National Iranian Oil Company v Council of the European Union.
Date: 2016-03-01
14


NIOC claims that, citing paragraph 39 of the judgment in Commission v Council (C‑370/07, EU:C:2009:590), according to the case-law of the Court, the binding nature of any act intended to have legal effects must be derived from a provision of EU law which prescribes the legal form to be taken by that act and which must be expressly indicated therein as its legal basis. However, the expressions ‘[w]here the Council decides’ and ‘it shall amend Annex IX’, in Article 46(2) of Regulation No 267/2012, fail to indicate in any way the legal form of the act to be adopted, so that that provision cannot constitute the legal basis of the act amending Annex IX to the Regulation containing the list of natural or legal persons, entities or bodies referred to in Article 23(2) and (3) of that regulation.
18


With regard to the legal form of the act to be adopted, it should be noted that it is not necessarily required when indicating the legal basis of that act. As the Council correctly argued, many of the provisions of the treaties, which are used as legal bases, do not set out the form of the legal acts that may be adopted. Moreover, Article 296 TFEU, which states that ‘[w]here the Treaties do not specify the type of act to be adopted, the institutions shall select it on a case-by-case basis, in compliance with the applicable procedures and with the principle of proportionality’ provides expressly for situations in which the provisions of the FEU Treaty do not specify the form of the acts which may be adopted.
19


It follows from the above that, the citations in the preamble to the contested regulation clearly indicating the legal basis empowering the Council to adopt restrictive measures against a person or entity, namely, Article 46(2) of Regulation No 267/2012, it was not necessary, contrary to what NIOC claims, to indicate, in that provision, the legal nature of the acts that may be adopted by the Council on the basis of that provision in order for the reference to that provision to constitute an adequate statement of the legal basis of the contested regulation. It follows that the General Court did not err in law in that regard.
23


By the first part of the second ground, NIOC cites paragraph 65 of the judgment in Parliament v Council (C‑130/10, EU:C:2012:472), which states that Article 215(2) TFEU is intended to constitute the legal basis of restrictive measures, and argues that that provision constitutes the only legal basis for the adoption of individual restrictive measures, for it sets out the procedure for adopting acts establishing such measures. According to NIOC, this is the sole legal basis provided for in Title IV of Part Five of the FEU Treaty relating to restrictive measures. However, Article 291(2) TFEU is found in Part Six of the FEU Treaty, which provides general rules which may not derogate from the special rules in Title IV of Part Five of the FEU Treaty.
24


By the second part of the second ground, NIOC cites paragraph 48 of the judgment in Parliament v Council (C‑130/10, EU:C:2012:472), which states that the procedures provided for in Articles 75 TFEU and 215 TFEU are incompatible, and argues that the same is true for the procedures provided for in Articles 215 TFEU and 291(2) TFEU. As regards the latter provision, it does not specify the procedure for the adoption of acts, so that it could not be used as a substitute for Article 215 TFEU. In any case, if those two provisions of the FEU Treaty were to be considered interchangeable, the result would be two different sets of rules for adopting restrictive measures, giving rise to inequality between the persons concerned by such measures, which would infringe the principle of equality of treatment provided for in Article 20 of the Charter of Fundamental Rights of the European Union.
34


As the General Court noted in paragraph 54 of the judgment under appeal, it is clear from the wording of Article 215 TFEU that that provision does not preclude a regulation adopted on the basis of that provision from conferring implementing powers on the Commission or the Council under the conditions laid down in Article 291(2) TFEU, where uniform conditions for the implementation of certain restrictive measures provided for in that regulation are necessary. In particular, it is not apparent from Article 215(2) TFEU that the individual restrictive measures taken against natural or legal persons and groups or non-State entities must be adopted according to the procedure laid down in Article 215(1) TFEU and cannot be adopted on the basis of Article 291(2) TFEU.
35


Moreover, there is no provision in the FEU Treaty which provides that Part Six thereof, relating to the institutional and financial arrangements, would not be applicable to the restrictive measures. Relying on Article 291(2) TFEU, which provides that ‘where uniform conditions for implementing legally binding Union acts are needed, those acts shall confer implementing powers on the Commission, or, in duly justified specific cases and in the cases provided for in Articles 24 and 26 of the Treaty on European Union, on the Council’ was thus not precluded, provided that the conditions in that provision were met.
36


With regard to that provision, it should be added that, according to the case-law of the Court, the concept of ‘implementation’ comprises both the drawing-up of implementing rules and the application of rules to specific cases by means of acts of individual application (judgment in Commission v Council, 16/88, EU:C:1989:397, paragraph 11).
37


In the light of that guidance, it should be noted that, in the present case, Regulation No 267/2012, Article 46(2) of which served as the basis for the adoption of the contested regulation, was adopted in order to take the action necessary, under the FEU Treaty, as to implement Decision 2012/35 amending Decision 2010/413 concerning restrictive measures against individuals or entities listed in Annexes I and II to that latter decision.
38


Regulation No 267/2012, which constitutes a legally binding act within the meaning of Article 291(2) TFEU, sets out the general criteria governing the inclusion of persons or entities on one of the lists, contained in Annexes VIII and IX of that regulation, of the persons or entities which are to be subject to restrictive measures, taking into account the amendments made by Decision 2012/35 to the general listing criteria set out in Decision 2010/413, the effect of which was, in particular, to add the criterion relating to the provision of support to the Government of Iran.
43


As regards the other arguments of NIOC, developed as part of the second part of the second ground, it should be noted, first, that paragraph 48 of the judgment in Parliament v Council (C‑130/10, EU:C:2012:472) is not relevant in the present case, since that judgment concerns the respective scope of Articles 75 TFEU and 215 TFEU, and not, as in the present case, Articles 215 TFEU and 291(2) TFEU.
44


Second, as regards the alleged breach of the principle of equal treatment resulting from the difference in the rules governing the adoption of restrictive measures, namely, that a person is designated by a provision based on Article 215(2) TFEU or by the adoption of an implementing regulation, based on Article 291(2) TFEU, it should be noted that, given its significant negative impact on the freedoms and fundamental rights of the person or of the entity concerned (see, to that effect, judgments in Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 358, and Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 132), any inclusion in a list of persons or entities subject to restrictive measures, whether based on Article 215 TFEU or on Article 291(2) TFEU, allows that person or entity access to the Courts of the European Union, in that it is similar, in that respect, to an individual decision, in accordance with the fourth paragraph of Article 263 TFEU (see, to that effect, judgment in Gbagbo and Others v Council, C‑478/11 P to C‑482/11 P, EU:C:2013:258, paragraph 57), for the purposes of, inter alia, verifying whether that individual decision complies with the general listing criteria laid down in the basic act.
45


The difference between the procedure under Article 215 TFEU and that under Article 291(2) TFEU reflects the intention of establishing a distinction, on the basis of objective criteria, between the basic act and an implementing act in the area of restrictive measures. In that context, the requirement laid down in Article 215(1) TFEU relating to a joint proposal from the High Representative of the Union for Foreign Affairs and Security Policy and the Commission is a condition inherent in the procedure provided in that provision, and not a procedural guarantee which would have to be afforded, in general, to any person or entity subject to inclusion in a list relating to restrictive measures, no matter what its basis. Therefore, in the context of the exercise of implementing powers based on Article 291(2) TFEU, the fact that the adoption of restrictive measures is not contingent on the presentation of such a joint proposal, contrary to what is the case in the procedure laid down in Article 215(1) TFEU, cannot be regarded as a breach of the principle of equal treatment in respect of inclusion in such a list.
49


As regards the case, provided for in Article 291(2) TFEU, whereby the Council may reserve the implementing power to itself ‘in duly justified specific cases’, it must be recalled that the Court interpreted the third indent of Article 145 of the EEC Treaty — which corresponds to Article 291(2) TFEU — as requiring the Council to state in detail the grounds for the decision to reserve the implementing powers to itself (judgment in Commission v Council, 16/88, EU:C:1989:397, paragraph 10).
50


The third indent of Article 202 EC, which replaced the third indent of Article 145 of the EC Treaty, was also the subject of interpretation in the judgments in Commission v Council (C‑257/01, EU:C:2005:25, paragraph 51) and Parliament v Council (C‑133/06, EU:C:2008:257, paragraph 47), in which the Court stated that the Council must properly explain, by reference to the nature and content of the basic instrument to be implemented or amended, why exception is being made to the rule that, under the system established by that treaty, when measures implementing a basic instrument need to be taken at Community level, it is the Commission which, in the normal course of events, is responsible for exercising that power.
51


In the present case, it should be noted that, under Article 45 of Regulation No 267/2012, the Council conferred wide powers on the Commission, in particular, to amend Annexes II to VII to that regulation, containing the lists of goods, technologies, equipment or metals covered by the provisions of that regulation. By contrast, in Article 46 of Regulation No 267/2012, the Council reserved to itself the power to amend Annexes VIII and IX of that regulation, that is to say the lists of natural or legal persons, entities or bodies, as regards Annex VIII of that regulation, following designation by the Security Council and, as regards Annex IX, on account of a restrictive measure taken autonomously by the European Union.
52


It is clear from the comparison of those measures that the Council reserved to itself the power to adopt the most sensitive of them, namely, the inclusion, in the regulation adopted on the basis of the FEU Treaty, of the designations decided by the Security Council and the application of the measures under Article 23(2) and (3) of Regulation No 267/2012, in that they have a particularly significant impact on the natural or legal persons, entities or agencies concerned.
53


As has already been mentioned in paragraph 44 above, despite their objective, namely, to put pressure on the Islamic Republic of Iran for the latter to put an end to proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems, those designations, resulting in the freezing of funds of persons or entities, have, on the fundamental rights and freedoms of those persons and entities, a substantial negative impact related, first, with regard to persons, to the serious disruption of those persons’ working and family life due to the restrictions of the exercise of their right to property and, second, with regard to entities, to disturbances that affect their activities, in particular their economic activities (see, to that effect, judgments in Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 358, and Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 132).
54


That conferral of implementing power on the Council can also be justified by the fact that it is that institution which adopts decisions taken in the framework of the Common Foreign and Security Policy, by which the names of natural or legal persons, entities or organisations are entered in the list of persons and entities whose funds are to be frozen. Such a decision can be enforced within the EU, in particular by financial institutions established in the EU, only if they are followed by the adoption of a regulation under the FEU treaty.
55


Moreover, if the reasons for listing a person are amended in the decision taken in the framework of the Common Foreign and Security Policy, in order to take into account the observations and evidence which may be provided to the Council by that person, that amendment must also appear in the regulation adopted pursuant to the FEU Treaty, failing which maintaining, during the review of the listing, the uncorrected statement of reasons could provide grounds for the legality of that regulation being challenged.
56


Therefore, the General Court did not err in judging, in paragraph 69 of the judgment under appeal, that the Council was properly entitled to reserve for itself the power to implement Article 23(2) and (3) of Regulation No 267/2012, in order to ensure the consistency of the procedures for the adoption of fund-freezing measures and of the findings of the competent authority in the context of Decision 2010/413 and Regulation No 267/2012 respectively, both at the time of the initial inclusion of the name of a person or an entity in the lists at issue and at the time of the review by the competent institution of that inclusion, in the light in particular of any observations and evidence that may be provided by the interested party.
57


Coordinating the adoption of decisions in the framework of the Common Foreign and Security Policy and of the measures taken on the basis of the FEU Treaty is all the more necessary because restrictive measures against natural or legal persons, entities or bodies must be adopted within a short period, either to comply with a resolution of the Security Council or to ensure as quickly as possible the desired effect by the new autonomous listings decided in the framework of the Common Foreign and Security Policy. In that regard, it should be noted that the decision taken in the framework of the Common Foreign and Security Policy and the contested implementing regulations designating NIOC were adopted on the same day, in accordance with the Council’s practice.
58


Those requirements of consistency, coordination and speed when adopting the acts required justify listing measures adopted on the basis of the FEU Treaty at the same time as listing measures in the framework of the Common Foreign and Security Policy being regarded as falling within specific cases within the meaning of Article 291(2) TFEU. Thus, as noted by the General Court in paragraph 72 of the judgment under appeal, the Court of Justice has rejected, in the judgment in Council v Manufacturing Support & Procurement Kala Naft (C‑348/12 P, EU:C:2013:776, paragraph 109), a plea alleging that the Council had no power to adopt measures freezing the funds of Manufacturing Support & Procurement Kala Naft Co., Tehran, such as those provided for by, inter alia, Decision 2010/413, on the basis of Article 29 TEU, an implementing regulation founded on Article 291(2) TFEU; the Court held in essence that that provision of the FEU Treaty gave the Council the power to adopt the measures at issue.
59


It follows that the General Court did not err in law in finding, in paragraph 73 of the judgment under appeal, that the Council could reasonably consider that the fund-freezing measures at issue were of a specific nature justifying its reserving to itself the implementing power in Article 46(2) of Regulation No 267/2012.
60


As regards the condition relating to the justification for the conferral of the implementing power on the Council, the General Court did not err in law, in paragraphs 74 to 76 of the judgment under appeal, by referring to the case-law concerning the obligation to state reasons under Article 296 TFEU. The Court has ruled that the Council must properly explain, in the light of the nature and content of the basic instrument to be implemented or amended, why exception is being made to the rule that it is the Commission that, in the normal course of events, is responsible for exercising that power (judgments in Parliament v Council, C‑133/06, EU:C:2008:257, paragraph 47 and Parliament and Commission v Council, C‑124/13 and C‑125/13, EU:C:2015:790, paragraph 53).
61


In that regard, it must be stated that the decisions and the regulations concerning restrictive measures regarding the Islamic Republic of Iran constitute a succession of acts frequently amended and regularly replaced in order to improve their clarity and legibility. However, certain provisions are similar in all the decisions and regulations.
62


As noted by the Advocate General in paragraphs 83 et seq of his Opinion, the conferral of implementing powers on the Council was already provided for in Article 15(2) of Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1) and Article 36(2) of Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007 (OJ 2010 L 281, p. 1). Both provisions were grounded on, respectively, recital 6 of Regulation No 423/2007 and recital 15 of Regulation No 961/2010. That latter recital states that ‘[t]he power to amend the lists in Annexes VII and VIII to this Regulation should be exercised by the Council, in view of the specific threat to international peace and security posed by Iran as manifested by the deepening concern about its nuclear programme underlined by the European Council on 17 June 2010, and to ensure consistency with the process for amending and reviewing Annexes I and II to Decision 2010/413/CFSP.’
63


It follows from the foregoing that the conferral of implementing power on the Council was justified in the regulations predating Regulation No 267/2012, by the consistency required between the designations adopted in the framework of the Common Foreign and Security Policy and those adopted on the basis of the FEU Treaty.
64


In the present case and having regard to the existence of the clause reserving implementing power to the Council and its justification in the regulations predating Regulation No 267/2012, the existence of that power of the Council could be understood as forming part of the context in which the act at issue was adopted and regarded as duly justified, within the meaning of Article 291(2) TFEU. Accordingly, the first part of the third ground is unfounded.
66


As regards there being no indication in Article 291(2) TFEU justifying the conferral of implementing power in Article 46(2) of Regulation No 267/2012, it should be recalled that failure to refer to a precise provision of the FEU Treaty need not constitute infringement of essential procedural requirements if the legal basis for a measure may be determined from other parts of the measure (judgment in Commission v Council, C‑370/07, EU:C:2009:590, paragraph 56). As the General Court correctly held in paragraphs 85 and 86 of the judgment under appeal, even if Article 291(2) TFEU is not mentioned as a legal basis for the conferral of implementing powers set out in Article 46(2) of Regulation No 267/2012, the provisions of that regulation do, however, make it possible to understand that the Council reserved that power to itself in accordance with the conditions set out in Article 291(2) TFEU thereof. It follows that the fourth and fifth grounds are unfounded.
77


As a preliminary point, it must be recalled that, as the Court has held, the Union legislature must be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. It concluded from this that the legality of a measure adopted in those fields can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (judgments in Sison v Council, C‑266/05 P, EU:C:2007:75, paragraph 33, and Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraph 120).
78


According to the Court’s case-law, a regulation providing for restrictive measures must be interpreted in the light not only of the decision adopted in the framework of the Common Foreign and Security Policy referred to in Article 215(2) TFEU, but also of the historical context in which the provisions were adopted by the European Union, that regulation being one such provision (see, to that effect, judgment in Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraph 75, and order in Georgias and Others v Council and Commission, C‑545/14 P, EU:C:2015:791, point 33). The same applies to a decision adopted in the area of the common foreign and security policy, which must be interpreted taking into account the context in which it is adopted.
79


Thus, the General Court was correct in stating, at paragraph 118 of the judgment under appeal, that the criterion at issue forms part of a legal framework clearly delimited by the objectives pursued by the rules governing the restrictive measures against the Islamic Republic of Iran and, in particular, that recital 13 of Decision 2012/35, inserted, for the first time, that criterion into Article 20(1) of Decision 2010/413, states expressly that the freezing of funds has to be applied to persons and entities ‘providing support to the Government of Iran allowing it to pursue proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems, in particular persons and entities providing financial, logistical or material support to the Government of Iran’. Similarly, the General Court is correct in stating that Article 23(2)(d) of Regulation No 267/2012 states also that that support may be ‘material, logistical or financial’.
80


The General Court concluded from this, in paragraphs 119 and 120 of the judgment under appeal, that the objective of the amendment of the criterion at issue had been to expand the designation criterion, in order to target the relevant person or entity’s own activity which, even if it has no actual direct or indirect connection with nuclear proliferation, is nonetheless capable of encouraging it, by providing the Iranian Government with resources or facilities of a material, financial or logistic nature which allow it to pursue proliferation activities.
81


That interpretation is supported by the changes in the legislation, examined in the light of the Council’s documents. It should, in that regard, be recalled that, in the seventeenth recital in the preamble to Resolution 1929, the Security Council noted the ‘potential connection between Iran’s revenues derived from its energy sector and the funding of Iran’s proliferation-sensitive nuclear activities’, that connection being mentioned in paragraph 5 of the judgment under appeal. The European Council, in order to take account of that aspect, in the declaration annexed to its Conclusions of 17 June 2010, invited the ‘Foreign Affairs’ Council to adopt at its next session measures implementing those contained in Resolution 1929, with the invitation leading to the adoption of measures aimed at, inter alia, the oil industry in both Decision 2010/413 and Regulation No 961/2010.
83


It is this objective which the General Court took into account when it considered, in paragraph 119 of the judgment under appeal, that the criterion at issue is aimed at the forms of support to the Government of Iran, which by their quantitative or qualitative importance, contribute to the pursuit of Iran’s nuclear activities. In doing so, the General Court in no way ‘rewrote’ that criterion, but interpreted it in the light of the objectives pursued by the Council, as reflected in the evolution of the international and Union legislation relating to the Islamic Republic of Iran.