Case T‑418/14

Sina Bank

v

Council of the European Union

‛Common foreign and security policy — Restrictive measures taken against Iran with the aim of preventing nuclear proliferation — Freezing of funds — Actions for annulment — Period allowed for commencing proceedings — Amendment of pleadings — Admissibility — Obligation to state reasons — Rights of defence — Right to effective judicial protection — Manifest error of assessment — Adjustment of the effects in time of an annulment’

Summary — Judgment of the General Court (First Chamber), 18 October 2016

Actions for annulment — Judgment annulling a measure — Effects — Annulment of a regulation at a different time from the expiry of a decision containing identical restrictive measures — Risk of legal certainty being seriously affected — Maintenance of the effects of the decision until the annulling judgment takes effect

Actions for annulment — Judgment annulling a measure — Effects — Partial annulment of a regulation and a decision on the adoption of restrictive measures against Iran — Such annulment taking effect as from the expiry of the period for lodging an appeal or from the dismissal of the appeal

European Union — Judicial review of the legality of the acts of the institutions — Restrictive measures against Iran — Ambit of the review — Exclusion of matters brought to the knowledge of the institution after the adoption of the contested decision — No substitution of the grounds supporting the measures under review

Common foreign and security policy — Restrictive measures against Iran — Freezing of funds of persons, entities or bodies identified by the Council as being engaged in nuclear proliferation — Obligation to extend that measure to entities owned or controlled by such an entity — Limitation to persons and entities entered in a list — Infringement of that limitation — Partial annulment

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 — Measures capable of being supported by some grounds and not others — Validity of those measures

EU law — Principles — Rights of defence — Freezing of funds of persons, entities or bodies engaged in or supporting nuclear proliferation — Duties of the Council — Communication to the person concerned of inculpatory evidence and the right to be heard — Scope — Infringement of the rights of the defence — Partial annulment

Judicial proceedings — Decision or regulation replacing the contested measure in the course of proceedings — Application to amend annulment plea — Time-limit for the submission of such an application — Point from which time starts to run — Date of notification of the new measure to the applicant’s representative — Condition — Notification to the representative expressly provided for by a regulation or by an agreement between the parties

Actions for annulment — Time-limits — Point from which time starts to run — Measure entailing restrictive measures against a person or body — Measure published and notified to the addressees — Address of the person concerned known at the time the measure was adopted — Time-limit starting to run as from the date of individual communication

Actions for annulment — Natural or legal persons — Locus standi — Action by a legal person against the maintenance of its name in the list of persons subject to restrictive measures under the CFSP — Admissibility

Pursuant to the second paragraph of Article 275 TFEU and the fourth and sixth paragraphs of Article 263 TFEU, a legal person has standing to bring an action for the annulment of a decision to maintain, after review, its name on the list of persons subject to restrictive measures under the Common Foreign and Security Policy, which underpins the maintenance of those measures. (see para. 49)

See the text of the decision. (see paras 49-52)

See the text of the decision. (see paras 56, 60)

A Council decision imposing restrictive measures on a legal person contributing to Iran’s nuclear or ballistic missile programme is reasoned to a sufficient legal standard where it permits identification of the persons or entities which, according to the Council, have ‘control’ over that legal person, within the meaning of Article 20(1)(b) of Decision 2010/413 concerning restrictive measures against Iran and repealing Common Position 2007/140 and Article 23(2)(a) of Regulation No 267/2012 concerning the adoption of restrictive measures against Iran, which are identified as being the ‘Foundation’ and the ‘Supreme Leader’ and makes it possible to understand the way in which, according to the Council, the Supreme Leader and the Foundation exercise, directly or indirectly, control over that legal person, within the meaning of those provisions. By contrast, such a decision is not reasoned to a sufficient legal standard where, concerning the application to that legal person of the criterion of support for nuclear proliferation, it merely states that that person contributes to funding the regime’s strategic interests. Even assuming that nuclear proliferation could be regarded as falling within the regime’s strategic interests, such a statement of reasons does not make it possible to ascertain the actual and specific reasons why the Council considers that that person contributes to the funding of nuclear proliferation. Such a decision must therefore be annulled for infringement of the obligation to state reasons. (see paras 78, 79, 82-84, 86, 87)

In so far as the statement of reasons for a Council decision imposing restrictive measures on a legal person contributing to Iran’s nuclear or ballistic missile programme is insufficient, in that it applies to it the criterion of support for nuclear proliferation, the person concerned has not been able, before the introduction of an action for annulment of that decision or within the context thereof, usefully or effectively to challenge the application of that criterion to its situation. Therefore, that decision, in so far as it applies the said criterion, infringes the applicant’s defence rights and its right to effective judicial protection. However, it does not infringe those same rights in respect of the part of the decision concerning application of the control criterion for which the reasoning is sufficient. (see paras 95-97, 99-104)

See the text of the decision. (see paras 113, 117-119, 139)

The Council makes an error of assessment in a decision maintaining the name of a legal person in a list of persons and entities contributing to the nuclear or ballistic missiles programme and of persons and entities supporting the Iranian Government, where it applies to that legal person the criterion of control set out in Article 20(1)(b) of Decision 2010/413 and in Article 23(2)(a) of Regulation No 267/2012, since, first, under those provisions, the Council is authorised to adopt restrictive measures only in regard to persons and entities whose names have been entered in a list of persons and entities subject to restrictive measures on the ground that they are controlled by persons or entities that have been recognised or identified as being engaged in, directly associated with, or providing support for, nuclear proliferation, and, second, the entities exercising the control was not entered on the list in question at the time the decision to maintain was adopted. Such a decision must therefore be annulled. The application of the criterion of ‘control’ rests on the existence of a not insignificant risk that, where the funds of a person or entity recognised as participating in nuclear proliferation are frozen, that person or entity puts pressure on people and entities which it owns or controls in order to circumvent the effect of the restrictive measures applying to it by encouraging them either to transfer to it directly or indirectly their funds or to conduct transactions that it cannot itself conduct because of the freezing of its funds. In the light of that risk, the freezing of funds of persons and entities controlled by the person or entity whose funds have been frozen is a necessary and appropriate measure in order to ensure the effectiveness of the measures adopted and to guarantee that those measures will not be circumvented. Any other solution would, moreover, place the person concerned in an extremely unfavourable procedural position, from the point of view of the defence of its rights and its right to effective judicial protection, since, in order to challenge the restrictive measures taken against it, it might be required to challenge the responsibility of the entities controlling it in nuclear proliferation, without being able to expect assistance in that regard from the latter, against which no restrictive measures were adopted. (see paras 121, 123, 125-131)

The legality of the contested measures may be assessed only on the basis of the elements of fact and law pursuant to which they were adopted; the Court cannot accept the Council’s invitation to substitute the grounds on which those measures are based. (see para. 142)

In the matter of the Common Foreign and Security Policy, the criterion of support for the Iranian Government, laid down by Article 20(1)(b) of Decision 2010/413 and Article 23(2)(a) of Regulation No 267/2012, which expands the scope of restrictive measures in order to reinforce pressure on the Islamic Republic of Iran, covers only the activity of a person or entity which, irrespective of any link, direct or indirect, established with nuclear proliferation, is liable, as a result of its quantitative or qualitative importance, to enable that proliferation, by providing support to the Government of Iran in the form of resources or material, financial or logistical facilities, allowing it to pursue proliferation. That criterion does not therefore refer to all forms of support, however small or symbolic, provided to the Government of Iran, but only to forms of support which, by their quantitative or qualitative importance, are likely to enable that government to pursue nuclear proliferation. Interpreted, subject to review by the Courts of the European Union, by reference to the objective of applying pressure on the Government of Iran in order to force it to end nuclear proliferation, the criterion at issue thus objectively establishes a limited category of persons and entities which may be subject to fund-freezing measures. (see para. 147)

See the text of the decision. (see paras 161-163)