observed that, inasmuch as the funds of the entities to which the restrictive measures provided for by Regulation No 423/2007 apply have not been confiscated as the proceeds of crime but rather frozen as a precautionary measure, those restrictive measures do not constitute criminal sanctions. Nor, likewise, do they imply any accusation of a criminal nature (see, by analogy, the judgment of 11 July 2007 in Case T-47/03
Sison
v
Council
(not published in the ECR), paragraph 101).
Consequently, the applicant’s argument that the freezing of its funds amounts to a criminal sanction is unfounded. That means that this plea in law must be rejected, and therefore the action must be dismissed in its entirety.
Costs
Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to pay the Council’s costs, including those relating to the proceedings for interim measures, as sought by the Council.
Under the first paragraph of Article 87(4) of Rules of Procedure, the Member States and institutions which have intervened in the proceedings are to bear their own costs. Accordingly, the United Kingdom, the French Republic and the Commission shall bear their own costs, including those relating to the proceedings for interim measures.

On those grounds,
THE COURT OF FIRST INSTANCE (Second Chamber)
hereby:

1.
Dismisses the action;

2.
Orders Bank Melli Iran to pay, in addition to its own costs, those incurred by the Council of the European Union, including those relating to the proceedings for interim measures;

3.
Orders the United Kingdom of Great Britain and Northern Ireland, the French Republic and the Commission of the European Communities to bear their own costs, including those relating to the proceedings for interim measures.

Pelikánová
Jürimäe
Soldevila Fragoso
Delivered in open court in Luxembourg on 14 October 2009.
[Signatures]
Table of contents

Background to the case

Restrictive measures taken against the Islamic Republic of Iran

Measures affecting the applicant

Procedure and forms of order sought

Law

The relevance of the documents produced by the applicant on 4 February 2009

The rigour of the judicial review

Arguments of the parties

Findings of the Court

The first plea in law: infringement of essential procedural requirements, of the EC Treaty, of the rules of law relating to its application and of Article 7(2) of Common Position 2007/140, misuse of power and want of a legal basis for the contested decision

Arguments of the parties

Findings of the Court

The second plea in law: breach of the principle of equal treatment

Arguments of the parties

Findings of the Court

The third plea in law: breach of the principle of proportionality and of the right to property

Arguments of the parties

Findings of the Court

The fourth plea in law: breach of the rights of the defence, of the right to effective judicial protection and of the obligation to state reasons laid down in Article 15(3) of Regulation No 423/2007

Arguments of the parties

Findings of the Court

The fifth plea in law: lack of competence

Arguments of the parties

Findings of the Court

Costs
(
*1
)	Language of the case: French.