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COUNTERING THE RISKS POSED BY ROGUE REGIMES - HAS JUDICIAL
CONTROL UNDERMINED EU SANCTIONS?
Professor Derrick Wyatt QC
University of Oxford
EU TARGETED SANCTIONS - ASSET FREEZES AND TRAVEL BANS
1.
The EU sanctions discussed today are those which apply asset freezes
on individuals or companies and travel bans on individuals. Targets of
sanctions are those have been identified as terrorists, or as assisting regimes which
threaten international peace, or oppress their civilian populations.
2.
Sanctions aimed at individuals or companies are known as targeted, or smart
sanctions, and that is because they are aimed at specific individuals or companies,
rather than, for example putting an embargo on all trade with a particular country.
3.
Some EU smart sanctions are imposed to give effect to UN Security Council
Resolutions (terrorism, Iran, Libya, Ukraine). But not all EU sanctions follow UN
Sanctions (e.g., Syria sanctions)
SANCTIONS PART OF COMMON FOREIGN AND SECURITY POLICY
BUT JUDICIAL REVIEW AVAILABLE UNDER ARTICLE 275 TFEU
WHAT ARE THE CRITERIA FOR “LISTING” OR “DESIGNATING” A PERSON AS
SUBJECT TO AN ASSET FREEZE/TRAVEL BAN?
4.
Where the UN has placed sanctions on individuals, the criteria for EU
sanctions are the same, and the EU and its Member States are obliged by the UN
Charter to place sanctions on those individuals sanctioned by the UN. Where the EU
imposes sanctions but the UN does not, the EU tends to use criteria which are the
same as or very similar to those used where the UN does impose sanctions.
5.
Where the EU imposes sanctions on terrorists who have not been
sanctioned by the UN, it does so on the basis of specific information and a
decision taken by a competent national authority in respect of the persons
groups or entities concerned (CFSP common position 2001/931).
6.
EU sanctions on Iran applied inter alia to persons (a) designated for
sanctions by the UNSC, (b) engaged in or providing support for Iran’s
proliferation-sensitive nuclear activities, (c) assisting designated persons avoiding
sanctions.
7.
EU sanctions on Syria applied inter alia to persons responsible for the
violent repression against the civilian population in Syria, and persons and
entities benefiting from or supporting the regime.
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MUST THE COUNCIL PROVE THAT PERSONS DESIGNATED
ACTUALLY FULFIL THE CRITERIA IN THE EU RULES? WHERE THE
EU FREEZES A PERSON’S ASSETS BECAUSE BOUND TO BY UN
RESOLUTIONS, CAN THIS BE REVIEWED BY THE EU COURTS?
8.
The normal EU rules for judicial review, (applying for e.g., in competition
cases) would (a) require compliance with procedural rules, such as clear and
precise reasoning by the decision-maker, (b) would impose a duty to disclose the
information on the file if requested, and (c) would require the decision-maker to
justify decisions on the basis of the evidence in the file.
9.
These key principle had developed in ECJ case law prior to the evolution of
human rights concepts and long before the Charter of Fundamental rights.
Why the human rights dimension became SO important - to
counter the specific argument that no EU judicial review
was permissible where EU sanctions implement UN
Security Council Resolutions, and the general argument
that Sanctions are “different” because part of foreign policy
THE KADI LITIGATION
The first Kadi case before the General Court and the ECJ on appeal (2001-2008)
10.
The main reason that the human rights dimension was to become important
in this context was because of the Kadi litigation. In this case the EU and Member
States argued that there could be no judicial review of EU sanctions decisions
implementing UN Security Council Resolutions because the EU and Member States
were bound by international law to apply the sanctions in question.
.
11.
The General Court held that the fact that EU sanctions implemented UN
sanctions inhibited judicial review by the EU courts. The ECJ disagreed and in 2008
held that the EU Courts must
“…in accordance with the powers conferred on it by the EC Treaty, ensure the
review, in principle the full review, of the lawfulness of all Community acts in the
light of the fundamental rights forming an integral part of the general principles of
Community law, including review of Community measures which, like the contested
regulation, are designed to give effect to the resolutions adopted by the Security
Council under Chapter VII of the Charter of the United Nations.”
12.
The Court also held that the rights of the defence of Mr Kadi had been
infringed :
“348. Because the Council neither communicated to the appellants the evidence
used against them to justify the restrictive measures imposed on them nor afforded
them the right to be informed of that evidence within a reasonable period after those
measures were enacted, the appellants were not in a position to make their point of
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view in that respect known to advantage. Therefore, the appellants’ rights of defence,
in particular the right to be heard, were not respected.”
13.
This failure in respect of rights of the defence also resulted in a breach in the
procedural requirements of P1A1 of the ECHR (right to property).
Consequences of the first Kadi case
14.
Subsequently, the UN Sanctions Committee made available a summary of its
reasons for listing Mr Kadi, which included allegations of supplying arms to and
otherwise supporting Al-Qaeda. Those reasons were made available to Mr Kadi by
the European Commission as grounds for listing him at EU level and his comments
were invited. Mr Kadi requested the Commission to disclose the evidence supporting
the various allegations made and an opportunity to make representations in respect
of that evidence. He also attempted to refute the reasons given against him, and
adduced evidence in support.
The second Kadi Case (Kadi II)
15.
Mr Kadi was listed once against at EU level (November 2008). He challenged
the listing before the General Court (judgment 2010) and there followed an appeal to
the ECJ (judgment 2013).
16.
ECJ JUDGMENT: A key point is that if a person is listed by an EU
institution and that person challenges the factual basis of the listing, the EU
institution will have to produce evidence to prove that factual basis if
requested by the EU judiciary, and if it is unable or unwilling to do so, the EU
court will decide the case solely on the basis of the information available to it.
17.
The ECJ accepted in principle that the Council need not disclose
confidential/security sensitive information to the listed person, but insisted that
grounds would have to be demonstrated to the Court to justify such non-disclosure. If
non-disclosure was justified, the Court would strike a fair balance between the public
interest and the interests of the individual, and consider possibilities such as limiting
disclosure to an outline of the evidence in question to the party concerned.
18.
The Court appears to accept that it is acceptable for the EU institution to act
initially on the basis of a listing by the UN Sanctions Committee, but makes it
clear that it will have to procure evidence from the Sanctions Committee if the EU
Courts request it and if evidence is not forthcoming the EU listing will be annulled.
19.
Although the Kadi litigation involved EU listing to implement UN listing, it is
clear that the same principles apply when there is no UN listing and the EU Council
makes its own decisions on listing. This means that in all cases if a person
contests the factual basis for a listing the EU Council will have to prove to the
EU courts that the conditions for listing have actually been met in the case in
question.
BUT THE EU COUNCIL HAS BEEN RELUCTANT TO ACCEPT THAT IT IS
OBLIGED TO PROVE THE CONDITIONS FOR LISTING BY PRODUCING
EVIDENCE
IT INITIALLY ARGUED THAT HAVING A REASONABLE SUSPICION THAT THE
CRITERIA WERE SATISFIED WAS ENOUGH.
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HOW THE LISTING PROCEDURE HAS WORKED SO FAR WHEN THE
EU COUNCIL IMPOSES SANCTIONS ON A PERSON OR COMPANY
WHICH HAS NOT BEEN LISTED BY THE UN
20.
Proposals for sanctioning a person or company are made by one or more
Member States. There is little or no supporting evidence.
21.
Despite the ruling of the ECJ in the first Kadi case in 2008, the Council
continued to impose sanctions on individuals and companies, solely on the basis of
listing proposals made by one or more Member States, which contained only
allegations against the persons concerned, without accompanying evidence to allow
these allegations to be verified.
22.
The General Court, however, applied the principles in the first Kadi case
(2008) to the cases which came before it, and subjected listing decisions to full
review, in particular examining whether the reasons given were sufficiently clear and
precise, and whether there was an adequate factual basis for a listing. In addition,
the General Court upheld the right of listed persons to have access to all the
information in the file - but this invariably amounted simply to a listing proposal in
identical terms to the listing and reasons adopted by the Council and published in the
OJ.
See for example the Fulmen Case
23.
For example, in 2010 the Council listed an Iranian company Fulmen (an
electrical contractor) for installing electrical equipment at an Iranian nuclear site. The
Council argued at the hearing before the General court that it was not necessary to
prove the company’s involvement, since the company had been involved in the
electrical contracting business for a number of years and had a substantial
workforce, and its involvement at the nuclear site was “probable”. The General
Court held that probability was not enough, and that the Council must prove
the company’s involvement with concrete evidence and information.
24.
The Council appealed to the ECJ. By the time the ECJ gave judgment in the
appeal (November 2013), it had already decided Kadi II, and it rejected the Council’s
appeal on the grounds indicated in the latter judgment, that the grounds of a listing
must be factually substantiated.
25.
In practice, the Council has only ever to date provided evidence to the EU
Courts which is available in the public domain. It has never sought to prove in a
particular case that evidence in its possession could not be placed before the court
on security grounds though it frequently makes general claims that confidentiality
or security considerations preclude it placing evidence before the General Court.
MEMBER STATES ARE RELUCTANT TO PROVIDE SECRET
INFORMATION TO THE GENERAL COURT
26.
Some Member States have said that they could not in practice place secret
information before the General Court because the rules of procedure provided for
such information to be disclosed to the other party. The rules of procedure of the
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General Court are in the process of being changed. Member States will be
allowed to submit only an outline of evidence to other parties. There is even the
possibility of the Court relying on evidence which has not been communicated to the
other party. Concerns have been raised that the EU Court might not have the means
to prevent inadvertent disclosure of security sensitive information.
THE COUNCIL MAY REVIEW A LISTING AND LIFT SANCTIONS
The Council may review a listing and remove a person from the list - but the
Council does not admit that the sanctions should never have been imposed,
and so legal action may continue so that the person/company can clear his/its
name by securing annulment of the listing.
JUDICIAL REVIEW DOES NOT UNDERMINE EU SANCTIONS POLICY.
THE EU COURTS WILL UPHOLD SANCTIONS WHERE THE COUNCIL
COMPLIES WITH THE RULES WHICH IT THE COUNCIL HAS LAID
DOWN.
The Council makes the rules, and writes the criteria for listing, and some
criteria are in principle easy to prove, such as “persons, entities or bodies that
provide support, such as material, logistical or financial support, to the
Government of Iran”.
27.
The GC rejected a challenge to the listing of the Central Bank of Iran on the
ground that it was not proven that that bank provided support to the Government of
Iran. The Central Bank satisfied this criterion since it provided important financial
services to the Government of Iran (that was the job of the Central Bank) which
allowed the government to purse nuclear proliferation.
Syrian sanctions provide for the listing of persons and entities “benefiting
from or supporting” the Syrian regime.
28.
The Council has targeted prominent businessmen in Syria, argued that it is
impossible to be a prominent businessman in Syria without being favoured by the
regime, and that it is entitled to presume that prominent business benefit from or
support the regime. The General Court has in substance accepted this line of
argument see the Anbouba appeal before the ECJ 21/04/15), saying in a recent
judgment (Akhras) that
“the Council did not err in law in considering that it could discharge its burden of proof
by relying on the presumption that the leading businessmen provided the Syrian
regime with economic support.”
The Court insists that the presumption is rebuttable, but it is not easy to rebut the
presumption. No businessman in Syria would dare to say that he had in any way
been actively engaged in opposition to the regime.
The Court may impose a high (indeed almost impossibly high) standard of
conduct on listed persons - the EIH Bank Case.
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29.
In the EIH Bank case (EIH is a German bank owned by Iranian banks) the
bank was sanctioned for allegedly assisting other listed banks to circumvent
sanctions. EIH readily accepted that it has engaged in transactions with certain listed
banks, but pointed out, and provided evidence, that these transactions related to
settling existing debts of listed companies, and that all transactions had been
covered by either case-by-case authorizations by the German regulator (the
Bundesbank), or by general approvals of a category of transactions which the
Bundesbank insisted on more than one occasion did not require case-by-case
authorizations. The General Court and the ECJ upheld the sanctions against EIH on
the basis that the Bundesbank had no authority to grant general approvals, and that
EIH should have realized this because the rules were clear. The ECJ’s judgment
imposes a high standard on sanctioned persons, since they are expected to make
their own judgment on whether or not the national authorities charged with enforcing
EU sanctions are interpreting them correctly or not.
POSSIBILITIES FOR THE COUNCIL TO MAINTAIN SANCTIONS IN
CASES WHERE IT HAS NO EVIDENCE OR (POSSIBLY) HAS
EVIDENCE BUT IS UNWILLING TO DISCLOSE IT
30.
The Council has used three tactics to maintain sanctions despite the Court’s
requirement that the Council prove the factual basis of its allegations:
•
•
•
maintaining sanctions on a listed person until the Court annuls the listing;
appealing against annulment of sanctions to maintain the sanctions pending
the outcome of the appeal
re-listing a listed person for different reasons and starting the process over
again
31. The Council does fight cases right through till the end when it is clear that
it has no evidence to support its allegations. See for example the Bank Tejarat
case, where sanctions were imposed on 23 January 2012. The Bank challenged the
sanctions before the General Court, which annulled its listing on 22 January 2015,
maintaining the effects of the annulment for a further two months and 10 days to
cover a possible appeal or further listing, i.e., the beginning of April 2015 - 3 years
and two months in all).
32.
If the Council loses a case, but appeals to the ECJ, the sanctions remain
in place until the ECJ rules on the appeal. In the Fulmen case, sanctions were
imposed on 26 July 2010. The Fulmen company challenged the sanctions before the
General Court, which annulled the listing on 31 March 2012, with the sanctions
remaining effective till early June 2012. The Council appealed, and the ECJ
dismissed that appeal on 28 November 2013. The sanctions thus remained in
force for 3 years and 4 months.
33.
The third option for the Council is to re-list a sanctioned person or company
after its listing has been annulled. Either the Council will re-list on new and different
grounds, or, more questionably, on old and different grounds. That is to say, that the
Council will re-list a person or company on grounds which existed at the time that the
person or company was originally listed, but which the Council did not include in its
original reasons for listing.