Opinion of the Advocate General — ECLI:EU:C:2010:13
Date: 2010-01-14
Language of the case: English
Subject matter: External relations;Free movement of capital;Common foreign and security policy
Procedure: Reference for a preliminary ruling
Origin: United Kingdom

summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both.’ 19 As from 16 November 2006 the Order of 2002 has been amended by the Al-Qaida and Taliban (United Nations Measures) Order 2006 (‘the Order of 2006’). 20 Article 7 of the Order of 2006, entitled ‘Freezing funds and economic resources of designated persons’, provides: ‘1. A person (including the designated person) must not deal with funds or economic resources belonging to, owned or held by a person referred to in paragraph (2) unless he does so under the authority of a licence granted under article 11. 2. The prohibition in paragraph (1) applies in respect of: (a) any designated person, (b) any person owned or controlled, directly or indirectly, by a designated person; and (c) any person acting on behalf or at the direction of a designated person. 3. A person who contravenes the prohibition in paragraph (1) is guilty of an offence.’ 21 Article 8 of the Order of 2006, entitled ‘Making funds or economic resources available to designated persons etc.’, provides: ‘1. A person must not make funds or economic resources available, directly or indirectly, to or for the benefit of a person referred to in article 7(2) unless he does so under the authority of a licence granted under article 11. 2. A person who contravenes the prohibition in paragraph (1) is guilty of an offence. …’ 22 Article 11 of the Order of 2006, entitled ‘Licences’, provides that: ‘1. The Treasury may grant a licence to exempt acts specified in the licence from the prohibition in article 7(1) or 8(1). 2. A licence may be (a) general or granted to a category of persons or to a particular person; (b) subject to conditions; (c) of indefinite duration or subject to an expiry date. 3. The Treasury may vary or revoke a licence at any time. … 6. Any person who has done any act under the authority of a licence and who fails to comply with any conditions attaching to that licence is guilty of an offence.’ The disputes in the main proceedings and the question referred for a preliminary ruling 23 The order for reference makes it clear that the disputes in the main proceedings concern several social security or social assistance benefits, such as income support, disability living allowance, child benefit, housing benefit and council tax benefit granted to M and Others, the appellants in the main proceedings, who are married to designated persons and live with the latter and their children in the United Kingdom. 24 By decisions taken in July 2006 and valid for an indefinite period the Treasury considered that those payments were caught by the prohibition laid down in Article 2(2) of Regulation No 881/2002. 25 Because the sums in question may be used to cover the basic needs of the households to which designated persons belong, such as the buying of food for a communal meal, they are, in the Treasury’s opinion, made indirectly available for the benefit of those persons within the meaning of that provision. 26 The Treasury decided that those payments may, in consequence, be made only if they are covered by an exception under Article 2a of Regulation No 881/2002 in the form of a licence issued in accordance with article 7 of the Order of 2002. 27 The Treasury issued licences, subject to a body of conditions, to various public authorities, permitting them to continue paying the social benefits to each of the spouses concerned in the main proceedings. 28 M and Others challenged those decisions, arguing that those payments were not caught by the prohibition laid down in Article 2(2) of Regulation No 881/2002. 29 Having been unsuccessful at first instance and on appeal, M and Others have brought the cases in the main proceedings before the House of Lords. 30 The court making the reference notes that the following obligations were imposed in connection with a licence issued by virtue of article 7 of the Order of 2002: – the benefits in question must be paid into a bank account from which the spouse concerned can draw only GBP 10 in cash for each member of the household; other payments from that account must be made by debit card; – the spouse concerned must send a monthly account to the Treasury detailing all her expenditure in the previous month, enclosing receipts for the goods purchased and a copy of her monthly bank statement. Those receipts may be checked by the Treasury in order to ascertain that the purchases do not exceed basic expenses, and – the licence includes a warning to the spouse that it is a criminal offence to make cash, financial assets or economic resources available to her husband, a designated person. 31 The House of Lords considers that such an intrusive regime is not required by Article 2(2) of Regulation No 881/2002 and puts forward the following arguments: – that regime is not required in order to give effect to the purpose of Resolution 1390 (2002), which is to stop funds being used for terrorist ends. It is hard to see how the expenditure of sums on current domestic expenses, such as the purchase of food, from which a designated person derives a benefit in kind, could create any risk that funds might be diverted to terrorist ends, the amounts of the social benefits in question being carefully calculated so as not to exceed the vital needs of the recipients; – a broad interpretation of the words ‘for the benefit of’ in Article 2(2) of Regulation No 881/2002 is inconsistent with Article 2(3) of that regulation, which prohibits making economic resources available to a designated person only when that enables such a person ‘to obtain funds, goods or services’; – the Treasury construes the words used in Article 2(2) of Regulation No 881/2002 as meaning ‘applied’ or ‘expended for the benefit of’. It seems more likely, however, having regard to the objective pursued by that regulation, that the drafters of that regulation intended those words to mean funds made available to or used for the benefit of a designated person that the latter could use for the purposes of terrorism, and – the Treasury’s construction produces a disproportionate and oppressive result. It means that any person paying money to the spouse of a designated person, such as her employer or her bank, must seek a licence simply because she lives with a designated person and some part of her expenditure may be used for his benefit. Furthermore, the terms of the licence are such that she is unable to spend her own money, however large her income, without accounting to the Treasury for every item of her expenditure. That constitutes an extraordinary invasion of the privacy of a person who is not included in the list in question. 32 In those circumstances, the House of Lords decided to stay proceedings and to refer the following question to the Court for a preliminary ruling: ‘Does Article 2(2) of … Regulation … No 881/2002 apply to the provision by the State of social security or social assistance benefits to the spouse of a designated [person] … on the ground only that the spouse lives with the designated person and will or may use some of the money to pay for goods and services which the latter will consume or from which he will benefit?’ Consideration of the question referred for a preliminary ruling 33 In the cases in the main proceedings, the Treasury argued that Article 2(2) of Regulation No 881/2002 was applicable to the payment of social security or social assistance benefits at issue to the spouses of designated persons, relying on the wording of that provision in its version in the English language, the latter being also the language of the instant case. 34 It is therefore to be considered whether the question referred may be answered by giving a literal interpretation of Article 2(2) of Regulation No 881/2002, which calls for a comparison of the various language versions of that provision. 35 According to the English version of the provision, ‘[n]o funds shall be made available, directly or indirectly, to, or for the benefit of,’ a designated person. 36 The Treasury, like the courts seised at first and second instance and like the United Kingdom Government, infers that the prohibition laid down in Article 2(2) of Regulation No 881/2002 includes making funds available indirectly for the benefit of a designated person. 37 In its view, it follows that that provision applies also when funds are made available to someone other than the designated person but when the latter indirectly derives benefit therefrom. That is so in the cases in the main proceedings, for the social security or social assistance benefits at issue are calculated and granted in order that the household, including the designated person, may derive benefit from them. 38 In this regard, while it seems that the Treasury’s definition of the ambit of Article 2(2) of Regulation No 881/2002 could also be founded on certain other language versions, such as the versions in Hungarian, Dutch, Finnish and Swedish, the fact remains that the wording of that provision in other language versions, in particular the versions in Spanish, French, Portuguese and Romanian, is different. 39 It is clear from those latter language versions that, in addition to making funds directly or indirectly available, it is also prohibited that funds should be ‘used for the benefit of’ a designated person. 40 In those language versions, the benefit supposedly derived by a designated person is linked, not to the making available of funds, but to their use. Furthermore, in those language versions, the words ‘directly or indirectly’ relate to the making available of funds and not to their use. 41 Separate examination, in the light of those latter language versions, does not support the argument that, by making social security or social assistance benefits available to the spouses of designated persons, the authorities concerned have ‘used’ those funds ‘for the benefit’ of a designated person. In point of fact, it is not those authorities, but the spouses of the designated persons to whom the funds at issue are made available, who then use them to buy goods or services which they provide as assistance in kind for the designated persons in order to meet the basic expenses of the household to which those persons belong. 42 Moreover, yet other language versions, such as those in German and Italian, do not fall within either of the two groups of language versions described above, but use their own terminology. 43 Thus, those versions, in addition to laying down the prohibition of making funds directly or indirectly available to a designated person, also prohibit that funds should ‘benefit’ (‘zugute kommen’) such a person, or that they should be ‘allocated for the benefit of’ (‘stanziar[e] a … vantaggio’) such a person. 44 In this regard, it is to be borne in mind that it is settled case-law that the different language versions of a text of European Union law must be given a uniform interpretation and hence, in the case of divergence between the language versions, the provision in question must be interpreted by reference to the purpose and general scheme of the rules of which it forms a part (Case C‑341/01 PlatoPlastik Robert Frank [2004] ECR I‑4883, paragraph 64 and case-law cited). 45 In addition, for the purpose of interpreting Regulation No 881/2002, account must also be taken of the wording and purpose of Resolution 1390 (2002) which that regulation, according to the fourth recital in the preamble thereto, is designed to implement (see, in particular, 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, paragraph 297 and case-law cited). 46 In the words of Paragraph 2(a) of Resolution 1390 (2002), the States are to ensure ‘that neither these nor any other funds [belonging to individuals, groups, undertakings and entities associated with them, as referred to in the list created pursuant to resolutions 1267 (1999) and 1333 (2000)], financial assets or economic resources are made available, directly or indirectly, for such persons’ benefit, by their nationals or by any persons within their territory’. 47 Although the expression ‘pour les fins qu’ils poursuivent’ [for the ends they pursue] in the French text of Paragraph 2(a) would appear to indicate that the making available of financial assets or economic resources is prohibited only if they can be used by the designated persons for the purposes of activities related to terrorism, the fact remains that other official language versions of that provision do not make it possible to arrive at an unequivocal interpretation to that effect on the basis of that text alone. 48 Indeed, that expression does not appear in the Spanish, that version merely stating that it must be prohibited that funds should be made available ‘to those persons’ (‘de esas personas’). The English version is different again, for it provides that it is prohibited to make funds available ‘for such persons’ benefit’. 49 In view of the divergences thus established between the language versions of both Article 2(2) of Regulation No 881/2002 and Resolution 1390 (2002), Article 2(2) of Regulation No 881/2002 must, in the light of what has been stated in paragraphs 44 and 45 above, be construed in terms of the purpose and general scheme of the legislation of which it forms part and account must in this regard be taken of the substance of Resolution 1390 (2002). 50 In this connection, with regard to the obligations referred to in Paragraph 2(a) of Resolution 1390 (2002), Paragraph 4 of Resolution 1822 (2008), adopted by the Security Council on 30 June 2008, provides that they ‘apply to financial and economic resources of every kind … used for the support of Al‑Qaeda, Usama bin Laden, and the Taliban and other individuals, groups, undertakings, or entities associated with them’. 51 Furthermore, in an information document of 11 September 2009 headed ‘Assets Freeze: Explanation of Terms’, available on the Sanctions Committee’s internet site, that committee stated that ‘[t]he purpose of the assets freeze is to deny … individuals, groups, undertakings and entities [included in the list drawn up by the Sanctions Committee] the means to support terrorism’. 52 So far as Regulation No 881/2002 is concerned, the Court has held that its objective is to prevent designated persons from having at their disposal any financial or economic resources, in order to impede the financing of terrorist activities (Case C‑117/06 Möllendorf and Möllendorf-Niehuus [2007] ECR I‑8361, paragraph 63). 53 Likewise, the Court has stated that the essential purpose and object of that regulation is to combat international terrorism, in particular to cut it off from its financial resources by freezing the economic funds and resources of persons or entities suspected of involvement in activities linked to terrorism (Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 169). 54 It follows that the objective of the rules freezing the funds of designated persons, of which the prohibition of making funds available laid down in Article 2(2) of Regulation No 881/2002 forms part, is to stop those persons having access to economic or financial resources, whatever their nature, that they could use to support their terrorist activities. 55 That objective is, moreover, reflected in the qualification contained in the definition in Article 1(2) of Regulation No 881/2002 of ‘economic resources’ as ‘assets of every kind, … which are not funds but can be used to obtain funds, goods or services’, and in Article 2(3) of that regulation prohibiting making economic resources available to designated persons ‘so as to enable that person, group or entity to obtain funds, goods or services’. 56 Having regard to the objective pursued by Regulation No 881/2002, that qualification has to be understood as meaning that the measure freezing economic resources applies only to those assets that can be turned into funds, goods or services capable of being used to support terrorist activities. 57 It is true that neither the definition of funds in Article 1(1) of Regulation No 881/2002 nor the measure prohibiting the making available of funds provided for in Article 2(2) of that regulation contains such a qualification. None the less, that absence can be explained by the fact that those provisions refer specifically to funds which, if made available, directly or indirectly, to a designated person, entail in themselves a danger that they may be diverted in order to support terrorist activities. 58 In the cases in the main proceedings, however, the interpretation given by the Treasury of Article 2(2) of Regulation No 881/2002 was not based on any danger whatsoever that the funds in question might be diverted in order to support terrorist activities. 59 It has not been argued that the spouses concerned hand over those funds to a designated person instead of allocating them to their basic household expenses. Such a misappropriation of funds would, moreover, be covered by the prohibition laid down in Article 2(2) of that regulation and would constitute an offence punishable under national criminal law. 60 It is not disputed that, in the cases in the main proceedings, the funds in question are in fact used by the spouses concerned to meet the essential needs of the households to which the designated persons belong. 61 As the court making the reference has observed, without being contradicted on this point before the Court, it is hard to imagine how those funds could be turned into means that could be used to support terrorist activities, especially because the benefits at issue are fixed at a level intended to meet only the strictly vital needs of the persons concerned. 62 In circumstances such as those in issue in the main proceedings, the benefit in kind that a designated person might indirectly derive from the social payments made to his spouse cannot, therefore, compromise the objective pursued by Regulation No 881/2002 which, as stated in paragraph 54 above, is to stop designated persons gaining access to economic or financial resources of any kind that they could use to support terrorist activities. 63 In consequence, having regard to the variations found to exist in the language versions of Article 2(2) of Regulation No 881/2002, that provision must, in the light of its object, be construed as meaning that it does not apply to the payment of social security or social assistance benefits in circumstances such as those in issue in the main proceedings. 64 In addition, it is to be borne in mind that, in construing a provision of secondary European Union law, preference should as far as possible be given to the interpretation which renders the provision consistent with the general principles of European Union law and, more specifically, with the principle of legal certainty (C‑1/02 Borgmann [2004] ECR I‑3219, paragraph 30 and case-law cited). 65 That principle requires legislation, such as Regulation No 881/2002, which imposes restrictive measures having considerable impact on the rights and freedoms of designated persons (Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 375) and which, as provided in Article 10 of that regulation, in domestic law involves penalties, in this instance criminal penalties, for infringement of those measures, to be clear and precise so that the persons concerned, including third parties such as the social security bodies involved in the main proceedings, may know unambiguously their rights and duties and take measures accordingly. 66 In that context, a construction contrary to that provided in paragraph 63 above would pose the danger of engendering legal uncertainty, in particular so far as concerns triangular situations in which funds are made available, directly or indirectly, not to a designated person but to someone else to whom the designated person is more or less closely connected and in which the latter indirectly derives some benefit from those funds. 67 Such legal uncertainty seems all the more unacceptable because, in such situations, the question in any event arises whether the specific benefit obtained for a designated person by the person to whom the funds are made available may be caught by the restrictive measures laid down in Article 2(2) and (3) of Regulation No 881/2002. 68 It may be added in that regard that, in circumstances such as those in issue in the main proceedings, the benefit derived by a designated person, in the form of assistance in kind, from funds made available to his spouse, cannot be treated as economic resources for the purposes of Articles 1(2) and 2(3) of Regulation No 881/2002 either, for such a benefit cannot be used by the designated person to obtain ‘funds, goods or services’ within the meaning of those provisions. 69 Indeed, as stated in paragraph 61 above, in situations such as those in issue in the main proceedings, it cannot reasonably be maintained that that benefit can be turned into economic or financial resources that the designated person could use to support terrorist activities. 70 Nor can it be maintained that, if the interpretation that the payment of the social benefits at issue in the main proceedings does not fall within the ambit of Article 2(2) and (3) of Regulation No 881/2002 were to be accepted, then the exception provided for by Article 2a of that regulation, relating in this case to basic expenses, would become superfluous. 71 As the Advocate General stated in point 102 of his Opinion, that exception is to be allowed in every case in which funds are directly or indirectly made available to a designated person and not to a third party, for, in such a situation, the designated person can decide how to use those funds, which involves a danger of their being diverted for terrorist purposes. 72 Last, it cannot be objected that, if the interpretation that the payment of the social benefits at issue in the main proceedings does not fall within the ambit of Article 2(2) and (3) of Regulation No 881/2002 were to be accepted, then the designated person would be relieved of the obligation to provide for his own basic needs, so enabling him to allocate to the purposes of terrorism the funds he managed to obtain by other means. 73 As the Advocate General observed in point 105 of his Opinion, even if a third party’s direct assumption of responsibility for a designated person’s basic expenses is not caught by Article 2 of Regulation No 881/2002, the fact nevertheless remains that the freezing of funds and the prohibitions laid down in that provision remain fully applicable to such a person without prejudice, where appropriate, to an exception in accordance with Article 2a of that regulation. 74 In the light of the foregoing, the answer to the question referred is that Article 2(2) of Regulation No 881/2002 must be construed as not applying to the provision by the State of social security or social assistance benefits to the spouse of a designated person on the grounds only that the spouse lives with the designated person and will or may use some of those payments to pay for goods and services which the designated person also will consume or from which he will benefit. Costs 75 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Fourth Chamber) hereby rules: Article 2(2) of Council Regulation (EC) No 881/2002 of 27 May 2002 imposing certain specific restrictive measures directed against certain persons and entities associated with Usama bin Laden, the Al-Qaeda network and the Taliban, and repealing Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and other financial resources in respect of the Taliban of Afghanistan, as amended by Council Regulation (EC) No 561/2003 of 27 March 2003, must be construed as not applying to the provision by the State of social security or social assistance benefits to the spouse of a person designated by the committee created pursuant to Paragraph 6 of Resolution 1267 (1999) of the Security Council of the United Nations and included in the list in Annex I to that regulation, as amended, on the grounds only that the spouse lives with that person and will or may use some of those payments to pay for goods and services which the designated person also will consume or from which he also will benefit. [Signatures] * Language of the case: English.