Joined Cases T-439/10 and T-440/10

Fulmen and Mahmoudian

v

Council of the European Union

‛(Common foreign and security policy — Restrictive measures against the Islamic Republic of Iran with the aim of preventing nuclear proliferation — Freezing of funds — Actions for annulment — Obligation to state reasons — Rights of the defence — Right to effective judicial protection — Error of assessment — Burden and standard of proof)’

Summary of the Judgment

Actions for annulment — Judgment annulling a measure — Effects — Partial annulment of a regulation and a decision on the adoption of restrictive measures against Iran — Annulment of regulation to take effect only as from the date of expiry of the period for bringing an appeal or from the date of dismissal of the appeal — Application of that period to when the annulment of the decision is to take effect

When a decision or a regulation of direct and individual concern to an individual is replaced, during the proceedings, by a measure with the same subject-matter, this is to be considered a new factor allowing the applicant to adapt its claims and pleas in law. It would be contrary to the principle of due administration of justice and to the requirements of procedural economy to oblige the applicant to make a fresh application. Moreover, it would be inequitable if the institution in question were able, in order to counter criticisms of a measure contained in an application brought before the Courts of the European Union against that measure, to amend the contested measure or to substitute another for it and to rely in the proceedings on such an amendment or substitution in order to deprive the other party of the opportunity of extending his original pleadings to the later measure or of submitting supplementary pleadings directed against that measure. (see para. 37)

Unless overriding considerations to do with the security of the European Union or of its Member States or with the conduct of their international relations militate against the communication of certain matters the Council is bound, by virtue of Article 15(3) of Regulation No 423/2007 concerning restrictive measures against Iran and Article 36(3) of Regulation No 961/2010 on the adoption of restrictive measures against Iran and repealing Regulation No 423/2007, to apprise the entity concerned by the measure adopted under, as the case may be, Article 15(3) of Regulation No 423/2007 or Article 16(2) of Regulation No 961/2010, of the actual specific reasons why the Council considers that provision to be applicable to it. The Council must therefore state the facts and points of law on which the legal justification of the measure depend and the considerations which led the Council to adopt it. Further, the statement of reasons must be appropriate to the measure at issue and the context in which it was adopted. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure, 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 that the statement of reasons specify all the relevant matters of fact and law, inasmuch as the adequacy or otherwise of the reasons is to be evaluated 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 measure adversely affecting a person are sufficient if it was adopted in circumstances known to that person which enable him to understand the scope of the measure concerning him. (see paras 49-50)

Article 15(3) of Regulation No 423/2007 concerning restrictive measures against Iran, in force when Implementing Regulation No 668/2010 implementing Article 7(2) of Regulation No 423/2007 was adopted, requires the Council to state individual and specific reasons for decisions taken pursuant to Article 7(2) of that regulation and to make them known to the persons, entities and bodies concerned. A similar provision is to be found in Article 24(3) of Decision 2010/413 concerning restrictive measures against Iran. While, as a general rule, the Council was required to discharge the obligation laid down in Article 15(3) of Regulation No 423/2007 by giving individual notification, that provision does not prescribe any specific form, since it refers to no other obligation than that of ‘making known’ to the person concerned the reasons for his inclusion in the contested lists. Similarly, Article 24(3) of Decision 2010/413 merely provides that the Council is to ‘communicate its decision’. In those circumstances, what matters is that useful effect should be given to the provisions concerned. That is the case where, notwithstanding that there was no individual notification, a person to whom the decision was addressed was in a position to communicate to the Council his observations on the imposition on him of restrictive measures within the period laid down for that purpose and to bring before the European Union courts, within the periods prescribed, an action seeking annulment of the contested measures. (see paras 64-66, 68)

Article 24(3) and (4) of Decision 2010/413 concerning restrictive measures against Iran, Article 15(3) of Regulation No 423/2007 concerning restrictive measures against Iran and Article 36(3) and (4) of Regulation No 961/2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007 set out provisions to safeguard the rights of the defence of entities which are subject to restrictive measures adopted under those acts. Respect for those rights is subject to review by the Courts of the European Union. In those circumstances, it must be concluded that the principle of respect for the rights of the defence can be relied on by those entities in an action seeking the annulment of the contested measures. (see paras 77-78)

As regards an initial measure whereby the funds of an entity are frozen, such as Decision 2010/413 concerning restrictive measures against Iran and Regulation No 668/2010 implementing Article 7(2) of Regulation No 423/2007, the evidence adduced against that entity should be notified to it either concomitantly with or as soon as possible after the adoption of the measure concerned. At the request of the entity concerned, it also has the right to make known its view on that evidence after the adoption of the measure. As regards the content of the notification of the evidence against them, where the Council states, upon the request of the entity concerned, that its file contains no evidence other than that set out in the contested measures, that statement does not constitute an infringement of the rights of defence of that entity. In so doing the Council does not make the defence of the entity concerned more difficult, which would have been the case if it had concealed the existence or the content of evidence on which its claims were based. On the contrary, by admitting that there is no additional evidence of relevance in its file, the Council enables the entity concerned to rely on that fact in support of its action for the annulment of the contested measures. (see paras 80, 82-84)

The principle of effective judicial protection is a general principle of European Union law stemming from the constitutional traditions common to the Member States, which has been enshrined in Articles 6 and 13 of the Convention for the Protection of Human Rights and Fundamental Freedoms, and in Article 47 of the Charter of Fundamental Rights of the European Union. The effectiveness of judicial review means that the European Union authority in question is bound to communicate to the entity concerned the grounds for a restrictive measure, such as Decision 2010/413 concerning restrictive measures against Iran and Regulation No 668/2010, implementing Article 7(2) of Regulation No 423/2007, so far as possible, either when that measure is adopted or, at the very least, as swiftly as possible after that decision, in order to enable the entity concerned to exercise, within the periods prescribed, its right to bring an action. Observance of that obligation to communicate the grounds is necessary both to enable the persons to whom restrictive measures are addressed to defend their rights in the best possible conditions and to decide, with full knowledge of the relevant facts, whether there is any point in their applying to the Courts of the European Union, and also to put the latter fully in a position to carry out the review of the lawfulness of the measure in question which is the duty of those courts. (see para. 87)

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 Courts of the European Union. Accordingly, the review of lawfulness which must be carried out is not limited to an appraisal of the abstract ‘probability’ of the grounds relied on, but must include the question whether those grounds are supported, to the requisite legal standard, by concrete evidence and information. In that regard, the contested measure, adopted on the proposal of a Member State in accordance with the procedure provided for in Article 23(2) of Decision 2010/413 concerning restrictive measures against Iran, is a measure taken by the Council. Consequently, the Council must ensure that its adoption is justified, if necessary by requesting the Member State concerned to submit to it the evidence and information required for that purpose. Moreover, taking into consideration the essential role of judicial review in the context of adoption of restrictive measures, the Courts of the European Union 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. Further, 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 Courts of the European Union whose task is to review the lawfulness of that decision. Lastly, the position that the Council cannot be expected to adduce proof of the involvement of an entity in nuclear proliferation cannot be justified on grounds of the clandestine nature of the conduct concerned. The mere fact that the adoption of restrictive measures is proposed pursuant to Article 23(2) of Decision 2010/413 presupposes that the Member State concerned or the High Representative of the Union for Foreign Affairs and Security Policy, as the case may be, are in possession of evidence or information demonstrating, in their opinion, that the entity concerned is involved in nuclear proliferation. Further, difficulties which may be encountered by the Council when attempting to prove that involvement may, in some cases, have an effect on the standard of proof required of it. On the other hand, the effect of such difficulties cannot be that the Council is entirely relieved of the burden of proof which rests on it. (see paras 96-97, 99-101)