Opinion of the Advocate General — ECLI:EU:C:2013:470
Date: 2013-07-11
Language of the case: French
Subject matter: External relations;Common foreign and security policy
Procedure: Action for annulment - unfounded;Appeal - successful

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 Kadi II, paragraph 119). 74 In the present case, in order to assess the lawfulness of the General Court’s review of the statement of reasons for and validity of the acts at issue, it is necessary to examine, first of all, the way in which the General Court identified and interpreted the general rules of the relevant legislation, before examining specifically the way in which it reviewed the statement of reasons and the validity of the acts at issue. 75 In that regard, there is nothing in the judgment under appeal to indicate that the General Court took into account the changes in European Union legislation after Security Council Resolution 1929 (2010). 76 Thus, its interpretation of that legislation led it – as is evident from paragraphs 113 and 114 of that judgment – to seek a direct link between Kala Naft and nuclear proliferation, although it is clear from Decision 2010/413 and Regulation No 961/2010 that the oil and gas industry in Iran may be subjected to restrictive measures, particularly where it is involved in the procurement of prohibited goods and technology, the link between those goods and technology and nuclear proliferation being established by the European Union legislature in the general rules of the relevant provisions. 77 Article 8(1) of Regulation No 961/2010 lays down a prohibition on selling, supplying, transferring or exporting key equipment or technology listed in Annex VI, directly or indirectly, to any Iranian person, entity or body or for use in Iran. According to Article 8(2) of that regulation, Annex VI lists key equipment and technology for key sectors of the oil and gas industry in Iran. It is apparent from those provisions that the concept of ‘procurement of prohibited goods and technology’, within the meaning of Article 16(2) of that regulation, extends to the procurement of key equipment and technology for key sectors of the oil and gas industry in Iran. 78 It is also apparent that neither the extract from Article 16(2) cited in paragraph 11 of the judgment under appeal nor the reference to that article in paragraph 114 of the judgment under appeal mentions that part of the provision under which those engaged in, directly associated with, or providing support for the nuclear activities of the Islamic Republic of Iran, ‘including through involvement in the procurement of prohibited goods and technology’ are to be subject to the restrictive measures. 79 As regards Implementing Regulation No 668/2010, it must be noted that it implemented Article 7(2) of Regulation No 423/2007 which, unlike Article 16(2) of Regulation No 961/2010, did not explicitly refer to the procurement of prohibited goods and technology. 80 However, Article 7(2)(a) of Regulation No 423/2007 covers engagement in, direct association with, or the provision of support for, Iran’s proliferation-sensitive nuclear activities. It must be noted that ‘support’ implies a lesser degree of connection to Iran’s nuclear activities than ‘engagement’ or ‘direct association’, and that it is capable of covering the procurement of or trade in goods and technology linked to the gas and oil industry. 81 That interpretation is supported by the adoption – after the adoption of Regulation No 423/2007 – of Security Council Resolution 1929 (2010), of the European Council Declaration of 17 June 2010 and of Decision 2010/413, which mention the revenues derived from the energy sector and the risk attached to material intended for the oil and gas industry. 82 Indeed, Security Council Resolution 1929 (2010), to which recital 22 in the preamble to Decision 2010/413 refers, notes the potential connection between the Islamic Republic of Iran’s revenues derived from its energy sector and the funding of its proliferation-sensitive nuclear activities, and mentions that chemical process equipment and materials required for the petrochemical industry have much in common with those required for certain sensitive nuclear fuel cycle activities. Furthermore, in its declaration of 17 June 2010, the European Council states that the new measures to be adopted must focus, inter alia, on key sectors of the gas and oil industry with prohibition of new investment, technical assistance and transfers of technologies, equipment and services related to those areas. 83 In the light of that Security Council resolution (Case C‑548/09 P Bank Melli Iran v Council [2011] ECR I‑11381, paragraph 104 and case-law cited), the European Council Declaration and Decision 2010/413, which mention the revenues derived from the energy sector and the risk attached to material intended for the oil and gas industry, Article 7(2) of Regulation No 423/2007 had to be interpreted, for the purposes of the assessment of the lawfulness of the restrictive measure adopted by Implementing Regulation No 668/2010, as meaning that trading in key equipment and technology for the gas and oil industry was capable of being regarded as support for the nuclear activities of the Islamic Republic of Iran. 84 The General Court erred in law in ruling, in paragraphs 113 to 115 of the judgment under appeal, that the adoption of restrictive measures against an entity presupposes that that entity has actually previously acted reprehensibly, the mere risk that the entity concerned may do so in the future being insufficient. 85 The various provisions of the acts at issue providing for funds to be frozen are worded in general terms (‘being engaged in, directly associated with, or providing support for …’) and make no reference to conduct prior to a decision to freeze funds. It follows from this that even where those provisions relate to a specific entity, the reference to a general objective as disclosed by the statutes of that entity may be sufficient to justify the adoption of restrictive measures. 86 Next, it is appropriate to examine in the light of the information and evidence which have been disclosed whether the reasons set out in the acts at issue are sufficiently detailed and specific and, where appropriate, whether the accuracy of the facts relating to the reason concerned has been established (see Kadi II, paragraph 136). 87 As regards the first ground of the acts at issue, according to which Kala Naft trades equipment for the oil and gas sectors that can be used for Iran’s nuclear programme, the General Court correctly considered that that was sufficiently detailed and specific to enable Kala Naft to verify whether the acts at issue were well founded, to defend itself before the General Court, and to enable the General Court to review the legality of those acts. 88 As regards the validity of the measure and, more specifically, the accuracy of the facts alleged in the first ground, it must be noted that, in accordance with Article 7(2)(a) of Regulation No 423/2007, Article 20(1)(b) of Decision 2010/413 and Article 16(2)(a) of Regulation No 961/2010, interpreted in the light of Security Council Resolution 1929 (2010) and the European Council Declaration of 17 June 2010, the Council was entitled to consider that the measures could be adopted against Kala Naft inasmuch as it was trading in equipment for the oil and gas sectors that could be used for Iran’s nuclear programme. 89 It is sufficient to note that Kala Naft is the central purchasing body of the Iranian national oil company, NIOC. This is included in the statutes of that company and is not disputed by it. Kala Naft itself states, in paragraph 27 of its application to the General Court, that its exclusively oil, gas and petrochemical-related functions are clearly apparent from its working methods. 90 In addition, in challenging the second ground for the acts at issue, Kala Naft itself states, in paragraphs 63, 64 and 118 of its application to the General Court, that it is regularly involved in the procurement of alloy gates for NIOC or its subsidiaries. In any event, on the basis of that role within the NIOC group, which necessarily entails the purchasing of a very large quantity of goods used by NIOC’s undertakings, the Council was entitled to find that Kala Naft was, in the context of its business, involved in the procurement of prohibited goods and technology within the meaning of Articles 4 and 20(1)(b) of Decision 2010/413 and of Articles 8(1) and (2) and 16(2)(a) of Regulation No 961/2010 and, in particular, of equipment for the oil and gas sectors that can be used for Iran’s nuclear programme, as referred to in the statement of reasons for the acts at issue. 91 In those circumstances, it must be held that the facts alleged in the first ground have been established to the requisite legal standard, and that that first ground in itself justified the listings in the acts at issue. In view of what is recalled in paragraph 72 of this judgment, it is not necessary to verify whether the second and third grounds of the acts at issue were sufficiently detailed and specific, or to check whether those grounds were substantiated and could in themselves constitute a sufficient basis for the acts at issue. 92 Even if the evidence substantiating the first ground for those listings was apparent from the pleadings exchanged during the proceedings before the Courts of the European Union and not from a comprehensive and clear statement of reasons substantiated by relevant information, that does not affect the lawfulness of those acts, since the statement of reasons was such that Kala Naft was able to understand it and the relevant information, such as the statutes of that company, was known to Kala Naft. 93 In the light of the errors of law made by the General Court, the judgment under appeal must be set aside. The action before the General Court 94 In accordance with the first paragraph of Article 61 of the Statute of the Court of Justice, if the latter quashes the decision of the General Court, it may itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment. 95 Following the setting aside of the judgment under appeal, it is for the court seised to rule afresh on the action for annulment brought by Kala Naft. 96 In the present case, the conditions are met for the Court of Justice itself to give judgment in the matter. The arguments which the parties set out before the General Court are contained in the pleadings exchanged during the written procedure before that court. Furthermore, in the part of their pleadings relating to the proposition of a successful appeal, the parties have had the opportunity, before this Court, to put their case again in respect of those arguments, and on any response that may have been given by the General Court. The first plea 97 Kala Naft submits that Decision 2010/413 is illegal in so far as Article 28 provided that that decision would enter into force on the date of adoption, which preceded the date of publication in the Official Journal of the European Union. It claims, in particular, that Article 4 of Decision 2010/413 provides for prohibitory measures the scope of which is not specified with sufficient precision. Through the combination of Articles 4 and 28, Decision 2010/413 lays down a prohibition that gives rise to criminal sanctions under the law of the Member States, but which does not enable those to whom the decision is addressed to gauge the scope of the prohibition. 98 None of the parties commented on that plea before this Court. 99 For the same reasons as those set out in paragraphs 36 to 38 of the judgment of the General Court, it must be concluded that, under the first paragraph of Article 275 TFEU, the Court of Justice does not have jurisdiction to take cognisance of an action seeking to assess the lawfulness of Article 4 of Decision 2010/413. 100 Since the challenge to the lawfulness of Article 28 is linked to that of Article 4, it is not necessary to respond to Kala Naft’s plea. The second plea, alleging infringement of the obligation to state reasons 101 Kala Naft submits that the Council did not state to the requisite legal standard the reasons for the acts at issue, so that Kala Naft is not in a position to ascertain the matters alleged against it and to verify or refute the merits of the reasons given in its case. 102 For the same reasons as those stated in paragraphs 72 and 87 of the present judgment, this plea must be rejected. The third plea, alleging infringement of Kala Naft’s rights of defence and of its right to effective judicial protection 103 Kala Naft submits by its third plea that, by adopting Decision 2010/413 and Implementing Regulation No 668/2010, the Council infringed Kala Naft’s rights of defence, which also entails an infringement of its right to effective judicial protection. 104 For the same reasons as those set out in paragraphs 94 to 104 of the judgment of the General Court, it must be held that the right of Kala Naft to put forward its point of view effectively in that connection was upheld. 105 As regards the evidence proving the matters alleged against Kala Naft, it is sufficient to note that Kala Naft’s function as central purchasing body of the NIOC group is evident both from its statutes and from the brochures which it produces. The Council was not, therefore, required to prove Kala Naft’s activities by means of other evidence. 106 With regard to proof of the attempt to procure material which has no use outside the nuclear industry, it must be held that any infringement of Kala Naft’s rights of defence would have no bearing on the outcome of the dispute, given that the first ground for listing Kala Naft in the acts at issue itself justified Kala Naft’s listing, as has been established in paragraph 91 of the present judgment. The fifth plea, alleging that the Council had no power to adopt the acts at issue 107 Kala Naft submits that the Council had no power to adopt the acts at issue. It claims that the legal basis of those acts is the European Council Declaration of 17 June 2010, but that that declaration merely provides for the Council to implement Security Council Resolution 1929 (2010) and adopt accompanying measures, and does not provide for the freezing of independent funds. Furthermore, Resolution 1929 (2010) does not contain measures relating to the Iranian oil and gas industry or to Kala Naft. It concludes that the Council had no power to adopt restrictive measures against it on the basis of the European Council Declaration of 17 June 2010. 108 It must be noted in that regard that although they must be taken into consideration in the interpretation of the acts at issue, neither Security Council Resolution 1929 (2010) nor the European Council Declaration of 17 June 2010 can constitute the legal basis of those acts. 109 It must be noted that Decisions 2010/413 and 2010/644 are founded on Article 29 TEU, that Implementing Regulation No 668/2010 is founded on Article 291(2) TFEU and Regulation No 423/2007, and that Regulation No 961/2010 is founded on Article 215 TFEU. Those provisions of the Treaties gave the Council the power to adopt the acts at issue, containing independent restrictive measures, distinct from the measures specifically recommended by the Security Council. 110 It follows from this that the plea is unfounded. The sixth plea, alleging misuse of power 111 Kala Naft submits that the Council misused its power by adopting restrictive measures in relation to Kala Naft without having proof of its involvement in nuclear proliferation and without taking account of its procedural rights. According to Kala Naft, this means that the Council in fact attempted to misuse the restrictive measures system connected with nuclear proliferation in order to target the Iranian oil, gas and petrochemical industry. 112 It is sufficient in that regard to note that, as has been pointed out in paragraphs 76 to 83 of the present judgment, the acts at issue related to the Iranian oil, gas and petrochemical industry owing to the risk that that industry presented with regard to nuclear proliferation, both by virtue of the revenue generated and through the use of equipment and materials which have much in common with those used for certain sensitive nuclear fuel cycle activities. 113 The plea is therefore unfounded. The seventh plea, alleging error of law with regard to the concept of involvement in nuclear proliferation 114 Kala Naft claims that the Council erred in law in relying on the first ground for its listing in the acts at issue, alleging that Kala Naft trades in equipment for the oil and gas sectors that can be used for Iran’s nuclear programme. It claims that that circumstance alone does not justify the adoption of restrictive measures. 115 As is evident from paragraphs 87 to 90 of the present judgment, Kala Naft’s activity in the oil and gas sectors, attested to by the company’s own statutes, was sufficient to justify the adoption of the restrictive measures. 116 The seventh plea is therefore unfounded. The eighth plea, alleging error of assessment of the facts relating to Kala Naft’s activities 117 Kala Naft denies carrying out the activity of trading in equipment that is linked to the nuclear programme. It claims that its role as NIOC’s central purchasing body is not a trading activity. 118 It must be held that the term ‘trades’ describes to the requisite legal standard the activity of Kala Naft that justifies its listing and enables the company to understand the reason for it. The fourth and ninth pleas, alleging breach of the principle of proportionality 119 Kala Naft challenges the public interest objective that could justify restrictions on the exercise of the right to property and on the freedom to pursue an economic activity, since neither the Security Council nor the European Council prescribed the adoption of measures relating to the oil and gas sector. Furthermore, even if there were such an objective, there was a failure to ensure that the means employed were reasonably proportionate to the aim pursued. 120 In so far as Kala Naft challenges the proportionality of the general rules on the basis of which it was decided to enter it on the lists, it must be noted that, with regard to judicial review of compliance with the principle of proportionality, the Court has held that the European Union legislature must be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. It concluded from this that the legality of a measure adopted in those fields can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (see Case C‑266/05 P Sison v Council [2007] ECR I‑1233, paragraph 33). 121 It must also be noted that the fundamental rights mentioned by Kala Naft are not absolute, and that their exercise may be subject to restrictions justified by objectives of public interest pursued by the European Union (see Bank Melli Iran v Council, paragraph 113). 122 Such is the case for the right to property and the freedom to pursue an economic activity. Consequently, restrictions may be imposed on the exercise of the freedom to pursue a trade or profession, as on the exercise of the right to property, provided that the restrictions in fact correspond to objectives of public interest and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed (see Bank Melli Iran v Council, paragraph 114). 123 With regard more specifically to the freedom to pursue an economic activity, the Court has held in particular that, in the light of the wording of Article 16 of the Charter, which differs from the wording of the other fundamental freedoms laid down in Title II thereof, yet is similar to that of certain provisions of Title IV of the Charter, that freedom may be subject to a broad range of interventions on the part of public authorities which may limit the exercise of economic activity in the public interest (see Case C‑283/11 Sky Österreich [2013] ECR, paragraph 46). 124 In that regard, it must be noted that the objective of the various acts at issue is to prevent nuclear proliferation and so to bring pressure to bear on the Islamic Republic of Iran to end the activities concerned. That objective forms part of a more general framework of endeavours linked to the maintenance of international peace and security and is, therefore, legitimate (see, to that effect, Bank Melli Iran v Council, paragraph 115). 125 Furthermore, contrary to what is claimed by Kala Naft, the Security Council had raised the risks connected with the petrochemical industry in the seventeenth recital in the preamble to Resolution 1929 (2010), and the European Council had, in its declaration of 17 June 2010, invited the Foreign Affairs Council to adopt measures in the sectors of the gas and oil industry. 126 As regards the proportionality of the measures, it is important to bear in mind the numerous reports of the IAEA, the large number of resolutions of the Security Council, and the various measures taken by the European Union. The restrictive measures adopted both by the Security Council and by the European Union are progressive and justified by the lack of success of the measures adopted previously. It follows from that approach, which is based on the progressive impairment of rights according to the effectiveness of the measures, that the proportionality of those measures is established. 127 It follows from this that the pleas are unfounded. 128 Since all the pleas have been rejected, the action must be dismissed. Costs 129 Under Article 184(2) of the Rules of Procedure, where the appeal is unfounded or where the appeal is well founded and the Court itself gives final judgment in the case, the Court is to make a decision as to the costs. Article 138 of the Rules of Procedure, which is applicable to appeal proceedings by virtue of Article 184(1), provides in paragraph 1 that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Article 140(1) of the Rules of Procedure, which is applicable to appeal proceedings by virtue of Article 184(1), provides that the Member States and institutions which have intervened in the proceedings are to bear their own costs. 130 Since the appeal brought by the Council has been allowed and the action brought by Kala Naft against the acts at issue has been dismissed, it is appropriate, in accordance with the form of order sought by the Council, to order Kala Naft to bear its own costs and to pay those incurred by the Council both at first instance and in the present appeal. 131 The Commission, as intervener, shall bear its own costs. On those grounds, the Court (Fifth Chamber) hereby: 1. Sets aside the judgment of the General Court of the European Union of 25 April 2012 in Case T‑509/10 Manufacturing Support & Procurement Kala Naft v Council; 2. Dismisses the action for annulment brought by Manufacturing Support & Procurement Kala Naft Co., Tehran; 3. Orders Manufacturing Support & Procurement Kala Naft Co., Tehran to bear its own costs and to pay those incurred by the Council of the European Union in relation both to the proceedings at first instance and to the appeal proceedings; 4. Orders the European Commission to bear its own costs both of the proceedings at first instance and of the appeal proceedings. [Signatures] * Language of the case: French.