Judgment — ECLI:EU:T:2016:264
Date: 2016-05-03
Language of the case: English
Court formation: First Chamber
Subject matter: External relations;Common foreign and security policy
Procedure: Action for annulment - unfounded

summary of reasons underpinning that decision, with the consequence that judicial review cannot be restricted to an assessment of the cogency in the abstract of the reasons relied on, but must concern whether those reasons, or, at the very least, one of those reasons, deemed sufficient in itself to support that decision, is substantiated (see judgment in Council v Fulmen and Mahmoudian, cited in paragraph 83 above, EU:C:2013:775, paragraph 64 and the case-law cited). 108 In that respect, it is the task of the competent European Union authority to establish, where it is challenged, that the reasons relied on against the person or the entity concerned are well founded, and not the task of the person or the entity concerned to adduce evidence of the negative, that those reasons are not well founded (see judgment in Council v Fulmen and Mahmoudian, cited in paragraph 83 above, EU:C:2013:775, paragraph 66 and the case-law cited). 109 It should however be recalled that, for the purposes of assessing the merits of the reasons given against a person subject to restrictive measures, such as fund-freezing measures, the EU judicature may rely on all of the evidence which has been submitted to it, both inculpatory or exculpatory, by the parties, during the judicial proceedings as the case may be (see, to that effect, judgments in Commission and Others v Kadi, cited in paragraph 93 above, EU:C:2013:518, paragraphs 123 and 137, and Council v Fulmen and Mahmoudian, cited in paragraph 83 above, EU:C:2013:775, paragraph 68). The fact that a piece of evidence has been submitted as exculpatory evidence by the person subject to the restrictive measures does not prevent that evidence from possibly being used against him to support the merits of the reasons underpinning the restrictive measures taken against him (see, to that effect and by analogy, judgments in Commission and Others v Kadi, cited in paragraph 93 above, EU:C:2013:518, paragraphs 123 and 137; Council v Fulmen and Mahmoudian, cited in paragraph 83 above, EU:C:2013:775, paragraph 68; of 29 April 2015 in National Iranian Gas Company v Council, T‑9/13, on appeal, EU:T:2015:236, paragraphs 163 and 164, and Bank of Industry and Mine v Council, T‑10/13, ECR, on appeal, EU:T:2015:235, paragraphs 182, 183 and 185). 110 The question whether the Council was entitled to consider, when adopting the contested acts, that the applicant could be subject to restrictive measures pursuant to the criterion at issue must be determined in the light of the case-law cited in paragraphs 105 to 109 above. 111 In the present case, according to what the Council had stated in the letter of 10 October 2013, the contested acts are based on a new statement of reasons, which states as follows: ‘Government-owned company which provides financial support to the Government of Iran.’ 112 In addition, by the letter of 18 November 2013, which, as is apparent from the non-confidential version of the email produced by the applicant in response to a measure of organisation of procedure adopted by the Court (paragraph 41 above), was communicated to the applicant by its lawyer on 20 November 2013, the Council sent to it the following clarifications: ‘In particular, since [the applicant] is owned by the Government of Iran and is engaged in commercial activities, the Government of Iran would benefit from profits made by [the applicant].’ 113 Finally, attached to the letter of 18 November 2013, and following a request by the applicant in the letter of 31 October 2013, the Council sent to the applicant the document from RELEX of 19 September 2013, bearing the reference MD 128/13 which reproduced pages from the applicant’s website and which were freely accessible on the internet. That document certifies that the applicant is one of the largest insurance companies in Iran and enjoys a certain reputation on the global insurance market. It also certifies that the applicant is a ‘State-owned company’ and its capital ‘entirely belongs to the [Government of Iran].’ It confirms, finally, that the activities of the applicant are profitable, since in respect of the period from 20 March 1997 to 20 March 1998 (fiscal year 1377 in the Iranian calendar), ‘net profit after taxation [amounted] to Rials 4 billion Iranian [(IRR)]’ (almost ECU 2.1 billion at the official exchange rate published on the website of the Iranian Central Bank on the internet, in force at the end of the fiscal year 1998). 114 All those grounds and that evidence, which were notified to the applicant in good time before the present action was brought on 29 January 2014, must be taken into consideration, according to the case-law cited in paragraph 109 above, in order to assess whether the Council erred, in the present case, in its assessment of the facts by imposing restrictive measures on it on the basis of the criterion at issue. 115 It is clear from paragraphs 87, 91 and 92 above that the Council can lawfully impose restrictive measures on any person or entity engaged in activities which, even if they do not have as such a link, direct or indirect, with nuclear proliferation, are, however, likely to promote it, by providing the Government of Iran with resources or facilities of a material, financial or logistical nature which, by their quantitative or qualitative significance, enable it to pursue nuclear proliferation. 116 In the present case, the applicant does not contest either that it is wholly owned by the Iranian Government or that it makes quantitatively significant profits when performing its commercial activities, as was the case in particular during the financial year 1997-1998 (see paragraph 113 above). In the absence of objection by the applicant in that regard, the Council was not required to provide, in accordance with the case-law cited in paragraph 108 above, other evidence than that related to the transfer of the applicant’s profits to the State or the Iranian Government budget to substantiate the validity of the contested acts. 117 The applicant complains that the Council assumed that it transferred the profits made in the exercise of its business to the State or the Iranian Government budget. The Council contends that the distribution of dividends to shareholders is a consequence resulting from the company law applicable to the applicant, without providing further details. 118 However, it is apparent from Article 19 of the applicant’s Article of Association, which it placed in the case-file for the present proceedings, that ‘[n]et profit of [the applicant] will be carried to the Treasury after considering reserves, taxes and other legal deductions’. While the Council did not expressly refer to that article, that evidence can be used against the applicant and taken into account when assessing the merits of the reasons given in the contested acts, in accordance with the case-law cited in paragraph 110 above. 119 In response to a measure of organisation of procedure adopted by the Court (paragraph 40 above), the applicant acknowledged that Article 19 of its Articles of Association ‘require[d] the [applicant] to pay its profits, if any, to the Treasury, after reserves are constituted and all legally mandated taxes and deductions are made,’ while stating, ‘nothing [was] paid to the Treasury if there [were] no profits’. The Council and the Commission also confirmed that, pursuant to that article, the applicant was required to transfer the profits made in the course of its commercial activities. 120 The parties therefore accept that Article 19 of the applicant’s Articles of Association requires the applicant to transfer to the Treasury, and therefore to the Iranian Government, the net profits which it makes resulting from its commercial activities. 121 In light of the exculpatory elements and information submitted by the applicant, the question arises whether Article 19 of the applicant’s Articles of Association should be deemed to be dead letter on the ground that it produces, in practice, no effect. 122 In order to show the absence of any effect, the applicant alleges, first, that, in respect of the fiscal years ending on 20 March 2013 and 20 March 2014, it suffered losses. It refers, in that regard, to a document certified by auditors. According to the applicant, ‘[t]his period is specifically relevant, because on 15 November 2013 the Council erroneously relisted [it]’. 123 Furthermore, the applicant maintains that, by decision of the extraordinary general meeting of 29 August 2013, its capital was increased, from the accumulated profits, in accordance with Article 93 of the Iranian Law on the Fifth Economic Development Plan (2010-2014) stating that ‘[t]he Government [was] authorised … to [allocate], in the framework of annual budgets, part of its earnings, after deduction of taxes, [to the applicant] and the banks which, according to the Law […] [remained] 100% in the public sector, to increase the capital of the Government in the [applicant] and banks’. 124 Lastly, the applicant argues that, ‘pursuant to the … Law of Iran’ and, in particular, Article 60 of the Iran Insurance Act, ‘the property … of the insurance [company] … shall be regarded as a guarantee for the rights … of [the] insured’. 125 In that regard, in the first place, the Court must take the view that the argument that, in essence, the capital of the applicant is not available as it would be regarded in law ‘as a guarantee for the rights … of the [creditors]’ is, in the present case, entirely irrelevant in so far as the Council merely stated that ‘the Government of Iran would benefit from profits made by [the applicant]’ and not that that Government could have some of the money stemming from a possible liquidation of the assets held by the applicant transferred to it. 126 In the second place, the other arguments advanced by the applicant do not to call into the merits of the Council’s reasoning. First, Article 19 of the applicant’s Articles of Association states that it must transfer the net profits made to the Iranian Government. Second, the documents relating to the fiscal year 1997-1998 and the capital increase from the accumulated profits of IRR 1 895 612 million (nearly EUR 57 million according to the official exchange rate at the time), made in 29 August 2013, establishes that before the financial years which ended on 20 March 2013 and 20 March 2014, the applicant had accumulated quantitatively significant profits in the exercise of its commercial activities. Third, it has not been shown that all the profits thus made were allocated to the applicant’s capital increase which took place on 29 August 2013, since Article 93 of the Iranian Law on Fifth Economic Development Plan (2010-2014) permits, in principle, the Government to allocate only ‘part’ of its revenues to such an operation. Fourth, the incurring of losses during the fiscal years which ended on 20 March 2013 and 20 March 2014 and the capital increase of 29 August 2013 could be a consequence of the restrictive measures put in place, from 27 July 2010, in the respect of the applicant, which must have made it more difficult for the applicant to conduct its business, which does not presuppose that, in the absence of such measures, the applicant would have continued to make quantitatively significant profits which would have benefitted the Iranian Government. 127 Thus, in view of Article 19 of the applicant’s Articles of Association and the fact that it was a large insurance company which made quantitatively significant profits, the Council was entitled, without committing any error of assessment, to find that the applicant provided quantitatively significant financial resources to the Iranian Government enabling it to pursue nuclear proliferation. Accordingly, the Council was entitled, without committing any error of assessment, to apply the criterion at issue to the applicant in the contested acts. 128 The Court must therefore reject the complaint alleging error of assessment of the facts as unfounded. 129 Second, the Court must examine the claim that the Council infringed Article 20(1) of Decision 2010/413, as amended by Article 1(7) of Decision 2012/35, and Article 23(2)(d) of Regulation No 267/2012, in that, in the contested acts, it did not establish a link, be it direct or indirect, between the applicant’s activities and nuclear proliferation. 130 In that regard, suffice it to note that, as is clear from paragraphs 87 and 91 above, the criterion at issue does not require the Council to demonstrate that the specific activities of the person or entity concerned have, as such, a direct or indirect link to nuclear proliferation. For that criterion to be applicable, it is enough that those activities are capable of encouraging nuclear proliferation, by providing the Iranian Government with resources or facilities of a material, financial or logistical nature which enable it, by their quantitative or qualitative importance, to pursue nuclear proliferation activities. 131 Accordingly, the Court must reject, as unfounded, the complaint alleging infringement of Article 20(1) of Decision 2010/413, as amended by Article 1(7) of Decision 2012/35, and of Article 23(2)(d) of Regulation No 267/2012. 132 Therefore, the first plea must also be rejected in its entirety as unfounded. The second plea, alleging infringement of the principles of equality, non-discrimination and sound administration 133 The applicant contends that, in adopting the contested acts solely on the ground that it was a Government-owned company and was engaged in commercial activities, the Council infringed the principles of equality and non-discrimination, as affirmed inter alia in Article 21(1) of the Charter of Fundamental Rights, in that it treated the applicant differently from other State-owned companies of Iran, which have not been subject to restrictive measures. In the letter of 18 November 2013, the Council itself acknowledged that it made an arbitrary choice of companies to subject to restrictive measures, according to its view of the impact those measures would have in the context of the European Union’s policy objectives. In those pleadings, the Council, supported by the Commission, also failed to explain the reasons why the applicant had been treated differently to other Iranian publicly-owned companies. By acting in that way, the Council also infringed the principle of sound administration — according to which it is required to act with due care and in good faith — by adopting the contested measures in an arbitrary way without complying with the ruling of the Court in the judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401). 134 The Council, supported by the Commission, disputes the applicant’s arguments, and contends that the second plea should be dismissed as unfounded. 135 In the present case, the applicant was found, in the contested acts, to be a person providing financial support to the Iranian Government, pursuant to the criterion at issue, and, as is clear from the examination of the present action, the applicant has not put forward any plea in law capable of calling into question the validity of that finding. 136 In those circumstances, even if the Council had in fact failed to adopt measures freezing the funds of certain persons meeting the criterion at issue and to examine, carefully and impartially, all the relevant evidence relating to those persons, the applicant cannot successfully rely on that fact, because the principle of equal treatment and non-discrimination and the principle of sound administration 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 (see, to that effect, judgment in Bank Melli Iran v Council, cited in paragraph 84 above, EU:T:2009:401, paragraph 59 and the case-law cited). 137 The second plea in law must therefore be rejected as being unfounded. The third plea, alleging inadequacy of the statement of reasons 138 The applicant maintains that, in so far as the reason for the contested acts is the impact they must have in the context of the European Union’s general objectives, those acts are based on reasons which are inadequate and, as such, should not have been taken into account by the Court, in accordance with the case-law. The inadequacy of that statement of reasons stems from the fact that it is based on a vague and unclear criterion and, in essence, does not state to what extent the contested acts would enable it to combat nuclear proliferation effectively. 139 The Council, supported by the Commission, disputes the applicant’s arguments, and contends that the third plea should be rejected as unfounded. 140 By the present plea, the applicant disputes, in substance, the validity of the grounds relating to the impact of restrictive measures taken against it in the context of the general objectives of the European Union, which, according to the applicant, were adopted by the Council in the contested acts. 141 As the Council correctly states, it is clear from the letters of 10 October and 18 November 2013 and the contested acts themselves that they were adopted on the sole ground that the applicant fulfilled the conditions set out by the criterion at issue to have a measure freezing funds imposed on it (see paragraphs 111 and 112 above). 142 Furthermore, contrary to what the applicant contends, the reference, in the letter of 18 November 2013, to the impact of the contested acts in the context of the general objectives of the Union should not be understood as the Council having expressed its intention to apply an additional criterion to the applicant, but as it having expressed that, in the present case, the application of the criterion at issue met the general objectives of the European Union, when it laid down that latter criterion. 143 Consequently, the third plea must be rejected as unfounded. The fourth plea in law, alleging misuse of power 144 The applicant contends that, in adopting the contested acts, the Council misused its powers, in so far as it used its power to impose restrictive measures on certain persons or entities in an arbitrary way without complying with the ruling of the Court in its judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401), thus deviating from the objective for which that power had been conferred on it. Following that judgment, either the Council should have ceased to impose restrictive measures on the applicant, or, before continuing to impose such measures on it based on the criterion at issue, it should have investigated the reality of the accusations against the applicant, its actual commercial activities and the possible relationship between those activities and nuclear proliferation. By providing a new reason for the restrictive measures, the Council merely sought to circumvent the judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401). 145 The Council, supported by the Commission, disputes the applicant’s arguments, and contends that the fourth plea should be dismissed as unfounded. 146 As the Council correctly observes, it appears from the letter of 10 October and 18 November 2013 and the contested acts themselves that they were adopted on the sole ground that the applicant fulfilled the conditions set out by the criterion at issue to have a fund-freezing measure imposed on it (see paragraphs 111 and 112 above). As already stated in paragraph 87 above, that criterion differs from the criterion relating to the provision of ‘support for nuclear proliferation’ set out in Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012, which had been applied by the Council in the measures annulled by the judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401, paragraph 113). 147 Contrary to what the applicant contends, the Council, in acting on the basis of a new, lawfully adopted criterion to justify the imposition of restrictive measures against the applicant, accordingly did not circumvent the judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401), or fail to adopt a measure which that judgment required to be adopted. 148 Moreover, as has already been stated in paragraph 135 above, it is clear from the examination of the present action that the applicant has not put forward any plea in law capable of calling into question the validity of the findings, set out in the contested acts, that they meet the criterion at issue, inasmuch as the applicant provides financial support to the Iranian Government. 149 Consequently, the fourth plea in law must be rejected as unfounded. The fifth plea, alleging infringement of the principle of protection of legitimate expectations 150 The applicant contends that, in adopting the contested acts, the Council infringed the principle of protection of legitimate expectations, since it did not take into account the expectations which the applicant might legitimately have, following the judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401), that it would no longer be subject to restrictive measures or, at the very least, not without a possible link being established between its commercial activities and nuclear proliferation. In any event, in the light of the agreement concluded on 24 November 2013 between the Islamic Republic of Iran and the People’s Republic of China, the French Republic, the Federal Republic of Germany, the Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States of America, supported by the High Representative of the European Union for Foreign Affairs and Security Policy, on a Joint Action Plan, which sets out an approach towards reaching a long-term comprehensive solution to nuclear proliferation, and of the measures implementing that plan, such as Council Decision 2014/21/CFSP of 20 January 2014 amending Council Decision 2010/413 (OJ 2014 L 15, p. 22) and Council Regulation No 2014/42/EU of 20 January 2014 amending Regulation (EU) No 267/2012 (OJ 2014 L 15, p. 18), which are based on the premiss that the Islamic Republic of Iran has put an end to nuclear proliferation and that certain restrictive measures adopted against the latter may be withdrawn, the applicant might legitimately have expected that the justification for the imposition of restrictive measures would no longer be the provision of financial support to the Government of Iran. The Islamic Republic of Iran’s clear undertakings under the first stage of the Joint Action Plan corresponded to an immediate halt in nuclear proliferation and that recital 3 et seq. of Decision 2014/21 suggested that the European Union was itself persuaded that compliance with those undertakings corresponded to the halting by the Islamic Republic of Iran, of nuclear proliferation as was subsequently confirmed by Statement No 140120/02 of the High Representative of the Union for Foreign Affairs and Security Policy of 20 January 2014 on the Joint Plan of Action with Iran. Therefore, after the first stage of the Joint Plan of Action had been implemented, the applicant could legitimately take the view that new restrictive measures could not be imposed on it solely on the ground that it was an Iranian Government-owned company. 151 The Council, supported by the Commission, disputes the applicant’s arguments, and contends that the fifth plea should be rejected as unfounded. 152 In view of the conclusions reached in paragraph 146 above, the Court must note that, as the Council correctly argues, the applicant is not justified in claiming that it was able to derive any legitimate expectations as to the application, in respect of it, of the criterion at issue from the fact that the measures previously adopted by the Council had been annulled by the judgment in Iran Insurance v Council, cited in paragraph 26 above (EU:T:2013:401). Those measures were adopted applying a different criterion, namely the provision of ‘support for nuclear proliferation’ set out in Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012 (judgment in Iran Insurance v Council, cited in paragraph 26 above, EU:T:2013:401, paragraph 113). 153 Moreover, neither the agreement concluded on 24 November 2013, nor the measures for implementing it, contain assurances from the Union to the effect that no new fund-freezing measures would be adopted on the basis of the criterion at issue. It is not clear either from the agreement concluded on 24 November 2013, or Decision 2014/21 or Regulation 2014/42, that Article 20(1)(c) of Decision 2010/413, as amended by Article 1(7) of Decision 2012/35, and Article 23(2)(d) of Regulation No 267/2012 were to be abrogated or even that their application was to be suspended. The only restrictive measures for which suspension was provided, for a period of six months, by those latter acts are measures which are distinct from the fund-freezing measures provided for in Article 20 of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012. Thus, as the Council correctly argues, the applicant is not justified in claiming that, from the agreement of 24 November 2013 and the measures for implementing it, it could derive a legitimate expectation that the criterion at issue would not be applied to it. 154 The fifth plea in law must therefore be rejected as being unfounded. The sixth plea, alleging infringement of the principle of proportionality 155 The applicant contends that, in adopting the contested acts, the Council infringed the principle of proportionality referred to in Article 5(4) TEU, in so far as those measures were manifestly inappropriate in the light of the ruling of the Court in the judgment in Iran Insurance v Council (paragraph 26 above, EU:T:2013:401), which required the Council, if it wished to continue to impose restrictive measures on the applicant, to establish the existence of a direct or indirect link between the latter’s commercial activities and nuclear proliferation. Since the Council did not establish such a link, the restrictive measures which it imposed on the applicant are disproportionate, a fortiori because some restrictive measures imposed on the Islamic Republic of Iran have already been withdrawn by Regulation No 2014/42. 156 The Council, supported by the Commission, disputes the applicant’s arguments, and contends that the sixth plea should be rejected as unfounded. 157 For the reasons already set out in paragraphs 98 to 100 above, the criterion at issue, on the basis of which the contested acts were adopted, cannot be regarded as infringing the principle of proportionality. 158 Furthermore, as has already been observed in paragraphs 135 and 148 above, it appears from the examination of the present action that the applicant has not put forward pleas such as to call into question the validity of the findings contained in the contested acts, according to which it meets the criterion at issue, in so far as it provides financial support to the Iranian Government. 159 In that context, the Court cannot take the view that the contested acts, which apply the criterion at issue to the applicant, are themselves disproportionate. 160 The sixth plea in law must therefore be rejected as being unfounded. 161 Therefore, the present action must be dismissed in its entirety. Costs 162 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. 163 Since the applicant has been unsuccessful, it must be ordered to pay the costs in accordance with the form of order sought by the Council. On those grounds, THE GENERAL COURT (First Chamber) hereby: 1) Dismisses the action; 2) Orders Iran Insurance Company to pay the costs. Kanninen Pelikánová Buttigieg Delivered in open court in Luxembourg on 3 May 2016. [Signatures] Table of contents Background to the dispute Restrictive measures adopted against the Islamic Republic of Iran Restrictive measures against the applicant Procedure and forms of order sought Law The interpretation of the applicant’s claims seeking that certain provisions be declared inapplicable to it Admissibility Substance The first plea of illegality, directed against Article 46(2) of Regulation No 267/2012, alleging infringement of Article 215 TFEU The second plea of illegality, directed against Article 20(1)(c) of Decision 2010/413, as amended by Article 1(7) of Decision 2012/35, and Article 23(2)(d) of Regulation No 267/2012, alleging infringement of the values and fundamental rights protected by Articles 2 TEU, 21 TEU and 23 TEU and by the Charter of Fundamental Rights The first plea, alleging a manifest error in the assessment of the facts and infringement of Article 20(1) of Decision 2010/413, as amended by Article 1(7) of Decision 2012/35, and of Article 23(2)(d) of Regulation No 267/2012 The second plea, alleging infringement of the principles of equality, non-discrimination and sound administration The third plea, alleging inadequacy of the statement of reasons The fourth plea in law, alleging misuse of power The fifth plea, alleging infringement of the principle of protection of legitimate expectations The sixth plea, alleging infringement of the principle of proportionality Costs * Language of the case:English