Judgment — ECLI:EU:T:2016:619
Date: 2016-10-18
Language of the case: English
Court formation: First Chamber
Subject matter: External relations;Common foreign and security policy
Procedure: Action for annulment - unfounded;Action for annulment - successful

summary of reasons underpinning that measure, 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 measure, is substantiated (see judgment of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 64 and the case-law cited). 118 To that end, it is for the Courts of the European Union, to carry out that examination, by requesting, where necessary, the competent European Union authority to produce information or evidence, confidential or not, which is relevant to such an examination (see judgment of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 120 and the case-law cited). 119 It is the task of the competent European Union authority to establish, in the event of challenge, that the reasons relied on against the person or entity concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded (see judgment of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 66 and the case-law cited). 120 As a preliminary point, it is apparent from the case-law referred to in paragraphs 117 to 119 above that the review carried out by the Court in the present case is not restricted to a review of whether there has been a manifest error of assessment. Accordingly, there is no need to pay particular attention to the fact that, according to the applicant, the error committed by the Council is manifest. The contested decision 121 As noted in paragraphs 75 and 78 to 81 above, it is apparent from the initial and supplementary statement of reasons pertaining to the contested decision set out in paragraphs 5 and 16 above that that decision is based in particular on the application, to the applicant, of the criterion of ‘control’, set out in Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012, and is based, more specifically, on the fact that the applicant was controlled by the Foundation, and through the latter, by the Supreme Leader. 122 The applicant’s arguments may be understood, in essence, as alleging that the Council, in the contested decision, made an error of assessment in holding that the applicant was controlled by a person or entity recognised as being engaged in, directly associated with, or providing support for, nuclear proliferation, within the meaning of Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012. 123 In that regard, the application of the criterion of ‘control’ rests on the existence of a not insignificant risk that, where the funds of a person or entity recognised as participating in nuclear proliferation are frozen, that person or entity puts pressure on people and entities which it owns or controls in order to circumvent the effect of the restrictive measures applying to it by encouraging them either to transfer to it directly or indirectly their funds or to conduct transactions that it cannot itself conduct because of the freezing of its funds (see, to that effect, judgment of 13 March 2012, Melli Bank v Council, C‑380/09 P, EU:C:2012:137, paragraph 58). In the light of that risk, the freezing of funds of persons and entities controlled by the person or entity whose funds have been frozen is a necessary and appropriate measure in order to ensure the effectiveness of the measures adopted and to guarantee that those measures will not be circumvented (see, to that effect, judgment of 13 March 2012, Melli Bank v Council, C‑380/09 P, EU:C:2012:137, paragraph 58). 124 Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012 require the Council to freeze the funds of any person or entity controlled by a person or entity recognised as being engaged in, directly associated with or providing support for, nuclear proliferation, without the measure adopted on that ground having to be based on the fact that the person or entity owned or controlled is itself engaged in nuclear proliferation (see, to that effect, judgment of 13 March 2012, Melli Bank v Council, C‑380/09 P, EU:C:2012:137, paragraphs 39 and 40). 125 In the light of the wording of Article 23(2)(a) of Regulation No 267/2012, which targets individuals and entities that, depending on the language versions, have been ‘recognised’ or ‘identified’ as being involved in nuclear proliferation, and the case-law relating to the application of the criterion of ‘control’ referred to in paragraphs 123 and 124 above, the Council may not adopt restrictive measures in respect of persons and entities whose names were included on a list of persons and entities subject to restrictive measures on the ground that they are controlled by persons or entities ‘recognised’ or ‘identified’ as being engaged in, directly associated with, or providing support for, nuclear proliferation. 126 In response to a written question from the Court (paragraph 42 above), the Council indicated that, when the contested decision was adopted, neither the name of the Foundation nor the name of the Supreme Leader had been included on the list at issue, which featured the names of persons or entities officially ‘recognised’ or ‘identified’ as being engaged in, directly associated with, or providing support for, nuclear proliferation, within the meaning of Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012, and requiring, for that reason, to be made subject to restrictive measures, such as the freezing of their funds. Consequently, the risk of the fund-freezing sanction being circumvented, which, as was noted in paragraph 123 above, normally justifies the application of the criterion of ‘control’, does not exist in the present case. 127 As a result of not having included the name of the Supreme Leader and the name of the Foundation on the list at issue, when the contested decision was adopted, the Council was not entitled to adopt that decision, inasmuch as it applies to the applicant the criterion of ‘control’. 128 Any other solution would, moreover, place the applicant in an extremely unfavourable procedural position, from the point of view of the defence of its rights and its right to effective judicial protection, since, in order to contest the restrictive measures taken against it, it might be required to challenge the responsibility of the Supreme Leader and of the Foundation for nuclear proliferation, without being able to expect assistance in that regard from the Supreme Leader and the Foundation, against which no restrictive measures were adopted. 129 The Council therefore committed an error of assessment in the contested decision by applying to the applicant the criterion of ‘control’. 130 Therefore, it is appropriate to uphold the second plea and to find that the contested decision is unfounded in so far as it applies to the applicant the criterion of ‘control’. 131 The contested decision must therefore be annulled on the ground that, in part, the reasons given in the statement of reasons are insufficient (paragraph 87 above) and contrary to the principle of respect for the rights of the defence and the right to effective judicial protection (paragraph 104 above) and, in part, unfounded (paragraph 130 above). The measures at issue 132 As noted in paragraphs 90 and 91 above, it is apparent from the statement of reasons pertaining to the measures at issue set out in paragraph 24 above that that statement is based in particular on the application to the applicant of the criterion of ‘control’, set out in Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012, and is based, more specifically, in that regard, on the fact that the applicant was controlled by the Foundation, and through the latter, by the Supreme Leader. 133 The applicant’s arguments may be understood, in essence, as alleging that the Council, in the contested decision, made an error of assessment in holding that the applicant was controlled by a person or entity recognised as participating, being directly associated with, or providing support for nuclear proliferation within the meaning of Article 20(1)(b) of Decision 2000/413 and Article 23(2)(a) of Regulation No 267/2012. 134 For the reasons set out in paragraphs 123 to 125 above, the Council may adopt restrictive measures only in respect of persons and entities that are controlled by persons or entities whose names have been included on a list of individuals and entities subject to restrictive measures, as persons or entities ‘recognised’ or ‘identified’ as being engaged in, directly associated with, or providing support for, nuclear proliferation. 135 In response to a written question from the Court (paragraph 42 above), the Council acknowledged that, when the measures at issue were adopted, neither the name of the Foundation nor the name of the Supreme Leader had been entered on the list at issue, which included the names of persons or entities officially recognised or identified as being engaged in, directly associated with, or providing support for, nuclear proliferation, within the meaning of Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012. Accordingly, the Council was not authorised to adopt those measures, in that they applied to the applicant the criterion of ‘control’. 136 The Council therefore committed an error of assessment in the measures at issue in applying to the applicant the criterion of ‘control’. 137 It follows that the measures at issue are unfounded, in that they apply to the applicant the criterion of ‘control’. 138 To the extent, however, that the measures at issue are based on the application of two different criteria, that substantive error is not in itself sufficient to justify the annulment of those measures, in accordance with the case-law referred to in paragraph 113 above, according to which the fact that a single criterion laid down by the legislation providing for restrictive measures is met is sufficient to justify the application of those measures. 139 As noted in paragraph 90 above, it is apparent from the statement of reasons pertaining to the measures at issue set out in paragraph 24 above that they are also based on the application to the applicant of the criterion of ‘support to the Government of Iran’, set out in Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012, and, more specifically, on the fact that the applicant ‘provid[es] financial services to the … Foundation and its group of subsidiary units and companies’. 140 To the extent that, in its pleadings, the Council refers to the payment, made by the applicant to the Foundation, of ‘dividends and bonuses’ and, in particular, to the fact that it is apparent from the applicant’s articles of incorporation and its financial statements for the tax year ending 20 March 2010, which were submitted as annexes to the application, that, as a shareholder of the applicant, the Foundation receives significant dividends and bonuses, those arguments cannot be taken into account, since they are not related to the specific grounds given in the measures at issue in order to justify applying to the applicant the criterion of ‘support to the Government of Iran’, namely that it ‘provid[ed] financial services to the … Foundation and its group of subsidiary units and companies’. 141 The distribution of dividends or bonuses by a company to its shareholders cannot be treated as equivalent to the supply of a financial service by the former to the latter. By using that line of argument, the Council thus seeks to rely on information other than that on the basis of which the measures at issue were adopted. 142 The legality of the contested measures may be assessed only on the basis of the elements of fact and law pursuant to which they were adopted; the Court cannot accept the Council’s invitation to substitute the grounds on which those measures are based (see, to that effect, judgment of 26 October 2012, Oil Turbo Compressor v Council, T‑63/12, EU:T:2012:579, paragraph 29). 143 Consequently, the Council’s arguments based on the payment of dividends or bonuses to the Foundation may not be taken into account for the purpose of assessing the merits of the measures at issue, to the extent that they apply to the applicant the criterion of ‘support to the Government of Iran’. 144 In any event, the Council relies only on the applicant’s distribution of dividends and bonuses to the Foundation, whereas the grounds for the measures at issue refer to financial services provided by the applicant not only to the Foundation itself, but also to the ‘group of subsidiary units and companies’ thereof. 145 Furthermore, in its pleadings, the Council refers to the fact that it is apparent from the applicant’s articles of incorporation and its financial statements for the tax year ending 20 March 2010 that, as the applicant’s shareholder, the Foundation ‘participates in a series of transactions involving [it]’. 146 The applicant, for its part, argues that ‘no substantial evidence of priority given to any governmental or state owned organisations was brought by the Council’ and observes that ‘figures and financial reports confirm that almost all of [its] loans, facilities and other services are offered to and used by private individual and entities rather than the government and state owned entities’ and that ‘[its] services and loans are offered and used by the regular private individuals and entities rather than the government and state owned entities’, referring in that regard to a list of its main clients for the period from March to November 2010, produced as an annex to the application. 147 In that regard, it should be noted that the criterion of ‘support to the Government of Iran,’ which expands the scope of restrictive measures in order to reinforce pressure on the Islamic Republic of Iran, covers only the activity of a person or entity which, irrespective of any link, direct or indirect, established with nuclear proliferation, is liable, as a result of its quantitative or qualitative importance, to enable that proliferation, by providing support to the Government of Iran in the form of resources or material, financial or logistical facilities, allowing it to pursue proliferation (see, to that effect, judgment of 16 July 2014, National Iranian Oil Company v Council, T‑578/12, not published, EU:T:2014:678, paragraphs 118 to 120, 140 and 141). The criterion of ‘support to the Government of Iran’ thus does not refer to all forms of support, however small or symbolic, provided to the Government of Iran, but only to forms of support which, by their quantitative or qualitative importance, are likely to enable that government to pursue nuclear proliferation. Interpreted, subject to review by the Courts of the European Union, by reference to the objective of applying pressure on the Government of Iran in order to force it to end nuclear proliferation, the criterion at issue thus objectively establishes a limited category of persons and entities which may be subject to fund-freezing measures (see, to that effect, judgment of 16 July 2014, National Iranian Oil Company v Council, T‑578/12, not published, EU:T:2014:678, paragraph 119). 148 In the present case, the Council does not claim that the applicant directly provides financial support to the Government of Iran, but that it provides such support ‘through the Foundation’. Thus, in the statement of reasons for the measures at issue, although the Foundation is described as ‘a major Iranian parastatal entity directly controlled by the Supreme Leader’, it is not equated, purely and simply, with the Government of Iran. 149 Such indirect application of the criterion of ‘support to the Government of Iran’ is justified, in the light of the objective pursued by that criterion, as noted in paragraph 147 above, only if it is established that the person or entity acting as an intermediary either is itself providing support to the Government of Iran, within the meaning of Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012, or is manipulated by that government in order to continue nuclear proliferation. 150 In the present case, it has not been established that the Foundation provided support to the Government of Iran, within the meaning of Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012. 151 The mere fact, relied on by the Council, that the Foundation is ‘a major Iranian parastatal entity directly controlled by the Supreme Leader’ is not sufficient to establish that it provides support to the Government of Iran which, through its quantitative or qualitative importance, is likely to allow it to pursue nuclear proliferation, as required by the case-law referred to in paragraph 147 above, or that it is an instrument for the pursuit by the Government of Iran of a policy of nuclear proliferation. 152 In addition, the Foundation’s name was not entered by the Council on the disputed list as one of the persons or entities providing support to the Government of Iran, within the meaning of Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012, or among the persons and entities engaged in, directly associated with, or providing support for, nuclear proliferation, within the meaning of Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012. 153 Finally, as part of the present procedure, the Council has furnished no evidence proving that the Foundation provides support to the Government of Iran or that it is engaged in, directly associated with, or provides support for, nuclear proliferation. 154 The conditions justifying an indirect application to the applicant of the criterion of ‘support to the Government of Iran’ (paragraph 149 above) are therefore not met in the present case. 155 It must therefore be held that the Council committed an error of assessment, in the measures at issue, in applying the criterion of ‘support to the Government of Iran’ to the applicant. 156 Consequently, and without it even being necessary to examine whether the applicant provided financial services to the Foundation, it is necessary to uphold the second plea and to find that the measures at issue are unfounded, to the extent that they apply to the applicant the criterion of ‘support to the Government of Iran’. 157 The measures at issue must therefore be annulled as being unfounded. 158 In the light of the conclusions reached in paragraphs 131 and 157 above, the present action must be upheld in its entirety and all of the contested measures annulled. The effects in time of the annulment of the contested measures 159 As stated by the Council in response to a written question from the Court (paragraph 42 above), the effects of the maintenance of the applicant’s name on the list at issue are suspended, pursuant to Article 26(5) of Decision 2010/413, as amended by Council Decision (CFSP) 2015/1863 of 18 October 2015 (OJ 2015 L 274, p. 174), applicable since 16 January 2016, in accordance with Article 1 of Council Decision (CFSP) 2016/37 of 16 January 2016 concerning the date of application of Decision 2015/1863 (OJ 2016 L 11 I, p. 1). The fact remains that, as long as the applicant’s name remains on the list at issue, as a result of Decision 2015/1008 and Implementing Regulation 2015/1001, the applicant runs the risk of a restoration of the restrictive measures taken against it, should the Islamic Republic of Iran fail to abide by the commitments which it made to the Federal Republic of Germany, the French Republic, the United Kingdom of Great Britain and Northern Ireland, the People’s Republic of China, the United States of America and the Russian Federation, with the support of the High Representative of the European Union for Foreign Affairs and Security Policy, as part of a Joint Plan of Action setting out an approach towards reaching a long-term comprehensive solution to nuclear proliferation. 160 With respect to Implementing Regulation 2015/1001, it must be recalled that, under the second paragraph of Article 60 of the Statute of the Court of Justice of the European Union, and by way of derogation from Article 280 TFEU, decisions of the General Court declaring a regulation to be void are to take effect only as from the date of expiry of the period referred to in the first paragraph of Article 56 of that statute or, if an appeal has been brought within that period, as from the date of dismissal of that appeal. 161 In the present case, Implementing Regulation 2015/1001 has the nature of a regulation within the meaning of the second paragraph of Article 60 of the Statute of the Court of Justice of the European Union, since Article 2 thereof provides that it is to be binding in its entirety and directly applicable in all Member States, which corresponds to the effects of a regulation as provided for in Article 288 TFEU (see, to that effect, judgment of 21 April 2016, Council v Bank Saderat Iran, C‑200/13 P, EU:C:2016:284, paragraph 121). The second paragraph of Article 60 of the Statute of the Court of Justice is therefore applicable to Implementing Regulation 2015/1001. 162 The Council therefore has, in accordance with the second paragraph of Article 60 of the Statute of the Court of Justice of the European Union, a period of two months, plus the 10-day period to take account of distance, as from the notification of the present judgment, to remedy the infringements found to have occurred in respect of Implementing Regulation 2015/1001, by adopting, as necessary, new restrictive measures in respect of the applicant. 163 In respect of Decision 2015/1008, it should be noted that, under the second paragraph of Article 264 TFEU, the General Court may, if it considers it necessary to do so, indicate which of the effects of the annulled measure must be regarded as definitive. In the present case, the existence of a difference between the date on which the decision annulling Implementing Regulation 2015/1001 takes effect and the date of the expiry of the effects of Decision 2015/1008 is liable seriously to impair legal certainty, inasmuch as Decision 2015/1008 and Implementing Regulation 2015/1001 provide for the imposition of identical restrictive measures on the applicant. It is therefore appropriate to maintain the effects of Decision 2015/1008, in so far as it retains the applicant’s name on the list in Annex II to Decision 2010/413, as amended by Decision 2010/644, until the date on which the present judgment takes effect, in that it annuls Implementing Regulation 2015/1001, inasmuch as that regulation maintains the applicant’s name on the list in Annex IX to Regulation No 267/2012 (see, to that effect, judgment of 6 September 2013, Persia International Bank v Council, T‑493/10, EU:T:2013:398, paragraph 129 (not published) and the case-law cited). 164 Since the other contested measures do not have any further effects at the present time, they are not affected by the application of the second paragraph of Article 264 TFEU. Costs 165 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Council has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant. On those grounds, THE GENERAL COURT (First Chamber) hereby: 1. Annuls the decision of the Council of the European Union, as contained in the notice published on 15 March 2014 for the attention of the persons and entities subject to the restrictive measures provided for in Council Decision 2010/413/CFSP and in Council Regulation (EU) No 267/2012 concerning restrictive measures against Iran, to maintain the name of Sina Bank on the list in 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 amended by Council Decision 2010/644/CFSP of 25 October 2010, and in Annex IX to Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran and repealing Regulation (EU) No 961/2010; 2. Annuls Council Decision 2014/776/CFSP of 7 November 2014 amending Decision 2010/413, Council Implementing Regulation (EU) No 1202/2014 of 7 November 2014 implementing Regulation No 267/2012, Council Decision (CFSP) 2015/1008 of 25 June 2015 amending Decision 2010/413, and Council Implementing Regulation (EU) 2015/1001 of 25 June 2015 implementing Regulation No 267/2012, in so far as those measures maintained the name of Sina Bank on the list in Annex II to Decision 2010/413, as amended by Decision 2010/644, or in Annex IX to Regulation No 267/2012; 3. Maintains the effects of Decision 2015/1008, in respect of Sina Bank, from the date of its entry into force until the date of expiry of the period for bringing an appeal against the present judgment, referred to in the first paragraph of Article 56 of the Statute of the Court of Justice of the European Union, or, if an appeal has been brought within that period against the present judgment, until the date on which that appeal is dismissed; 4. Orders the Council to pay the costs. Kanninen Pelikánová Buttigieg [Signatures] Table of contents Background to the dispute 1. Restrictive measures adopted against the Islamic Republic of Iran 2. Restrictive measures directed at the applicant Facts occurring after the present action had been brought Procedure and forms of order sought Law 1. Admissibility The admissibility of the first head of claim, inasmuch as it concerns the annulment of Annex IX to Regulation No 267/2012, in so far as it concerns the applicant Admissibility of the third head of claim 2. Substance The first plea, alleging infringement of the obligation to state reasons, of the principle of respect for the rights of the defence and of the right to effective judicial protection Infringement of the obligation to state reasons – The contested decision – The measures at issue Infringement of the principle of the rights of the defence and of the right to effective judicial protection – The contested decision – The measures at issue The second plea in law, alleging a manifest error of assessment The contested decision The measures at issue The effects in time of the annulment of the contested measures Costs ** Language of the case: English.