Judgment — ECLI:EU:T:2012:661
Date: 2012-12-11
Language of the case: English
Court formation: Fourth Chamber
Subject matter: External relations;Common foreign and security policy
Procedure: Action for annulment - unfounded;Action for annulment - successful;Action for annulment - inadmissible

summary of the pleas in law on which the application is based, as set out in Article 44(1)(c) of the Rules of Procedure. 48 By this plea raised of the Court’s own motion, it is therefore necessary to dismiss as inadmissible the pleas of illegality against Article 20(1)(b) of Decision 2010/413 and Article 16(2) of Regulation No 961/2010 raised by the applicant. 49 It follows from the whole of those considerations that the action is admissible only in so far as it seeks annulment of the inclusion or maintenance after review of the applicant on the lists at issue (‘the contested measures’). For the remainder, the action must be dismissed as inadmissible. Substance 50 In support of its action, the applicant makes four pleas in law for the annulment of the contested measures. The first plea claims manifest error of assessment, resulting from the fact that the Council included or maintained it on the lists at issue without it fulfilling the substantive criteria permitting such inclusion. The second plea claims that it was treated differently from other Iranian banks not included on the lists at issue, from the Daftar (office of the Leader of the Islamic revolution, hereinafter referred to, respectively, as ‘the Leader’s office’ and ‘the Leader’) and from the Mostaz’afan Foundation of the Islamic Republic of Iran (‘the Foundation’) and in an identical manner with other Iranian banks included on the lists at issue. The third plea claims infringement of the principle of respect for the rights of the defence, of the right to effective judicial protection and the duty to state reasons, arising from the fact that the applicant did not have communicated to it either the precise grounds or the evidence and documents justifying its inclusion or maintenance on the lists at issue. The fourth plea claims infringement of the right to property and the principle of proportionality, resulting from the fact that, in any event, the freezing of its funds and economic resources unnecessarily and disproportionately affected its right to property. 51 For reasons of the sound administration of justice, economy of procedure and convenience, it is appropriate to examine the third plea first. In that plea, the applicant makes three claims, alleging, first, infringement of the principle of respect for the rights of the defence, second, infringement of the right to effective judicial protection, and, third, infringement of the duty to state reasons, arising from the fact that the Council adopted the contested measures without communicating to it the precise grounds, the evidence and the documents justifying its inclusion or maintenance on the lists at issue. 52 For the same reasons as set out in paragraph 51 above, it is appropriate to begin by examining the third complaint in the third plea, claiming infringement of the duty to state reasons. 53 By the latter, the applicant maintains that, in adopting the contested measures, the Council infringed the essential formal requirement that it communicate to the person concerned the reasons for inclusion on the lists at issue, giving it the opportunity to submit its comments, as expressly recalled in Article 36(3) of Regulation No 961/2010. It argues that the grounds invoked in support of the contested measures are too brief, vague, imprecise or evasive to count as a statement of reasons. The Council did not state in what way the applicant was supposedly linked to the Leader’s office or contributed to nuclear proliferation, or even merely ‘strategic interests of the regime’. It did not mention what the alleged support consisted of (supplying financial services, including proposing letters of credit and keeping accounts), or the alleged beneficiaries of that support. The Council’s attempts to remedy that lack of reasoning in the course of the present legal proceedings cannot be taken into account, the applicant submits, without undermining the right to a fair legal process and the principle of the equality of parties before the EU judicature. 54 The Council, supported by the Commission, disputes the applicant’s arguments, and pleads that the third complaint of the third plea should be dismissed as unfounded. 55 As a preliminary observation, it should be recalled that the freezing of funds and economic resources has considerable effects for the entities concerned, as it may restrict the exercise of their fundamental rights (Case C‑548/09 P Bank Melli Iran v Council [2011] ECR I‑11381, paragraph 49). 56 The principle of effective judicial protection means that the EU authority which adopts an act imposing restrictive measures against a person or entity is bound to communicate the grounds on which it is based, so far as possible, either when that measure is adopted or, at the very least, as swiftly as possible after it has been adopted in order to enable those persons or entities to exercise their right to bring an action (Bank Melli Iran v Council, cited in paragraph 55 above, paragraph 47 and case-law cited). In any event, the reasoning for the measure must be provided to the person concerned by the measure before the latter brings an action against it. Non-compliance with the duty to state reasons cannot be regularised by the fact that the person concerned becomes cognisant thereof during proceedings before the EU judicature (see, to that effect, Case T‑390/08 Bank Melli Iran v Council [2009] ECR II‑3967, paragraph 80 and case-law cited). 57 It is with a view to compliance with the right to effective judicial protection that Article 24(3) of Decision 2010/413 and Article 36(3) of Regulation No 961/2010 require the Council to give individual and specific reasons which justify the measures freezing funds and economic resources, taken in accordance with Article 20(1)(b) of Decision 2010/413 and Article 16(2) of Regulation No 961/2010, and to bring them to the knowledge of the persons, entities and bodies concerned by those measures (see, to that effect and by analogy, Bank Melli Iran v Council, paragraph 55 above, paragraph 48). It is clear from the case-law that it is by an individual communication that the Council must perform, in this case, its obligation under Article 24(3) of Decision 2010/413 and Article 36(3) of Regulation No 961/2010 (see, to that effect and by analogy, Bank Melli Iran v Council, cited in paragraph 55 above, paragraph 52). 58 In this case, the Council indicated to the applicant, by the letter of 28 October 2010, that the contested measures were based on the fact that ‘[t]he Council considers that there are no new elements on the file which would justify a change in its position [with regard to the freezing of the applicant’s funds and economic resources]. Therefore ... the reasons presented in ... Decision 2010/413 ... are still valid’. 59 That letter does not give the specific and individual reasons which justify the freezing of the applicant’s funds and economic resources. However, it is apparent from the case-law that the statement of reasons must. 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 (Bank Melli Iran v Council, cited in paragraph 56 above, paragraph 82 and case-law cited). 60 In this case, account must therefore be taken of the fact that, first, a copy of Decision 2010/413 was annexed to the letter of 28 October 2010 and, second, at the time when the applicant received that letter, Decision 2010/413 had already been published in the Official Journal of the European Union, namely on 27 July 2010. Thus, the applicant was in a position to take cognisance of the grounds set out in Decision 2010/413 to justify the decision to freeze its funds and economic resources, as already set out in paragraph 5 above. 61 Moreover, in its defence, the Council acknowledged that it did not have ‘any other information concerning the applicant, in addition to the information mentioned in the Council’s statement of reasons for the applicant’s [inclusion on the lists at issue]’. No additional ground was therefore communicated to the applicant before the present action was brought. 62 In so far as, before the General Court, the Council claims to support the contested measures on the basis of evidence produced by the applicant in support of its action, which is claimed to show that the Leader indirectly controls the applicant, through the intermediary of the Foundation, it is important to note that, in accordance with the case-law cited in paragraph 56 above, that complement to the argument cannot be taken into account for the purposes of perfecting the argument, which might be insufficient, contained in the contested measures since it was communicated to the applicant after the bringing of the present action. 63 Therefore, the Court must reply to the claim alleging infringement of the duty to state reasons having regard only to the grounds set out in paragraph 5 above. 64 In that respect, it should be remembered that, in order to fulfil its function, which is to guarantee compliance with the right to effective judicial protection, the statement of reasons must, first, provide the person concerned with sufficient information to defend his rights and 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 EU judicature and, secondly, enable the latter to review the lawfulness of that measure (Bank Melli Iran v Council, cited in paragraph 56 above, at paragraph 80). 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. (Bank Melli Iran v Council, cited in paragraph 56 above, at paragraph 82). 65 It follows that the reasoning of the contested measures must be assessed having regard in particular to the provisions on the basis of which they were adopted, namely, respectively, Article 20(1)(b) of Decision 2010/413 and Article 16(2) of Regulation No 961/2010, which must, themselves, be interpreted taking account of their wording, the context in which they were adopted and the aims pursued by the legislation of which they form part (Case C‑380/09 P Melli Bank v Council [2012] ECR, paragraph 38 and case-law cited). 66 Article 20(1)(b) of Decision 2010/413 and Article 16(2)(a) of Regulation No 961/2010 require the Council to freeze the funds and economic resources of natural and legal persons, entities and organisations which have been recognised as being ‘engaged in, directly associated with, or providing support for, [nuclear proliferation] activities’ or ‘owned or controlled by [the latter] including through illicit means, or acting on their behalf or at their direction’, the Council assessing on a case-by-case basis whether one or other of those conditions has been met in respect of each person, entity or organisation concerned (see, to that effect and by analogy, Melli Bank v Council, cited in paragraph 65 above, paragraphs 39 and 40). 67 It follows that the individual and specific reasons which the Council is required to give, pursuant to Article 24(3) of Decision 2010/413 and Article 36(3) of Regulation No 961/2010 (see paragraph 55 above), are those relating to the inclusion of the persons, entities and organisations concerned on the lists at issue, that is to say to engagement in, direct association with or support for nuclear proliferation or, concerning entities owned or controlled by, or acting on behalf of or under instructions from others, those reasons which caused it to consider that the condition of ownership, control or acting on behalf of or under instructions from others was met (see, to that effect and by analogy, Melli Bank v Council, cited in paragraph 65 above, paragraph 43). 68 It is apparent from consistent case-law that, in order correctly to perform its obligation to give reasons for a measure imposing restrictive measures, the Council must mention the elements of fact and law on which the legal justification of those measures depends and the considerations which led it to take them (see, to that effect, Bank Melli Iran v Council, paragraph 56 above, paragraph 81 and case-law cited). It follows that, in principle, the statement of reasons for such a measure must concern not only the legal conditions for applying restrictive measures, but also the specific and concrete reasons why the Council considers, in the exercise of its broad discretion, that the person concerned should be subject to such measures (see, to that effect and by analogy, Case T‑228/02 Organisation des Modjahedines du peuple d’Iran v Council [2006] ECR II‑4665, paragraph 146; Case T‑49/07 Fahas v Council [2010] ECR II‑5555, paragraph 53; Case T‑86/11 Bamba v Council [2011] ECR II‑2749, paragraph 47). 69 Thus, a measure freezing funds and economic resources adopted by the Council cannot be regarded as being sufficiently reasoned unless the Council mentions the elements of fact and law which have led it to consider, as the case may be, that the person, entity or organisation concerned has participated in, been directly associated with, or supported nuclear proliferation, or that that person, entity or organisation was owned or controlled by, or acted on behalf of or under the instructions of, a person, entity or organisation engaged in, being directly associated with, or supporting, nuclear proliferation. 70 It is apparent from the grounds communicated to the applicant before the bringing of this action, by the letter of 28 October 2010, that the contested measures were based on ‘the reasons presented in Decision … 2010/413’, namely the following reasons: ‘[The applicant] is closely linked to the interests of the “Daftar” (Leader’s office: administration of around 500 officers). It thus contributes to the financing of the regime’s special interests’. At the hearing, the Council stated that it had thus intended to base the contested measures on a dual reason, first that the applicant was effectively controlled by the Iranian regime and, second, that it could be inferred, with near certainty, from such control that the applicant financed nuclear proliferation. It follows that the Council’s intention was to base the contested measures, first, on the applicant’s participation in, direct association with, or support for nuclear proliferation and, second, on control of the applicant by a person or entity engaged in, being directly associated with, or supporting those same activities, which is identified in the grounds communicated to the applicant as the Leader’s office. That dual reason was well understood by the applicant, which denies, first, being under the control of persons, entities or organisations which participated in, were directly associated with, or supported nuclear proliferation, such as the Iranian authorities, and, second, having participated in, been directly associated with or supported nuclear proliferation. 71 Concerning, first, the grounds communicated to the applicant which refer to control of the applicant by persons, entities or organisations having participated in, been directly associated with, or supporting nuclear proliferation, the latter are not sufficiently specific and concrete to allow the applicant and the Court to understand the reasons which led the Council to consider that that criterion was fulfilled in this case. 72 According to the Council, ‘[the applicant] is closely linked to the interests of the “Daftar” (Leader’s office: administration of around 500 officers’. However, the concept of being ‘linked to the interests of’ a third party is, in itself, vague and imprecise. It is not evidently and directly connected to the concept of ‘control’ referred to in Article 20(1)(b) of Decision 2010/413 and Article 16(2)(a) of Regulation No 961/2010. The Council has not mentioned any precise and concrete element attesting to any control exercised by the Leader’s office over the applicant. 73 In the context of this case, recourse to the concept of ‘linkage to the interests’ of the ‘Daftar (Leader’s office: administration of around 500 officers)’ is all the more vague and imprecise in that the said office has not been identified, as such, as a person, entity or organisation engaged in, being directly associated with or supporting nuclear proliferation. As the applicant has correctly observed, the Leader’s office does not appear on the lists at issue, whereas other entities exercising political responsibilities in Iran or other government organs were included on those lists, on the ground that they constituted persons, entities or organisations having participated in, being directly associated with, or supporting nuclear proliferation. Moreover, the Council has not specified the concrete means allegedly enabling the Leader’s office, as such or through the intermediary of its members, to control the applicant so that it act in accordance with its interests and, in particular, that it provide financial support to nuclear proliferation. 74 In so far as the applicant admits in its pleadings that it was and still is partially owned by the Foundation, itself directed by the Leader, and the Council purports, in these proceedings, to rely on those factors to justify the contested measures, it must be held that those grounds are new, since the Council never communicated to the applicant, before the bringing of this action, grounds concerning the links existing between it and the Leader, through the intermediary of the Foundation, but only grounds based on the links existing between it and the Leader’s office. The links existing between the Leader, the Foundation and the applicant were never mentioned by the Council before the bringing of this action and may even have been unknown to the latter until that latter date. Even if those links were sufficient to justify the freezing of the applicant’s funds and economic resources, the fact remains that they constitute new grounds, raised out of time, and cannot, for that reason, be upheld by the General Court, in accordance with the case-law cited in paragraph 56 above. 75 Therefore, it is not possible, in the absence of any other specific and concrete factor communicated by the Council, to judge the foundation of the contested measures, in so far as the latter are based on the links existing, for the purposes of Article 20(1)(b) of Decision 2010/413 and Article 16(2)(a) of Regulation No 961/2010, between the applicant and the Iranian regime, merely from the grounds actually communicated by the Council, namely that ‘[the applicant] is closely linked to the interests of the “Daftar” (Leader’s office: administration of around 500 officers).’ 76 That first type of grounds communicated to the applicant cannot therefore be regarded as providing a sufficient statement of reasons for the contested measures. 77 Concerning, second, the grounds communicated to the applicant which relate to the latter’s participation in, direct association with or support for nuclear proliferation, those grounds are not sufficiently specific and concrete to enable the applicant and the General Court to understand the reasons which led the Council to consider that one or other of the statutory criteria for establishing that a person, entity or organisation is directly involved in nuclear proliferation was fulfilled in this case. 78 According to the Council, the applicant ‘contributes to the financing of the regime’s special interests’. Even if, as the applicant observes, that ground evokes merely its supposed contribution ‘to the financing of the regime’s special interests’ and not to nuclear proliferation, the fact remains, as the Council argues, that the latter activity is necessarily included within the concept of the ‘regime’s special interests’. Consequently, this ground could be interpreted as meaning that the Council was actually accusing the applicant of contributing to the financing of nuclear proliferation. 79 In so far as the Council attempts to infer the applicant’s ‘contribution’ to the ‘financing’ of nuclear proliferation from the fact that it is ‘closely linked to the interests of the ... Leader’s office’, it should be noted that, for the same reasons as set out in paragraphs 73 to 76 above, the contested measures have not been justified to a sufficient legal standard, since the connected interests at issue have not been sufficiently specified and concretised to enable the applicant and the General Court to assess whether the said measures are well founded on that point. 80 Even if it was the Council’s intention to establish the applicant’s contribution to the financing of nuclear proliferation, it did not in any event provide any specific and concrete evidence of the financing of that activity by the applicant, concerning, for example, the nature, amount or destination of the financing. 81 That second type of grounds communicated to the applicant can therefore serve no better than the first to provide sufficient justification for the contested measures. 82 Consequently, it must be held that the contested measures have not been justified to a sufficient legal standard by the Council, which has therefore infringed the obligation to communicate the grounds, incumbent on it under Article 24(3) of Decision 2010/413 and Article 36(3) of Regulation No 961/2010, and the duty to state reasons, which is more generally incumbent upon it in respect of the measures which it adopts. 83 In the light of the above, this Court must uphold the third complaint of the third plea, claiming infringement of the duty to state reasons, and therefore annul the contested measures on that basis, without there being any need to rule on the first and second complaints of the third plea or on the first, second and fourth pleas of the action. 84 As regards the temporal effects of annulment of Annex VIII to Regulation No 961/2010, in so far as the latter concerns the applicant, it should be remembered that the latter implies the annulment of the applicant’s very inclusion on the list appearing in that annex. That inclusion is of the same nature as Regulation No 961/2010, which is of general scope and Article 41, second paragraph, of which provides that it is binding in all respects and directly applicable in all Member States, which corresponds to the effects of a regulation, as provided in Article 288 TFEU. 85 By virtue of Article 60, second paragraph, of the Statute of the Court of Justice of the European Union, by derogation from Article 280 TFEU, decisions of the General Court annulling a regulation, or even only a provision of a regulation, take effect only as from the expiry of the time-limit for an appeal laid down by the first paragraph of Article 56 of that Statute, or, if an appeal has been introduced within that time-limit, as from the dismissal of the latter. The Council will thus have a period of 2 months, plus the time-limit for distance of 10 days, as from the notification of this judgment, to remedy the infringement found herein, by adopting a new restrictive measure in respect of the applicant. 86 In this case, the risk of a serious and irreversible undermining of the effectiveness of the restrictive measures imposed by Annex VIII to Regulation No 961/2010 on the applicant does not appear to be sufficiently high, bearing in mind the major impact of those measures on the rights and freedoms of the latter, to justify maintaining the effects in the said regulation in its regard during a period going beyond that laid down by Article 60, second paragraph, of the Statute of the Court of Justice (see, by analogy, Case T‑316/11 Kadio Morokro v Council, not published in the ECR, paragraph 38). 87 Under Article 264, second paragraph, TFEU, the General Court may, if it considers necessary, indicate which of the effects of the annulled measure must be regarded as definitive. 88 In this case, the existence of a difference between the date of effectiveness of the annulment of Annex VIII to Regulation No 961/2010 and that of Annex II to Decision 2010/413, as resulting from Decision 2010/644, would be likely to entail a serious undermining of legal certainty, those two measures imposing identical measures on the applicant. 89 The effects of Annex II to Decision 2010/413, as resulting from Decision 2010/644, must therefore be retained as regards the applicant until the annulment of Annex VIII to Regulation No 961/2010 takes effect (see, by analogy, Kadio Morokro v Council, cited in paragraph 86 above, paragraph 39). Costs 90 Under Article 87(3) of the Rules of Procedure, the General Court may order that the costs be shared or that each party bear its own costs if each party succeeds on some and fails on other heads. 91 As the action has been only partially upheld (see paragraph 49 above), it is fair in the circumstances of the case to decide that the Council must bear two thirds of the applicant’s costs and two thirds of its own costs. The applicant must bear one third of its own costs and one third of the Council’s costs. 92 Under the first subparagraph of Article 87(4) of the Rules of Procedure, institutions which have intervened in the proceedings are to bear their own costs. Consequently, the Commission shall bear its own costs. On those grounds, THE GENERAL COURT (Fourth Chamber) hereby: 1. Annuls Annex II to Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP, as resulting from Council Decision 2010/644/CFSP of 25 October 2010 amending Decision 2010/413, and Annex VIII to Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007, in so far as the latter concern Sina Bank; 2. Orders that the effects of Annex II to Decision 2010/413, as resulting from Decision 2010/644, be maintained in relation to Sina Bank until annulment of Annex VIII to Regulation No 961/2010 takes effect; 3. Dismisses the action as to the remainder; 4. Orders the Council to bear two thirds of the costs incurred by Sina Bank and two thirds of its own costs; 5. Orders Sina Bank to bear one third of its own costs and one third of the Council’s costs; 6. Orders the European Commission to bear its own costs. Pelikánová Jürimäe Van der Woude Delivered in open court in Luxembourg on 11 December 2012. [Signatures] * Language of the case: English.