Case T‑384/11

Safa Nicu Sepahan Co.

v

Council of the European Union

‛Common foreign and security policy — Restrictive measures against Iran to prevent nuclear proliferation — Freezing of funds — Error of assessment — Right to effective judicial protection — Claim for damages’

Summary — Judgment of the General Court (First Chamber), 25 November 2014

Non-contractual liability — Conditions — Real and certain damage caused by an illegal measure — Non-material damage caused by the adoption and maintenance of restrictive measures — Annulment of the contested measure not ensuring adequate compensation for the non-material damage suffered

Non-contractual liability — Damage — Damage for which compensation is available — Non-material loss caused by publication in the Official Journal of restrictive measures affecting the reputation of the entity concerned by those measures — Included

Non-contractual liability — Conditions — Sufficiently serious breach of a rule of law conferring rights on individuals — Rule of law intended to confer rights on individuals — Concept — Conditions relating to the adoption of restrictive measures against Iran — Included

Non-contractual liability — Conditions — Sufficiently serious breach of a rule of law conferring rights on individuals — EU institution having reduced discretion or no discretion at the time the act adopted — Need to take account of the factual context

European Union — Judicial review of the legality of the acts of the institutions — Restrictive measures against Iran — Measures in the context of the fight against nuclear proliferation — Ambit of the review

See the text of the decision. (see para. 30)

The Courts of the European Union have, in accordance with the powers conferred on them by the FEU Treaty, to ensure the review, in principle the full review, of the lawfulness of all European Union acts in the light of the fundamental rights forming an integral part of the European Union legal order. Those fundamental rights include, inter alia, the right to effective judicial protection. The effectiveness of the judicial review guaranteed by Article 47 of the Charter of Fundamental Rights of the European Union requires inter alia that the Courts of the Union ensure that the act in question, which affects the person or entity concerned individually, is adopted on a sufficiently solid factual basis. That entails a verification of the facts alleged in the summary of reasons underpinning that decision, with the consequence that judicial review cannot be restricted to an assessment of the cogency, in the abstract, of the reasons relied on, but must concern whether those reasons, or, at the least, one of those reasons, deemed sufficient in itself to support that decision, is substantiated. To that end, it is for the Courts of the Union, in order to carry out that examination, to request the competent European Union authority, when necessary, to produce information or evidence, confidential or not, relevant to such an examination. That is because 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 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 paras 32-36)

See the text of the decision. (see paras 47, 48)

See the text of the decision. (see paras 50-55)

Although Regulation No 961/10 and Regulation No 267/2012 concerning the adoption of restrictive measures against Iran are intended essentially to permit the Council to impose certain restrictions on individuals’ rights in order to prevent nuclear proliferation and the financing thereof, the provisions which set forth exhaustively the conditions in which restrictions such as those at issue in the present case are permitted are, a contrario, intended essentially to protect the interests of the individuals concerned, by limiting the cases of application, and the extent or degree of the restrictive measures that may lawfully be imposed on those individuals. Such provisions thus ensure that the individual interests of the persons and entities liable to be concerned are protected and are, therefore, to be considered to be rules of law intended to confer rights on individuals. If the substantive conditions in question are not satisfied, the person or the entity concerned is entitled not to have the measures in question imposed on it. Such a right necessarily implies that the person or the entity on which restrictive measures are imposed in circumstances not provided for by the provisions in question may seek compensation for the harmful consequences of those measures, if it should prove that their imposition was founded on a sufficiently serious breach of the substantive rules applied by the Council. (see paras 56-58)

See the text of the decision. (see para. 70)

See the text of the decision. (see para. 71)

When an entity is the subject of restrictive measures because of the support it is has allegedly given to nuclear proliferation, it is publicly associated with conduct which is considered a serious threat to international peace and security, as a result of which it becomes an object of opprobrium and suspicion which thus affects its reputation and is therefore caused non-material damage. First, the opprobrium and suspicion provoked by restrictive measures such as those at issue in the present case do not relate to the economic and commercial capacity of the entity concerned but to its willingness to be involved in activities regarded as reprehensible by the international community. Thus, the effect on the entity concerned goes beyond the sphere of its current commercial interests. Second, the injury to the reputation of the entity concerned is all the more serious since it is caused not by the expression of a personal opinion, but by an official statement of the position of an EU institution, which is published in the Official Journal of the European Union and entails binding legal consequences. In that regard, the publication of the restrictive measures is an integral part of the process for their adoption, given in particular that their entry into force with regard to third parties is dependent upon it. In those circumstances, publication of those measures in the Official Journal is not capable of breaking the causal link between the adoption and maintenance of the restrictive measures in question and the injury to the reputation of the entity concerned. (see paras 80, 82-84)

Annulment of the entry of an entity on the list of entities contributing to nuclear proliferation is capable of constituting a form of reparation for the non-material damage which that entity has suffered, since the annulling judgment finds that the association of the applicant with nuclear proliferation was unjustified and, consequently, unlawful. However, in cases where the allegation of the involvement of that entity in nuclear proliferation has affected the conduct of third parties, mostly situated outside the EU, with regard to the latter, the annulment of the applicant’s listing is such as to limit the amount of compensation awarded but cannot represent full reparation for the damage suffered. Those effects cannot be wholly offset by a subsequent finding that the said listing was unlawful, given that the adoption of restrictive measures against an entity tends to attract more attention and provoke a greater reaction, in particular outside the European Union, than does their subsequent annulment. Moreover, the allegation levelled by the Council at the entity concerned is particularly serious inasmuch as it associates it with Iranian nuclear proliferation, in other words, an activity representing, in the Council’s view, a threat to international peace and security. (see paras 86-89)

In the matter of non-contractual liability of the European Union, a refusal to supply products does not, in itself, constitute damage. Damage arises solely where the refusal has an impact on the financial results of the company concerned. That is the case, in particular, where the company is obliged to purchase the same products on less favourable terms from other suppliers or where the refusal to deliver causes delay in the performance of contracts concluded with customers, thus exposing the company to financial penalties. Similarly, where an alternative supplier cannot be found, existing contracts may be terminated and the company in question may be prevented from taking part in ongoing calls for tenders. (see para. 110)