62008TJ0181_EN
Parties
Grounds
Operative part
Parties
In Case T‑181/08,
Pye Phyo Tay Za,
residing in Yangon (Myanmar), represented by D. Anderson QC, M. Lester, Barrister, and G. Martin, Solicitor,
applicant,
v
Council of the European Union,
represented by M. Bishop and E. Finnegan, acting as Agents,
defendant,
supported by
United Kingdom of Great Britain and Northern Ireland,
represented initially by S. Behzadi-Spencer, acting as Agent, and subsequently by I. Rao, acting as Agent, and by D. Beard, Barrister,
and by
European Commission,
represented by A. Bordes, P. Aalto and S. Boelaert, acting as Agents,
interveners,
APPLICATION for annulment of Council Regulation (EC) No 194/2008 of 25 February 2008 renewing and strengthening the restrictive measures in respect of Burma/Myanmar and repealing Regulation (EC) No 817/2006 (OJ 2008 L 66, p. 1), in so far as the applicant’s name appears on the list of persons, entities or bodies to which the regulation applies,
THE GENERAL COURT (Eighth Chamber),
composed of M.E. Martins Ribeiro, President, N. Wahl and A. Dittrich (Rapporteur), Judges,
Registrar: C. Kantza, Administrator,
having regard to the written procedure and further to the hearing on 8 July 2009,
gives the following
Judgment
Grounds
Background to the dispute
1. On 28 October 1996, certain restrictive measures were imposed against the Union of Myanmar in Common Position 96/635/CFSP defined by the Council on the basis of Article [12 EU], on Burma/Myanmar (OJ 1996 L 287, p. 1), which was subsequently extended and amended, most recently by Common Position 2000/346/CFSP of 26 April 2000 (OJ 2000 L 122, p. 1), before being repealed and replaced by Common Position 2003/297/CFSP of 28 April 2003 on Burma/Myanmar (OJ 2003 L 106, p. 36), which was applicable until 29 April 2004. The restrictive measures adopted pursuant to Common Position 2003/297 were maintained by the Council of the European Union in Common Position 2004/423/CFSP of 26 April 2004 renewing restrictive measures against Burma/Myanmar (OJ 2004 L 125, p. 61), strengthened by Council Common Position 2004/730/CFSP of 25 October 2004 on additional restrictive measures against Burma/Myanmar and amending Common Position 2004/423 (OJ 2004 L 323, p. 17), amended by Common Position 2005/149/CFSP of 21 February 2005 amending Common Position 2004/423 (OJ 2005 L 49, p. 37), and extended and amended by Council Common Position 2005/340/CFSP of 25 April 2005 extending restrictive measures against Burma/Myanmar and amending Common Position 2004/423 (OJ 2005 L 108, p. 88).
2. In view of the political situation in Myanmar, the Council considered that it was justified in maintaining restrictive measures against the Union of Myanmar and adopted Common Position 2006/318/CFSP of 27 April 2006 renewing restrictive measures against Burma/Myanmar (OJ 2006 L 116, p. 77). It prohibited, inter alia, the sale or supply of weapons, and the provision of technical assistance, financing or financial assistance related to military activities and the export of equipment which might be used for repression within the country. It also imposed the freezing of funds and economic resources belonging to members of the Government of the Union of Myanmar or to any natural or legal person, entity or body associated with them – those members of the Government and natural persons also being subject to a prohibition on travel in the Member States – and prohibited the granting of any financial loan or credit to State-owned enterprises of the Union of Myanmar and the acquisition or extention of a participation in those enterprises.
3. In view of the lack of improvement of the human rights situation in Myanmar and the lack of visible progress towards an inclusive democratisation process, the restrictive measures provided for in Common Position 2006/318 were extended until 30 April 2008 by Council Common Position 2007/248/CFSP of 23 April 2007 renewing restrictive measures against Burma/Myanmar (OJ 2007 L 107, p. 8), which also amended the list of persons, entities and bodies to which those restrictive measures apply.
4. In view of the seriousness of the situation in Myanmar, the Council considered it necessary to increase pressure on the military regime and adopted Council Common Position 2007/750/CFSP of 19 November 2007 amending Common Position 2006/318 (OJ 2007 L 308, p. 1). It adopted, in particular, new restrictive measures targeting inter alia logging, timber, and mining of metals, minerals, and precious or semi-precious stones.
5. All those restrictive measures were extended until 30 April 2009 by Council Common Position 2008/349/CFSP of 29 April 2008 renewing restrictive measures against Burma/Myanmar (OJ 2008 L 116, p. 57), which also amended the list of persons, entities and bodies to which those restrictive measures apply.
6. Article 5 of Common Position 2006/318, as amended by Common Position 2007/750, concerns the freezing of funds and economic resources. Article 5(1) to (3) thereof provide:
‘1. All funds and economic resources belonging to, owned, held or controlled by the individual members of the Government of … Myanmar and belonging to, owned, held or controlled by the natural or legal persons, entities or bodies associated with them as listed in Annex II shall be frozen.
2.
No funds or economic resources shall be made available directly or indirectly to or for the benefit of natural or legal persons, entities or bodies listed in Annex II.
3.
The competent authority may authorise the release of certain frozen funds or economic resources or the making available of certain funds or economic resources, under such conditions as it deems appropriate, after having determined that the funds or economic resources concerned are:
(a) necessary to satisfy the basic needs of persons listed in Annex II and their dependent family members, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges;
(b) intended exclusively for payment of reasonable professional fees and reimbursement of incurred expenses associated with the provision of legal services;
(c) intended exclusively for payment of fees or service charges for routine holding or maintenance of frozen funds or economic resources;
(d) necessary for extraordinary expenses, provided that the competent authority has notified the grounds on which it considers that a specific authorisation should be granted, to the other competent authorities and the Commission at least two weeks before the authorisation.’
7. Under Heading J ‘Persons who benefit from Government economic policies and other persons associated with the regime’ in Annex II to Common Position 2006/318, as amended by Common Position 2008/349, appear the applicant’s name, Pye Phyo Tay Za, together with inter alia the identifying information ‘Son of Tay Za’ (J1c), the name of his father, Tay Za, together with inter alia the identifying information ‘Managing Director, Htoo Trading Co.; Htoo Construction Co.’ (J1a), the name of his father’s wife (J1b) and the name of his paternal grandmother (J1e).
8. In accordance with the first sentence of Article 9 of Common Position 2006/318, the common position is to be kept under constant review.
9. With a view to ensuring that the restrictive measures laid down in the common positions, which fall within the scope of the EC Treaty, are applied uniformly by economic operators in all Member States, the Council adopted acts for the implementation of those measures as far as the European Community is concerned.
10. Accordingly, Council Regulation (EC) No 194/2008 of 25 February 2008 renewing and strengthening the restrictive measures in respect of Burma/Myanmar and repealing Regulation (EC) No 817/2006 (OJ 2008 L 66, p. 1; ‘the contested regulation’) implemented some of the restrictive measures provided for in Common Positions 2006/318 and 2007/750. That regulation, for which Articles 60 EC and 301 EC form the legal basis, entered into force, in accordance with Article 23 thereof, on the day of its publication in the Official Journal of the European Union, that is 10 March 2008. The annexes to the contested regulation, containing the lists of persons, entities and bodies to which the restrictive measures apply, were amended by Commission Regulation (EC) No 385/2008 of 29 April 2008 amending Regulation No 194/2008 (OJ 2008 L 116, p. 5).
11. Articles 11 to 14 of the contested regulation concern the freezing of funds and economic resources.
12. Article 11 of the contested regulation provides:
‘1. All funds and economic resources belonging to, owned, held or controlled by the individual members of the Government of … Myanmar and to the natural or legal persons, entities or bodies associated with them, as listed in Annex VI, shall be frozen.
2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies listed in Annex VI.
…’
13. Pursuant to Article 13(1) of the contested regulation, the competent authorities in the Member States may authorise the release of certain frozen funds or economic resources or the making available of certain funds or economic resources, under such conditions as they deem appropriate, after having determined that the funds or economic resources concerned are:
‘(a) necessary to satisfy the basic needs of persons listed in Annex VI and their dependent family members, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges;
(b) intended exclusively for payment of reasonable professional fees and reimbursement of incurred expenses associated with the provision of legal services;
(c) intended exclusively for payment of fees or service charges for routine holding or maintenance of frozen funds or economic resources;
(d) necessary for extraordinary expenses, provided that the Member State concerned has notified the other Member States and the Commission of the grounds on which it considers that a specific authorisation should be granted, at least two weeks before the authorisation.’
14. Annex VI to the contested regulation, as amended by Regulation No 385/2008, is entitled ‘List of members of the Government of … Myanmar and persons, entities and bodies associated with them referred to in Article 11’.
15. Under Heading J ‘Persons who benefit from Government economic policies’ of Annex VI to the contested regulation, as amended by Regulation No 385/2008, appear the applicant’s name, together with inter alia the identifying information ‘Son of Tay Za’ (J1c), his father’s name, Tay Za, together with inter alia the identifying information ‘Managing Director, Htoo Trading Co.; Htoo Construction Co.’ (J1a), the name of his father’s wife (J1b) and the name of his paternal grandmother (J1e).
16. As regards the modalities for submitting information in relation to Annex VI to the contested regulation, Article 18(2) thereof provides for the publication of a notice.
17. On 11 March 2008, the notice was published for the attention of the persons and entities on the lists provided for in Articles 7, 11 and 15 of Regulation No 194/2008 (OJ 2008 C 65, p. 12).
18. In that notice, the Council states, inter alia, that the persons and entities listed in Annex VI to the contested regulation are:
‘(a) individual members of the Government of … Myanmar; or
(b) natural or legal persons, entities or bodies associated with them.’
19. In addition, the Council states, in particular, that the contested regulation provides for ‘the freezing of all funds, other financial assets and economic resources belonging to the persons, groups and entities listed in Annex VI and that no funds, other financial assets and economic resources may be made available to them, whether directly or indirectly’.
20. Furthermore, the Council draws the attention of the persons and entities concerned to the possibility of making an application to the competent authorities of the relevant Member State in order to obtain an authorisation to use frozen funds for essential needs or specific payments in accordance with Article 13 of the contested regulation.
21. Additionally, the Council reminds the persons and entities concerned that, at any time, they may submit a request to it, together with any supporting documentation, that the decision to include and maintain their names on the lists in question should be reconsidered, and that such requests will be considered when they are received.
22. Similarly, the Council states that it regularly reviews the lists, in accordance with Article 9 of Common Position 2006/318.
23. Lastly, the Council mentions the possibility of challenging its decision before this Court.
24. The applicant first became subject to restrictive measures imposed by the Council under Decision 2003/907/CFSP of 22 December 2003 implementing Common Position 2003/297 (OJ 2003 L 340, p. 81), and under Commission Regulation (EC) No 2297/2003 of 23 December 2003 amending Council Regulation (EC) No 1081/2000 prohibiting the sale, supply and export to Burma/Myanmar of equipment which might be used for internal repression or terrorism, and freezing the funds of certain persons related to important governmental functions in that country (OJ 2003 L 340, p. 37). Decision 2003/907, in accordance with Article 2 thereof, took effect on the date of its adoption. Regulation No 2297/2003 entered into force in December 2003.
25. As from those dates, the applicant has been continuously subject to the restrictive measures in respect of the Union of Myanmar.
26. By letter of 15 May 2008, the applicant asked the Council, inter alia, to provide him with the facts justifying the inclusion of his name on the list in Annex VI to the contested regulation and to remove his name from that list. The Council replied by letter of 26 June 2008.
Procedure and forms of order sought
27. By application lodged at the Court Registry on 16 May 2008, the applicant brought the present proceedings.
28. By documents lodged at the Court Registry on 11 and 20 August 2008 respectively, the Commission of the European Communities and the United Kingdom of Great Britain and Northern Ireland applied for leave to intervene in the present proceedings in support of the form of order sought by the Council. After the parties were heard, leave to intervene was granted by order of the President of the Eighth Chamber of the Court of 5 November 2008.
29. The Commission and the United Kingdom of Great Britain and Northern Ireland lodged their statements in intervention on 18 and 19 December 2008 respectively. By document lodged at the Court Registry on 23 February 2009, the applicant submitted his observations on the statement in intervention of the United Kingdom of Great Britain and Northern Ireland.
30. Acting upon a report of the Judge-Rapporteur, the Court (Eighth Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure under Article 64 of its Rules of Procedure, requested the Council to lodge the letter of 26 June 2008. The Council complied with that request on 25 May 2009.
31. The parties presented oral argument and replied to the questions put by the Court at the hearing on 8 July 2009.
32. In the application, the applicant claims that the Court should:
– annul the contested regulation in its entirety, or in so far as it concerns him;
– order the Council to pay the costs.
33. At the hearing, the applicant sought leave to amend his first head of claim in the light of the adoption of Commission Regulation (EC) No 353/2009 of 28 April 2009 amending Regulation No 194/2008 (OJ 2009 L 108, p. 20), in so far as it replaces Annex VI to the contested regulation which concerns him, and the other parties did not oppose that request. Furthermore, in reply to a question from the Court, the applicant stated that he was no longer seeking, as he had in the originating application, the annulment of the contested regulation in its entirety, but only in so far as it concerns him. Formal notice was taken in the minutes of the hearing of the applicant’s request, the agreement of the other parties, and his statement.
34. The Council contends that the Court should:
– dismiss the application;
– order the applicant to pay the costs.
35. The United Kingdom of Great Britain and Northern Ireland contends that the Court should dismiss the application.
36. The Commission contends that the Court should dismiss the application and order the applicant to pay the costs.
Law
1. The procedural consequences of the amendment of Annex VI to the contested regulation by Regulation No 353/2009
37. Following the adoption by the Council on 27 April 2009 of Common Position 2009/351/CFSP renewing restrictive measures against Burma/Myanmar (OJ 2009 L 108, p. 54), by which Annex II to Common Position 2006/318 was amended, Annex VI to the contested regulation was amended by Regulation No 353/2009 after the present application was lodged. At the hearing, the applicant applied for leave to amend his first head of claim in the light of the adoption of Regulation No 353/2009, in so far as it replaces Annex VI to the contested regulation which concerns him.
38. In that connection, it should be noted that the applicant’s request does not alter his head of claim seeking the annulment of the contested regulation in so far as it concerns him, as set out in the application. The present case must be distinguished from Case T-256/07 People’s Mojahedin Organization of Iran
v Council
[2008] ECR II-3019, paragraphs 45 to 48, to which the applicant referred at the hearing. In that case, the decision originally challenged had been repealed and replaced during the proceedings by another decision. In the present case the contested regulation originally challenged by the applicant has not been repealed since the application was lodged. Only Annex VI to the contested regulation has been replaced, without any amendment to the information concerning the applicant. The information concerning the applicant which appeared in Annex VI to the contested regulation before its amendment by Regulation No 353/2009 has been reproduced word for word in Annex VI to the contested regulation as amended. It is therefore the same legal measure which continues to be the subject of the application.
39. Since the adoption of Regulation No 353/2009 by the Commission in the course of proceedings is a matter of fact which came to light in the course of the procedure, the applicant was entitled, pursuant to Article 48(2) of the Rules of Procedure, to base the pleas on which his application rests on that matter.
40. In any event, even if the contested regulation had been replaced in the course of proceedings by a regulation having the same subject-matter, quod non, the applicant would have been allowed to adapt the form of order sought and his pleas (see, to that effect, People’s Mojahedin Organization of Iran
v Council, paragraph 38 above, paragraphs 45 to 48 and the case-law cited).
41. It is therefore necessary to consider that, in this case, the application seeks the annulment of the contested regulation, as amended by Regulation No 353/2009, in so far as it concerns the applicant.
2. Substance
42. In support of his first head of claim, the applicant submits, first of all, that the contested regulation has no legal basis. Furthermore, he claims that the Council has failed to comply with its obligation to state reasons with respect to the contested regulation. He also claims that the Council has infringed his fundamental rights and breached the principle of proportionality. In the reply, the applicant also claims breach of the principles of law deriving from the criminal law nature of the freezing of assets, in particular the presumption of innocence, and infringement of the principle of legal certainty.
Plea alleging the absence of a legal basis for the contested regulation
Arguments of the parties
43. The applicant submits that the Community and its institutions may act only within the ambit of their powers arising under the EC Treaty. He argues that Articles 60 EC and 301 EC do not provide a sufficient legal basis for the contested regulation in so far as it applies to him.
44. The applicant claims that the Community has no express power to impose restrictions on the movement of capital and payments. Articles 60 EC and 301 EC are special provisions in that they expressly contemplate situations in which Community action may be proved necessary in order to achieve the implementation of a common foreign and security policy.
45. The applicant adds that Articles 60 EC and 301 EC confer on the Community competence to adopt restrictive measures against persons and entities associated with entities or persons effectively controlling the government apparatus of a third country, and which provide them with financial support. However, those provisions do not authorise restrictive measures to be imposed where there is an insufficient link between the person or entity concerned and the territory or governing regime of the third country. A close connection between the person in question and the governing regime of that State is required.
46. The applicant points out that he is not a member of the Government of Myanmar or a person associated with it. He submits that he does not benefit in any way from the administration of that government and does not frustrate the process of national reconciliation, respect for human rights or the democratisation of Myanmar. The applicant adds that he does not have a sufficient link with the military regime of Myanmar. He is a student and has never been involved in or associated in any way with the military regime.
47. The applicant argues that, in 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 (‘ Kadi ’), the Court of Justice held that Articles 60 EC and 301 EC do not provide authority for the institutions to freeze the funds of persons in the absence of any link with the governing regime of a third country. The imposition of restrictive measures on persons in a third country is authorised only where those persons are rulers of that country, associated with those rulers or controlled by them. Furthermore, it is not sufficient that the restrictive measures at issue target persons or entities in a third country or associated with it in some other way.
48. The fact that the applicant is the son of a person whom the Council considers to have benefited from the military regime of Myanmar does not give him the requisite connection with that regime. Moreover, the fact that the applicant had a shareholding for two years in two of his father’s companies in Singapore does not show that he benefited from any advantages that his father’s companies may have received from the military regime in Myanmar. Neither the applicant nor his father received any benefits from that regime.
49. The applicant also contests the necessary and urgent nature of the restrictive measures imposed under Articles 60 EC and 301 EC. He submits that restrictive measures applying to a person solely on the basis that he may directly or indirectly have enjoyed benefits which his father’s companies are assumed to have received cannot be regarded as ‘necessary urgent measures’ within the meaning of those articles. The applicant submits that the imposition of financial sanctions requires that they are necessary not only in the light of the general situation in a country, but also after an assessment of the particular situation of the person subject to the restrictive measures at issue (Case T-362/04 Minin
v Commission
[2007] ECR II‑2003, paragraphs 72 to 74).
50. Finally, according to the applicant, Articles 60 EC and 301 EC should not be construed broadly because to do so would undermine the separation between the First and Second Pillars of the EU Treaty and would infringe the rule of law which requires that the power of supra-national institutions to impose sanctions on individuals should be construed narrowly.
51. The Council, supported by the Commission and the United Kingdom of Great Britain and Northern Ireland, contests the applicant’s arguments.
Findings of the Court
52. In the first plea, the applicant denies that Articles 60 EC and 301 EC constitute a sufficient legal basis for adopting the contested regulation. He argues essentially that those provisions must be construed narrowly with the result that they cannot be used in order to adopt restrictive measures applicable to persons who do not have any connection with the military regime in Myanmar. He argues that the mere fact that he is his father’s son cannot found the necessary link with that regime in accordance with Articles 60 EC and 301 EC. Furthermore, the freezing of his assets is not a ‘necessary urgent measure’ within the meaning of those articles.
53. It must be recalled that, according to settled case-law, the choice by an institution of the legal basis for a measure must rest on objective factors which are amenable to judicial review, including in particular the aim and the content of the measure (see Case C-440/05 Commission
v Council
[2007] ECR I-9097, paragraph 61 and the case-law cited).
54. It should also be pointed out that, on the basis of Article 60(1) EC, the Council may, in accordance with the procedure provided for in Article 301 EC, take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned. Article 301 EC expressly provides for the possibility of Community action to interrupt or to reduce, in part or completely, economic relations with one or more third countries.
55. Accordingly, as is clear from the wording of Articles 60 EC and 301 EC, the necessary urgent measures decided upon on the basis of those provisions must be adopted against a third country.
56. In the first place, it is appropriate therefore to examine whether the measure consisting in freezing the applicant’s funds and economic resources on the basis of the contested regulation constitutes a measure adopted against a third country.
57. First, the purpose of the contested regulation is to renew and strengthen the restrictive measures against the Union of Myanmar. It is clear from recital 6 in the preamble to the contested regulation that, during a period of more than 10 years before the adoption of the contested regulation, the Council and members of the international community repeatedly condemned the practices of the military regime in Myanmar, in particular the restrictions on fundamental rights, and that, in view of that regime’s longstanding, continuing serious violations of human rights, the restrictive measures adopted by the Council were intended to promote respect for fundamental human rights and thus serve the purpose of protecting public morals.
58. Accordingly, the contested regulation in general is clearly directed against a third country, namely the Union of Myanmar.
59. In that regard, the present case must be distinguished from Kadi, paragraph 47 above. The restrictive measures provided for in the regulation which was the subject of the latter case, namely 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 (OJ 2002 L 139, p. 9), which are aimed directly at Usama bin Laden, the Al-Qaeda network and the persons associated with them and were therefore adopted in the absence of any link with the governing regime of a third country, do not, as such, fall within the ambit of Articles 60 EC and 301 EC ( Kadi, paragraph 47 above, paragraph 167).
60. Second, in order to satisfy the requirements of Articles 60 EC and 301 EC, the restrictive measures specifically applying to the applicant, that is the freezing of his funds and economic resources, must constitute restrictive measures taken against a third country.
61. In that connection, it must be recalled that, according to case-law, the concept of a third country, within the meaning of Articles 60 EC and 301 EC, may include the rulers of such a country and also individuals and entities associated with or controlled, directly or indirectly, by them (Kadi, paragraph 47 above, paragraph 166). In order to be treated as associated with the rulers of a third country a sufficient link must exist between the individual concerned and the regime in question.
62. The applicant is included in the list in Annex VI to the contested regulation, as amended by Regulation No 353/2009, containing the names of members of the Government of Myanmar and persons, entities and bodies associated with them. It is also common ground that the applicant is not a member of the Government of Myanmar. He has therefore been included in that list by the Council as a person associated with that government.
63. It follows that, in the light of the case-law cited in paragraph 61 above, it is necessary to examine whether there is a sufficient link between the applicant and the rulers of Myanmar.
64. In this case, the applicant’s name appears under Heading J of Annex VI to the contested regulation, as amended by Regulation No 353/2009, among the persons who benefit from the economic policies of the Government of Myanmar and other persons associated with the regime of that country. He is listed as the son of Tay Za, whose name also appears under that heading, and who is described as the managing director of Htoo Trading Co. and Htoo Construction Co.
65. It should be noted that the Council, in the statement of reasons for the contested regulation, does not assume that the applicant has a direct link with the Government of Myanmar. It states that the applicant is associated with that regime because of the existence of an indirect link between him and the regime. It is clear from the contested regulation that that link is established as a result of his father’s function as managing director of Htoo Trading Co. and Htoo Construction Co., from which the applicant is assumed to benefit.
66. The Court also finds that the Council rightly considered that those in charge of major businesses under the military regime in Myanmar, such as the applicant’s father, who is the managing director of Htoo Trading Co. and Htoo Construction Co., could be treated as persons associated with that regime. In Myanmar, the commercial activity of those businesses cannot prosper unless they enjoy the favour of the regime. As persons in charge of those businesses they benefit, by their function, from the economic policies of that country. Accordingly, there is a close link between those business figures and the military regime.
67. As regards family members of such leading business figures, it may be presumed that they benefit from the functions exercised by those businessmen, so that there is nothing to prevent the conclusion that such family members also benefit from the economic policies of the government.
68. However, the presumption that the family members of leading business figures in a third country also benefit from the economic policies of the government of that country can be rebutted if an applicant successfully demonstrates that he does not have a close link with the businessman who is part of his family.
69. In that regard, the applicant has not established that he had dissociated himself from h is father, so that his father’s position as a leading business figure no longer enabled him to benefit from the economic policies of the Government of Myanmar. It is true that at the hearing the applicant stated that he had lived with his mother in Singapore from the age of 13, that he had never worked for his father and had no shareholdings in companies in Myanmar. However, he did not indicate the source of the funds which allowed him to be a shareholder in two of his father’s companies established in Singapore between 2005 and 2007.
70. Furthermore, under Article 301 EC, an action by the Community may go as far as totally interrupting economic relations with a third country. The Council could, therefore, take the necessary urgent measures on the movement of capital and on payments in order to implement such an action, in accordance with Article 60 EC. A general embargo on trade against a third country would concern all persons in Myanmar and not only those who benefit from the economic policies of the military regime of Myanmar by reason of their personal situation in that country. In the present case, it must, a fortiori, be held that the restrictive measures, on the basis of targeted and selective sanctions applied to certain categories of persons deemed by the Council to be associated with the regime concerned, including the family members of leading business figures in the third country concerned, fall within the scope of Articles 60 EC and 301 EC.
71. Such an interpretation is also consistent with the humanitarian concerns inherent in general trade embargoes. The imposition of targeted sanctions directed at the persons associated with the regime concerned instead of a general trade embargo could reduce the suffering endured by the civilian population in the country concerned.
72. Furthermore, the inclusion of family members in the categories of persons covered by the restrictive measures in relation to the Union of Myanmar is justified by considerations of effectiveness. Inasmuch as they provide for Community powers to impose restrictive measures of an economic nature in order to implement actions decided on under the common foreign and security policy, Articles 60 EC and 301 EC are the expression of an implicit underlying objective, namely, that of making it possible to adopt such measures through the effective use of a Community instrument ( Kadi, paragraph 47 above, paragraph 226). The inclusion of family members of leading business figures prevents the circumvention of the restrictive measures in question by the transfer of the assets of those businessmen to their family members.
73. In the light of the foregoing, it must be concluded that, in the present case, there is a sufficient link, for the purposes of Articles 60 EC and 301 EC, between the applicant and the military regime of Myanmar. The restrictive measures specifically applying to the applicant may therefore be regarded as having been adopted against a third country.
74. In the second place, as regards the applicant’s argument that the freezing of his funds and economic resources is not a ‘necessary urgent measure’ within the meaning of Articles 60 EC and 301 EC, the applicant referred to Minin
v Commission, paragraph 49 above (paragraphs 72 to 74), relating to the restrictive measures adopted with regard to Liberia and specifically imposed on Charles Taylor and his associates. According to the applicant, the imposition of financial sanctions requires that they are necessary, not only in view of the general situation in a country, but also as the result of an examination of the particular situation of the person to whom the restrictive measures at issue apply.
75. In Minin
v Commission, paragraph 49 above, the Court did not give a ruling on the concept of necessary urgent measures within the meaning of Articles 60 EC and 301 EC. It merely verified whether the sanctions imposed had a sufficient link with the country concerned or the governing regime of such a country by examining whether the sanctions imposed on an associate of Charles Taylor, although the latter had already been removed from presidential power in Liberia at the time the regulation at issue in that case was adopted, actually sought to interrupt or to reduce, in part or completely, the economic relations with a third country.
76. In any event, as regards the necessary and urgent character of the restrictive measures, it must be noted that the contested regulation was adopted by the Council in order to implement Common Position 2007/750 and Common Position 2006/318.
77. In addition, according to the case-law, a bridge has been constructed between the actions of the Community involving economic measures under Articles 60 EC and 301 EC and the objectives of the EU Treaty in the sphere of external relations, including the common foreign and security policy ( Kadi, paragraph 47 above, paragraph 197). Articles 60 EC and 301 EC are provisions which expressly envisage that a Community action may be necessary in order to attain one of the objectives specifically assigned to the European Union by Article 2 EU, that is to say the implementation of a common foreign and security policy.
78. As regards the necessary character of the restrictive measures against the Union of Myanmar specifically applying to the applicant, it is thus appropriate to examine whether the restrictive measures provided for by the contested regulation go beyond the implementation of Common Position 2006/318 and Common Position 2007/750.
79. The Court finds that the restrictive measures adopted against the Union of Myanmar and specifically applying to the applicant form part of the implementation of those common positions.
80. Article 11 of the contested regulation implements Article 5 of Common Position 2006/318, as amended by Common Position 2007/750, as regards the freezing of funds and economic resources. The applicant’s name appears in Annex VI to the contested regulation, as amended by Regulation No 353/2009, to which Article 11 thereof refers (see paragraphs 12, 14 and 15 above). That reference corresponds to Annex II of Common Position 2006/318, as amended by Common Position 2009/351, and to Article 5 of Common Position 2006/318, as amended by Common Position 2007/750 (see paragraphs 6 and 7 above).
81. As regards the urgent nature of the restrictive measures against the Union of Myanmar specifically applying to the applicant, he does not put forward any evidence capable of casting doubt on it.
82. In the light of all the foregoing, it must therefore be concluded that the restrictive measures against the Union of Myanmar specifically applying to the applicant may be regarded as necessary urgent measures within the meaning of Articles 60 EC and 301 EC.
83. Accordingly, this plea must be dismissed.
Plea alleging failure to comply with the obligation to state reasons
Arguments of the parties
84. The applicant submits that, in the case of a measure freezing assets, the Council must refer, in its initial decision, to each specific piece of information and material (including new material) leading to the decision, the matters of fact and law on which its decision is based, and the actual and specific reasons why the Council considers that that measure must be applied to the party concerned.
85. Furthermore, in subsequent decisions to maintain the asset freeze, the Council must include the material which justifies maintaining the freeze in relation to the individual in question and the specific reasons why it considers on re-examination that the freeze remains justified in relation to that individual.
86. Additionally, in a case where the party concerned was not afforded the opportunity to be heard before the adoption of an initial decision to freeze funds, compliance with the obligation to state reasons is all the more important because it constitutes the sole safeguard enabling him to make effective use of the remedies available to challenge the legality of the decision.
87. Finally, the reasons must be notified to the person concerned at the same time as the act adversely affecting him and a failure to state reasons cannot be remedied by a person being informed of the reasons in the course of judicial proceedings, because the applicant would then only have the reply in which to set out pleas contesting the reasons, adversely affecting the right to a fair hearing and the principle of equality of parties before the Courts of the European Union.
88. The applicant submits that, in the present case, the Council failed to set out in the contested regulation the reasons why his name was included in Annex VI to that regulation, or why he is considered to be either a member of the Government of Myanmar or a person associated with it. The identifying information ‘son of Tay Za’ cannot assist. It simply states that the applicant is identified by the fact that he has a father named Tay Za. Furthermore, the Council has not stated how he or his father has benefited from the economic policies of that government.
89. According to the applicant, given the context, particularly clear and cogent reasons should have been given to him, because the measure concerned was draconian and constituted a far-reaching interference with his fundamental rights. Additionally, there is no evidence of any fault or wrongdoing on the part of the applicant and there is no justification for the measure concerned for reasons related to national security or terrorism. The applicant further submits that he was not afforded an opportunity to be heard before the Council adopted the measure concerned, so that notification of the Council’s reasons would have been the sole means enabling him to make use of his legal remedies.
90. The applicant asserts that, when he was subject for the first time to restrictive measures taken against the Union of Myanmar, he was not given any reasons. Similarly, as regards subsequent measures, he was not informed of the reasons for which the Council considered that his continued inclusion on the list of persons in Annex VI to the contested regulation remained justified.
91. The applicant states that he knew nothing of the procedure which led to the inclusion of his name on the list of persons in Annex VI to the contested regulation or of the matters of fact on which that procedure was based.
92. The Council, supported by the Commission and the United Kingdom of Great Britain and Northern Ireland, contests the applicant’s arguments.
Findings of the Court
93. It must be recalled that the obligation to state reasons is an essential procedural requirement which must be distinguished from the question whether the reasons given are correct, a matter going to the substantive legality of the contested measure, and which must satisfy the requirements set out in the case-law.
94. The purpose of the obligation to state the reasons for an act adversely affecting a person, as provided for in Article 253 EC, is, first, to provide the person concerned with sufficient information to make it possible to determine whether the act is well founded or whether it is vitiated by an error which may permit its validity to be contested before the courts and, second, to enable the courts to review the lawfulness of the act. The statement of reasons must therefore in principle be notified to the person concerned at the same time as the act adversely affecting him. A failure to state the reasons cannot be remedied by the fact that the person concerned learns the reasons for the act during the proceedings before the courts. If the party concerned is not afforded the opportunity to be heard before the adoption of an initial decision to freeze funds, compliance with the obligation to state reasons is all the more important because it constitutes the sole safeguard enabling the party concerned, especially after the adoption of that decision, to make effective use of the legal remedies available to it to challenge the lawfulness of that decision (see Case T-228/02 Organisation des Modjahedines du peuple d’Iran
v Council
[2006] ECR II-4665, ‘ OMPI ’, paragraphs 138 to 140 and the case-law cited).
95. The Court has consistently held that the statement of reasons required by Article 253 EC must be appropriate to the measure at issue and to the context in which it was adopted. It must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent court to exercise its power of review of the lawfulness thereof. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the statement of reasons to specify all the relevant matters of fact and law, since the question whether the statement of reasons meets the requirements of Article 253 EC 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. In particular, the reasons given for a decision are sufficient if it was adopted in circumstances known to the party concerned which enable him to understand the scope of the measure concerning him (see OMPI, paragraph 94 above, paragraph 141 and the case-law cited).
96. According to that case-law, unless overriding considerations concerning the security of the Community or its Member States or the conduct of their international relations preclude it, the Council is required to state the matters of fact and law which constitute the legal basis of its decision and the considerations which led it to adopt that decision. The grounds for such a measure must therefore indicate the actual and specific reasons why the Council considers that the relevant rules are applicable to the party concerned (see OMPI, paragraph 94 above, paragraphs 143 and 148 and the case-law cited).
97. In the present case, in adopting the contested regulation, the Council renewed and strengthened the restrictive measures against the Union of Myanmar. Under Article 11(1) of that regulation all funds and economic resources belonging to, owned, held or controlled by the individual members of the Government of Myanmar and to the natural or legal persons, entities or bodies associated with them, as listed in Annex VI to the regulation, are to be frozen. Furthermore, under Article 11(2) thereof no funds or economic resources are to be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies listed in Annex VI.
98. In the light of the foregoing, in order to comply with the obligation to state reasons, the Council was therefore required to set out the reasons for which it considers that, in general, the restrictive measures taken against the Union of Myanmar and, in particular, those specifically applying to the applicant are or remain justified.
99. As regards, first, the restrictive measures taken against the Union of Myanmar, the Council set out, in a general manner, in recital 1 in the preamble to the contested regulation, its concerns regarding the absence of progress towards democratisation and the continuing violation of human rights in Myanmar in view of the political situation in that country, which had continued since it imposed restrictive measures against that country for the first time.
100. In recital 2 in the preamble to the contested regulation, the Council stated that Common Position 2006/318 therefore provided for the maintenance of the restrictive measures against the military regime in Myanmar, those who benefit most from its misrule and those who actively frustrate the process of national reconciliation, respect for human rights and democracy. It added that the restrictive measures provided for by that common position included the freezing of funds and economic resources of members of the Government of Myanmar and of any natural or legal persons, entities or bodies associated with them.
101. In recital 6 in the preamble to the contested regulation, the Council stated that, for more than a decade, it had repeatedly condemned the practices of the military regime in Myanmar. It added that the restrictive measures in the contested regulation were instrumental in promoting respect for fundamental human rights and thus served the purpose of protecting public morals.
102. Accordingly, the Court finds that the Council explained the reasons for which it had adopted and maintained restrictive measures against the Union of Myanmar and gave a sufficient statement of reasons in the contested regulation on that point.
103. As regards, second, the restrictive measures specifically applying to the applicant, the background to those measures was known to the applicant. The contested regulation implements Common Position 2006/318, as amended by Common Position 2007/750. Recitals 3 and 4 in the preamble to Common Position 2006/318 clearly show the Council’s reasoning which consists in adopting and maintaining restrictive measures specifically applying to persons benefiting from the policies of the Government of Myanmar and their families in view of the political situation in that country.
104. In that connection, it should also be recalled that the applicant was for the first time the subject of restrictive measures against the Union of Myanmar under Regulation No 2297/2003, which entered into force in December 2003. From that date, the applicant has been continuously subject to the restrictive measures at issue. The Council’s reasoning, which consists in extending the scope of the restrictive measures at issue to persons benefiting from the policies of the governing regime of the Union of Myanmar and their families, was already set out in recital 3 in the preamble to Common Position 2003/297, which was implemented by that regulation.
105. The contested regulation was therefore intended only to maintain the restrictive measures specifically applying to the applicant. In the absence of substantial changes in the matters of fact and law which justified the inclusion of the applicant’s name among the persons who benefit from the economic policies of the Government of Myanmar and other persons associated with it, the Council was not required to state explicitly the reasons for which certain restrictive measures taken against the Union of Myanmar specifically apply to the applicant.
106. In any event, the applicant was aware of the reasons for which such restrictive measures specifically apply to him, since he states in paragraph 37 of the originating application that there may be a risk of his father circumventing the freeze on his own assets by transferring his funds to other family members.
107. As to the applicant’s argument that the Council has not stated how he or his father have benefited from the economic policies of the Government of Myanmar, it should be noted that the name of the applicant ’s father, Tay Za, was included on the list in Annex VI to the contested regulation, as amended by Regulation No 353/2009, as the managing director of Htoo Trading Co. and Htoo Construction Co. In the contested regulation the Council therefore established a link between the applicant’s father and his function as managing director. With respect to that link the Council set out, to the requisite legal standard, how the applicant’s father benefited from the economic policies of that government. In fact, he benefits from his function as managing director.
108. It follows that the Council stated the reasons why certain restrictive measures taken against the Union of Myanmar specifically apply to the applicant, and gave a sufficient statement of reasons in the contested regulation on that point.
109. As regards the applicant’s argument that he was unaware of the procedure which had led to the inclusion of his name on the list of persons in Annex VI to the contested regulation, it must be observed that it is clear from that regulation that the Council acted in accordance with the procedure laid down in Article 301 EC.
110. Consequently, in the light of all the foregoing, the Council has not infringed the obligation to state reasons as laid down in Article 253 EC.
111. This plea must therefore be dismissed.
Pleas alleging infringement of certain fundamental rights and breach of the principle of proportionality
112. The applicant pleads infringement of the right to property, breach of the principle of proportionality, infringement of the right to a fair hearing and infringement of the right to effective judicial protection.
113. The Court considers it appropriate to examine the pleas alleging infringement of procedural rights before the plea alleging infringement of the right to property and that alleging breach of the principle of proportionality.
Plea alleging infringement of the right to a fair hearing
– Arguments of the parties
114. The applicant submits that observance of the rights of the defence, in all proceedings initiated against a person which are liable to culminate in a measure adversely affecting him, is a fundamental principle of law which must be guaranteed even in the absence of any rules governing the proceedings. That principle requires that the addressees of decisions which significantly affect their interests should be placed in a position in which they may effectively make known their views.
115. According to the applicant, the person concerned by a sanction must be informed of the evidence and material adduced to justify the proposed sanction either concomitantly with or as soon as possible after the adoption of the initial decision to freeze assets. He further submits that that person must be afforded the opportunity effectively to make known his views on that evidence and material, including the specific information on which the decision to freeze his assets and to maintain the freeze is founded. The applicant adds that he must have the opportunity to request an immediate re-examination of an initial measure, and that subsequent decisions must be preceded by a further hearing and by the notification of new evidence.
116. The applicant submits that those principles have not been observed in the present case. The same is true as regards the ban on his entering or transiting through a Member State of the European Union provided for by Common Position 2006/318.
117. In the reply, the applicant adds that defendants to criminal charges must be made aware promptly and thoroughly of the nature of an allegation, the material facts on which it is based, and the acts alleged to have been committed, in order to be able to exercise their rights of defence.
118. The applicant submits that his rights of defence have not been respected in this case. He adds that the contested regulation fails to provide for any procedure for communicating the evidence justifying the inclusion of the names of the persons concerned, and does not contain any specific factual information justifying the decision to freeze his funds and maintain the freeze.
119. The Council, supported by the Commission and the United Kingdom of Great Britain and Northern Ireland, contests the applicant’s arguments.
– Findings of the Court
120. By this plea, the applicant claims infringement of the rights of the defence and, in particular, infringement of the right to be informed of the matters of fact and law justifying the imposition of restrictive measures and the right to be placed in a position in which he may effectively make known his views on those matters.
121. In that connection, it should be noted that the present case must be distinguished from OMPI, paragraph 94 above. The subject of the latter case was restrictive measures taken against certain persons and entities with a view to combating terrorism. Those measures were of direct and individual concern ( OMPI, paragraph 94 above, paragraph 98) to the persons included on the lists annexed to the contested provisions, without providing for restrictive measures against a third country. Those persons were thus the subject of the restrictive measures at issue because they were presumed, as such, to be involved in terrorist activities.
122. By contrast, in the present case, persons and entities have been specifically made the subject of restrictive measures taken by the Council against a third country, namely the Union of Myanmar, in view of the political situation in that country. Those restrictive measures are therefore directed at the military regime of Myanmar. Instead of imposing a general embargo against that country, the Council has provided for targeted, selective sanctions and has enumerated in the contested regulation the categories of persons and entities specifically covered by the restrictive measures taken against the Union of Myanmar. In this case, therefore, it is not the activities of the persons and entities concerned which justify the restrictive measures at issue taken by the Council, but their membership of a certain general category of persons and entities having a function or a position in the State which is the subject of sanctions. The applicant is covered by the sanctions regime because he falls within the category of family members of leading business figures in Myanmar.
123. In the case of sanctions taken against a third country specifically applying to an individual there are, therefore, no proceedings initiated against that individual for the purposes of OMPI, paragraph 94 above (paragraph 91). The process which culminates in the adoption of sanctions against a State applying to certain categories of its nationals does not constitute, in respect of those categories of persons, proceedings in the course of which they may, as individuals, have sanctions imposed on them for the purposes of paragraph 91 of OMPI, paragraph 94 above. A regulation which contains sanctions against a third country applying to certain categories of its nationals is a general legislative act even if the persons concerned are identified by name. It is true that such a regulation adversely affects them directly and individually and they are entitled to bring an action to challenge it. However, in a legislative procedure culminating in the adoption of sanctions against a third country which apply to certain categories of its nationals, the rights of the defence are not applicable to them. For the establishment of such a regulation, individuals do not have rights of participation, even if they are ultimately individually concerned.
124. Specific notification of the matters of law and fact justifying the restrictive measures at issue was not, in any event, necessary prior to the adoption of the contested regulation, since its purpose is to maintain restrictive measures already adopted. In that connection, it should be noted that the contested regulation implements Common Positions 2006/318 and 2007/750 which were published in the Official Journal and which set out all the matters of fact and law justifying the adoption and maintenance of the restrictive measures at issue.
125. Recitals 3 and 4 in the preamble to Common Position 2006/318 clearly show the reasoning of the Council which consists in adopting and maintaining restrictive measures specifically applying to persons who benefit from the policies of the Government of Myanmar and their families in view of the political situation in that country. In that connection, it should also be recalled that the applicant’s name and that of his father appear in Annex II to Common Position 2006/318, as amended by Common Position 2009/351, and that those listings correspond, as regards their content, to Annex VI to the contested regulation, as amended by Regulation No 353/2009 (see paragraph 80 above). Further, the Council’s reasoning which consists in extending the scope of the restrictive measures at issue to persons benefiting from the policies of the regime governing the Union of Myanmar and their families has been known to the applicant since the first time measures provided for in Regulation No 2297/2003, which entered into force in December 2003, were imposed on him (see paragraphs 24 and 25 above). The Council set out that reasoning in recital 3 in the preamble to Common Position 2003/297, which was implemented by that regulation.
126. The Court therefore finds that the relevant matters of law and fact in this case were known to the applicant before the Council adopted the contested regulation.
127. As regards the applicant’s argument that a hearing prior to the adoption of the contested regulation was necessary, the applicant stated at the hearing that the Council should have invited him to make known his views before the adoption of the regulation.
128. In that connection, the Court finds that nothing prevented the applicant from effectively making known his views to the Council before the adoption of the contested regulation.
129. The applicant’s assets and economic resources were frozen for the first time pursuant to the restrictive measures provided for in Regulation No 2297/2003, which entered into force in December 2003. That asset freeze continued until the adoption of the contested regulation, which implements, in particular, Common Position 2006/318, as amended by Common Position 2007/750, including Annex II in which the applicant’s name is mentioned.
130. The common positions on which the Community provisions implementing the restrictive measures at issue are based were limited in time. Common Position 2006/318 applied, in particular, pursuant to the second paragraph of Article 10 thereof, for a period of 12 months from 30 April 2006. It was regularly extended but only for one year at a time (see paragraphs 3 and 5 above). Furthermore, under Article 9 of Common Position 2006/318, it was kept under constant review and renewed or amended as appropriate. In view of the considerations justifying the restrictive measures against the Union of Myanmar specifically applying to the applicant in Common Positions 2006/318 and 2007/750, of which he was aware (see paragraphs 124 and 125 above), and of the political situation in Myanmar, the applicant could not expect his name to be removed from the list in Annex II to Common Position 2006/318 when that common position was periodically renewed and amended. He should rather have proceeded on the basis that his name would also be included in Annex II to that common position following those renewals and amendments, as was in fact the case.
131. In those circumstances, the Council could have effectively taken account of an express intervention by the applicant by including his views in its periodic review of the maintenance of names included in Annex II to Common Position 2006/318. Since the contested regulation implements in particular Common Position 2006/318, as amended by Common Position 2007/750, Annex VI to the contested regulation was, as far as the applicant is concerned, to correspond to Annex II to Common Position 2006/318 (see paragraphs 76 to 80 above). In the light of the foregoing, the applicant could therefore have effectively made known his views to the Council before the adoption of the contested regulation.
132. In any event, the absence of a prior hearing would have no effect on the legality of the act, since such a hearing could not have led to a different result (see, to that effect, Case C-301/87 France
v Commission [1990] ECR I-307, paragraph 31, and Case C-51/92 P Hercules Chemicals
v Commission
[1999] ECR I-4235, paragraphs 80 to 82). Neither the applicant’s observations in the letter of 15 May 2008 which he sent to the Council nor the matters of fact and law which have been presented in the present proceedings contain any substantial additional information capable of leading to a different assessment by the Council of the political situation in Myanmar and the specific situation of the applicant. In fact, the applicant does not challenge the presentation of the political situation in Myanmar in the contested regulation, or the professional status of his father, or his family relationship with the latter, as set out in Annex VI to that regulation, as amended by Regulation No 353/2009. He has also failed to establish that he had dissociated himself from his father, so that his father’s position as a leading business figure no longer benefits him (see paragraph 69 above).
133. Furthermore, account must be taken of the fact that, in the notice of 11 March 2008, even though it had not yet been published when the contested regulation was adopted, the Council mentioned the possibility for the persons and entities concerned to submit to it at any time a request, together with any supporting documentation, that the decision to include and maintain their names on the lists concerned should be reconsidered. In this case, the applicant requested the Council, by letter of 15 May 2008, to make available to him the matters of fact justifying the inclusion of his name on the list in Annex VI to the contested regulation and to remove his name from that list. The Council replied by letter of 26 June 2008 explaining the reason for maintaining the applicant’s name on that list.
134. Finally, as regards the applicant’s argument that the rights of the defence have not been observed as regards the ban on entering or transiting through a Member State of the European Union provided for by Common Position 2006/318, it is sufficient to observe that such measures do not appear in the contested regulation. As is apparent from Article 4(1) of that common position, those measures must be implemented by the Member States and not by the Community. The Court does not have jurisdiction to give a ruling on a common position adopted on the basis of Article 15 EU.
135. This plea must therefore be dismissed.
Plea alleging infringement of the right to effective judicial protection
– Arguments of the parties
136. The applicant submits that effective judicial review of the lawfulness of an asset freezing provision must extend to the assessment of the facts and circumstances relied on as justifying it, and checking the evidence and information on which that assessment is based.
137. According to the applicant, the contested regulation does not provide for any of those fundamental safeguards. There is no provision for access to a court. The possibility of bringing an action for annulment before this Court is not an effective remedy in this sense. The applicant submits that what is required is a substantive review and examination of the reasons for including him on the list. The Court must be able to verify, for example, that procedural rules have been complied with, that proper reasons have been given, that facts relied upon are materially accurate, that there is no manifest error in the assessment of facts, and that there has been no misuse of power.
138. The applicant adds that that absence of effective judicial protection is compounded by the difficulties which he faces in seeking to challenge the ban on entering and transiting through the Member States of the European Union provided for by Common Position 2006/318.
139. The applicant claims that he is unable to defend his rights, with regard to the evidence against him, in satisfactory conditions before the Courts of the European Union. Consequently, this Court is unable to undertake a review of the lawfulness of the contested regulation in so far as it concerns him. According to the applicant, that regulation provides for no procedure for him to make his views known on the evidence adduced against him.
140. The Council, supported by the Commission and the United Kingdom of Great Britain and Northern Ireland, contests the applicant’s arguments.
– Findings of the Court
141. It should be recalled that, according to settled case-law, individuals must be able to avail themselves of effective judicial protection of the rights they have under the Community legal order, as the right to such protection is part of the general principles of law which stem from the constitutional traditions common to the Member States and has been enshrined in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950 (‘the ECHR’), and reaffirmed by Article 47 of the Charter of Fundamental Rights of the European Union, proclaimed on 7 December 2000 in Nice (OJ 2000 C 364, p. 1) (see Kadi, paragraph 47 above, paragraph 335, and OMPI, paragraph 94 above, paragraph 110 and the case-law cited).
142. Contrary to the applicant’s assertions, the safeguard relating to the right to effective judicial protection is ensured by the right the parties concerned have to bring an action for annulment before this Court against a decision to freeze their funds (see, to that effect, OMPI, paragraph 94 above, paragraph 152 and the case-law cited).
143. In that connection, it should be observed that, in the contested regulation, the Council is not required to mention expressly the possibi lity to bring an action. Since the action for annulment is part of the general system of remedies provided for by the EC Treaty, it is not disputed that the applicant also has, under the conditions laid down by that provision, access to the courts. In any event, in the notice of 11 March 2008, the Council expressly drew the attention of the persons and entities concerned to the possibility of challenging its decision before this Court.
144. As regards the extent of the review exercised by the Court, it must be acknowledged that the Council enjoys broad discretion in its assessment of the matters to be taken into consideration for the purpose of adopting economic sanctions on the basis of Articles 60 EC and 301 EC, consistent with a common position adopted on the basis of the common foreign and security policy. Because the Courts may not, in particular, substitute their assessment of the evidence, facts and circumstances justifying the adoption of such measures for that of the Council, the review carried out by the Court of the lawfulness of decisions to freeze funds must be restricted to checking that the rules governing procedure and the statement of reasons have been complied with, that the facts are materially accurate, and that there has been no manifest error of assessment of the facts or misuse of power (see OMPI, paragraph 94 above, paragraph 159 and the case-law cited).
145. The effectiveness of such a review requires the institution concerned to comply with the obligation to state reasons (see paragraph 95 above). As is clear from the examination of the plea relating to the obligation to state reasons, the Council has, in the present case, given reasons to the requisite legal standard for the imposition of the restrictive measures at issue (see paragraphs 93 to 111 above).
146. Lastly, as regards the applicant’s argument that the absence of effective judicial protection is compounded by the difficulties he faces in seeking to challenge the ban on entering and transiting through the Member States of the European Union provided for by Common Position 2006/318, it should be recalled that the Court does not have jurisdiction to give a ruling on such a ban, even assuming it has been implemented by the Member States, which the applicant has not proved in this case (see paragraph 134 above).
147. This plea must therefore be dismissed.
Pleas alleging infringement of the right to property and breach of the principle of proportionality
148. Given that the applicant’s arguments in support of the pleas alleging infringement of the right to property and breach of the principle of proportionality are closely connected, it seems appropriate to examine those two pleas together.
– Arguments of the parties
149. The applicant submits that the inclusion of his name in the contested regulation constitutes a disproportionate interference with his right to property.
150. According to the applicant, the indefinite freezing of an individual’s assets constitutes ‘a far-reaching interference with the peaceful enjoyment of property’. That restriction is not justified in this case, since he is not involved with the regime in power and his father has not attempted to circumvent the freeze on his own assets by transferring funds to other family members.
151. The applicant submits that that interference is also disproportionate, since the consequences of the freeze on his assets are ‘extensive’ and ‘severe’. He submits that the contested regulation provides for a total freeze on all of his funds, and on all funds and economic resources being made available to him.
152. The effects of the contested regulation are even more significant in combination with the ban on entering or travelling through any Member State provided for by Common Position 2006/318.
153. In the reply, the applicant submits that, in order to assess the proportionality of the restrictive measures at issue, a comprehensive view must be taken of the applicable procedures. Despite the existence of a mechanism for periodic review of the restrictive measures at issue, and despite a provision to allow funds to be released to cover basic expenses, the measure concerned is an unjustified restriction on the right to property.
154. As regards the periodic review of his situation, the applicant submits that it can never result in the restrictions against him being lifted, since he cannot change the fact that ‘he is his father’s son’.
155. The Council, supported by the Commission and the United Kingdom of Great Britain and Northern Ireland, contests the applicant’s argument.
– Findings of the Court
156. According to settled case-law, the right to property, enshrined, in particular, in Article 6(2) EU and Article 1 of the Additional Protocol to the ECHR, and reaffirmed in Article 17(1) of the Charter of Fundamental Rights of the European Union, is one of the general principles of law. It is not, however, absolute, but must be viewed in relation to its function in society. Consequently, the exercise of the right to property may be restricted, provided that those restrictions in fact correspond to objectives of public interest pursued by the Community and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the right so guaranteed (see Kadi, paragraph 47 above, paragraphs 355 and 356 and the case-law cited).
157. It should be observed that, even if the measure freezing the applicant’s assets, which is a precautionary measure, is not supposed to deprive him of his property, it entails a restriction on the exercise of the applicant’s right to property. That restriction must be classified as significant having regard to the general application of the asset freezing measure and taking account of the fact that it has been applied, under Regulation No 2297/2003, since December 2003 (see paragraph 24 above).
158. Therefore, the question arises as to whether that restriction on the exercise of the applicant’s right to property can be justified.
159. In that regard, according to the case-law of the European Court of Human Rights, there must exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised. The Court must therefore determine whether a balance has been struck between the demands of the public interest and the interest of the individual or individuals concerned. In so doing, the Court recognises that the legislature enjoys a wide margin of appreciation, with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the public interest for the purpose of achieving the object of the law in question ( Kadi, paragraph 47 above, paragraph 360; see European Court of Human Rights, judgment in J.A. Pye (Oxford) Ltd and J.A. Pye (Oxford) Land Ltd v. the United Kingdom
of 30 August 2007, ECHR 2007-X, §§ 55 and 75).
160. Moreover, the importance of the aims pursued by legislation providing for sanctions may be such as to justify negative consequences, even of a substantial nature, for certain persons concerned, including persons who are in no way responsible for the situation which led to the adoption of the measures concerned, but who are adversely affected in particular with respect to their rights to property (see, to that effect, Case C-84/95 Bosphorus
[1996] ECR I-3953, paragraphs 22 and 23, and judgment of 12 July 2006 in Case T-49/04 Hassan
v Council and Commission, not published in the ECR, paragraphs 99 and 100; see also European Court of Human Rights, judgment in Bosphorus Hava Yollari Turizm ve Ticaret Anonim Şirketi v. Ireland
of 30 June 2005, ECHR 2005-VI, §§ 166 and 167).
161. In the present case, it is clear from recital 6 in the preamble to the contested regulation that, in view of the longstanding, continuing serious violations of fundamental rights by the military regime of Myanmar, the aim of the regulation is to be instrumental, by renewing and strengthening the restrictive measures against the Union of Myanmar, in promoting respect for fundamental human rights and thus to serve the purpose of protecting public morals.
162. The Council rightly considered that the objective of general interest pursued by the contested regulation is fundamental for the international community. As the Council stated in the defence, for many years the European Union, third countries, international organisations and non-governmental organisations have attempted to exert pressure in different ways on the military regime in Myanmar and those associated with it, with a view to improving the political situation in that country.
163. In the light of the importance of such an objective of general interest, the freezing of all the funds and economic resources of members of the Government of Myanmar and the persons associated with them cannot, in itself, be regarded as inappropriate or disproportionate (see, to that effect, Bosphorus, paragraph 160 above, paragraph 26, and European Court of Human Rights, judgment in Bosphorus Hava Yollari Turizm ve Ticaret Anonim Şirketi v. Ireland, paragraph 160 above, § 167).
164. It should also be noted that, in the contested regulation, a balance has been maintained between the requirements of the general interest and those of the applicant’s interest.
165. Under Article 13(1) of the contested regulation, the competent authorities in the Member States may authorise the release of certain frozen funds or economic resources or the making available of certain funds or economic resources. That exemption relates to the funds or economic resources that are necessary to satisfy basic needs, intended for payment of professional fees and reimbursement of incurred expenses associated with the provision of legal services, intended for payment of fees or service charges for routine holding or maintenance of frozen funds or economic resources, or necessary for extraordinary expenses.
166. In addition, under Article 9 of Common Position 2006/318, restrictive measures taken against the Union of Myanmar are to be kept under constant review by the Council. Such a review also includes consideration as to whether to maintain on the lists in Annex II to that common position the persons whose names are included. In the notice of 11 March 2008, the Council in fact stated that the persons and entities concerned could at any time submit a request to it for reconsideration of the decision by which their names were included and maintained on those lists.
167. As regards the applicant’s argument that such an individual reconsideration cannot result in the restrictive measures applied to him being lifted since he cannot change the fact that ‘he is his father’s son’, the Court finds that a reconsideration need not necessarily lead to the lifting of restrictive measures after every such request. That individual reconsideration seeks essentially to avoid the situation in which a person is targeted even though he does not fall within the categories of persons covered by the restrictive measures, for example because he is not a leading business figure or a family member of such a person. It is also necessary for determining whether family members of a leading business figure have dissociated themselves from him. An individual reconsideration cannot call into question in a general manner the restrictive measures taken against a third country. It follows that, contrary to the applicant’s submissions, the fact that he is the son of a leading business figure does not have the consequence that, following an individual reconsideration by the Council of the decision by which his name was included or maintained on the list of persons to which an asset freeze applies, his name must automatically be maintained on that list, since it is always open to him to show that he has dissociated himself from his father and does not benefit in any way from the economic policies of the third country.
168. As to the restrictions concerning the entry to or transit through the Member States imposed on the applicant, provided for by Article 4 of Common Position 2006/318, it should be recalled that the Court does not have jurisdiction to give a ruling on such a measure, even assuming it has been adopted by the Member States, which the applicant has failed to prove in this case (see paragraph 134 above).
169. Lastly, according to the case-law, the applicable procedures must afford the person concerned a reasonable opportunity of putting his case to the competent authorities. Further, in order to ascertain whether this condition, which constitutes a requirement inherent in Article 1 of the Additional Protocol to the ECHR, has been satisfied, a comprehensive view must be taken of the applicable procedures ( Kadi, paragraph 47 above, paragraph 368; see also European Court of Human Rights, judgment in Bäck v. Finland
of 20 July 2004, ECHR 2004-VII, § 56 and the case-law cited).
170. In the present case, the examination of the applicable procedures has not led to the conclusion that the applicant had not had a reasonable opportunity of putting his case to the competent authorities (see paragraphs 120 to 135 and 141 to 147 above).
171. In the light of all the foregoing, it must therefore be concluded that the restrictive measures against the Union of Myanmar specifically applying to the applicant constitute justified restrictions which comply with the principle of proportionality.
172. The pleas alleging infringement of the right to property and breach of the principle of proportionality cannot therefore be accepted.
Pleas alleging breach of the principles of law deriving from the criminal law nature of the imposition of the asset freeze and breach of the principle of legal certainty
Arguments of the parties
173. The applicant submits in the reply that the explanation as to why his name was included in Annex VI to the contested regulation, as amended by Regulation No 353/2009, put forward by the Council in the defence, amounts to the imposition of a criminal sanction on him.
174. The applicant claims that no accusation has been made against him. Similarly, no evidence of wrongdoing or evidence that he benefited from the economic policies of the Government of Myanmar has been put forward.
175. The applicant argues that the Council applies inconsistently the presumption that he benefited from the economic policies of the Government of Myanmar on account of his relationship with his father by not freezing the assets of the children of prominent businessmen if those children are minors. The applicant’s assets were frozen for the first time when he was 16 years old.
176. According to the applicant, the Council therefore breached the principles of the presumption of innocence and legal certainty by freezing for an indefinite period the assets of the family members of prominent businessmen.
177. In addition, the applicant submits that the Council breached the principle that criminal penalties must be specific to the individual concerned. An individual may be penalised only for the acts personally imputed to him and he cannot be penalised for doing no wrong.
178. The Council, supported by the Commission and the United Kingdom of Great Britain and Northern Ireland, states that in the reply the applicant raises new pleas which are inadmissible in accordance with Article 48(2) of the Rules of Procedure. Furthermore, the Council contests the applicant’s arguments.
Findings of the Court
179. In the reply, the applicant claims breach of the principles of law deriving from the criminal law nature of the imposition of the asset freeze, in particular, the presumption of innocence, and breach of the principle of legal certainty.
180. As regards, first of all, the plea alleging breach of the principles of law deriving from the criminal law nature of the imposition of the asset freeze, it must be recalled that, pursuant to Article 48(2) of the Rules of Procedure, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure.
181. The Council’s reasoning appears clearly and unequivocally in the contested regulation and enabled the applicant to know the justifications for the measures taken against the Union of Myanmar (see paragraphs 93 to 111 above). The Court finds that, according to that reasoning, the measure which consists in including the applicant in the list in the annex concerned did not constitute a criminal sanction. Contrary to the applicant’s submissions, the Council did not supplement the statement of reasons, in the defence, by producing matters of law or fact concerning the classification of the decision to include the applicant’s name in the list of persons to whom those measures specifically apply.
182. The plea alleging breach of the principles of law deriving from the criminal law nature of the imposition of the asset freeze, and in particular the presumption of innocence, therefore constitutes a new plea which must be rejected as inadmissible.
183. In any event, the restrictive measures at issue are not of a criminal nature. Since the assets of the persons concerned have not been confiscated as the proceeds of a crime, but frozen as a precautionary measure, those measures do not constitute criminal sanctions and do not, moreover, imply any accusation of a criminal nature (judgment of 11 July 2007 in Case T-47/03 Sison
v Council, not published in the ECR, paragraph 101).
184. As regards the applicant’s argument that no evidence of wrongdoing by him has been put forward, it should be observed that Articles 60 EC and 301 EC do not require the applicant to have committed wrongful acts in order for restrictive measures to be applied to him.
185. Lastly, as regards the applicant’s argument that no evidence showing that he benefited from the economic policies of the Government of Myanmar has been adduced, it must be recalled that, although certain restrictive measures taken against the Union of Myanmar specifically apply to the applicant, that results from the presumption that family members of leading business figures in a third country also benefit from the economic policies of the government of that country, which can be rebutted if an applicant successfully proves that he does not have a close link with the businessman who is a member of his family, so that he does not benefit in any way from those economic policies. Therefore, it is not for the Council to adduce evidence that the applicant benefits from the economic policies of the Government of Myanmar.
186. Next, as regards the plea alleging a breach of the principle of legal certainty, the applicant criticises the Council for the indefinite period for which his assets are frozen.
187. The Court finds that this plea is not a new plea, within the meaning of Article 48(2) of the Rules of Procedure, but the amplification of the pleas made previously, whether directly or by implication, in the original application and it must be considered admissible (see, to that effect, Case T-53/03 BPB v Commission
[2008] ECR II-1333, paragraph 435 and the case-law cited). This plea was raised in the context of the pleas alleging an infringement of the right to property and a breach of the principle of proportionality (see paragraphs 149 to 151 above). The applicant’s argument concerning the indefinite period for which his assets are frozen was rejected in the examination of those pleas (see paragraph 167 above). In this case, it should be added that the common positions adopted by the Council with a view to imposing and maintaining the restrictive measures at issue are limited in time (see paragraphs 3 and 5 above).
188. Lastly, the applicant asserts that the Council applies inconsistently the presumption that he has benefited from the economic policies of the Government of Myanmar on account of his relationship with his father by not freezing the assets of the children of prominent businessmen if those children are minors. It is maintained that the applicant’s assets were frozen for the first time when he was 16 years old. In that connection, it is sufficient to state that a limit on sanctions, so as not to include minors among the persons to whom the restrictive measures taken against the Union of Myanmar specifically apply, could not mean that the inclusion of the applicant’s name in the list in Annex VI to the contested regulation, as amended by Regulation No 353/2009, is unlawful. Moreover, in recital 6 in the preamble to Common Position 2005/340 and in recital 6 in the preamble to Common Position 2006/318, the Council explained its policy that children under 18 years old should not be the subject of the restrictive measures at issue.
189. It follows that the pleas alleging breach of the principles of law deriving from the criminal law nature of the imposition of the asset freeze and breach of the principle of legal certainty must be rejected.
190. In the light of all the foregoing the application must therefore be dismissed in its entirety.
Costs
191. Under Article 87(2) 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. Furthermore, under Article 87(4), the Member States and institutions which intervened in the proceedings are to bear their own costs.
192. Since the Council has applied for costs and the applicant has been unsuccessful, the latter must be ordered to bear his own costs and to pay those incurred by the Council. The United Kingdom of Great Britain and Northern Ireland and the Commission shall bear their own costs.
Operative part
On those grounds,
THE GENERAL COURT (Eighth Chamber)
hereby:
1. Dismisses the application;
2. Orders Pye Phyo Tay Za to bear his own costs and to pay those incurred by the Council of the European Union;
3. Orders the United Kingdom of Great Britain and Northern Ireland and the European Commission to bear their own costs.