1 By its appeal, Bank Refah Kargaran seeks the partial annulment of the judgment of the General Court of the European Union of 10 December 2018, Bank Refah Kargaran v Council (T‑552/15, not published, the judgment under appeal, EU:T:2018:897), by which the General Court dismissed Bank Refah Kargaran’s action for damages under Article 268 TFEU for the harm it allegedly suffered as a result of the adoption of the restrictive measures taken against it.
2 The background to the dispute is set out in paragraphs 1 to 13 of the judgment under appeal in the following terms: ‘1. The present case has been brought in connection with the restrictive measures introduced 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. 2. The [appellant], Bank Refah Kargaran, is an Iranian bank. 3. On 26 July 2010, the [appellant]’s name was entered on the list of entities involved in nuclear proliferation in Annex II to Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP (OJ 2010 L 195, p. 39). The inclusion of its name was motivated by the fact that it was alleged to have relayed ongoing operations of Bank Melli Iran following the adoption of the restrictive measures against the latter. 4. Consequently, the [appellant]’s name was entered on the list for the same reason in Annex V to Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1), by Council Implementing Regulation (EU) No 668/2010 of 26 July 2010 implementing Article 7(2) of Regulation No 423/2007 (OJ 2010 L 195, p. 25). Following the repeal of Regulation No 423/2007 by Council Regulation (EU) No 961/2010 of 25 October 2010 concerning restrictive measures against Iran (OJ 2010 L 281, p. 1), the [appellant]’s name was entered on the list in Annex VIII to the latter regulation. 5. By Decision 2010/644/CFSP of 25 October 2010 amending Decision 2010/413 (OJ 2010 L 281, p. 81), the Council of the European Union maintained the [appellant]’s name on the list set out in Annex II to Decision 2010/413. Council Decision 2011/783/CFSP of 1 December 2011 amending Decision 2010/413 (OJ 2011 L 319, p. 71) did not amend that list as far as the [appellant] was concerned. 6 By Council Implementing Regulation (EU) No 1245/2011 of 1 December 2011 implementing Regulation No 961/2010 (OJ 2011 L 319, p. 11), the [appellant]’s name was maintained on the list set out in Annex VIII to Regulation No 961/2010. Regulation No 961/2010 was repealed by Council Regulation (EU) No 267/2012 of 23 March 2012 on restrictive measures against Iran (OJ 2012 L 88, p. 1). The [appellant]’s name was included in the list in Annex IX to the latter regulation. The reasons given in respect of the [appellant] have not been altered. 7. By application lodged at the Registry of the General Court on 19 January 2011, the [appellant] brought an action, registered as Case T‑24/11, for, inter alia, annulment of Decision 2010/644 and Regulation No 961/2010 in so far as those acts concerned it. The [appellant] then amended its claim in order to seek the annulment of Decision 2011/783, Implementing Regulation No 1245/2011 and Regulation No 267/2012, in so far as those legal acts concerned it. 8. In paragraph 83 of the judgment of 6 September 2013, Bank Refah Kargaran v Council (T‑24/11, EU:T:2013:403, ‘the annulment judgment’), the [General] Court upheld the second plea raised by the [appellant], in so far as it relied on breach of the duty to state reasons. 9. The [General] Court therefore annulled, in essence, the [appellant]’s inclusion in the lists in Annex II to Decision 2010/413, as amended by Decision 2010/644 and then by Decision 2011/783, in Annex VIII to Regulation No 961/2010, as amended by Implementing Regulation No 1245/2011, and in Annex IX to Regulation No 267/2012. 10. In the annulment judgment, the [General] Court also held that the effects of Annex II to Decision 2010/413, as amended by Decision 2010/644 and subsequently by Decision 2011/783, were to be maintained as regards the [appellant] until the annulment of Annex IX to Regulation No 267/2012 took effect, in so far as that annex concerned the [appellant]; 11. Following the annulment judgment, by Council Decision 2013/661/CFSP of 15 November 2013 amending Decision 2010/413 (OJ 2013 L 306, p. 18), the [appellant]’s name was again included on the list in Annex II to Decision 2010/413. 12. In consequence thereof, by Council Implementing Regulation (EU) No 1154/2013 of 15 November 2013 implementing Regulation No 267/2012 (OJ 2013 L 306, p. 3), the [appellant]’s name was again included on the list in Annex IX to Regulation No 267/2012. The following reason was given in respect of the [appellant]: “Entity providing support to the Government of Iran. It is 94 per cent owned by the Iranian Social Security Organisation, which in turn is controlled by the Government of Iran, and it provides banking services to government ministries.” 13. By application lodged at the Registry of the General Court on 28 January 2014, the [appellant] brought an action seeking, inter alia, the annulment of Decision 2013/661 and Implementing Regulation No 1154/2013, in so far as those measures concerned it. By judgment of 30 November 2016, Bank Refah Kargaran v Council (T‑65/14, not published, EU:T:2016:692), the General Court dismissed the action. No appeal was brought against that judgment.’
3 By application lodged at the Registry of the General Court on 25 September 2015, the appellant brought an action for damages against the European Union for the harm caused by the adoption and maintenance of the restrictive measures concerning it, which were annulled by the annulment judgment, in the amount of EUR 68651318, together with statutory interest, in respect of the pecuniary loss and the amount of EUR 52547415, together with statutory interest, in respect of the non-pecuniary loss, and, in the alternative, that the General Court find that all or part of the sums claimed in respect of the non-pecuniary loss be regarded as relating to the pecuniary loss.
4 By the judgment under appeal, the General Court dismissed the action in its entirety and ordered the appellant to pay the costs.
5 In the first place, in paragraphs 25 to 32 of the judgment under appeal, the General Court examined of its own motion whether it had jurisdiction to rule on the action for damages in the light of Decisions 2010/413, 2010/644 and 2011/783, adopted pursuant to the Common Foreign and Security Policy (CFSP).
6 In that regard, in paragraph 27 of the judgment under appeal, the General Court noted that the appellant had not distinguished between, on the one hand, liability of the European Union arising from the adoption of Decisions 2010/413, 2010/644 and 2011/783 pursuant to the CFSP and, on the other hand, from the adoption of Regulations Nos 961/2010 and 267/2012 and Implementing Regulation No 1245/2011.
7 In paragraph 30 of the judgment under appeal, the General Court held that, by virtue of the sixth sentence of the second subparagraph of Article 24(1) TEU and the first paragraph of Article 275 TFEU, the Courts of the European Union did not, in principle, have jurisdiction in respect of provisions of primary law relating to the CFSP and legal acts adopted on the basis thereof and that it was only exceptionally, in accordance with the second paragraph of Article 275 TFEU, that the EU Courts had any jurisdiction in the field of the CFSP. The General Court added that that jurisdiction included, on the one hand, the monitoring of compliance with Article 40 TEU and, on the other hand, actions for annulment brought by persons or entities, under the conditions laid down in the fourth paragraph of Article 263 TFEU, in respect of restrictive measures adopted by the Council pursuant to the CFSP and that, by contrast, the second paragraph of Article 275 TFEU does not confer any jurisdiction on the EU Courts to hear and determine any action for damages. The General Court concluded that an action for damages for the harm allegedly caused by a legal act adopted in the field of the CFSP fell outside that court’s jurisdiction.
8 The General Court held, in paragraph 31 of the judgment under appeal, that it did, however, have jurisdiction to hear an action for damages for harm allegedly suffered by a person or entity as a result of the operation of restrictive measures adopted in respect of that person or entity, in accordance with Article 215 TFEU.
9 The General Court concluded, in paragraph 32 of the judgment under appeal, that it did not have jurisdiction to hear the appellant’s action in so far as it sought damages for the harm allegedly caused by the restrictive measures provided for in Decisions 2010/413, 2010/644 and 2011/783, and that it had jurisdiction to rule on the action only in so far as it was based on non-contractual liability of the European Union arising from Regulations Nos 961/2010 and 267/2012 and Implementing Regulation No 1245/2011.
10 In the second place, as regards the examination of the substance of the action for damages in respect of the regulations referred to in the previous paragraph, the General Court examined whether the condition relating to the Council’s allegedly illegal actions was satisfied.
11 First, in paragraph 41 of the judgment under appeal, the General Court noted that, in the annulment judgment, it had annulled the inclusion of the appellant’s name in the lists in Annex VIII to Regulation No 961/2010, as amended by Implementing Regulation No 1245/2011, and in Annex IX to Regulation No 267/2012, in relation to the claim alleging that the Council breached the duty to state reasons, and found that the reason for that inclusion was not sufficiently precise.
12 In that regard, the General Court held, in paragraph 43 of the judgment under appeal, that, according to settled case-law, the infringement of the duty to state reasons, enshrined in Article 296 TFEU, was not in itself such that the European Union could be found liable.
13 The General Court added, in paragraph 45 of the judgment under appeal, that, in the annulment judgment, it had annulled the restrictive measures concerning the appellant on the ground of breach of the duty to state reasons, but did not rule on whether those reasons were well founded. It stated that the illegality found in the judgment of 25 November 2014, Safa Nicu Sepahan v Council (T‑384/11, EU:T:2014:986), upheld on appeal by the judgment of 30 May 2017, Safa Nicu Sepahan v Council (C‑45/15 P, EU:C:2017:402), was therefore different in nature and that, since the General Court had not ruled in that judgment on whether the Council had breached the duty to state reasons, the appellant could not rely on that judgment in order to establish a sufficiently serious breach of EU law in the case at hand.
14 Second, in paragraph 49 of the judgment under appeal, the General Court noted that the appellant had referred to paragraph 82 of the annulment judgment, in which the General Court had found that the Council had infringed the obligation to disclose to the appellant, as the entity concerned, the evidence against it as to why the measures freezing funds were taken against it. Nevertheless, the General Court considered that that finding must be read in the light of the appellant’s argument, referred to in paragraph 68 of that annulment judgment, that the inadequate statement of reasons had not been remedied by the documents subsequently disclosed by the Council. The General Court added, in paragraph 50 of the judgment under appeal, that that finding was not by itself such as to establish the existence of a sufficiently serious breach of the rights of the defence in the case at hand.
15 Furthermore, the General Court pointed out, in paragraph 51 of the judgment under appeal, that, since the appellant had brought an action in respect of the restrictive measures taken against it and the General Court had annulled those measures in the annulment judgment, it could not plead the existence of a sufficiently serious breach of its right to effective judicial protection in the present case.
16 Third, in paragraphs 52 to 58 of the judgment under appeal, the General Court examined the argument put forward by the appellant in its reply that the Council, by unlawfully including its name on the lists of persons subject to restrictive measures, had failed to apply the test which it claimed to have applied, namely the test relating to entities assisting designated persons or entities in evading or violating certain United Nations Security Council resolutions or Decision 2010/413, since the statement of reasons for the inclusion of its name, namely that it had relayed Bank Melli Iran’s operations, does not satisfy that test.
17 In that regard, the General Court held, in paragraph 55 of the judgment under appeal, that the plea in law and the arguments raised in the application, seeking to establish the existence of a sufficiently serious breach of a rule of law conferring rights on individuals for which the European Union can be found liable, were based solely on the illegalities allegedly found by the General Court in the annulment judgment and that, among those illegalities, the appellant had not, at the stage of the application, alleged any illegality arising from the fact that the reason for the inclusion of its name on the lists of persons subject to restrictive measures was not in conformity with the test applied by the Council.
18 The General Court added, in paragraphs 56 and 57 of the judgment under appeal, that, moreover, the appellant’s argument in its reply differed from that in the application in that it was based not on a breach of the duty to state reasons but challenged whether the reasons for its inclusion were well founded and that the appellant’s argument in the reply could not, therefore, be regarded as elaborating on the plea in law raised in the application. The General Court therefore concluded, in paragraph 58 of the judgment under appeal, that, since the appellant raised that argument only in its reply and since it did not relate to any plea or argument raised in the application, it should be regarded as a new plea and, consequently, dismissed as inadmissible.
19 Fourth, in paragraphs 59 and 60 of the judgment under appeal, the General Court found that the condition for non-contractual liability of the European Union to be established, relating to the illegality of the actions for which the Council is criticised was not satisfied in the present case and that the action must therefore be dismissed, without it being necessary to examine the other elements of such liability.
20 By its appeal, the appellant asks the Court to: - set aside in part the judgment under appeal; - order the European Union to pay damages for the adoption and maintenance of the restrictive measures concerned, which were annulled by the annulment judgment, in the amount of EUR 68651318, in addition to statutory interest, in respect of pecuniary damage, and in the amount of EUR 52547415, in addition to statutory interest, in respect of non-pecuniary damage incurred by the appellant; - in the alternative, refer the case back to the General Court; and - in any event, order the Commission to pay the costs of both sets of proceedings.
21 The Council contends that the Court should: - dismiss the appeal and - order the appellant to pay the costs of the whole proceedings.
22 The Commission contends that the Court should: - dismiss the appeal and - order the appellant to pay the costs of the proceedings.
23 As a preliminary point, it should be noted that, in paragraph 32 of the judgment under appeal, the General Court held of its own motion that it did not have jurisdiction to hear the appellant’s action for damages in so far as that action sought compensation for the harm allegedly caused by restrictive measures provided for by decisions falling within the scope of the CFSP taken pursuant to Article 29 TEU (‘CFSP Decisions’).
24 While claiming, in its appeal, that the judgment under appeal should be set aside in its entirety, including the part of that judgment which dismisses the claim for damages for the harm allegedly caused by restrictive measures provided for by CFSP Decisions, the appellant does not dispute that finding as such.
25 However, given that the question of the Court of Justice of the European Union’s jurisdiction over an action is a matter of public policy, that question may be considered by the Court at any stage in the proceedings, even of its own motion (judgment of 12 November 2015, Elitaliana v Eulex Kosovo, C‑439/13 P, EU:C:2015:753, paragraph 37 and the case-law cited).
26 In that regard, pursuant to the final sentence of the second subparagraph of Article 24(1) TEU and the first paragraph of Article 275 TFEU, the Court of Justice of the European Union does not, in principle, have jurisdiction with respect to the provisions relating to the CFSP or with respect to legal acts adopted on the basis of those provisions (judgments of 24 June 2014, Parliament v Council, C‑658/11, EU:C:2014:2025, paragraph 69, and of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 60).
27 However, the Treaties expressly lay down two exceptions to that principle. First, both the last sentence of the second subparagraph of Article 24(1) TEU and the second paragraph of Article 275 TFEU provide that the Court of Justice of the European Union has jurisdiction to monitor compliance with Article 40 TEU. Second, the last sentence of the second subparagraph of Article 24(1) TEU confers on the Court of Justice of the European Union jurisdiction to review the legality of certain decisions referred to in the second paragraph of Article 275 TFEU. The latter provision confers on the Court of Justice of the European Union jurisdiction to give rulings on actions, brought subject to the conditions laid down in the fourth paragraph of Article 263 TFEU, concerning the review of the legality of Council decisions, adopted on the basis of provisions relating to the CFSP, which provide for restrictive measures against natural or legal persons (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 60).
28 In the present case, by the annulment judgment, the General Court annulled, in so far as concerned the appellant, CFSP Decisions and regulations enacted under Article 215 TFEU relating to restrictive measures which, although not falling within the scope of the CFSP, implemented those decisions, on the ground that they were inadequately reasoned. In its action for damages consequent to that annulment judgment, the appellant draws no distinction between, on the one hand, liability of the European Union arising from the CFSP Decisions and, on the other hand, liability arising from the regulations.
29 It is common ground that, as the General Court correctly held, in essence, in paragraph 31 of the judgment under appeal, the Court of Justice of the European Union has jurisdiction to hear an action for damages for the harm allegedly suffered by the appellant as a result of the restrictive measures taken against it in those regulations.
30 Thus, the Court of Justice has already applied the rules governing the European Union’s non-contractual liability following the annulment of regulations based on Article 215 TFEU, in particular in the judgment of 30 May 2017, Safa Nicu Sepahan v Council (C‑45/15 P, EU:C:2017:402).
31 It is true that Article 275 TFEU does not expressly mention the jurisdiction of the Court of Justice of the European Union to rule on harm allegedly caused by restrictive measures taken in CFSP Decisions.
32 Nevertheless, first, the final sentence of the second subparagraph of Article 24(1) TEU and the first paragraph of Article 275 TFEU introduce a derogation from the jurisdiction of general scope which Article 19 TEU confers on the Court of Justice of the European Union in order to ensure that in the interpretation and application of the Treaties the law is observed. Consequently, Article 24(1) TEU and the first paragraph of Article 275 TFEU must be interpreted restrictively (judgments of 24 June 2014, Parliament v Council, C‑658/11, EU:C:2014:2025, paragraph 70, and of 19 July 2016, H v Council and Others, C‑455/14 P, EU:C:2016:569, paragraph 40).
33 Second, an action for damages is an autonomous form of action, with a particular purpose to fulfil within the system of legal remedies and subject to conditions for its use dictated by its specific purpose (judgments of 28 April 1971, Lütticke v Commission, 4/69, EU:C:1971:40, paragraph 6, and of 10 September 2019, HTTS v Council, C‑123/18 P, EU:C:2019:694, paragraph 40).
34 Third, an action for damages must be assessed having regard to the whole of the system established by the treaties for the judicial protection of the individual (see, to that effect, judgments of 5 December 1979, Amylum and Tunnel Refineries v Council and Commission, 116/77 and 124/77, EU:C:1979:273, paragraph 14, and of 12 April 1984, Unifrex v Commission and Council, 281/82, EU:C:1984:165, paragraph 11), since that action contributes to the effectiveness of that protection (see, to that effect, judgment of 12 September 2006, Reynolds Tobacco and Others v Commission, C‑131/03 P, EU:C:2006:541, paragraphs 82 and 83).
35 In that regard, it is apparent from both Article 2 TEU, which is included in the common provisions of the EU Treaty, and Article 21 TEU, concerning the European Union’s external action, to which Article 23 TEU, relating to the CFSP, refers, that one of the European Union’s founding values is the rule of law (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 72 and the case-law cited).
36 It may be added that Article 47 of the Charter of Fundamental Rights of the European Union, which constitutes a reaffirmation of the principle of effective judicial protection, requires, in its first paragraph, that any person whose rights and freedoms guaranteed by EU law are violated should have the right to an effective remedy before a tribunal in compliance with the conditions laid down in that article. The very existence of effective judicial review designed to ensure compliance with provisions of EU law is of the essence of the rule of law (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 73 and the case- law cited).
37 Indeed, as recalled in paragraphs 29 and 30 of the present judgment, the Court of Justice of the European Union has jurisdiction to rule on an action for damages in so far as it concerns restrictive measures provided for by regulations based on Article 215 TFEU.
38 That article, which serves as a bridge between the objectives of the EU Treaty in matters of the CFSP and the actions of the European Union involving economic measures falling within the scope of the FEU Treaty, permits the adoption of legislation by the Council, acting by a qualified majority on a joint proposal from the High Representative and the Commission, in order to give effect to restrictive measures where such measures fall within the scope of the FEU Treaty, and, in particular, to ensure their uniform application in all the Member States (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 89).
39 In those circumstances, as the Advocate General has, in essence, observed in points 67 and 68 of his Opinion, the necessary coherence of the system of judicial protection provided for by EU law requires that, in order to avoid a lacuna in the judicial protection of the natural or legal persons concerned, the Court of Justice of the European Union must also have jurisdiction to rule on the harm allegedly caused by restrictive measures provided for in CFSP Decisions.
40 Lastly, the Court of Justice does not accept the Council’s submission that, since the regulations enacted pursuant to Article 215 TFEU reproduce, in essence, the decisions taken pursuant to Article 29 TEU, the jurisdiction of the Court of Justice of the European Union to rule on the harm allegedly caused by the restrictive measures taken pursuant to Article 215 TFEU ensures full judicial protection of the natural or legal persons concerned.
41 As the Council itself acknowledges, CFSP Decisions, and the regulations enacted pursuant to Article 215 TFEU to implement them, may not be substantively identical. In particular, as far as natural persons are concerned, restrictions on admission to the territory of the Member States are likely to be included in CFSP Decisions, without necessarily being included in regulations based on Article 215 TFEU.
42 Moreover, the public designation of persons subject to restrictive measures is accompanied by opprobrium and suspicion (see, to that effect, judgment of 28 May 2013, Abdulrahim v Council and Commission, C‑239/12 P, EU:C:2013:331, paragraph 70 and the case-law cited), in respect of which it cannot be ruled out that they cause harm and justify bringing an action for damages in compensation thereof.
43 Therefore, the principle of effective judicial protection of persons or entities subject to restrictive measures requires, in order for such protection to be complete, that the Court of Justice of the European Union be able to rule on an action for damages brought by such persons or entities seeking damages for the harm caused by the restrictive measures taken in CFSP Decisions.
44 Accordingly, it must be held that the General Court and, in the case of an appeal, the Court of Justice, have jurisdiction to rule on an action for damages in so far as it seeks to obtain compensation for the harm allegedly caused by restrictive measures taken against natural or legal persons pursuant to CFSP Decisions.
45 That finding is not called into question by the Council’s argument based on the judgments of 27 February 2007, Gestoras Pro Amnistía and Others v Council (C‑354/04 P, EU:C:2007:115, paragraph 46), and of 27 February 2007, Segi and Others v Council (C‑355/04 P, EU:C:2007:116, paragraph 46). The Council claims that it follows from those judgments that, under the Treaties, as in force at that time, Article 35 EU did not confer on the Court of Justice of the European Union any jurisdiction to hear any action for damages in respect of Title VI of the EU Treaty, in its version prior to the Treaty of Lisbon, entitled ‘Provisions on police and judicial cooperation in criminal matters’.
46 The Council relies on the judgment of 27 February 2007, Segi and Others v. Council (C‑355/04 P, EU:C:2007:116, paragraphs 50 and 56), to maintain that the same interpretation which was the subject of Title V of the EU Treaty in its version prior to the Treaty of Lisbon should be applied to the CFSP, and that the courts of the Member States should have sole jurisdiction in respect of actions for damages brought in this field.
47 In that regard, it should be noted that the structure of the Treaties has changed as compared with that existing at the time of the facts that were at issue in the cases giving rise to the judgments referred to in paragraph 45 of the present judgment. Since then, the Treaty of Lisbon, which entered into force on 1 December 2009, has, by giving the European Union a single legal personality, enshrined in Article 47 TEU, put an end to the distinction that had previously been drawn between the European Community and the European Union. This has resulted in particular in the integration of CFSP provisions into the general framework of EU law, although the CFSP is nevertheless subject to specific rules and procedures, as laid down in Article 24 TEU (see, to that effect, judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 91).
48 As a result of this new structure, the provisions of the EU Treaty relating to the powers of that institution, applicable before the entry into force of the Treaty of Lisbon, and, by extension, the judgments relied on by the Council, are irrelevant for the purposes of assessing the current scope of the powers of the Court of Justice of the European Union in CFSP matters.
49 It follows from all the foregoing considerations that the General Court erred in law in holding, in paragraph 30 of the judgment under appeal, that an action for damages for harm allegedly suffered by a natural or legal person as a result of restrictive measures provided for by CFSP Decisions fell outside its jurisdiction.
50 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 (judgment of 26 July 2017, Council v LTTE, C‑599/14 P, EU:C:2017:583, paragraph 75).
51 In the present case, it is common ground that the annulment judgment annulled CFSP Decisions as well as regulations based on Article 215 TFEU on the same grounds, that the appellant, in its action for damages, did not draw any distinction as to the non-contractual liability arising from those decisions and those regulations and that, by the judgment under appeal, the General Court dismissed that action in its entirety.
52 In those circumstances, it must be held that the error of law found in paragraph 49 of the present judgment does not affect the operative part of the judgment under appeal provided that none of the grounds of appeal succeed in overturning the assessment by the General Court of the substance of the action for damages.
53 The first ground of appeal alleges that the inadequacy of the statement of reasons for the measures annulled by the annulment judgment constitutes a sufficiently serious breach of a rule of EU law intended to confer rights on individuals.
54 The appellant submits that the General Court erred in law by holding, in paragraph 43 of the judgment under appeal, that the breach of the duty to state reasons, enshrined in Article 296 TFEU, was not in itself such as to give rise to liability on the part of the European Union.
55 The appellant maintains that the case-law on which the General Court relied is irrelevant in so far as it concerns legal acts of general application, and not restrictive measures of individual scope which, as in the present case, have a significant impact on the rights and freedoms of the persons concerned.
56 Moreover, the duty to state reasons is a key component of the sound administration of justice. In that regard, the Court of Justice has, according to the appellant, held that the principle of respect for the rights of the defence and the right to effective judicial protection is fundamental in any proceedings capable of resulting in injurious individual sanctions, in particular in the judgment of 8 February 2007, Groupe Danone v Commission (C‑3/06 P, EU:C:2007:88, paragraph 68). The appellant claims that such a duty is even more important in the case of decisions which, as in the case of restrictive measures with individual scope, are injurious by their very nature.
57 Lastly, in the alternative, the appellant maintains that the General Court was wrong to hold that its office did not require it to carry out an assessment in concreto of the seriousness of the alleged infringement for the purpose of assessing whether it constituted a sufficiently serious breach of a rule of EU law intended to confer rights on individuals.
58 The Council and the Commission dispute those arguments.
59 In paragraph 43 of the judgment under appeal, the Court held that, according to settled case-law, breach of the duty to state reasons was not in itself such that the European Union could be found liable.
60 The appellant submits that that case-law applies only in the case of a legal act of general application which is vitiated by a defective or inadequate statement of reasons.
61 In that regard, as far as the system of legal remedies is concerned, the requirement of a statement of the reasons upon which legal acts of general application are based is designed to enable the Court to exercise its powers of review of the legality of such legal acts in the context of Article 263 TFEU for the benefit of individuals to whom that remedy is made available by the FEU Treaty (see, to that effect, judgment of 15 September 1982, Kind v EEC, 106/81, EU:C:1982:291, paragraph 14). Nevertheless, any inadequacy in the statement of reasons for a legal act of general application is not per se sufficient for the European Union to be found liable (see, to that effect, judgments of 15 September 1982, Kind v EEC, 106/81, EU:C:1982:291, paragraph 14, and of 30 September 2003, Eurocoton and Others v Council, C‑76/01 P, EU:C:2003:511, paragraph 98).
62 To the same effect, the Court has held that inadequacy of the statement of reasons for a legal act imposing a restrictive measure is not, in itself, such as to give rise to non-contractual liability of the European Union (judgment of 10 September 2019, HTTS v Council, C‑123/18 P, EU:C:2019:694, paragraph 103). Consequently, contrary to the appellant’s contention, that case-law applies not only to a legal act of general application but also to a legal act imposing restrictive measures which apply to individuals.
63 It must therefore be held that the General Court was correct to hold, in paragraph 43 of the judgment under appeal, that the inadequacy of the statement of reasons for the legal acts imposing restrictive measures on the appellant was not in itself such as to give rise to liability on the part of the European Union and, accordingly, that the first ground of appeal must be dismissed.
64 Nevertheless, it should be added that the duty to state reasons established by Article 296 TFEU is an essential procedural requirement which must be distinguished from the question whether the reasoning is well founded, which is concerned with the substantive legality of the measure at issue. The reasoning of a decision consists in a formal statement of the grounds on which that decision is based. If those grounds are unsupported or are vitiated by errors, that will vitiate the substantive legality of the decision, but not the statement of reasons in it (judgments of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 181, and of 16 November 2017, Ludwig-Bölkow-Systemtechnik v Commission, C‑250/16 P, EU:C:2017:871, paragraph 16).
65 It follows that, as the Advocate General stated, in essence, in point 88 of his Opinion, the European Union may be found liable where, in particular, the EU acts on which a restrictive measure is based are vitiated for want of any, or any sufficient, statement of reasons and the Council has not provided information capable of establishing that the measure is well founded, provided that the person or entity concerned by that measure expressly raises a plea to that effect in an action for damages.
66 The second ground of appeal is based on the contention that obtaining the annulment of restrictive measures does not make reliance on a sufficiently serious breach of the right to effective judicial protection pointless.
67 The appellant notes that, according to paragraph 51 of the judgment under appeal, the right to effective judicial protection is essentially procedural in nature, since it is limited to the right to bring an action for annulment.
68 The appellant submits, however, that in the annulment judgment the General Court did not rule on all the complaints raised, since it annulled the restrictive measures solely on the ground of the inadequate statement of reasons for the legal acts imposing the restrictive measures. The appellant maintains that it also pleaded infringement of its right to effective judicial protection. In its action for damages, it claims that it can rely on that infringement, since the General Court did not rule on all of its arguments.
69 Furthermore, the appellant considers that it is not pointless, once an illegal restrictive measure is annulled, for it to be claimed, subsequently, that the illegality committed by the Council constitutes a serious breach of the right to effective judicial protection. The examination of a possible infringement of that right thus depends, according to the appellant, on the extent of the latitude available to the Council in relation to the rule infringed, having regard to the seriousness of the illegal actions and, in particular, their duration.
70 In that regard, it asserts that the Court held, in its judgment of 30 May 2017 (Safa Nicu Sepahan v Council, C‑45/15 P, EU:C:2017:402, paragraph 40), that, even where a restrictive measure is annulled following an action for annulment, the illegality in question may constitute a sufficiently serious breach of EU law, including that of the right to effective judicial protection.
71 The Council and the Commission contend that this ground of appeal must be dismissed.
72 As a preliminary point, it should be noted that, in paragraph 55 of the judgment under appeal, the General Court held that the plea in law and the arguments raised in the application seeking to establish the existence of a sufficiently serious breach of a rule of EU law intended to confer rights on individuals capable of giving rise to non-contractual liability on the part of the European Union, were based solely on the illegality found by the General Court in the annulment judgment.
73 That assessment is not disputed by the appellant in its appeal.
74 In its application which led to the annulment judgment, the appellant argued that the duty to state reasons for legal acts arises from the second paragraph of Article 296 TFEU and also, in particular, from the right to effective judicial protection.
75 In the part of the application entitled ‘Failure to comply with the duty to state adequate reasons’, the appellant concluded that ‘the decision to include [it] … on the lists does not therefore provide adequate reasons, which constitutes infringement of the second paragraph of Article 296 TFEU, of the right to good administration, of the rights of the defence and of the right to effective judicial protection’.
76 Consequently, as pleaded by the appellant, the argument based on the right to effective judicial protection related, in reality, to the claim alleging breach of the duty to state reasons and was not a distinct claim.
77 Furthermore, while it is true that nothing prevents the appellant from relying, in an action for damages such as that which gave rise to the judgment under appeal, on an illegality consisting in infringement of the right to effective judicial protection, it should nevertheless be noted that the appellant has failed to show how the General Court erred in law in holding, in paragraph 51 of the judgment under appeal, that the Council had not committed such an infringement.
78 In the light of those factors, the second ground of appeal must be dismissed.
79 The third and sixth grounds of appeal, which it is appropriate to examine together, allege an error of law and a distortion of the application, in that the General Court dismissed a plea in law relied on in the response.
80 In that regard, the appellant submits that the General Court, in paragraphs 52 to 58 of the judgment under appeal, erred in law by confining itself to ascertaining whether one of the illegalities referred to by the appellant in its reply, namely the fact that the Council did not apply the test which it claimed to have applied in order to designate the persons and entities to be subject to the restrictive measures, had been expressly relied on in the application initiating the proceedings, without ascertaining whether that illegality had implicitly been raised.
81 It submits that the General Court was obliged to consider whether that plea, even if only in embryonic form, was already contained in the application or whether its elaboration in the reply resulted from the normal development of the debate in adversarial proceedings. Thus, the appellant claims that it confined itself to replying to the arguments put forward by the Council in the latter’s defence. By failing to consider whether that was the case, the General Court excluded information relevant to an assessment of the seriousness of the infringement of EU law at issue from its examination.
82 Furthermore, the appellant considers that, also in the same paragraphs 52 to 58, the General Court distorted its application by rejecting as inadmissible its argument that the Council failed to apply the test which it claimed to have applied in order to justify the sanctions it imposed. In that regard, the appellant claims that it is apparent from its application that it had indeed pleaded the illegality of the restrictive measures in question, for which the European Union should be found liable.
83 The Council and the Commission contend that the third and sixth grounds of appeal should be dismissed.
84 In paragraphs 55 to 58 of the judgment under appeal, the General Court held that the argument put forward by the appellant in its reply, alleging that the reason for the inclusion of its name on the lists of persons concerned by restrictive measures did not meet the test applied by the Council and challenging the validity of that inclusion, could not be regarded as an elaboration of the plea, raised in the application, seeking to establish the existence of a sufficiently serious breach of a rule of law conferring rights on individuals for which the European Union could be found liable and that, as a new plea, it had to be dismissed as inadmissible.
85 The appellant challenges that interpretation, pointing, in its application before the General Court, to the claim that the Council had infringed an obligation in relation to which it did not have any latitude, inasmuch as it could act only in accordance with the generally applicable criteria laid down by the decision and the regulations concerned, establishing the categories of persons and entities liable to be subjected to restrictions.
86 However, it is important to note that, in that application, the appellant placed that argument in connection with the breach of the duty to state reasons. Indeed, following the claim set out in the previous paragraph of the present judgment, the appellant immediately added that the ‘illegality vitiating the legal acts of the Council lies in the breach of the duty to state reasons, which is a clear infringement of the rights of the defence and of the right to effective judicial protection’.
87 Consequently, the General Court was fully entitled to consider that the argument put forward by the appellant in that application, alleging the illegality of the legal acts of the Council annulled by the annulment judgment, in that, according to the appellant, the Council applied a test other than that which it claimed to have applied, was based solely on breach of the duty to state reasons, and did not question whether the grounds for its inclusion on the list of persons and entities covered by the restrictive measures provided for by those legal acts were well founded.
88 In those circumstances, the third and sixth grounds of appeal must be dismissed.
89 The fourth, fifth and seventh grounds of appeal, which it is appropriate to examine together, relate to a misinterpretation of the annulment judgment, an erroneous finding that the failure to disclose to the appellant the evidence against it did not establish a sufficiently serious breach of a rule of EU law, and a distortion of the application in that the General Court reduced the pleas of illegality put forward to a mere breach of the duty to state reasons.
90 The appellant criticises the General Court for having misinterpreted, in paragraphs 49 and 50 of the judgment under appeal, the annulment judgment as regards the Council’s obligation to disclose to the appellant the evidence against it.
91 In paragraph 82 of the annulment judgment, the appellant submits that the General Court explicitly stated that the Council had infringed its obligation to disclose such evidence. According to the appellant, it is apparent from the preceding paragraphs of that judgment that the Council was unable to produce any evidence capable of substantiating the complaints justifying the sanctions imposed on the appellant. Accordingly, the General Court, in the annulment judgment, did not merely suggest that the inadequate statement of reasons had not been remedied by the documents subsequently disclosed, but correctly found that the Council had failed to fulfil its obligation to disclose the evidence against the appellant, without even being able to identify any specific act it had committed.
92 The appellant also claims that the General Court, in paragraph 50 of the judgment under appeal, erred in law by holding that the breach of the disclosure obligation did not, in the present case, establish the existence of a sufficiently serious breach of EU law for which the European Union could be found liable.
93 In that regard, it maintains that the Court of Justice held, in its judgment of 30 May 2017, Safa Nicu Sepahan v Council (C‑45/15 P, EU:C:2017:402, paragraph 40), that the breach of the obligation to provide, in the event of dispute, information or evidence supporting the grounds for the adoption of restrictive measures constitutes a sufficiently serious breach of a rule of law intended to confer rights on individuals. The appellant considers that such a breach of the obligation to disclose information or evidence is identical to breach of the obligation to disclose to the appellant, in its capacity as the entity concerned, the evidence against it with regard to the reason for the measures freezing the funds taken against it.
94 Lastly, the appellant submits that, in paragraphs 44, 45 and 55 to 58 of the judgment under appeal, the General Court distorted its application by reducing the pleas of alleging illegality merely to breach of the duty to state reasons. In that regard, the appellant claims that it stated, in its application, that there was no evidence to justify the sanctions imposed. The appellants considers that this ground of appeal is distinct from what the General Court held in the operative part of the annulment judgment, but is related to what it found in the grounds of that judgment.
95 The Commission contends that these grounds of appeal are unfounded.
96 In paragraph 82 of the annulment judgment, the General Court held that the Council had infringed its duty to state reasons and to disclose to the appellant, as the entity concerned, the evidence against it with regard to the reason for the measures freezing funds taken against it. In paragraph 83 of the annulment judgment, the General Court concluded that the second plea in law must be upheld in so far as it alleged a breach of the duty to state reasons; a finding which justified, on its own, the annulment of the contested measures in so far as they concerned the appellant.
97 It is clear from those paragraphs in the annulment judgment that the General Court considered that the appellant’s argument, alleging breach of the obligation to disclose to it the evidence against it, fell within the scope of the complaint alleging breach of the duty to state reasons.
98 To that effect, the General Court stated, in paragraph 68 of the annulment judgment, that as regards, in particular, the statement of reasons, the appellant claimed, in essence, that it was not in a position to understand the basis on which it had been included in the lists of persons covered by the measures for the freezing of funds, that the inadequacy of the statement of reasons had not been remedied by the documents disclosed at a later stage and that the letter of 5 December 2011 that the Council sent to it was formulaic.
99 However, in the application which gave rise to the annulment judgment, the appellant had itself placed the failure to disclose the evidence against it in connection with its complaint alleging breach of the duty to state reasons, raised in its second plea in law.
100 It follows that, as the Advocate General observed in point 93 of his Opinion, the General Court correctly held, in paragraph 49 of the judgment under appeal, that the failure to disclose the evidence against the appellant did not constitute a separate ground for annulment.
101 Furthermore, the appellant’s argument that its application before the General Court was distorted in that the General Court did not regard its argument based on the absence of any factor capable of justifying the sanctions imposed on it as a distinct plea of illegality must be rejected.
102 Indeed, as the Advocate General stated, in essence, in points 95 to 97 of his Opinion, it follows from that application that, as was found in paragraph 86 of the present judgment in relation to the argument that the Council applied a test other than that which it claimed to have applied, the argument put forward by the appellant that there was no factor capable of justifying the sanctions imposed on it was inextricably linked to its plea alleging breach by the Council of its duty to state reasons.
103 It should be added that, notwithstanding the fact that, in the judgment of 30 May 2017, Safa Nicu Sepahan v Council (C‑45/15 P, EU:C:2017:402, paragraph 40), relied on by the appellant in its appeal, the Court did point to the Council’s obligation to disclose, in the event of a dispute, information or evidence substantiating the reasons for the adoption of restrictive measures against a natural or legal person, that judgment concerned a judicial review of the substantive legality of individual restrictive measures and not a review of compliance with the duty to state reasons. As is clear from the case-law cited in paragraph 64 of the present judgment, the duty to state reasons is an essential procedural requirement and distinct from the question whether the reasons given are correct.
104 The judgment of 30 May 2017, Safa Nicu Sepahan v Council (C‑45/15 P, EU:C:2017:402), is therefore irrelevant in support of the fourth, fifth and seventh grounds of appeal, since, in the light of the arguments put forward by the appellant both in its action for damages before the General Court and in its appeal, the present case concerns only the consequences to be drawn from the breach of the duty to state reasons.
105 These grounds of appeal, which are based on an erroneous reading of the annulment judgment and of the application before the General Court, must therefore be dismissed.
106 In the light of the foregoing and in accordance with what has been stated in paragraph 52 of the present judgment, it must be concluded that the error of law found in paragraph 49 of the present judgment is not such as to justify setting aside the judgment under appeal.
107 It follows from all of the foregoing considerations that the appeal must be dismissed in its entirety.
108 In accordance with Article 184(2) of the Rules of Procedure of the Court, where the appeal is unfounded, the Court is to make a decision as to costs. Under Article 138(1) of the Rules of Procedure, which is applicable to the procedure on appeal by virtue of Article 184(1) thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
109 Since the Council has applied for the appellant to be ordered to pay the costs and the appellant has been unsuccessful, the latter must be ordered to bear its own costs and to pay those incurred by the Council.
110 Pursuant to Article 140(1) of those rules, which provides that Member States and institutions which have intervened in the proceedings are to bear their own costs, the Commission is to be ordered to bear its own costs.