Case T-518/23: Action brought on 21 August 2023 — Middle East Bank, Munich Branch v Commission
Date: 2023-08-21
Institutions: General Court
Subjects: United States, extra-territoriality, free movement of capital, freezing of assets, humanitarian aid, international law, international trade, principle of legal certainty, principle of proportionality, retroactivity of a law, right to justice








C_202300067EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2023/67


9.10.2023





Action brought on 21 August 2023 — Middle East Bank, Munich Branch v Commission
(Case T-518/23)
(C/2023/67)
Language of the case: German

Parties


Applicant: Middle East Bank, Munich Branch (Munich, Germany) (represented by: C. Franz and N. Bornemann, lawyers)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:






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annul the European Commission’s implementing decision under the second paragraph of Article 5 of the EU Blocking Statute (Regulation (EC) 2271/96) of 27 April 2023 in favour of Clearstream Banking AG vis-à-vis the applicant;










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order the defendant to produce the implementing decision under the second paragraph of Article 5 of the EU Blocking Statute (Regulation (EC) 2271/96) of 27 April 2023 in favour of Clearstream Banking AG vis-à-vis Middle East Bank, Munich;










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declare unlawful the refusal to inspect and disclose the full implementing decision under the second paragraph of Article 5 of the EU Blocking Statute (Regulation (EC) 2271/96) of 27 April 2023 in favour of Clearstream Banking AG vis-à-vis Middle East Bank, Munich; and










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order the defendant to pay the costs of the proceedings.





Pleas in law and main arguments

In support of the action, the applicant relies on the following pleas in law:






1.


First plea in law, alleging the prohibition of retroactivity, infringement of the principle of legal certainty and the protection of legitimate expectations and infringement of the scope of application of the second paragraph of Article 5 of Regulation (EC) No 2271/96 (1) (‘the EU Blocking Statute’)






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The express order of retroactive effect of the exemption under the second paragraph of Article 5 of the EU Blocking Statute, which the defendant issued to the applicant on 27 April 2023, infringes the principle of the prohibition of retroactive effect recognised under EU law and by the highest courts. In particular, the decision issued with retroactive effect to the date of the application on 26 February 2021 infringes the principle of legal certainty and the protection of legitimate expectations.










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The order of retroactive effect infringes the scope of application of the second paragraph of Article 5 of the EU Blocking Statute. That scope of application does not provide for a retroactive order of a decision pursuant to the second paragraph of Article 5 of the EU Blocking Statute, neither according to the wording nor according to the spirit and purpose of the provision. On the contrary, the defendant’s own guidance note on the application of the EU Blocking Statute (2) states that a request under the second paragraph of Article 5 of the EU Blocking Statute does not have suspensive effect and that the requirements of the EU Blocking Statute must be complied with until a decision is made on the application for exemption under the second paragraph of Article 5 of the EU Blocking Statute. The defendant itself thus excluded the retroactive effect of a decision under the second paragraph of Article 5 of the EU Blocking Statute. The applicant enjoyed protection of legitimate expectations in this respect.














2.


Second plea in law, alleging infringement of fundamental procedural rights — in particular, the right to a fair hearing, due to lack of disclosure of the full decision






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The applicant had been heard prior to the adoption of the decision under the second paragraph of Article 5 of the EU Blocking Statute and was thus a party to the authorisation procedure under the second paragraph of Article 5 of the EU Blocking Statute. Since the applicant was a party to the proceedings, the decision under the second paragraph of Article 5 of the EU Blocking Statute should be notified to it in its entirety.










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The failure to disclose the complete decision infringes the principle of the protection of legitimate expectations and the right to a fair administrative procedure. After having been heard, the applicant had a right to comprehend and to be able to verify whether and to what extent its own submission had been taken into account in the decision-making process.














3.


Third plea in law, alleging incorrect exercise of the discretionary and proportionality balancing test






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The defendant erred in exercising its discretion in its decision under the second paragraph of Article 5 of the EU Blocking Statute. Article 4 of Implementing Regulation (EU) 2018/1101 (3) relating to the EU Blocking Statute grants the defendant a margin of discretion in its decision under the second paragraph of Article 5 of the EU Blocking Statute. The defendant did not exercise the discretion granted to it or exercised it incorrectly.










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The defendant failed to consider possible milder means in the context of its decision, as required by Article 4(d) of Implementing Regulation (EU) 2018/1101. In particular, the defendant failed to recognise that the applicant would not face US sanctions if it carried out humanitarian transactions in connection with the applicant. The defendant should have taken this into account in its decision and should have restricted the operative part accordingly and excluded the applicant’s humanitarian transactions from it (in accordance with paragraph 11 of Executive Order 13902). Due to the fact that the applicant did not face US sanctions when carrying out humanitarian transactions, it was reasonable for it to carry out such transactions. By authorising the freezing of all funds for the purposes of the second paragraph of Article 5 of the EU Blocking Statute, without differentiating between the humanitarian transactions also permitted under US law, the defendant infringed its discretionary powers and the principle of proportionality.










(1)  Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom (OJ 1996 L 309, p. 1).

(2)  Guidance Note — Questions and Answers: adoption of update of the Blocking Statute, point 20 (OJ 2018 C 277 I, p. 4).

(3)  Commission Implementing Regulation (EU) 2018/1101 of 3 August 2018 laying down the criteria for the application of the second paragraph of Article 5 of Council Regulation (EC) No 2271/96 protecting against the effects of the extra-territorial application of legislation adopted by a third country, and actions based thereon or resulting therefrom (OJ 2018 L 199I, p. 7).


ELI: http://data.europa.eu/eli/C/2023/67/oj
ISSN 1977-091X (electronic edition)