By its appeal, Bank Melli Iran, an Iranian bank owned by the Iranian State, requests the Court of Justice to set aside the judgment of the Court of First Instance of the European Communities (now the General Court) in Case T‑390/08 Bank Melli Iran v Council [2009] ECR II‑3967 (‘the judgment under appeal’), by which that court dismissed its action seeking the annulment of paragraph 4 of Table B in the annex to Council Decision 2008/475/EC of 23 June 2008 implementing Article 7(2) of Regulation (EC) No 423/2007 concerning restrictive measures against Iran (OJ 2008 L 163, p. 29) (‘the contested decision’) in so far as it relates to Bank Melli Iran and its branches.
In order to apply pressure on the Islamic Republic of Iran to end proliferation‑sensitive nuclear activities and the development of nuclear weapon delivery systems (‘nuclear proliferation’), on 23 December 2006 the United Nations Security Council (‘the Security Council’) adopted Resolution 1737 (2006), the annex to which lists a series of persons and entities involved in nuclear proliferation whose funds and economic resources (‘funds’) were to be frozen. The list contained in the annex to Resolution 1737 (2006) has subsequently been updated by several resolutions, in particular by Security Council Resolution 1747 (2007) of 24 March 2007, by which the funds of Bank Sepah, an Iranian bank, and its subsidiary in the United Kingdom, Bank Sepah International plc, were frozen. The appellant has not been the subject of any fund-freezing measures adopted by the Security Council.
Resolution 1737 (2006) was given effect, so far as the European Union is concerned, by Council Common Position 2007/140/CFSP of 27 February 2007 concerning restrictive measures against Iran (OJ 2007 L 61, p. 49).
Article 5(1) of Common Position 2007/140 states the following:
The appellant is not mentioned in the annexes to Common Position 2007/140.
In so far as concerned the powers of the European Community, Resolution 1737 (2006) was given effect by Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1), adopted on the basis of Articles 60 EC and 301 EC in relation to Common Position 2007/140, and the content of which is substantially the same as that of Common Position 2007/140 in that the same names of entities and physical persons are listed in the annex to that regulation.
Article 5 of Regulation No 423/2007 prohibits certain transactions with persons or entities in Iran or for use in that country.
Article 7 of Regulation No 423/2007 provides:
The appellant is not mentioned in the annexes to Regulation No 423/2007.
Articles 8 and 9 of Regulation No 423/2007 provide for the possibility to release certain funds to enable the execution of a judicial, administrative or arbitral lien or judgment, or for the payment of a sum which is due. Article 10 of that regulation provides for the possibility of releasing certain funds to meet, under the supervision of the competent authorities, certain expenditure, such as that necessary to subsidise the basic needs of persons whose funds have been frozen or to pay for expenses associated with the provision of legal services.
Article 13 of Regulation No 423/2007 requires the persons and entities concerned to provide various items of information to the competent authorities and to cooperate with them.
Article 15(2) and (3) of that regulation provides:
Article 16 of Regulation No 423/2007 provides that Member States are to determine the penalties applicable to infringements of the regulation.
Under paragraph 10 of Security Council Resolution 1803 (2008) of 3 March 2008, the Security Council called upon ‘all States to exercise vigilance over the activities of financial institutions in their territories with all banks domiciled in Iran, in particular with Bank Melli and Bank Saderat, and their branches and subsidiaries abroad, in order to avoid such activities contributing to proliferation‑sensitive nuclear activities, or to the development of nuclear weapon delivery systems’.
Council Common Position 2008/479/CFSP of 23 June 2008 amending Common Position 2007/140 (OJ 2008 L 163, p. 43), replaced, inter alia, Annex II to Common Position 2007/140. That annex contains Table A, entitled ‘Natural persons’, and Table B, entitled ‘Entities’.
Although Resolution 1803 (2008) did not freeze the funds of Melli Bank and Bank Melli Iran, such a freeze is provided for in Common Position 2008/479. Paragraph 5 of Table B in the annex to that common position states the following in the first column, entitled ‘Name’:
In a second column, entitled ‘Identifying information’, an address is given opposite the name of each of the banks concerned.
The third column, entitled ‘Reasons’, states the following:
In the fourth column, entitled ‘Date of listing’, the date is given as ‘23.6.2008’.
On 23 June 2008 the Council also adopted the contested decision. The annex to that decision replaces Annex V to Regulation No 423/2007. It contains Table A, entitled ‘Natural persons’, and Table B, entitled ‘Legal persons, entities and bodies’, which both contain the same columns as those in the annex to Common Position 2008/479. The appellant is listed in paragraph 4 of Table B. The information relating to the appellant is identical to that in the annex to the common position. The contested decision was published in the Official Journal of the European Union on 24 June 2008.
A notice for the attention of those persons, entities and bodies that have been included by the Council on the list of persons, entities and bodies to which Article 7(2) of Council Regulation (EC) No 423/2007 applies (Annex V) (OJ 2009 C 145, p. 1) was published in the Official Journal of the European Union on 25 June 2009. It is stated therein that, according to Article 15(2) of the regulation, that list is to be reviewed at regular intervals and at least every 12 months. For that purpose, the persons, entities or bodies concerned may submit a request to the Council, together with supporting documentation, that the decision to include them on the list in question should be reconsidered. Any such requests should be sent to the Council within one month from the date of publication of that notice.
By application lodged at the Registry of the General Court on 18 September 2008, the appellant brought an action for the annulment of paragraph 4 of Table B in the annex to the contested decision, and requested the General Court to:
The French Republic, the United Kingdom of Great Britain and Northern Ireland and the Commission of the European Communities (now the European Commission) were granted leave to intervene before the General Court in support of the form of order sought by the Council that the action be dismissed.
In support of the form of order it sought, the appellant raised five pleas. The first plea alleged an infringement of essential procedural requirements, of the EC Treaty, of the rules of law relating to its application and of Article 7(2) of Common Position 2007/140, misuse of power and want of a legal basis for the contested decision; the second, infringement of the principle of equal treatment; the third, infringement of the principle of proportionality and of the right to property; the fourth, infringement of the rights of the defence, of the right to effective judicial protection and of Article 15(3) of Regulation No 423/2007; and the fifth, that the Council lacked competence to impose ‘criminal sanctions’, such as the freezing of funds, under the Treaty.
At the outset, and before examining those pleas, the General Court set out, in paragraphs 35 to 37 of the judgment under appeal, the principles applicable to judicial review.
The General Court then examined and rejected each of the pleas raised and dismissed the action in its entirety.
Bank Melli Iran claims that the Court of Justice should:
The Commission contends that the Court should dismiss the appeal and order the appellant to pay the costs.
The French Republic contends that the Court of Justice should:
The United Kingdom requests the Court of Justice to dismiss the appeal.
The Commission contends that the Court of Justice should:
Bank Melli Iran relies on three principal grounds of appeal and on three other grounds of appeal in the alternative.
Principally, it submits, first, that the General Court erred in law by not finding the obligation of individual notification of the contested measure to be an essential procedural requirement and that its reasoning was vitiated by erroneous grounds, second, that the General Court committed an error of law in the interpretation of the legal bases of Regulation No 423/2007 and vitiated its reasoning by erroneous grounds and, third, that the General Court infringed the duty to state the reasons for measures which it adopts, and infringed the rights of the defence and the principle of effective judicial protection.
In the alternative, it submits, first, that the General Court infringed Article 7(2) of Regulation No 423/2007 and contradicted itself, second, that it made an error of assessment of law with regard to the appellant’s right to property and, third, that the Council made a manifest error of assessment of the facts by including and maintaining the appellant in the list in Annex V to Regulation No 423/2007.
The present ground of appeal concerns paragraphs 86 to 90 of the judgment under appeal, which state the following:
The appellant submits that the General Court committed an error of law by failing to find the obligation of individual notification, laid down in Article 15(3) of Regulation No 423/2007, which if not fulfilled results in the annulment of the measure, to be an essential procedural requirement and that it vitiated its statement of reasons with erroneous grounds.
It emphasises that, according to Article 234 EC, individual decisions take effect only upon their notification. It was all the more important to notify the contested decision since the appellant was not heard before the decision was adopted.
Citing the judgment in Case C‑227/92 P Hoechst v Commission [1999] ECR I‑4443, the appellant submits that the notification of a decision is an essential procedural requirement, which if not fulfilled constitutes an absolute ground for nullity of the measure. That nullity cannot be made good by information provided to the addressee of the measure by another person or entity. In the appellant’s view, the notification of the contested decision made by the French banking commission could thus not satisfy the conditions for notification specified in Regulation No 423/2007.
In addition to the infringement of essential procedural requirements, the appellant accuses the General Court of providing erroneous grounds for its judgment by considering that the information provided to the appellant by the French banking commission made good the nullity and justifying that finding by the fact that the Council did not determine there to be ‘exceptional circumstances’, even though the failure to notify a measure having adverse effects constitutes an infringement of a rule of European Union law which is of a public policy nature.
The French Republic and the Commission dispute the General Court’s reasons and suggest that the Court of Justice substitute those grounds for its own. In their view, Article 15(3) of Regulation No 423/2007 does not require individual notification of the contested decision and no obligation to notify can be inferred from primary law. The General Court was thus wrong to require, in paragraph 88 of the judgment under appeal, that the Council provide individual notification.
The Council, the French Republic and the Commission note the prescriptive nature of a decision to freeze funds. The Council states that, in spite of its reasoning in relation to the obligation to notify, the General Court did not conclude that the contested measure constituted a decision and not a regulation.
The French Republic also contests the comparison made by the General Court, in paragraph 87 of the judgment under appeal, between fund-freezing measures adopted in the campaign against nuclear proliferation, which concern third countries, and those adopted in the campaign against terrorism, which concern individuals and entities on an individual basis. It was never claimed that a measure imposing sanctions on a third country had to be notified to that country individually. The difference in objectives results, moreover, from a difference in legal bases; Regulation No 423/2007 was adopted on the basis of Articles 60 EC and 301 EC, whereas the measures in relation to terrorism were adopted on the basis of Article 308 EC.
At the hearing, the Council stated that fund-freezing measures taken against persons linked to terrorism are notified in accordance with the guidelines set out in paragraph 147 of the judgment of the General Court in Organisation des Modjahedines du people d’Iran v Council, that is to say that, in order to prevent the legitimate expectations of those persons from being jeopardised, only the general grounds for the decision are published in the Official Journal of the European Union, whereas the specific and concrete grounds are notified to them.
The United Kingdom states that the purpose of notification is to inform the addressee of a decision and to enable him to bring an action. In the present case, as regards the freezing of funds, prior notification would not have been possible given the required surprise effect. Article 254 EC does not state how notification is to be effected. The United Kingdom considers, in that regard, that an opinion published in the Official Journal of the European Union at the same time as the decision draws sufficient attention. In any event, the entity concerned would immediately feel the effects of the implementation of the decision. In the present case, the French branch of Bank Melli Iran was informed of the contested decision and the appellant could have brought an action. The United Kingdom, the Council, the French Republic and the Commission point out that the appellant did not suffer any harm as a result of the failure to notify the contested decision.
The Court of Justice notes, first, that, in spite of its title, the contested decision is of the same nature as a regulation. It contains just one annex, which replaces Annex V to Regulation No 423/2007. The effect of that annex is determined in the second paragraph of Article 19 of that regulation, which provides that the regulation is to be binding in its entirety and directly applicable in all Member States, which corresponds to the effects of a regulation as provided for in Article 249 EC.
In principle, therefore, the Treaty does not require such a measure to be notified, but to be published, in accordance with Article 254(1) and (2) EC.
Second, as regards Article 15(3) of Regulation No 423/2007 more specifically, it must be borne in mind that the principle of effective judicial protection means that the European Union authority which adopts an act imposing restrictive measures against a person or entity is bound to communicate the grounds on which it is based, so far as possible, either when that measure is adopted or, at the very least, as swiftly as possible after it has been adopted in order to enable those persons or entities to exercise their right to bring an action (see, to that effect, Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 336).
It is with a view to ensuring observance of that principle that Article 15(3) of Regulation No 423/2007 requires the Council to state individual and specific reasons for decisions taken pursuant to Article 7(2) of the regulation and make them known to the persons, entities and bodies concerned.
As the General Court noted in paragraph 86 of the judgment under appeal, the freezing of funds has considerable consequences for the entities concerned, for it may restrict the exercise of their fundamental rights.
Although Regulation No 423/2007 does not state how reasons are ‘to be made known’ to the persons, entities and bodies concerned, the claim made by the United Kingdom that publication in the Official Journal of the European Union is sufficient cannot be upheld.
Indeed, if the communication of individual and specific reasons could be regarded as accomplished through publication in the Official Journal of the European Union, it is difficult to imagine why express reference is made to such communication, as in Article 15(3) of Regulation No 423/2007, since that decision must be published in any event, in accordance with Article 254(1) and (2) EC, having regard to its prescriptive nature, as pointed out in paragraph 45 above.
It follows that the Council is required to communicate a decision individually to satisfy the obligation imposed on it by that provision.
That conclusion is not called into question by Article 254(3) EC, to which the appellant refers, concerning the notification of a decision in the narrow sense; besides, the appellant did not allege an infringement of that provision before the General Court.
The same is true of paragraphs 68 to 73 of the judgment in Hoechst v Commission, to which the appellant refers and which need to be understood in the light of the parties’ arguments to which they respond and their context. As is apparent from paragraphs 44 to 53 of the judgment in Hoechst v Commission, and paragraphs 21 to 24 of the Opinion of Advocate General Cosmos in that case, Hoechst AG relied on the lack of authentification of the contested decision and the fact that the text sent to it was not that adopted on the date indicated. In paragraph 69 of that judgment, the Court of Justice answered that line of argument by referring to paragraphs 48 and 49 of the judgment in Case C‑137/92 P Commission v BASF and Others [1994] ECR I‑2555, which relate to irregularities such as that at issue in that case, namely the lack of authentification of the measure. In so far as concerns paragraph 72 of the judgment in Hoechst v Commission, reference is clearly made to the issue ruled upon in Commission v BASF and Others, namely, the legal consequences of the lack of authentification of a measure.
In the present case, the individual and specific reasons for the freezing of funds provided for in Article 15(3) of Regulation No 423/2007 have not been communicated by the Council, but sufficient information was communicated to the appellant’s branch by the French banking commission and the appellant was able to bring an action. In the light of those factors, nor did the General Court commit an error of law, in paragraph 90 of the judgment under appeal, in holding that the fact that the Council did not apprise the appellant of the statement of reasons for the contested decision did not have the effect of depriving it of an opportunity of knowing, in good time, the reasons for the contested decision or of assessing the validity of the fund-freezing measure adopted in its regard.
Although, as just pointed out, an individual communication is necessary in principle, it is sufficient to note that Article 15(3) of Regulation No 423/2007 does not require communications to take a specific form, and refers only to the obligation to ‘make them known’. What matters is that useful effect should have been given to that provision, namely, effective judicial protection of the persons and entities concerned by the restrictive measures adopted pursuant to Article 7(2) of the regulation, which was the case in this instance.
It follows from all of the above considerations that the first ground of appeal is unfounded.
This ground of appeal concerns paragraphs 45 to 50 of the judgment under appeal, which read as follows:
The appellant submits that the General Court committed an error of law in interpreting the legal bases of Regulation No 423/2007 and vitiated its judgment with erroneous grounds.
The appellant observes that Article 7(2) of Regulation No 423/2007 relates to entities that ‘[are] engaged in, directly associated with, or providing support’ for nuclear proliferation. On the basis of the judgment in Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 167, it submits that, since the relevant criterion adopted by Regulation No 423/2007 and the contested decision is not the fact of being controlled by a third country, but participation in certain proliferation-sensitive nuclear activities, those provisions go beyond the scope of Article 60 EC and 301 EC. Consequently, it was essential to base those provisions not only on Articles 60 EC and 301 EC, but also on Article 308 EC, which requires a unanimous vote.
The appellant submits that the General Court also erred in law in considering that Common Position 2007/140 did not constitute a legal basis for Regulation No 423/2007 and the contested decision, but merely a ‘condition’ laid down by Article 301 EC. In doing so, the General Court made a distinction which is not made in the rules laid down in the Treaty. The appellant argues that the list in Annex V to Regulation No 423/2007 is identical to that in Annex II to Common Position 2007/140, which, pursuant to Article 7(2) of that common position, can be amended only unanimously. Since Regulation No 423/2007 is based on Articles 60 EC and 301 EC and on Common Position 2007/140, Annex V to the regulation should have been amended in accordance with the rule of unanimity. By disregarding that rule in adopting the contested decision, the Council misused its powers.
The French Republic considers that the ground of appeal raised by the appellant goes against the very wording of Article 301 EC.
The Council, the United Kingdom and the Commission submit that Regulation No 423/2007 is clearly directed at the Islamic Republic of Iran and that, therefore, it was not necessary to use Article 308 EC as a legal basis. In that regard, the judgment in Kadi and Al Barakaat International Foundation v Council and Commission is not relevant since it concerned a different situation. Unlike in the present case, the regulation at issue in that case did not relate to a third country. The Commission adds that, if the appellant now disputes its links with the Islamic Republic of Iran, that constitutes a new ground of appeal which is inadmissible.
So far as concerns misuse of powers, the Commission considers that, in paragraph 50 of the judgment under appeal, the General Court responded correctly by referring to the case‑law applicable in that area.
The appellant contests the General Court’s reasoning in relation to the legal basis for Regulation No 423/2007, considering that that regulation should have been adopted unanimously either on the basis of Articles 60 EC, 301 EC and 308 EC, or on the basis of Articles 60 EC and 301 EC and Common Position 2007/140. Consequently, the contested decision could not have been adopted by qualified majority, as provided for in Article 15(2) of Regulation No 423/2007 for amendments to the list of persons, entities and bodies referred to in Article 7(2) of that regulation.
According to the settled case-law of the Court of Justice, the choice of legal basis for a Community measure must rest on objective factors that are amenable to judicial review, including, in particular, the aim and the content of the measure (see, inter alia, Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 182).
The appellant does not dispute the use of Article 60 EC and 301 EC. It merely disputes the fact that Regulation No 423/2007 is based solely on those provisions.
According to its title, Regulation No 423/2007 concerns restrictive measures against the Islamic Republic of Iran. It is apparent from the recitals in the preamble thereto and from its provisions taken as a whole that the regulation is intended to prevent or slow down the nuclear policy of that State, in the light of the threat it poses, by means of restrictive economic measures. As noted by the Advocate General in point 75 of his Opinion, it is not nuclear proliferation in general which is being combated, but the risks inherent in the Iranian nuclear proliferation programme.
The aim and content of the measure in question clearly being the adoption of economic measures against the Islamic Republic of Iran, it was not necessary to have recourse to Article 308 EC, since Article 301 EC constitutes a sufficient legal basis in that it provides for an action by the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries; that action may cover the freezing of funds of entities, such as Bank Melli Iran, which are associated with the regime of the third country concerned.
As regards the need, asserted by the appellant, to include Common Position 2007/140 among the legal bases, it is sufficient to note that that need is contradicted by the very wording of Article 301 EC, which provides for the possibility of adopting Community measures when a common position or Community action adopted under the provisions of the EU Treaty, in the version prior to the Treaty of Lisbon, on the CFSP provide for Community action. The wording of that article indicates that the common position or joint action must exist in order for Community measures to be adopted, but not that those measures must be based on that common position or joint action.
In any event, a common position cannot constitute the legal basis for a Community measure. Council common positions in the sphere of the CFSP, such as Common Positions 2007/140 and 2008/479, are adopted within the framework of the EU Treaty, in accordance with Article 15 thereof, whereas Council regulations, such as Regulation No 423/2007, are adopted within the framework of the EC Treaty.
The Council could, therefore, adopt a Community measure only on the basis of the powers conferred on it by the EC Treaty, in this case Articles 60 EC and 301 EC.
The General Court thus rightly held, in paragraph 47 of the judgment under appeal, that the existence of a common position previously adopted in the sphere of the CFSP was simply a condition laid down by Article 301 EC.
As regards the complaint alleging misuse of powers, the Court of Justice finds that the appellant has not shown in what way paragraph 50 of the judgment under appeal might be erroneous.
It follows from the above that the second principal ground of appeal is unfounded.
This ground of appeal concerns paragraphs 80 to 85 of the judgment under appeal, which state:
The third principal ground of appeal also concerns paragraph 97 of the judgment under appeal, which states:
Finally, it is necessary to reproduce paragraphs 102 to 104 of the judgment under appeal:
The appellant challenges, first, the General Court’s conclusion, in paragraphs 84 and 85 of the judgment under appeal, that it held sufficiently precise information in relation to the grounds for freezing its funds, second, the conclusion, in paragraph 97 of the judgment under appeal, that the Council was not required to grant it access to the documents in the file, third, the conclusion, in paragraphs 102 and 104 of the judgment under appeal, that, the appellant having omitted to make such a request to the Council, the latter was not obliged to grant it access to the file whether before or after the bringing of an action and, fourth, the conclusion, in paragraph 106 of the judgment under appeal, that it was in a position fully to carry out its review.
The appellant submits that, according to the case‑law of the Court of Justice, the person concerned must receive, as of the administrative procedure, all the information necessary to defend his interests. It adds, citing Case C‑49/88 Al‑Jubail Fertilizer v Council [1991] ECR I‑3187, paragraphs 17 and 18), that that person must be enabled to make known his views on the truth and relevance of the facts and circumstances alleged and the evidence held against him. In accordance with Case C‑51/92 P Hercules Chemicals v Commission [1999] ECR I‑4235, paragraphs 76 and 78, the infringement of that right cannot be remedied by the mere fact that access was made possible at a later stage, during an action in which annulment of the contested decision is sought. A fortiori, on the basis of that case‑law, the rights of the defence and the right to effective legal protection are not respected where access was never granted to the file, even during the annulment proceedings.
In the appellant’s view, the contested paragraphs of the judgment under appeal contradict the case‑law of the General Court itself, in particular Case T‑284/08 People’s Mojahedin Organization of Iran v Council [2008] ECR II‑3487, paragraphs 74 and 75), and the case‑law of the European Court of Human Rights, namely Saadi v Italy of 28 February 2008 (§ 138 and § 139), and A and Others v United Kingdom of 19 February 2009 (§ 126).
The French Republic and the United Kingdom submit that paragraph 4 of Table B in the annex to the contested decision contained clear and sufficient information in relation to the appellant. It was thus not necessary, in their view, to grant the appellant access to the material in the file, as stated by the General Court in paragraph 97 of the judgment under appeal.
The French Republic states that the judgment in People’s Mojahedin Organization of Iran v Council is not relevant, since it concerns the procedure applicable to sanctions in relation to terrorism, whereas the contested decision concerns sanctions against a third country. As for the case‑law in relation to competition cases, the Council and the United Kingdom claim that that case‑law also is irrelevant in the present case. Moreover, the United Kingdom and the Commission consider that the case‑law of the European Court of Human Rights does not support the appellant’s reasoning.
The Council and the Commission submit, as regards the furnishing of evidence during the judicial proceedings, that the appellant does not take account of paragraphs 30, 31 and 107 of the judgment under appeal, from which it transpires that ‘the application contains no plea challenging the Council’s finding that the [appellant] has provided financial support for nuclear proliferation, even though that finding forms the basis of the contested decision so far as it concerns the [appellant] and, in consequence, could have been raised as soon as the action was brought, if necessary with the clarification that additional evidence would be produced as soon as it was available’ (paragraph 30), with the result that the General Court was able to conclude, in paragraph 107 of the judgment under appeal, that it was not necessary for the Council to produce evidence in support of the grounds set out in the decision at issue.
When questioned on that point at the hearing, the appellant stated that a ground of appeal disputing financial support for nuclear proliferation was implicitly included in the action before the General Court and that it intended to develop that ground of appeal after receiving the file of evidence on which the Council relied in adopting the contested decision.
In so far as concerns the part of the present ground of appeal alleging an infringement of the duty to state reasons, the Court notes at the outset that, in the absence of notification, by the Council, of the individual and specific grounds for a contested decision in accordance with Article 15(3) of Regulation No 423/2007, it is the grounds set out in that decision, as published and notified to the appellant by the French banking commission, that need to be taken into consideration.
The General Court did not err in law in holding, in paragraphs 84 and 85 of the judgment under appeal, that the grounds for the contested decision were sufficient in the light of the case‑law relating to the duty to state reasons. The General Court stated, inter alia, that the contested decision indicated the legal basis on which it had been adopted and the individual and specific reasons which had led the Council to consider that the appellant was providing support to Iran for nuclear proliferation. A reading of the grounds set out in the contested decision confirms that such information was sufficient to enable the appellant to understand the claims made against it and to assess the merits of the decision.
The issue of the grounds for the contested decision is different, however, from that of the evidence of the conduct of which the appellant is accused, namely, the facts set out in the contested decision and the treatment of those facts as constituting engagement in, or support for, the proliferation-sensitive nuclear activities of the Islamic Republic of Iran or the development by that State of nuclear weapon delivery systems, within the meaning of Article 7(2)(a) and (b) of Regulation No 423/2007.
As submitted by the United Kingdom and the Commission, the case‑law of the European Court of Human Rights referred to by the appellant is not relevant. The judgments cited, namely Saadi v Italy and A and Others v United Kingdom, relate to Article 3 of the European Convention on Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950 (‘the ECHR’), on the absolute prohibition of torture, degrading treatment or punishment. However, the right to property, which the freezing of funds goes against, does not enjoy such absolute protection either under the ECHR or European Union law (on the absolute nature of the prohibition of torture, see Case C‑112/00 Schmidberger [2003] ECR I‑5659, paragraph 80); as a result the case‑law referred to is not transposable to it.
Regulation No 423/2007 does not provide for an administrative procedure prior to decisions to freeze funds either for initial decisions, as a result of the expected surprise effect, or for re-examination decisions. Only the notice in the Official Journal of the European Union described in paragraph 21 above is relevant to the interests of the persons, entities and bodies included in a list in that it authorises them to request a reexamination of the decision by which they were included in that list, by attaching supporting documents to their application.
In the present case, having regard to the fact that there was no organised administrative procedure, the case‑law of the European Union referred to by the appellant is not relevant. Al-Jubail Fertilizer v Council was delivered in the context of dumping proceedings, to which Council Regulation (EEC) No 2176/84 of 23 July 1984 on protection against dumped or subsidised imports from countries not members of the European Economic Community (OJ 1984 L 201, p. 1) was applicable, and the judgment in Hercules Chemicals v Commission was delivered in a competition case in which Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles [81] and [82] of the Treaty (OJ, English Special Edition 1959-1962, p. 87) was applicable, and also as Regulation No 99/63/EEC of the Commission of 25 July 1963 on the hearings provided for in Article 19(1) and (2) of Council Regulation No 17 (OJ, English Special Edition 1963-1964, p. 47).
In any event, in paragraph 97 of the judgment under appeal, the General Court stated that it is only on the request of the party concerned that the Council is required to provide access to all non-confidential official documents concerning the measure at issue. However, the appellant does not explain in what way the General Court committed an error of law in making that finding. Moreover, it is apparent from the findings of the General Court in paragraphs 103 and 104 of the judgment under appeal, not contested by the appellant in its appeal, that the latter did not request the Council to grant it access to its file.
It follows from the above that the third principal ground of appeal is unfounded.
This ground of appeal concerns, in particular, paragraphs 51, 52, 64 and 65 of the judgment under appeal, which state:
The appellant submits that the General Court disregarded the limits of the Council’s power of assessment on the basis of Article 7(2) of Regulation No 423/2007 by rejecting the relevance of the Security Council resolutions in that assessment. It thus committed an error of law and an error of assessment of the facts by rejecting the pleas alleging an infringement of the principle of proportionality and of the right to property since its reasoning was vitiated by contradictory grounds.
According to the appellant, the relationship between Regulation No 423/2007 and the Security Council resolutions cannot be denied; the purpose of that regulation was to implement those resolutions. Resolution 1803 (2008) merely required Member States to exercise ‘vigilance’ as regards Bank Melli Iran.
Moreover, the General Court’s reasoning is vitiated by contradictory grounds. In paragraph 52 of the judgment under appeal, the General Court noted the relevance of Security Council resolutions whereas, in paragraphs 64 and 65 of the judgment under appeal, it described the Council’s power as autonomous.
The Council, the French Republic, the United Kingdom and the Commission stress the autonomous nature of the measures adopted by the Council. The French Republic states that, in Resolution 1803 (2008) the Security Council left it to the States to make an assessment. In any event, the fact that the Security Council recommended vigilance does not mean that fund-freezing is a disproportionate measure. The Commission points out that Council pursued the objective of Resolution 1737 (2006).
Those Member States and institutions also refer to the derogations provided for in Regulation No 423/2007, in particular Article 9 thereof, and conclude that the principle of proportionality was not infringed.
It is important to note at the outset that Security Council resolutions and Council common positions and regulations originate from distinct legal orders.
Security Council resolutions, such as Resolutions 1737 (2006) and 1803 (2008), were adopted within the framework of the United Nations, to which neither the European Union nor the European Community is a party. Council common positions in the sphere of the CFSP, such as Common Positions 2007/140 and 2008/479, were adopted under Title V of the EU Treaty, in the version prior to the Treaty of Lisbon, in accordance with Article 15 thereof. As for the Council regulations, such as Regulation No 423/2007, they were adopted in the framework of the EC Treaty, which constitutes the Community pillar of the European Union.
Measures within the framework of the United Nations and the European Union are adopted by organs with autonomous powers, granted to them by their basic charters, that is to say the treaties that created them.
In Kadi and Al Barakaat International Foundation v Council and Commission, the Court of Justice ruled on the relationship which exists between a Security Council resolution and a European Community regulation. It held, in paragraph 296 of that judgment, in particular, that, in drawing up Community measures aimed at giving effect to a Security Council resolution envisaged in a common position, the Community is to take due account of the terms and objectives of the resolution concerned.
The Court of Justice has similarly repeatedly held that account must be taken of the wording and purpose of a Security Council resolution when interpreting the regulation which seeks to implement that resolution (Case C‑84/95 Bosphorus [1996] ECR I‑3953, paragraph 14; Case C‑177/95 Ebony Maritime and Loten Navigation [1997] ECR I‑1111, paragraph 20; Case C‑117/06 Möllendorf and Mölendorf-Niehuus [2007] ECR I‑8361, paragraph 54; Kadi and Al Barakaat International foundation v Council and Commission, paragraph 297; Case C‑340/08 M and Others [2010] ECR I‑3913, paragraph 45; and the judgment in Case C‑550/09 E and F [2010] ECR I‑0000, paragraph 72).
The Court of Justice has also held, however, that, without the primacy of a Security Council resolution at the international level thereby being called into question, the requirement that the Community institutions should pay due regard to the institutions of the United Nations could not result in their abstaining from reviewing the lawfulness of Community measures in the light of the fundamental rights forming an integral part of the general principles of Community law (see, to that effect, Kadi and Al Barakaat International Foundation v Council and Commission, paragraphs 288 and 326).
The above provides sufficient support for the General Court’s conclusion, in paragraph 64 of the judgment under appeal, that the power granted to the Council under Article 7(2) of Regulation No 423/2007 is an autonomous power. In that regard, an obligation to ‘take due account’ of the wording and purpose of the resolution concerned in no way runs counter to the finding that the Council legislates autonomously within the limits of its own legal order. Therefore, contrary to what the appellant claims, the General Court did not contradict itself in referring, in paragraph 52 of the judgment under appeal, to the relevance of Security Council resolutions, while describing the Council’s power as being autonomous, in paragraphs 64 and 65 of that judgment.
The General Court considered, in paragraph 65 of the judgment under appeal, that the content and objectives of Resolution 1803 (2008) were not a yardstick against which the compatibility of the contested decision with the principle of proportionality must be assessed. That statement must be understood in the light of the wording of Resolution 1803 (2008), which does not impose precise measures on the States, but requests them to exercise vigilance over the activities of financial institutions in their territories, in particular Bank Melli Iran, in order to avoid such activities contributing to proliferation‑sensitive nuclear activities.
Such wording in no way prevents States from adopting concrete fund-freezing measures as against Bank Melli Iran.
It results from the above that the first ground of appeal in the alternative is unfounded.
This second ground of appeal concerns more specifically paragraphs 70 and 71 of the judgment under appeal, which state:
The appellant submits that, in accordance with the case‑law of the European Court of Human Rights, in particular Saadi v Italy (§ 138 and § 139) and A and Others v United Kingdom (§ 126), the protection of the fundamental rights guaranteed by the EDHR may not be weighed against the fight against terrorism and protection from terrorism. The same reasoning applies, on the same grounds, to measures to be taken for the maintenance of international peace and security. The justification given for the restrictive measures taken, namely, the maintenance of international peace and security, is not valid reasoning for the protection of human rights which the Court of Justice ensures in the Community legal order.
The Council, the French Republic, the United Kingdom and the Commission submit that the right to property is not an absolute right. They point out that the judgment under appeal is in line with the case‑law of the Court of Justice (Bosphorus, and Kadi and Al Barakaat International Foundation v Council and Commission) and the case‑law of the European Court of Human Rights (Hava Yolları Turizm ve Ticaret Anonim Şirketi (Bosphorus Airways) v Ireland, 30 June 2005, Reports of Judgments and Decisions, 2005-VI, § 155). They also state that the case‑law of the European Court of Human Rights cited by the appellant is not relevant since it does not concern the right to property.
Without its being necessary to take a position on whether the appellant, as an entity which is held, in its entirety, by the Iranian State, was able to rely on the protection of the right to property as a fundamental right, it is sufficient to note that the General Court found, in paragraph 70 of the judgment under appeal, that the fundamental rights at issue in the present case are not absolute, and that their exercise may be subject to restrictions justified by objectives of public interest pursued by the Community.
Such is the case for the right to property and the freedom to pursue a trade or profession (see, inter alia, Case 4/73 Nold v Commission [1974] ECR 491, paragraph 14; Joined Cases C‑20/00 and C‑64/00 Booker Aquaculture and Hydro Seafood [2003] ECR I‑7411, paragraphs 67 and 68; Swedish Match, paragraph 72; and Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 355). Consequently, restrictions may be imposed on the exercise of the freedom to pursue a trade or profession, as on the exercise of the right to property, provided that the restrictions in fact correspond to objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed (Swedish Match, paragraph 72).
In that regard, the ground relied on by the General Court in paragraph 71 of the judgment under appeal, in relation to the primary importance of maintaining international peace and security, is sufficient to identify the objective of general interest pursued. That argument must be read in the light of the various measures adopted alongside the contested decision.
As stated in paragraph 89 above, the case‑law of the European Court of Human Rights cited by the appellant is not relevant.
Moreover, the General Court stated, first, that the restrictions concern only part of the appellant’s assets and, second, that Articles 9 and 10 of Regulation No 423/2007 provide for certain exceptions enabling the entities concerned by the fund-freezing measures to meet essential expenditure. Such a consideration provides an implicit, yet sufficient, verification of the proportionate nature of those measures.
The second ground of appeal raised in the alternative must therefore be rejected.
The appellant refers to Council Regulation (EC) No 1100/2009 of 17 November 2009 implementing Article 7(2) of Regulation No 423/2007 and repealing Decision 2008/475 (OJ 2009 L 303, p. 31). That regulation constitutes a new element enabling the appellant to submit new grounds of appeal. It is clear from a letter of the Council of 18 November 2009 that that regulation is based both on the reasons that initially caused it to include the appellant in the list in Annex V to Regulation No 423/2007 and on new factors described in a letter of the Council of 1 October 2009. If the Court of Justice were to consider that, in spite of its filing of an application for annulment of the contested decision, the appellant had not already challenged, even implicitly, the correctness of the Council’s allegation that it was engaged in nuclear proliferation, it would now be entitled to do so.
The appellant submits that the Council committed a manifest error of assessment of the facts by including and maintaining it in the list in Annex V to Regulation No 423/2007 and refers, in that regard, to all the documents which it lodged to challenge Regulation No 1100/2009.
The Council, the French Republic, the United Kingdom and the Commission consider that the present ground of appeal is inadmissible since it would enable the appellant to bring before the Court of Justice a case of wider ambit than that which came before the General Court.
Although Regulation No 1100/2009 would constitute a new element enabling the appellant to formulate a new ground of appeal, it is sufficient to note that such a ground of appeal would relate to the merits of the case and not to the appeal proceedings. In these proceedings, the jurisdiction of the Court of Justice is confined to review of the findings of law on the pleas argued before the General Court or which the General Court would have been required to raise of its own motion.
Consequently, the present ground of appeal is inadmissible.
Since none of the grounds of appeal raised by the appellant has been upheld, the appeal must be dismissed.
Under Article 122 of the Rules of Procedure of the Court of Justice, where the appeal is unfounded and the Court itself gives final judgment in the case, the Court is to make a decision as to costs. Under Article 69(2) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings pursuant to Article 118 of those rules, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the appellant has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the Council, the French Republic, the United Kingdom and the Commission.