Cases T‑35/10 and T‑7/11

Bank Melli Iran

v

Council of the European Union

‛Common foreign and security policy — Restrictive measures against Iran with the aim of preventing nuclear proliferation — Freezing of funds — Obligation to state reasons — Rights of the defence — Right to effective judicial protection — Legitimate expectations — Review of the restrictive measures adopted — Error of assessment — Equal treatment — Legal basis — Essential procedural requirements — Proportionality’

Summary — Judgment of the General Court (Fourth Chamber), 6 September 2013

Common Foreign and Security Policy — Restrictive measures taken against Iran in the context of the fight against nuclear proliferation — Choice of legal basis — Measures going beyond those decided upon by the United Nations Security Council — Irrelevant — No infringement of the principle of proportionality

Common Foreign and Security Policy — Restrictive measures taken against Iran in the context of the fight against nuclear proliferation — Scope — Funds and resources of an establishment established in a non-member State — Not included — Limits — Funds involved in business transactions carried out wholly or in part within the Union

Common Foreign and Security Policy — Restrictive measures taken against Iran in the context of the fight against nuclear proliferation — Freezing of funds of persons, entities or bodies engaged in or supporting nuclear proliferation — Judicial review of legality — Scope — Burden of proof — Decision based on information supplied by Member States and not communicable to the EU judicature — Not permissible

Actions for annulment — Natural or legal persons — Measures of direct and individual concern to them — Restrictive measures taken against Iran in the context of the fight against nuclear proliferation — Act adopting or maintaining such measures — No communication to the applicant — Irrelevant unless established that the applicant’s rights thereby infringed

European Union — Judicial review of the legality of the acts of the institutions — Restrictive measures taken against Iran in the context of the fight against nuclear proliferation — Freezing of funds of persons, entities or organisations engaged in or supporting nuclear proliferation — Obligation to communicate inculpatory evidence at the same time as the adoption of the measure adversely affecting the person concerned or immediately thereafter

Acts of the institutions — Statement of reasons — Obligation — Scope — Restrictive measures against Iran — Freezing of funds of persons, entities or bodies engaged in or supporting nuclear proliferation — Obligation to communicate the reasoning to the person concerned at the same time as the measure adversely affecting him or immediately thereafter — Limits — Security of the Union and the Member States or conduct of their international relations — Right of access to documents subject to a request in that behalf to the Council

Judicial proceedings — Measures repealing and replacing the contested measure in the course of proceedings — Application to amend pleas for annulment formulated in the course of the proceedings — 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 persons concerned

See the text of the decision. (see para. 57)

See the text of the decision. (see para. 62)

Neither in the Charter of Fundamental Rights of the European Union nor in European Union primary law are there any provisions which state that legal persons which are emanations of States are not entitled to the protection of fundamental rights. In this context, on Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms is a procedural provision which is not applicable to procedures before the Courts of the European Union. Secondly, according to the case-law of the European Court of Human Rights, the aim of that provision is to ensure that a State which is a party to the ECHR is not both applicant and defendant before that court. Moreover, the fact that a State is the guarantor of respect for fundamental rights in its own territory is of no relevance as regards the extent of the rights to which legal persons which are emanations of that same State may be entitled in the territory of third countries. Lastly, services which represent commercial activities carried out in a competitive sector and subject to the ordinary law and commercial transactions entered into with entities engaged in nuclear proliferation are not sufficient to demonstrate that the undertaking concerned participates in the exercise of public powers and do not justify it being classified as an emanation of a State. (see paras 65, 67, 69, 72, 73)

Unless overriding considerations pertaining to the security of the European Union or of its Member States or to the conduct of their international relations militate against the communication of certain matters, the Council is bound to apprise an entity that is subject to restrictive measures of the actual and specific reasons why it takes the view that they had to be adopted. As regards a measure whereby the funds of an entity are frozen, unless overriding considerations pertaining to the security of the European Union or of its Member States or to the conduct of their international relations preclude it, the evidence adduced against that entity should be disclosed to it either concomitantly with or as soon as possible after the adoption of the measure concerned. When sufficiently precise information has been communicated, enabling the entity concerned effectively to state its point of view on the evidence adduced against it by the Council, the principle of respect for the rights of the defence does not mean that the Council is obliged spontaneously to grant access to the documents in its file. It is only on the request of the party concerned that the Council is required to provide access to all non-confidential official documents concerning the measure at issue. In those circumstances, the Council’s obligation to state reasons is satisfied by reasons which make it possible to identify the entities to which the applicant provided financial services and which are subject to restrictive measures adopted by the European Union or by the United Nations Security Council, and also the period during which the services concerned were provided and, in certain cases, the specific transactions to which those services were linked. Failure to communicate a document on which the Council relied in order to adopt or maintain the restrictive measures to which an entity is subject does not constitute a breach of the rights of the defence that would justify annulment of the acts concerned unless it is established that the restrictive measures concerned could not have been lawfully adopted or maintained if the document that was not communicated had to be excluded as inculpatory evidence. (see paras 79, 83, 84, 89, 100)

See the text of the decision. (see para. 85)

While it is true that an act adopting or maintaining restrictive measures against a person or entity must be notified to that person or entity and it is that notification which starts time running for the purpose of the bringing of an action, by the person or entity concerned, for annulment of the act in question pursuant to the fourth paragraph of Article 263 TFEU, that does not mean that the absence of such notification justifies, by itself, the annulment of the act in question. The person concerned must demonstrate that failure to notify has resulted in an infringement of his rights. (see paras 112, 113)

The judicial review of the lawfulness of a measure whereby restrictive measures are imposed on an entity extends to the assessment of the facts and circumstances relied on as justifying it, and to the evidence and information on which that assessment is based. In the event of challenge, it is for the Council to present that evidence for review by the EU judicature. The fact that restrictive measures against an applicant have been adopted on the basis of evidence obtained by a Member State in no way detracts from the fact that the contested measures are measures taken by the Council, which must, therefore, ensure that their adoption is justified, if necessary by requesting the Member State concerned to submit to it the evidence and information required for that purpose. Similarly, the Council cannot rely on a claim that the evidence concerned comes from confidential sources and cannot, consequently, be disclosed. While that circumstance might, possibly, justify restrictions in relation to the communication of that evidence to the applicant or its lawyers, the fact remains that, taking into consideration the essential role of judicial review in the context of the adoption of restrictive measures, the EU judicature must be able to review the lawfulness and merits of such measures without it being possible to raise objections that the evidence and information used by the Council is secret or confidential. Moreover, the Council is not entitled to base an act adopting restrictive measures on information or evidence in the file communicated by a Member State, if that Member State is not willing to authorise its communication to the Court of the European Union whose task is to review the lawfulness of that decision. (see paras 122, 125, 126)

Whilst a financial establishment established in a non-member State and constituted according to the law of that State is not obliged, under Regulation No 423/2007, Regulation No 961/2010 and Regulation No 267/2012, to freeze the funds of entities involved in nuclear proliferation, the fact remains that its funds and economic resources which are located within the European Union, involved in business carried out wholly or in part within the European Union, or held by nationals of Member States or by any legal persons, entities or bodies which are incorporated or constituted under the law of a Member State, can be caught by the restrictive measures adopted pursuant to those regulations, in so far as such an establishment is engaged in, is directly associated with, or is providing support for nuclear proliferation. It follows that, where a foreign financial establishment knows or may reasonably suspect that one of its customers is involved in nuclear proliferation, it should bring to an end the supply of financial services to that customer without delay, taking into account the applicable legal obligations, and should not supply any further services. (see paras 132-134)

See the text of the decision. (see paras 163, 164, 167-175)

The fact that restrictive measures adopted under the Common Foreign and Security Policy go beyond those decided by the United Nations Security Council has no impact on the appropriateness and sufficiency of Article 215 TFEU as a legal basis for those measures. The same conclusion must be applied, by analogy, to the restrictive measures adopted pursuant to Article 29 TEU, such as those provided for by Decision 2010/413 and by the decisions adopted in order to implement it. Article 29 TEU also does not limit the powers it confers on the Council to implementing measures decided by the United Nations Security Council. Consequently, the mere fact that the restrictive measures to which the applicant is subject go beyond those adopted by the United Nations Security Council does not mean that the Council has breached the principle of proportionality. Moreover, the Council is not obliged to provide the applicant with ‘objective justification’ for the fact that it adopts autonomous restrictive measures with respect to the applicant, but only with the actual and specific reasons why it took the view that the criteria for the adoption of autonomous restrictive measures applied to the applicant. (see paras 170, 182-184)