CELEX: 62009CJ0380
Language: en
Date: 2012-03-13 00:00:00
Title: Judgment of the Court (Grand Chamber) of 13 March 2012. # Melli Bank plc v Council of the European Union. # Appeal - Politique étrangère et de sécurité commune - Mesures restrictives prises à l’encontre de la Appeal - Common foreign and security policy - Restrictive measures against the Islamic Republic of Iran to prevent nuclear proliferation - Freezing the funds of a bank’s subsidiary - Principle of proportionality - Ownership or control of the entity. # Case C-380/09 P.

Reports of Cases
                                    JUDGMENT OF THE COURT (Grand Chamber)
                                                   13 March 2012 *
    ((Appeal — Common foreign and security policy — Restrictive measures against the Islamic Republic
      of Iran to prevent nuclear proliferation — Freezing the funds of a bank’s subsidiary — Principle of
                                 proportionality — Ownership or control of the entity))
   In Case C-380/09 P,
   APPEAL under Article 56 of the Statute of the Court of Justice, brought on 25 September 2009,
   Melli Bank plc, established in London (United Kingdom), represented by D. Anderson and D. Wyatt
   QC and by R. Blakeley, Barrister, instructed by S. Gadhia and T. Din, Solicitors,
                                                                                                       appellant,
   the other parties to the proceedings being:
   Council of the European Union, represented by M. Bishop and R. Szostak, acting as Agents,
                                                                                    defendant at first instance,
   French Republic, represented by E. Belliard, G. de Bergues, L Butel and E. Ranaivoson, acting as
   Agents,
   United Kingdom of Great Britain and Northern Ireland, represented by S. Hathaway, acting as
   Agent, and by S. Lee, Barrister,
   European Commission, represented by S. Boelaert and M. Konstantinidis, acting as Agents,
                                                                                   interveners at first instance,
                                           THE COURT (Grand Chamber),
   composed of V. Skouris, President, A. Tizzano, J.N. Cunha Rodrigues, K. Lenaerts, J.-C. Bonichot,
   A. Prechal, Presidents of Chambers, A. Rosas (Rapporteur), R. Silva de Lapuerta, K. Schiemann,
   E. Juhász, D. Šváby, M. Berger and E. Jarašiūnas, Judges,
   Advocate General: P. Mengozzi,
   Registrar: L. Hewlett, Principal Administrator,
   having regard to the written procedure and further to the hearing on 29 March 2011,
   * Language of the case: English.
EN
          ECLI:EU:C:2012:137                                                                                    1
 ---pagebreak---                                        JUDGMENT OF 13. 3. 2012 — CASE C-380/09 P
                                                MELLI BANK v COUNCIL
  after hearing the Opinion of the Advocate General at the sitting on 28 June 2011,
  gives the following
                                                    Judgment
1 By its appeal, Melli Bank plc (‘Melli Bank’) asks the Court to set aside the judgment of the Court of
  First Instance of the European Communities (now ‘the General Court’) of 9 July 2009 in Joined Cases
  T-246/08 and T-332/08 Melli Bank v Council [2009] ECR II-2629 (‘the judgment under appeal’)
  dismissing its actions for (i), in Joined Cases T-246/08 and T-332/08, annulment of paragraph 4 of
  Table B of the Annex to Council Decision 2008/475/EC of 23 June 2008 implementing Article 7(2) of
  Regulation (EC) No 423/2007 concerning restrictive measures against Iran (OJ 2008 L 163, p. 29; ‘the
  contested decision’), in so far as it relates to Melli Bank, and (ii), in Case T-332/08, if necessary, a
  declaration that Article 7(2)(d) of Council Regulation (EC) No 423/2007 of 19 April 2007 concerning
  restrictive measures against Iran (OJ 2007 L 103, p. 1) is inapplicable.
2 As the General Court stated in paragraph 1 of the judgment under appeal, the appellant, Melli Bank, is
  a public limited company registered and having its registered office in the United Kingdom, authorised
  and regulated by the United Kingdom Financial Services Authority. It began to carry on its banking
  activities in the United Kingdom on 1 January 2002, following the transformation of the branch of
  Bank Melli Iran in that Member State. Bank Melli Iran, the parent entity wholly owning Melli Bank, is
  an Iranian bank controlled by the Iranian State.
  Legal context
  United Nations Security Council Resolutions 1737 (2006) and 1747 (2007)
3 In order to apply pressure on the Islamic Republic of Iran to end proliferation-sensitive nuclear
  activities and the development of nuclear weapon delivery systems (‘nuclear proliferation’), on
  23 December 2006 the United Nations Security Council (‘the Security Council’) adopted Resolution
  1737 (2006).
4 In paragraph 12 of that resolution, the Security Council:
  ‘[decided] that all States shall freeze the funds, other financial assets and economic resources which are
  on their territories at the date of adoption of this resolution or at any time thereafter, that are owned
  or controlled by the persons or entities designated in the Annex, as well as those of additional persons
  or entities designated by the Security Council or by the Committee as being engaged in, directly
  associated with or providing support for Iran’s proliferation sensitive nuclear activities or the
  development of nuclear weapon delivery systems, or by persons or entities acting on their behalf or at
  their direction, or by entities owned or controlled by them, including through illicit means …’
5 The Annex to Resolution 1737 (2006) lists the persons and entities involved in nuclear proliferation
  whose funds and economic resources (‘funds’) must be frozen.
6 That list was subsequently updated by several resolutions, in particular Security Council Resolution
  1747 (2007) of 24 March 2007, by which the funds of the Iranian Bank Sepah and its subsidiary in the
  United Kingdom, Bank Sepah International plc, were frozen. The appellant has not been the subject of
  any fund-freezing measures adopted by the Security Council.
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                                               MELLI BANK v COUNCIL
   Common Position 2007/140/CFSP
7  So far as the European Union is concerned, Resolution 1737 (2006) was given effect by Council
   Common Position 2007/140/CFSP of 27 February 2007 concerning restrictive measures against Iran
   (OJ 2007 L 61, p. 49).
8  Article 5(1) of Common Position 2007/140 is worded as follows:
   ‘All funds … which belong to, are owned, held or controlled, directly or indirectly by the following,
   shall be frozen:
   (a) persons and entities designated in the Annex to Resolution 1737 (2006) as well as those of
        additional persons and entities designated by the Security Council or by the Committee in
        accordance with Paragraph 12 of UNSCR 1737 (2006), such persons or entities being listed in
        Annex I;
   (b) persons and entities not covered by Annex I that are engaged in, directly associated with, or
        providing support for, Iran’s proliferation sensitive nuclear activities or for the development of
        nuclear weapon delivery systems, or persons or entities acting on their behalf or at their
        direction, or entities owned or controlled by them, including through illicit means, as listed in
        Annex II, shall be frozen’.
9  The appellant is not mentioned in the annexes to Common Position 2007/140.
   Regulation No 423/2007
10 In so far as the powers of the European Community were concerned, Resolution 1737 (2006) was given
   effect by Regulation No 423/2007, adopted on the basis of Articles 60 EC and 301 EC, with reference
   to Common Position 2007/140, and the content of which is substantially similar to that of the
   position, since the same names of entities and natural persons appear in the annexes to that
   regulation.
11 Article 5 of that regulation prohibits certain transactions with persons or entities in, or for use in, Iran.
12 Article 7 of that regulation is worded as follows:
   ‘1. All funds … belonging to, owned, held or controlled by the persons, entities and bodies listed in
   Annex IV shall be frozen. Annex IV shall include the persons, entities and bodies designated by the …
   Security Council or by the Sanctions Committee in accordance with paragraph 12 of
   UNSCR 1737 (2006).
   2. All funds … belonging to, owned, held or controlled by the persons, entities and bodies listed in
   Annex V shall be frozen. Annex V shall include natural and legal persons, entities and bodies, not
   covered by Annex IV, who, in accordance with Article 5(1)(b) of Common Position 2007/140 …, have
   been identified as:
   (a) being engaged in, directly associated with, or providing support for, Iran’s proliferation-sensitive
        nuclear activities, or
   (b) being engaged in, directly associated with, or providing support for, Iran’s development of nuclear
        weapon delivery systems, or
   (c) acting on behalf of or at the direction of a person, entity or body referred to under (a) or (b), or
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                                               MELLI BANK v COUNCIL
   (d) being a legal person, entity or body owned or controlled by a person, entity or body referred to
        under (a) or (b), including through illicit means.
   3. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit
   of the natural or legal persons, entities or bodies listed in Annexes IV and V.
   4. The participation, knowingly and intentionally, in activities the object or effect of which is, directly
   or indirectly, to circumvent the measures referred to in paragraphs 1, 2 and 3 shall be prohibited.’
13 The appellant is not mentioned in Annex V to Regulation No 423/2007.
14 Article 13 of that regulation requires the persons and entities concerned to provide various items of
   information to the competent authorities and to cooperate with them.
15 Article 15(2) and (3) of that regulation provides:
   ‘2. The Council, acting by qualified majority, shall establish, review and amend the list of persons,
   entities and bodies referred to in Article 7(2) and in full accordance with the determinations made by
   the Council in respect of Annex II to Common Position 2007/140... The list in Annex V shall be
   reviewed in regular intervals and at least every 12 months.
   3. The Council shall state individual and specific reasons for decisions taken pursuant to paragraph 2
   and make them known to the persons, entities and bodies concerned.’
16 Article 16 of the same regulation provides that Member States are to lay down the penalties applicable
   to infringements of the regulation.
   Security Council Resolution 1803 (2008)
17 Under paragraph 10 of Security Council Resolution 1803 (2008) of 3 March 2008, the Security Council
   called upon ‘all States to exercise vigilance over the activities of financial institutions in their territories
   with all banks domiciled in Iran, in particular with Bank Melli and Bank Saderat, and their branches
   and subsidiaries abroad, in order to avoid such activities contributing to the proliferation sensitive
   nuclear activities, or to the development of nuclear weapon delivery systems’.
   Common Position 2008/479/CFSP
18 Council Common Position 2008/479/CFSP of 23 June 2008 amending Common Position 2007/140 (OJ
   2008 L 163, p. 43), replaced, inter alia, Annex II to Common Position 2007/140. That annex contains
   Table A, entitled ‘Natural persons’, and Table B, entitled ‘Entities’.
19 Under Common Position 2008/479, Bank Melli Iran and Melli Bank were included among the entities
   whose funds were frozen. Paragraph 5 of Table B in the annex to that common position states the
   following in the first column, headed ‘Name’:
   ‘Bank Melli, Melli Bank Iran and all branches and subsidiaries:
   (a) Melli Bank plc
   (b) Bank Melli Iran Zao’.
20 In a second column, headed ‘Identifying information’, an address is given alongside the name of each of
   the banks concerned.
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                                                  MELLI BANK v COUNCIL
21 The third column, headed ‘Reasons’, contains the following text:
   ‘Providing or attempting to provide financial support for companies which are involved in or procure
   goods for Iran’s nuclear and missile programmes (AIO, SHIG, SBIG, AEOI, Novin Energy Company,
   Mesbah Energy Company, Kalaye Electric Company and DIO). Bank Melli serves as a facilitator for
   Iran’s sensitive activities. It has facilitated numerous purchases of sensitive materials for Iran’s nuclear
   and missile programmes. It has provided a range of financial services on behalf of entities linked to
   Iran’s nuclear and missile industries, including opening letters of credit and maintaining accounts.
   Many of the above companies have been designated by [Security Council] Resolutions 1737 (2006)
   and 1747 (2007).’
22 In the fourth column, headed ‘Date of listing’, the date is given as ‘23.6.2008’.
   The contested decision
23 On 23 June 2008 the Council also adopted the contested decision. The annex to that decision replaces
   Annex V to Regulation No 423/2007. It contains Table A, entitled ‘Natural persons’, and Table B,
   entitled ‘Legal persons, entities and bodies’, which both contain the same columns as those in the
   annex to Common Position 2008/479. The appellant is listed in paragraph 4 of Table B. The
   information relating to the appellant is identical to that which is set out in the Annex to Common
   Position 2008/479, except for the date of listing, which is given as 24 June 2008. That decision was
   published in the Official Journal of the European Union on 24 June 2008.
   The action before the General Court and the judgment under appeal
24 By application lodged at the Registry of the General Court on 25 June 2008, the appellant brought the
   action in Case T-246/08, by which it sought annulment of paragraph 4 of Table B in the Annex to the
   contested decision in so far as it related to the appellant and an order that the Council should pay the
   costs.
25 By application lodged at the Registry of the General Court on 15 August 2008, the appellant brought
   the action in Case T-332/08, by which it claimed that the General Court should:
   — annul paragraph 4 of Table B in the annex to the contested decision in so far as it relates to the
       appellant;
   — if it should find that Article 7(2)(d) of Regulation No 423/2007 is mandatory in effect, declare that
       provision inapplicable under Article 241 EC; and
   — order the Council to pay the costs.
26 The French Republic, the United Kingdom of Great Britain and Northern Ireland and the Commission
   of the European Communities were granted leave to intervene before the General Court in support of
   the form of order sought by the Council.
27 In support of its claims the appellant put forward several pleas in law. The first plea alleged that Bank
   Melli Iran was not engaged in the funding of nuclear proliferation. The second plea alleged
   misinterpretation and misapplication of Article 7(2)(d) of Regulation No 423/2007, in that the Council
   had some discretion. The third plea, which was submitted in the alternative, alleged that Article 7(2)(d)
   of Regulation No 423/2007 was unlawful — on the ground that it infringed the principle of
   proportionality — in that it required the Council to include the appellant in the list in Annex V to that
   regulation. The fourth plea alleged misinterpretation or misapplication of Article 7(2)(d), in that the
   ECLI:EU:C:2012:137                                                                                         5
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                                               MELLI BANK v COUNCIL
   appellant was not an entity ‘owned or controlled’ by the parent entity within the meaning of that
   provision. The fifth plea alleged infringement of the principle of non-discrimination. The sixth plea
   alleged infringement of the obligation to state reasons for the contested decision.
28 The General Court declared the first plea to be inadmissible, on the grounds that in the application it
   was simply claimed that Bank Melli Iran was not engaged in the funding of nuclear proliferation and
   that, in so far as that plea was raised subsequently, it was new.
29 The General Court then examined each of the other pleas and rejected them.
   Forms of order sought by the parties to the appeal
30 Melli Bank claims that the Court should:
   — set aside the judgment under appeal;
   — uphold the actions brought in Cases T-246/08 and T-332/08;
   — annul paragraph 4 of Table B in the Annex to the contested decision in so far as it relates to the
        appellant;
   — declare Article 7(2)(d) of Regulation No 423/2007 inapplicable, if the Court finds that it is
        mandatory in effect; and
   — order the Council to pay the costs of the appeal and of the proceedings at first instance.
31 The Council, the French Republic, the United Kingdom and the Commission contend that the Court
   should:
   — dismiss the appeal, and
   — order the appellant to pay the costs.
   Concerning the appeal
32 The appeal is based on four grounds. By its first ground of appeal, which comprises two parts, the
   appellant claims that the General Court erred in law in holding that Article 7(2)(d) of Regulation
   No 423/2007 is a mandatory provision, whereas such an interpretation is contrary, according to the
   first part of that ground of appeal, to the wording of that provision and, according to the second part
   of that ground of appeal, to the principle of proportionality. By the second ground of appeal, the
   appellant claims that the General Court erred in law in holding that Article 7(2)(d) is consistent with
   the principle of proportionality. By the third ground of appeal, the appellant claims that the General
   Court erred in law in the formulation and application of the test for determining whether the
   appellant was owned and controlled by the parent entity. By the fourth ground of appeal, the appellant
   claims that the General Court erred in law in concluding that the Council had fulfilled its obligation to
   state the reasons for its decision to include the appellant in the list of persons, entities and bodies
   referred to in Article 7(2) of Regulation No 423/2007.
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                                                 MELLI BANK v COUNCIL
   First part of the first ground of appeal: error of law in the interpretation of Article 7(2)(d) of Regulation
   No 423/2007
   Arguments of the parties
33 The first part of the first ground refers, in essence, to paragraphs 61 to 67 and paragraphs 69 and 70 of
   the judgment under appeal.
34 The appellant disputes the analysis of the words ‘shall be frozen’, appearing in Article 7(2) of
   Regulation No 423/2007, which the General Court carried out in paragraph 63 of the judgment under
   appeal and from which it concludes that the Council had no discretion. In the appellant’s submission,
   the use of the words ‘who … have been identified’, in the second sentence of Article 7(2), qualifies the
   prior use of ‘shall include’ and demonstrates that the Council must undertake an exercise of evaluation
   and identification in order to determine whether the assets of entities owned or controlled should be
   frozen. Moreover, the General Court’s finding in that respect conflicts with paragraphs 64 and 65 of
   the judgment under appeal, in which the Court holds that the Council must assess whether the
   conditions for the application of Article 7(2)(d) of Regulation No 423/2007 are met, including in
   respect of wholly-owned subsidiaries of entities identified as engaged in nuclear proliferation.
35 The appellant submits that Regulation No 423/2007 envisages an individualised approach to the listing
   of persons, entities and bodies referred to in Article 7(2) of Regulation No 423/2007, and this is what
   justifies the obligation to give specific reasons for including each entity in the list; that obligation is laid
   down in Article 15(3) of Regulation No 423/2007 and it requires the Council to state its reasons for
   considering that a particular entity satisfies the requirements for inclusion in that list.
36 The Council, the French Republic, the United Kingdom and the Commission dispute that
   interpretation.
   Findings of the Court
37 Article 7(2)(d) of Regulation No 423/2007 provides that ‘[a]ll funds … belonging to, owned, held or
   controlled by the persons, entities and bodies listed in Annex V shall be frozen’ and that ‘Annex V
   shall include natural and legal persons, entities and bodies, not covered by Annex IV, who, in
   accordance with Article 5(1)(b) of Common Position 2007/140…, have been identified as being a legal
   person, entity or body owned or controlled by a person, entity or body referred to under (a) or (b)
   [being engaged in, directly associated with, or providing support for nuclear proliferation], including
   through illicit means’.
38 It is settled case-law (see, by analogy, Case 292/82 Merck [1983] ECR 3781, paragraph 12, and Case
   C-480/08 Teixeira [2010] ECR I-1107, paragraph 48) that the General Court has taken into
   consideration, in interpreting Article 7(2)(d) of Regulation No 423/2007, the wording of that provision
   and the context in which it occurs and also the objects of the rules of which it is part.
39 As the Advocate General stated in point 40 of his Opinion, the General Court did not err in law in
   holding, on the basis of the wording of Article 7(2)(d) of Regulation No 423/2007, that that provision
   required the Council to freeze the funds of an entity ‘owned or controlled’ by an entity identified as
   engaged in nuclear proliferation, as provided for in Article 7(2)(a) or (b) of that regulation, the
   Council assessing case by case whether the entities concerned are entities ‘owned or controlled’ by the
   entity concerned.
40 The General Court was right to hold in paragraphs 64 and 65 of the judgment under appeal that, with
   regard to the words ‘have been identified’ appearing in the introductory part of Article 7(2) of
   Regulation No 423/2007, the classification as an entity ‘owned or controlled’ must be the subject of a
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                                                MELLI BANK v COUNCIL
   case-by-case evaluation by the Council, by reference, inter alia, to the degree to which the entities
   concerned are owned or controlled. The General Court was also right to hold in paragraphs 63
   and 69 of that judgment that, with regard to the use of the words ‘shall be frozen’ in that same
   provision of Regulation No 423/2007, a fund-freezing measure must be adopted in respect of an entity
   identified by the Council as being owned or controlled by an entity which is itself identified as being
   engaged in nuclear proliferation, and the reason for the adoption of that measure need not be that the
   entity owned or controlled is itself engaged in nuclear proliferation.
41 Those two findings by the General Court are not contradictory, since the first covers the obligation to
   determine, with a certain amount of discretion, whether the entity concerned is ‘owned or controlled’,
   whilst the second relates to the obligation to freeze the funds of such an entity without determining
   whether it is itself engaged in nuclear proliferation.
42 In those circumstances, it may not be inferred from the fact that the Council has discretion as to
   whether the entity concerned is owned or controlled that the Council also has discretion to assess
   whether that entity plays a part in nuclear proliferation in order to decide whether its funds should be
   frozen.
43 Nor may it be concluded from the obligation to give reasons, laid down in Article 15(3) of Regulation
   No 423/2007, that such discretion must be acknowledged. The individual and specific reasons that the
   Council is required to give are those for the inclusion of persons, entities and bodies in the list at issue,
   namely, as the case may be, involvement in the Islamic Republic of Iran’s nuclear activities or, with
   regard to entities that are owned or controlled, the reasons that led it to consider that the test that it
   is owned or controlled is met.
44 In view of the foregoing, the first part of the first ground of appeal is unfounded and must therefore be
   rejected.
   Second part of the first ground and second ground: infringement of the principle of proportionality
   Arguments of the parties
45 By the second part of the first ground of appeal, the appellant argues that, by interpreting
   Article 7(2)(d) of Regulation No 423/2007 as leaving the Council no discretion to determine whether
   a subsidiary meets the criteria laid down by that provision, the General Court infringed the principle of
   proportionality. By the second ground of appeal, it submits that, if the Court were to hold that
   application of Article 7(2)(d) of that regulation is deemed to be mandatory, that provision itself
   infringes the principle of proportionality and must therefore be declared inapplicable in the present
   case, in accordance with Article 241 EC, which would deprive the contested decision of a legal basis.
   That part and that ground relate essentially to paragraphs 75, 76, 99, 102 and 103 of the judgment
   under appeal, and to paragraphs 107 to 110 thereof.
46 The appellant criticises the General Court’s reasoning on the ground that the latter did not take into
   account the Security Council resolutions when interpreting Article 7(2)(d) of Regulation No 423/2007.
   It points out the link between those resolutions and that regulation, which is particularly clear from
   recitals 1, 2, 5 and 6 in the preamble to the regulation and from the recitals in the preamble to
   Common Position 2007/140. Moreover, even though it was adopted after Regulation No 423/2007,
   Resolution 1803 (2008) is particularly significant when interpreting Article 7(2)(d) of that regulation.
   Indeed, the fact that the Security Council adopted no fund-freezing measures against the appellant
   but, in paragraph 10 of that resolution, recommended that the States ‘exercise vigilance’ shows that
   measures less onerous than the freezing of funds could be effective in achieving the aims of the
   Security Council resolutions.
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47 The appellant submits, moreover, that the General Court erred in law in holding, as stated in the last
   sentence of paragraph 103 of the judgment under appeal, that freezing the funds of entities owned or
   controlled by an entity identified as being engaged in nuclear proliferation was necessary and
   appropriate to ensure the effectiveness of the measures taken against the latter and to ensure that
   those measures will not be circumvented. In the appellant’s submission, Articles 5(1), 7(3) and (4), 13
   and 16 of Regulation No 423/2007 already provide for effective measures. The General Court was, in
   the appellant’s submission, wrong to dismiss the alternative measures proposed by the appellant as
   not being capable of preventing possible future transactions incompatible with the restrictive measures
   enacted. In any event, as regards the ex post alternative measures, it was possible to provide for the
   inclusion of the subsidiary in the list only after application of such measures. In ruling as it did, the
   General Court distorted the principle of proportionality and changed the burden of proof by requiring
   the appellant to demonstrate that alternative measures would be entirely effective.
48 Moreover, in the appellant’s submission, the General Court’s peremptory dismissal, in paragraph 107 of
   the judgment under appeal, of its arguments concerning the efficacy of such alternative measures was
   manifestly inappropriate given the extent of the interference with the appellant’s fundamental rights
   occasioned by the fund-freezing measures.
49 The appellant points out, moreover, that only 2 of Bank Melli Iran’s 20 subsidiaries were mentioned in
   the contested decision. It also provided the General Court with another example, given in paragraph 53
   of the judgment under appeal, which showed that the Council had included a parent company in the
   list at issue without mentioning any of its 6 subsidiaries. It infers from this either that the Council has
   discretion in applying Article 7(2)(d) of Regulation No 423/2007, as it submits, or that that practice
   illustrates the disproportionate nature of the inclusion of all the subsidiaries in that list.
50 The appellant concludes from this that the Council has discretion and that the General Court erred in
   law in interpreting Article 7(2)(d) of Regulation No 423/2007 as meaning that its application is
   mandatory. At the very least, Article 7(2)(d) of that regulation is ambiguous. It is settled case-law that
   when a provision of secondary law is open to more than one interpretation, preference should be given
   to the interpretation that renders that provision consistent with the Treaty. In the present case, the
   General Court erred in law in failing to interpret Article 7(2)(d) of Regulation No 423/2007 as
   meaning that the Council had discretion.
51 The Council, the French Republic, the United Kingdom and the Commission contend that the General
   Court did not err in law in its assessment of the proportionality of the measure at issue.
   Findings of the Court
52 According to settled case-law, the principle of proportionality is one of the general principles of
   European Union law and requires that measures implemented through provisions of European Union
   law be appropriate for attaining the legitimate objectives pursued by the legislation at issue and must
   not go beyond what is necessary to achieve them (Case C-491/01 British American Tobacco
   (Investments) and Imperial Tobacco [2002] ECR I-11453, paragraph 122; Joined Cases C-453/03,
   C-11/04, C-12/04 and C-194/04 ABNA and Others [2005] ECR I-10423, paragraph 68; and Case
   C-58/08 Vodafone and Others [2010] ECR I-4999, paragraph 51).
53 The appellant does not challenge the legitimacy of the aim pursued, namely, to combat nuclear
   proliferation in Iran in the interest of the preservation of international peace and security, but rather
   whether it is appropriate and necessary to freeze the funds of entities that are owned or controlled. It
   criticises the General Court, in the first place, for not taking sufficient account of the Security Council
   resolutions when interpreting Article 7(2) of Regulation No 423/2007.
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54 In that regard, it is important to note that Security Council resolutions, on the one hand, and Council
   common positions and regulations, on the other hand, originate from distinct legal orders. Measures
   within the framework of the United Nations and the European Union are adopted by organs with
   autonomous powers, granted to them by their basic charters, that is to say, the treaties that created
   them (Case C-548/09 P Bank Melli Iran v Council [2011] ECR I-11381, paragraphs 100 and 102).
55 In paragraph 103 of Bank Melli Iran v Council, the Court held that, in drawing up Community
   measures aimed at giving effect to a Security Council resolution envisaged in a common position, the
   Community is to take due account of the terms and objectives of the resolution concerned. Similarly,
   account must be taken of the wording and purpose of a Security Council resolution when interpreting
   the regulation which seeks to implement that resolution (Bank Melli Iran v Council, paragraph 104
   and the case-law cited).
56 The General Court did take Resolution 1737 (2006) into account, since it held in paragraph 6 of the
   judgment under appeal that that resolution was given effect by Regulation No 423/2007, the content
   of which is substantially the same as that of Common Position 2007/140. In that regard, the appellant
   does not explain how the General Court could have reached a different conclusion as regards the need
   to freeze the funds of entities that are owned or controlled. It should be noted that paragraph 12 of
   Resolution 1737 (2006) provides expressly that the funds of entities that are owned or controlled by
   persons or entities engaged in the nuclear activities of the Islamic Republic of Iran are to be frozen.
57 As for Resolution 1803 (2008), it does not impose precise measures on the States, but requests them to
   exercise vigilance over the activities of financial institutions in their territories, in particular Bank Melli
   Iran, in order to avoid such activities contributing to proliferation-sensitive nuclear activities (see, to
   that effect, Bank Melli Iran v Council, paragraph 107). It cannot be inferred from that
   recommendation that there is no need to freeze the funds of entities owned or controlled by Bank
   Melli Iran.
58 In those circumstances, the General Court did not err in law in holding, in paragraph 103 of the
   judgment under appeal, that where the funds of an entity identified as being engaged in nuclear
   proliferation are frozen there is a not insignificant danger that that entity may exert pressure on the
   entities it owns or controls in order to circumvent the effect of the measures applying to it and that
   the freezing of the funds of those entities is necessary and appropriate in order to ensure the
   effectiveness of the measures adopted and to ensure that those measures are not circumvented.
59 As regards, secondly, the alternative measures referred to by the appellant, it should be noted from the
   outset that in paragraph 109 of the judgment under appeal the General Court excluded examination of
   the measures both of prior authorisation and supervision by an independent agent and of total
   prohibition of transactions with the Islamic Republic of Iran, mentioned for the first time at the
   hearing, on the grounds that it was contrary to Articles 48(2) and 76a(3) of the Rules of Procedure of
   the General Court for them to have been referred to during the proceedings. In paragraph 107 of the
   judgment under appeal, the General Court held that it had not been established that the supervision
   and control measures existing at the time the contested decision was adopted were adequate in
   relation to the danger described in paragraph 103 of that judgment, thus finding there was a lack of
   evidence which does not fall to be reviewed by the Court of Justice in an appeal. As for the ex post
   measures referred to in paragraph 108 of that judgment, the General Court assessed their efficacy in
   findings of fact which, similarly, it is not for the Court of Justice to review in the context of an appeal.
60 In the light of those factors, the General Court’s conclusion, in paragraph 110 of the judgment under
   appeal, that the alternative measures suggested by the applicant were not apt to attain the objective
   pursued, cannot be called into question.
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                                                MELLI BANK v COUNCIL
61 Similarly, as the Advocate General stated in point 53 of his Opinion and for the reasons given by the
   General Court in paragraphs 111 and 112 of the judgment under appeal, that Court was able to
   conclude, without erring in law, that given the prime importance of the preservation of international
   peace and security, the restrictions on the freedom to carry on economic activity and the right to
   property of a bank occasioned by the fund-freezing measures were not disproportionate to the ends
   sought.
62 The appellant relies, thirdly, on the fact that it was not the Council’s practice to freeze the funds of all
   entities owned or controlled by an entity identified as being engaged in nuclear proliferation. The
   General Court did not however err in law in holding:
   — in paragraph 73 of the judgment under appeal, that the Council could legitimately not apply
       Article 7(2)(d) of Regulation No 423/2007 to entities which, in its opinion, did not fulfil the
       conditions for the application of that provision;
   — in paragraph 74 of that judgment, that it was impossible to identify, in every case, all the entities
       owned or controlled by an entity identified as engaged in nuclear proliferation and,
   — in paragraph 75 of that judgment, any divergent practice on the part of the Council, assuming it to
       be unlawful, cannot give rise to any legitimate expectations on the part of the entities concerned, or
       the right to rely, to their own benefit, on an unlawful act committed in favour of another.
63 Nor did the General Court err in law in paragraph 76 of the judgment under appeal in holding that the
   case-law concerning the interpretation of the Community provisions relied on by the appellant and
   recalled in paragraph 50 above was not relevant, since there was no doubt as to the interpretation of
   Article 7(2)(d) of Regulation No 423/2007.
64 It is clear from those considerations that the General Court did not infringe the principle of
   proportionality either in its interpretation of Article 7(2)(d) of Regulation No 423/2007 or in its
   review of the application of that provision to the appellant. Consequently, the second part of the first
   ground of appeal and the second ground of appeal are unfounded and must be rejected.
   Third ground: error of law in the conclusion that the appellant is owned or controlled by its parent
   company
   Arguments of the parties
65 The appellant criticises paragraphs 119 to 129 of the judgment under appeal. It points out that the test
   to be applied is that set out in paragraph 121 of that judgment, the question being whether ‘because it
   is owned by [Bank Melli Iran], it is to a considerable degree likely that the [appellant] may be
   prompted to circumvent the measures adopted against its parent entity’.
66 The appellant submits that the General Court erred in law, however, in holding, in paragraph 123 of
   the judgment under appeal, that only extraordinary circumstances were capable of justifying
   non-application of Article 7(2)(d) of Regulation No 423/2007 to a subsidiary which is wholly owned
   by an entity regarded as being engaged in nuclear proliferation.
67 The appellant also alleges that the General Court erred in law by inappropriately taking into account
   precedents in the field of competition law. The appellant points out that the presumption used in
   competition law is rebuttable. Furthermore, although under competition law the companies in
   question are entitled to make submissions to the Commission, that was not so in the present case,
   where the appellant was included in the list at issue without having an opportunity to contest the
   Council’s conclusion.
   ECLI:EU:C:2012:137                                                                                       11
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                                                 MELLI BANK v COUNCIL
68 The appellant also submits that the General Court erred in law in applying to the appellant the test
   laid down in paragraph 121 of the judgment under appeal. In particular, it erred by placing undue
   weight on the parent entity’s ability to appoint the directors of Melli Bank. The appellant notes, in that
   regard, the numerous elements relied on in paragraph 17 of the application lodged before the General
   Court and the restraints on the appellant’s trading, and concludes from this that it was not necessary
   to adopt a measure such as the freezing of its funds.
69 In the appellant’s submission, by working on the assumption that the appellant will engage in unlawful
   conduct, the contested decision and the judgment under appeal infringe the principle of the
   presumption of innocence, the freezing of funds being comparable to a criminal penalty.
70 The Commission points out, in connection with this ground of appeal also, that the appellant does not
   demonstrate how the General Court’s reasoning is vitiated by an error of law. Moreover, the appellant
   challenges the General Court’s assessment of facts and evidence.
71 The French Republic, the United Kingdom and the Commission challenge the test adopted by the
   General Court in the first sentence of paragraph 121 of the judgment under appeal. In their
   submission, Article 7(2)(d) of Regulation No 423/2007 contains an alternative test, so that if it is
   established that the appellant is wholly owned by Bank Melli Iran it is no longer necessary to
   demonstrate the existence of control of the appellant. The Commission contends that the various
   elements relied on by the General Court to establish the existence of such control must rather be
   regarded as ‘elements which demonstrate the ratio legis’ of Article 7(2)(d) of Regulation No 423/2007.
72 The United Kingdom notes, however, that even if the test adopted by the General Court were
   accepted, the appellant has not demonstrated that the General Court erred in law in its reasoning.
73 With regard to the General Court’s use of criteria based on competition law, the Council, the French
   Republic, the United Kingdom and the Commission argue that the General Court was merely guided
   by those criteria.
74 Those institutions and Member States recall the case-law of the Court according to which the freezing
   of funds is a temporary precautionary measure and not a penalty.
   Findings of the Court
75 Article 7(2)(d) of Regulation No 423/2007 provides for the freezing of the funds of entities identified as
   owned or controlled by entities which are themselves identified as engaged in, directly associated with
   or providing support for nuclear proliferation as referred to in Article 7(2)(a) or (b) of that regulation.
   That provision must be interpreted in the light of paragraph 12 of Resolution 1737 (2006), which
   provides for the freezing of the funds of entities that are owned or controlled by persons or entities
   designated as being engaged in, directly associated with or providing support for nuclear proliferation.
76 Article 7(2)(d) of Regulation No 423/2007 provides for two alternative tests, namely, ownership and control.
   It is apparent from the contested decision and from the Council’s observations at the hearing before the
   General Court, as set out by the latter in paragraph 120 of the judgment under appeal, that the appellant’s
   funds were frozen because it was an entity ‘owned’ by Bank Melli Iran. The General Court was therefore
   correct in deciding to limit its review to determining whether Melli Bank was owned by Bank Melli Iran.
77 The appellant does not deny that it is wholly owned by Bank Melli Iran. It considers, however, that the
   General Court did not determine to the requisite legal standard whether, because the appellant was
   owned by Bank Melli Iran, it was to a considerable degree likely that it might be prompted to
   circumvent the measures adopted against its parent entity; a reference to the first sentence of
   paragraph 121 of the judgment under appeal.
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                                                MELLI BANK v COUNCIL
78 In that regard, it must be held that, despite the clear wording of Article 7(2)(d) of Regulation
   No 423/2007, interpreted in the light of paragraph 12 of Resolution 1737 (2006), and whilst it is not
   denied by the appellant that it was wholly owned by Bank Melli Iran, the General Court considered it
   necessary to carry out further review.
79 In so doing, it failed to apply European Union law correctly. Where an entity is wholly owned by an
   entity regarded as being engaged in nuclear proliferation, the ownership test contained in
   Article 7(2)(d) of Regulation No 423/2007 is satisfied.
80 That error of law does not mean, however, that the judgment under appeal must be set aside, since in
   any event the General Court rejected the appellant’s plea.
81 Contrary to what the appellant contends, the measure adopted in relation to the appellant as a
   consequence of its being wholly owned by Bank Melli Iran does not affect the presumption of
   innocence. The adoption of fund-freezing measures under Article 7(2)(d) of Regulation No 423/2007
   is specifically not directed against the autonomous behaviour of an entity such as the appellant and
   therefore does not require that entity to have behaved in a manner contrary to the provisions of that
   regulation.
82 Consequently the third ground of appeal is unfounded.
   Fourth ground of appeal: defective statement of reasons
   Arguments of the parties
83 The appellant challenges the General Court’s reasoning in paragraphs 143 to 151 of the judgment
   under appeal. It points out that the statement of reasons for an act having adverse effects must be
   communicated to the person concerned at the same time as the act and notes that, in the present
   case, the contested decision contained no ‘individual and specific reason’, as required by Article 15(3)
   of Regulation No 423/2007. In the reply, it states that it ought to have been notified of that decision.
84 First, in the appellant’s submission, it was not sufficient for the Council to state in the contested
   decision that that decision had been taken pursuant to Article 7(2)(d) of Regulation No 423/2007, as
   that provision covers several situations in which the Council could have included the appellant in the
   list at issue.
85 Secondly, no reason was given why the Council had considered it to a considerable degree likely that
   the appellant might be prompted to circumvent the effects of inclusion of its parent entity in that list.
86 The appellant submits, thirdly, that the General Court’s assertion that the Council had by implication
   considered that the appellant was owned by its parent entity for the purposes of Article 7(2)(d) of
   Regulation No 423/2007, and that it was therefore included in the list on that basis, is a hasty
   conclusion that in no way follows from the wording of the contested decision.
87 Fourthly, the appellant submits that the fact that it is possible to bring an action against the contested
   decision does not alter the fact that the Council failed to comply with the obligation to state the
   reasons for that decision.
88 Fifthly, the appellant points out that it engaged in correspondence with the Council in order to attempt
   to ascertain the reasons for its inclusion in the list at issue and for the freezing of its funds, but that the
   Council refused to send its file to the appellant.
   ECLI:EU:C:2012:137                                                                                           13
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                                                MELLI BANK v COUNCIL
89 The Council, the French Republic and the Commission dispute the admissibility of the plea that the
   contested decision was not notified.
90 The Commission points out that the appellant does not dispute the principle stated by the General
   Court in paragraph 146 of the judgment under appeal that, in addition to indicating the legal basis of
   the measure adopted, the obligation to state reasons incumbent on the Council related to the
   circumstance that the entity concerned was owned or controlled by an entity identified as being
   engaged in nuclear proliferation as provided for in Article 7(2)(a) or (b) of Regulation No 423/2007.
91 In that regard, the Council, the French Republic, the United Kingdom and the Commission submit that
   the General Court did not err in law, in paragraph 147 et seq. of the judgment under appeal, when it
   held that sufficient reasons were given for the contested decision. In particular, the mention of Melli
   Bank in paragraph 4 of Table B in the Annex to that decision allowed the appellant to ascertain that
   the funds were frozen because it was a subsidiary of Bank Melli Iran.
   Findings of the Court
92 It is necessary to reject from the outset the plea that the contested decision was not notified. As the
   Advocate General pointed out in point 66 of his Opinion, that plea was not raised before the General
   Court. In an appeal the jurisdiction of the Court of Justice is in principle confined to review of the
   findings of law on the pleas argued at first instance (judgment of 15 September 2011 in Case
   C-544/09 P Germany v Commission, paragraph 63).
93 With regard to the obligation to provide a statement of reasons, the appellant does not challenge the
   principle that that obligation must be assessed by reference to the circumstances of each case, which
   the General Court recalled in paragraphs 143 to 145 of the judgment under appeal. It does however
   contend that the General Court erred in law in holding that the statement of reasons for the
   contested decision was sufficient and satisfied the obligation laid down in Article 15(3) of Regulation
   No 423/2007 to give individual and specific reasons for that decision.
94 In paragraph 147 of the judgment under appeal, the General Court held that the Council had
   indicated, both in the title of the contested decision and in recital 2 in the preamble thereto, the legal
   basis on which the decision had been adopted, namely, Article 7(2) of Regulation No 423/2007, and, in
   paragraph 4 of Table B in the Annex to that decision, the fact that Bank Melli Iran engaged in nuclear
   proliferation and the fact that the appellant was among the branches and subsidiaries of that company.
95 Contrary to what the appellant contends, the fact that the General Court held that it was not necessary to
   state that the contested decision, in so far as it related to the appellant, had been adopted in accordance
   with Article 7(2)(d) of that regulation, does not mean that the judgment under appeal was vitiated by an
   error of law, since the branches and subsidiaries of Bank Melli Iran are mentioned in that judgment.
96 The General Court did not therefore err in law in holding, in paragraph 148 of the judgment under
   appeal, that the mention of the appellant as being a subsidiary of Bank Melli Iran, a fact which is
   necessarily known to the appellant and one which has never been challenged, was sufficient having
   regard to the case-law relating to the obligation to state reasons which it had cited.
97 As regards the fact that it was possible to bring an action, the appellant’s argument results from a
   misreading of the judgment under appeal. In paragraph 151 of that judgment, the General Court did
   not merely point out that the appellant had been able to bring an action, it gave details of the
   subject-matter of the application in Case T-246/08 in support of its finding that the statement of
   reasons was sufficient, noting in that regard that, when it brought its action, the appellant was aware
   of the link between the freezing of its funds and the engagement in nuclear proliferation laid to the
   charge of its parent entity, Bank Melli Iran.
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                                                MELLI BANK v COUNCIL
98  With regard to the argument concerning the failure to send the Council’s file, this is not relevant for
    the purposes of examining the ground alleging infringement of the obligation to state reasons for the
    contested decision, since the General Court held, without erring in law, that the statement of reasons
    for that decision was sufficient in the light of the relevant case-law.
99  It follows that the fourth ground must be rejected.
100 Since none of the grounds of appeal raised by the appellant has been upheld, the appeal must be
    dismissed.
    Costs
101 Under Article 122 of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the
    Court is to make a decision as to costs. Under Article 69(2) of those rules, which apply to the
    procedure on appeal by virtue of Article 118 of those rules, the unsuccessful party must be ordered to
    pay the costs if they have been applied for in the successful party’s pleadings. Since the appellant has
    been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought
    by the Council, the French Republic, the United Kingdom and the Commission.
    On those grounds, the Court (Grand Chamber) hereby:
    1.    Dismisses the appeal.
    2.    Orders Melli Bank plc to pay the costs.
    [Signatures]
    ECLI:EU:C:2012:137                                                                                    15