Pye Phyo Tay Za v Council of the European Union.
Date: 2012-03-13
32. The appellant submits that the inclusion on such a list of the family members of the persons at whom the contested regulation is directed in order to avoid the risk of circumventing the asset freeze is not a convincing justification, since it would not prevent the pre‑emptive transfer of assets to either more distant family members or third parties.
42. That argument cannot be accepted.
43. As the General Court observed at paragraph 61 of the judgment under appeal, according to the case-law of the Court of Justice, the concept of a third country, within the meaning of Articles 60 EC and 301 EC, may include the rulers of such a country and also individuals and entities associated with or controlled, directly or indirectly, by them (see Kadi and Al Barakaat International Foundation  v Council and Commission , paragraph 166).
46. According to the Court’s settled case-law, the choice of the legal basis for a Community measure must rest on objective factors which are amenable to judicial review, including in particular the aim and the content of the measure (see, inter alia, Case C‑548/09 P Bank Melli Iran v Council [2011] ECR I-0000, paragraph 66).
47. Article 60(1) EC provides that, if, in the cases envisaged by Article 301 EC, action by the Community is deemed necessary, the Council may take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned.
48. According to Article 301 EC, where it is provided, in a common position or in a joint action adopted according to the Treaty on European Union relating to the common foreign and security policy, for an action by the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries, the Council is to take the necessary urgent measures.
49. The contested regulation concerns the adoption of restrictive measures against the Republic of the Union of Myanmar.
50. It is apparent from recital 6 in the preamble to the contested regulation that, taking into account the continuing serious violations of human rights by the regime in power in that country, the restrictive measures in that regulation are instrumental in promoting respect for fundamental rights and thus serve the purpose of protecting public morals in that country.
51. Article 11 of the contested regulation provides that the restrictive measures in question are to take the form of the freezing of all funds and economic resources belonging to the individual members of the Government of the Republic of the Union of Myanmar and to the natural or legal persons, entities or bodies associated with them.
52. The list referred to in Article 11 of the contested regulation of the individual members of that government and the persons, entities and bodies associated with them, which appears in Annex VI to the regulation, contains inter alia the names of the members of the State Peace Development Council, Ministers, senior military officers and persons benefiting from the economic policies of that government.
53. In that regard, it should be recalled that the Court has already held that, having regard to the wording of Articles 60 EC and 301 EC, especially to the expressions ‘as regards the third countries concerned’ and ‘with one or more third countries’ used there, those provisions concern the adoption of measures vis-à-vis third countries, since that concept may include the rulers of such a country and also individuals and entities associated with or controlled, directly or indirectly, by them ( Kadi and Al Barakaat International Foundation  v Council and Commission , paragraph 166).
54. The list of persons benefiting from the economic policies of the Government of the Republic of the Union of Myanmar whose respective funds and economic resources have been frozen, which appears under heading J of Annex VI to the contested regulation, includes, inter alia, the names of family members of those in charge of certain businesses, including that of the appellant.
55. In the light of the Court’s case‑law cited at paragraph 53 above, the possibility cannot be ruled out that those in charge of certain businesses may be subject to restrictive measures adopted on the basis of Articles 60 EC and 301 EC, provided it is established that they are associated with the leaders of the Republic of the Union of Myanmar or that the activities of those businesses are dependent on those leaders.
56. However, the family members of those in charge of businesses on the list in Annex VI to the contested regulation are covered by the measures freezing funds for the sole reason that they belong to the families of persons who, in turn, are associated with those national leaders.
57. In that connection, the General Court held, at paragraph 67 of the judgment under appeal, that it may be presumed that the family members of leading business figures benefit from the functions exercised by those businessmen, so that there is nothing to prevent the conclusion that such family members also benefit from the economic policies of the government. That court also found that that presumption can be rebutted if the applicant successfully demonstrates that he does not have a close link with the businessman who is part of his family (paragraph 68 of the judgment under appeal).
58. The General Court therefore concluded (paragraph 70 of the judgment under appeal) that the restrictive measures, on the basis of targeted and selective sanctions applied to certain categories of persons deemed by the Council to be associated with the regime concerned, including the family members of leading business figures in the third country concerned, fall within the scope of Articles 60 EC and 301 EC.
59. It is necessary to ascertain whether, in reaching that conclusion, the General Court erred in law as regards the scope of Articles 60 EC and 301 EC, as interpreted by the case‑law of the Court of Justice (see, inter alia, Kadi and Al Barakaat International Foundation  v Council and Commission ).
60. While it is true that, at paragraph 166 of Kadi and Al Barakaat International Foundation  v Council and Commission , the General Court gave a broad interpretation of Articles 60 EC and 301 EC, in so far as it included in the concept of ‘third country’ used in those provisions the leaders of such countries as well as the individuals and entities associated with or controlled, directly or indirectly, by them, the fact remains that such an interpretation was subject to conditions designed to ensure that Articles 60 EC and 301 EC are applied in a manner that is consistent with the objective assigned to them.
61. This Court has rejected the Commission’s argument that it is enough for the restrictive measures at issue to be directed at persons or entities present in a third country or associated with one in some other way in order for them to be regarded as having been adopted against such a country for the purpose of Articles 60 EC and 301 EC (see Kadi and Al Barakaat International Foundation  v Council and Commission , paragraph 168).
62. According to the Court, such an interpretation of Articles 60 EC and 301 EC would give those provisions an excessively broad meaning and would fail to take any account at all of the requirement, imposed by their very wording, that the measures decided on the basis of those provisions must be taken against third countries ( Kadi and Al Barakaat International Foundation  v Council and Commission , paragraph 168).
63. It follows from the above that, in order for it to be possible for them to be adopted on the basis of Articles 60 EC and 301 EC as restrictive measures imposed on third countries, the measures in respect of natural persons must be directed only against the leaders of such countries and the persons associated with those leaders ( Kadi and Al Barakaat International Foundation  v Council and Commission , paragraph 166).
64. That requirement ensures that there is a sufficient link between the persons concerned and the third country targeted by the restrictive measures adopted by the European Union, precluding too broad an interpretation of Articles 60 EC and 301 EC which would therefore be contrary to the Court’s case‑law.
65. By considering that it may be presumed that the family members of leading business figures also benefit from the economic policies of the government, the General Court extended the category of natural persons who may be subject to targeted restrictive measures.
66. The application of such measures to natural persons on the sole ground of their family connection with persons associated with the leaders of the third country concerned, irrespective of the personal conduct of such natural persons, is at variance with the Court’s case‑law on Articles 60 EC and 301 EC.
67. It is not easy to establish a link, even an indirect link, between the absence of progress towards democratisation and the continuing violation of human rights in Myanmar, which, as is apparent from recital 1 in the preamble to the contested regulation, is one of the reasons which led to the adoption of the regulation, and the conduct of the family members of those in charge of businesses, whi ch, in itself, has not been criticised.
68. On the other hand, by finding at paragraph 168 of Kadi and Al Barakaat International Foundation  v Council and Commission that the restrictive measures adopted against a third country could not be directed at persons associated with that country ‘in some other way’, the Court intended to restrict the categories of natural persons at whom targeted restrictive measures may be directed to those whose connection with the third country concerned is quite obvious, namely the leaders of third countries and the individuals associated with them.
69. Moreover, the criterion used by the General Court in order to include the family members of those in charge of businesses is based on a presumption for which no provision was made in the contested regulation or in Common Positions 2006/318 and 2007/750, to which that regulation refers, and which is inconsistent with the objective of the regulation.
70. Consequently, a measure to freeze funds and economic resources belonging to the appellant could have been adopted within the framework of a regulation intended to impose sanctions on a third country on the basis of Articles 60 EC and 301 EC only in reliance upon precise, concrete evidence which would have enabled it to be established that the appellant benefits from the economic policies of the leaders of the Republic of the Union of Myanmar.
71. It follows from all the foregoing considerations that, by finding that it may be presumed that the family members of leading business figures benefit from the functions exercised by those businessmen, so that such family members also benefit from the economic policies of the government, and that there is therefore a sufficient link, for the purposes of Articles 60 EC and 301 EC, between the appellant and the military regime of Myanmar, the General Court erred in law.
72. It follows that the first ground of appeal is well founded and that the judgment under appeal must be set aside to the extent that it failed to annul the contested regulation, in so far as the appellant is concerned, for want of legal basis.