Council of the European Union v Liberation Tigers of Tamil Eelam (LTTE).
Date: 2017-07-26
24


That being the case, the General Court was also right to rule, in essence, in paragraph 139 of the judgment under appeal, that the Council must, before acting on the basis of a decision of an authority of a third State, verify whether that decision was adopted in accordance with the rights of the defence and the right to effective judicial protection.
25


The Court has repeatedly held that the Council is obliged, when adopting restrictive measures, to respect the fundamental rights that form an integral part of the EU legal order, which include, in particular, respect for the rights of the defence and the right to effective judicial protection (see, to that effect, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 97 and 98, and of 28 November 2013, Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraphs 65 and 66).
26


The need for the verification described in paragraph 24 of the present judgment, which is expressly acknowledged by the Council in this appeal, arises, inter alia, from the purpose of the requirement, laid down in Article 1(4) of Common Position 2001/931, that the initial entry of a person or entity on the list at issue be based on a decision adopted by a competent authority. That requirement is designed to protect the persons or entities concerned by ensuring that they are first included on that list only on a sufficiently solid factual basis (see, to that effect, judgment 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraph 68). That objective cannot be attained unless the decisions of third States on which the Council bases initial listings of persons or entities are adopted in accordance with the rights of the defence and the right to effective judicial protection.
29


The purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the Courts of the European Union and, second, to enable those Courts to review the legality of that act (judgments of 18 February 2016, Council v Bank Mellat, C‑176/13 P, EU:C:2016:96, paragraph 74, and of 21 April 2016, Council v Bank Saderat Iran, C‑200/13 P, EU:C:2016:284, paragraph 70).
31


Having regard to the purpose, referred to in paragraph 26 of the present judgment, of the requirement that the initial entry of a person or entity on the list at issue be based on a decision adopted by a competent authority, it must be held that, when the Council bases that listing on a decision by a third State, the guarantee that that decision has been taken in accordance with the rights of the defence and the right to effective judicial protection has decisive importance in the context of that listing and of subsequent fund-freezing decisions. The Council is, therefore, required to provide, in the statements of reasons relating to those decisions, the particulars from which it may be concluded that it has ascertained that those rights were respected.
33


The purpose of the obligation to state reasons is to enable the person concerned to decide, with full knowledge of the relevant facts, whether there is any point in his applying to the court having jurisdiction (see, to that effect, judgments of 4 June 2013, ZZ, C‑300/11, EU:C:2013:363, paragraph 53, and of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 100). It is sufficient, for that purpose, that the Council briefly refer in the statement of reasons relating to a decision to freeze funds to the reasons why it considers the decision of the third State on which it intends to rely to have been adopted in accordance with the rights of the defence and the right to effective judicial protection.
37


Neither Implementing Regulations No 83/2011, No 687/2011, No 1375/2011, No 542/2012, No 1169/2012, No 714/2013 and No 125/2014 nor Implementing Regulation No 790/2014 refer to anything that might suggest that the Council verified whether the decision of the Indian authorities was adopted in accordance with the rights of the defence and the right to effective judicial protection. The statements of reasons for those regulations do not, therefore, disclose whether the Council fulfilled its verification obligation in that regard.
45


The Court has ruled, with regard to initial decisions on the freezing of funds, that the wording of Article 1(4) of Common Position 2001/931 refers to the decision taken by a national authority by requiring that precise information or evidence in the file exists which shows that such a decision has been taken. That requirement seeks to ensure that, in the absence of any means at the disposal of the European Union that would enable it to carry out its own investigations regarding the involvement of a person or entity in terrorist acts, the Council’s decision on the initial listing is taken on a sufficient factual basis enabling the Council to conclude that there is a danger that, if preventive measures are not taken, the person or entity concerned may continue to be involved in terrorist activities (see, to that effect, judgment of 15 November 2012, Al-Aqsa v Council and Netherlands v Al‑Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraphs 69, 79 and 81).
46


As regards, on the other hand, subsequent fund-freezing decisions, it is apparent from the case-law of the Court that the essential question when reviewing whether to continue to include a person or entity on the list at issue is whether, since the inclusion of that person or that entity on that list or since the last review, the factual situation has changed in such a way that it is no longer possible to draw the same conclusion in relation to the involvement of that person or entity in terrorist activities (judgment of 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraph 82).
52


In the process of verifying whether the risk of the person or entity concerned being involved in terrorist activities is ongoing, the subsequent fate of the national decision that served as the basis for the original entry of that person or entity on the list at issue must be duly taken into consideration, in particular the repeal or withdrawal of that national decision as a result of new facts or material or any modification of the competent national authority’s assessment.
54


In that regard, if, in view of the passage of time and in the light of changes in the circumstances of the case, the mere fact that the national decision that served as the basis for the original listing remains in force no longer supports the conclusion that there is an ongoing risk of the person or entity concerned being involved in terrorist activities, the Council is obliged to base the retention of that person or entity on the list on an up-to-date assessment of the situation, and to take into account more recent facts which demonstrate that that risk still exists (see, by analogy, judgment of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 156).
55


In the present case, a significant period of time elapsed between the adoption in 2001 of the UK decisions which served as the basis for the original entry of the LTTE on the list at issue, the listing itself, which occurred in 2006, and the adoption of the acts at issue in the period from 2011 to 2014. In addition, as the Council mentioned in the statements of reasons relating to the acts at issue, the LTTE incurred a military defeat, announced by the Sri Lankan Government in May 2009, which significantly weakened that organisation. The Council was therefore obliged to base the retention of the LTTE on that list on more recent material demonstrating that there was still a risk that the LTTE were involved in terrorist activities. Consequently, contrary to what is claimed by the Council, the General Court did not err in law in considering, at least implicitly, that the UK decisions did not in themselves constitute a sufficient basis for the acts at issue.
58


As regards, in the first place, Article 1 of Common Position 2001/931, it must be noted first of all that that article draws a distinction between the initial entry of a person or entity on the list at issue, referred to in paragraph 4 thereof, and the retention on that list of a person or entity already listed, referred to in paragraph 6 thereof.
59


Under Article 1(4) of Common Position 2001/931, the initial entry of a person or entity on the list at issue presupposes the existence of a national decision by a competent authority or of a decision of the United Nations Security Council imposing a sanction.
60


No such condition is laid down in Article 1(6) of Common Position 2001/931, however, according to which ‘the names of persons and entities on the list in the Annex shall be reviewed at regular intervals and at least once every six months to ensure that there are grounds for keeping them on the list’.
61


That distinction is attributable to the fact that, as has been stated in paragraph 51 of the present judgment, the retention of a person or entity on the list at issue is, in essence, an extension of the original listing and presupposes, therefore, that there is an ongoing risk of the person or entity concerned being involved in terrorist activities, as initially established by the Council on the basis of the national decision on which that original listing was based.
70


In the case of subsequent fund-freezing decisions, the person or entity concerned is protected, inter alia, by the possibility of bringing an action against such decisions before the Courts of the European Union. These are required to determine, in particular, first, whether the obligation to state reasons laid down in Article 296 TFEU has been complied with and, therefore, whether the reasons relied on are sufficiently detailed and specific, and, second, whether those reasons are substantiated (see, by analogy, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraphs 118 and 119, and of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 64).
75


It must be borne in mind, however, that if the grounds of a decision of the General Court reveal an infringement of EU law, but the operative part of the judgment under appeal can be seen to be well founded on other legal grounds, that infringement is not capable of leading to the annulment of that decision and a substitution of grounds must be made (see, to that effect, judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 150, and of 5 March 2015, Commission and Others v Versalis and Others, C‑93/13 P and C‑123/13 P, EU:C:2015:150, paragraph 102 and the case-law cited).
79


Thus, in the absence of any other relevant information, the statements of reasons relating to the third to eighth implementing regulations at issue do not refer to anything that might justify the Council’s assessment that, notwithstanding that military defeat, the likely intention of the LTTE was to continue terrorist attacks in Sri Lanka. In view of the fact that that military defeat represented a significant change in circumstances, one that was capable of calling in question the ongoing nature of the risk of the LTTE’s involvement in terrorist activities, the Council should have referred to the evidence supporting that assessment in those statements of reasons. Consequently, the third to eighth implementing regulations at issue are vitiated by a failure to give sufficient reasons that is capable of leading to their annulment.