JUDGMENT OF THE GENERAL COURT (Fourth Chamber)
20 March 2013(*)
(Common foreign and security policy – Restrictive measures against Iran with the aim of preventing nuclear proliferation – Freezing of funds – Entity wholly owned by an entity identified as being involved in nuclear proliferation – Plea of illegality – Obligation to state reasons – Rights of the defence – Right to effective judicial protection)
In Case T‑495/10,
Bank Saderat plc, established in London (United Kingdom), represented initially by S. Gadhia and S. Ashley, Solicitors, D. Anderson QC and R. Blakeley, Barrister, and subsequently by Ashley, S. Jeffrey and A. Irvine, solicitors, D. Wyatt QC and Blakeley,
applicant,
v
Council of the European Union, represented by M. Bishop and R. Liudvinaviciute-Cordeiro, acting as Agents,
defendant,
supported by
European Commission, represented by S. Boelaert and M. Konstantinidis, acting as Agents,
intervener,
APPLICATION for annulment of 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), Council Implementing Regulation (EU) No 668/2010 of 26 July 2010 implementing Article 7(2) of Regulation (EC) No 423/2007 concerning restrictive measures against Iran (OJ 2010 L 195, p. 25), Council Decision 2010/644/CFSP of 25 October 2010 amending Decision 2010/413 (OJ 2010 L 281, p. 81), Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007 (OJ 2010 L 281, p. 1), Council Decision 2011/783/CFSP of 1 December 2011 amending Decision 2010/413 (OJ 2011 L 319, p. 71), Council Implementing Regulation (EU) No 1245/2011 of 1 December 2011 implementing Regulation No 961/2010 (OJ 2011 L 319, p. 11) and Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran and repealing Regulation No 961/2010 (OJ 2012 L 88, p. 1) in so far as those measures concern the applicant and, further, an application for a declaration of the inapplicability to the applicant of Article 7(2)(d) of Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1), Article 16(2)(a) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012,
THE GENERAL COURT (Fourth Chamber),
composed of I. Pelikánová (Rapporteur), President, K. Jürimäe and M. van der Woude, Judges,
Registrar: N. Rosner, Administrator,
having regard to the written procedure and further to the hearing on 3 July 2012,
gives the following
Judgment
Background to the dispute
1 The applicant, Bank Saderat plc, is a public limited company registered and having its registered office in the United Kingdom, authorised and regulated by the Financial Services Authority. It is wholly owned by Bank Saderat Iran (‘BSI’), an Iranian bank.
2 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 (‘nuclear proliferation’).
3 On 26 July 2010 BSI and the applicant were named on the list of entities involved in Iranian 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).
4 Consequently, the names of BSI and the applicant were listed 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 means of 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). As a result of that listing, the funds and economic resources of the applicant were frozen.
5 In Decision 2010/413 the Council of the European Union adopted the following reasons in respect of BSI:
‘Bank Saderat is an Iranian state-owned bank (94% owned by [the Iranian] government). Bank Saderat has provided financial services for entities procuring on behalf of Iran’s nuclear and ballistic missile programmes, including entities designated under [United Nations Security Council Resolution] 1737. Bank Saderat handled [Defence Industries Organisation; ‘DIO’] (sanctioned in [United Nations Security Council Resolution] 1737) and Iran Electronics Industries payments and letters of credit as recently as March 2009. In 2003 Bank Saderat handled letter[s] of credit on behalf of [Iranian] nuclear-related Mesbah Energy Company (subsequently sanctioned in [United Nations Security Council Resolution] 1737).’
6 The reasons adopted in Implementing Regulation No 668/2010 with regard to BSI are the same as those adopted in Decision 2010/413.
7 Both in Decision 2010/413 and Implementing Regulation No 668/2010 the applicant was identified as being ‘100% owned’ by BSI.
8 The applicant was informed of its designation in Annex II to Decision 2010/413 and Annex V to Regulation No 423/2007 by an HM Treasury letter of 27 July 2010.
9 By letters of 24 August and 2, 9 and 30 September 2010, the applicant asked the Council to disclose to it the information and documents on which the Council had relied to justify adopting the restrictive measures in respect of itself and BSI. By letter of 15 September 2010 the applicant also asked the Council to reconsider the decision to place it on the list in Annex II to Decision 2010/413 and on that in Annex V to Regulation No 423/2007.
10 The listing of the names of BSI and the applicant in Annex II to Decision 2010/413 was continued by Council Decision 2010/644/CFSP of 25 October 2010 amending Decision 2010/413 (OJ 2010 L 281, p. 81). The reason in respect of the applicant is the same as that adopted in Decision 2010/413. The reasons adopted in respect of BSI are as follows:
‘Bank Saderat is an Iranian bank partly owned by the Iranian government. Bank Saderat has provided financial services for entities procuring on behalf of Iran’s nuclear and ballistic missile programmes, including entities designated under [United Nations Security Council Resolution] 1737. Bank Saderat handled DIO (sanctioned in [United Nations Security Council Resolution] 1737) and Iran Electronics Industries payments and letters of credit as recently as March 2009. In 2003 Bank Saderat handled letters of credit on behalf of Iranian nuclear-related Mesbah Energy Company (subsequently sanctioned in [United Nations Security Council Resolution] 1737.’
11 Since Regulation No 423/2007 was repealed by Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran (OJ 2010 L 281, p. 1), the applicant’s name was inserted by the Council in Annex VIII to the latter regulation. Consequently, the funds and economic resources of the applicant were frozen under Article 16(2) of that regulation. The reason in respect of the applicant is the same as that adopted in Decision 2010/413. The reasons adopted in respect of the listing of BSI are, in essence, the same as those adopted in Decision 2010/644.
12 By letter of 28 October 2010 the Council replied to the applicant’s letter of 15 September 2010 stating that, after a review, it rejected the applicant’s request to have its name removed from the lists in Annex II to Decision 2010/413 and Annex VIII to Regulation No 961/2010. First, the Council stated that the grounds for the applicant’s designation were sufficient having regard to the applicable provisions and the case-law. Secondly, the Council stated that, in its view, the continuation of restrictive measures against BSI was justified for the reasons mentioned in the measures concerned. As annexes to the letter of 28 October 2010, the Council sent to the applicant copies of two proposals for the adoption of restrictive measures against BSI and one proposal concerning the applicant.
13 By letter of 5 January 2011 the applicant claimed that, in its opinion, the review of the restrictive measures against it was vitiated by a number of errors. In particular, the applicant submitted that the Council had not, in the letter of 28 October 2010, provided reasons which were sufficient in law for the continuation of those measures.
14 As an annex to the rejoinder, the Council sent to the applicant a copy of a fourth proposal, submitted by a Member State, for the adoption of restrictive measures against BSI.
15 By letter of 29 July 2011 the applicant asked the Council to reconsider the decision to place it on the list in Annex II to Decision 2010/413 and on that in Annex VIII to Regulation No 961/2010. The applicant maintained, in that context, that the objective pursued by the Council could have been achieved by other less restrictive measures.
16 The listing of the names of BSI and the applicant in Annex II to Decision 2010/413 and in Annex VIII to Regulation No 961/2010 was not affected by the entry into force of Council Decision 2011/783/CFSP of 1 December 2011 amending Decision 2010/413 (OJ 2011 L 319, p. 71) and Council Implementing Regulation (EU) No 1245/2011 of 1 December 2011 implementing Regulation No 961/2010 (OJ 2011 L 319, p. 11).
17 By letter of 5 December 2011 the Council informed the applicant that its name would continue to be listed in Annex II to Decision 2010/413 and Annex VIII to Regulation No 961/2010. The Council stated that the observations presented by the applicant on 29 July 2011 did not justify lifting the restrictive measures against it, since the applicant was wholly owned by BSI.
18 By letter of 26 January 2012 the applicant claimed that, in its opinion, the review of the continuation of the restrictive measures against it was vitiated by errors. In particular, the applicant stated that, in its opinion, the Council had not, in the letter of 5 December 2011, stated reasons to the requisite legal standard for the refusal to take into consideration the alternative measures which the applicant had suggested in the letter of 29 July 2011.
19 Since Regulation No 961/2010 was repealed by Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran (OJ 2012 L 88, p. 1), the names of BSI and the applicant were included by the Council in Annex IX to the latter regulation. The reason in respect of the applicant is the same as that adopted in Decision 2010/413. The reasons adopted in respect of the listing of BSI are, in essence, the same as those adopted in Decision 2010/644. Consequently, the applicant’s funds and economic resources were frozen pursuant to Article 23(2) of that Regulation No 267/2012.
Procedure and forms of order sought by the parties
20 By application lodged at the Registry of the General Court on 7 October 2010, the applicant brought the present action.
21 By document lodged at the Court’s Registry on 5 November 2010, the applicant adapted its heads of claim following the adoption of Decision 2010/644 and Regulation No 961/2010.
22 By document lodged at the Court’s Registry on 14 January 2011 the European Commission sought leave to intervene in the present proceedings in support of the Council. By order of 8 March 2011 the President of the Fourth Chamber of the General Court granted leave to intervene.
23 By document lodged at the Court’s Registry on 26 January 2012, the applicant, first, adapted its heads of claim following the adoption on 1 December 2011 of Decision 2011/783 and Implementing Regulation No 1245/2011 and, secondly, requested that the contested measures be annulled, if appropriate, with immediate effect.
24 By document lodged at the Court’s Registry on 27 April 2012, the applicant adapted its heads of claim following the adoption of Regulation No 267/2012.
25 On hearing the report of the Judge-Rapporteur, the Court (Fourth Chamber) decided to open the oral procedure and, by way of measures of organisation of procedure under Article 64 of the Rules of Procedure of the General Court, put questions in writing to the parties on the implications, for this case, of the judgment of 13 March 2012 in Case C‑380/09 P Melli Bank v Council, and on the admissibility of the applicant’s fourth plea in law. The parties replied to the Court’s questions.
26 In its reply to the Court’s questions, lodged at the Court’s Registry on 8 June 2012, the applicant stated that it was no longer pursuing (i) part of its complaint, within the first plea in law, of an infringement of the obligation to state reasons, the principle of respect for the rights of the defence and the right to effective judicial protection (ii) part of its complaint, within the second plea in law, of an error of assessment as regards whether the applicant was owned or controlled by BSI and (iii) the third plea in law, claiming that Article 20(1)(b) of Decision 2010/413, Article 7(2)(d) of Regulation No 423/2007, Article 16(2)(a) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012 were disproportionate and therefore unlawful.
27 The parties presented oral argument and replied to questions put by the Court at the hearing on 3 July 2012.
28 By order of the Court (Fourth Chamber) of 4 September 2012, the oral procedure was re-opened in order to obtain the observations of the applicant on the order of the President of the Court of Justice of 19 July 2012 in Case C‑110/12 P(R) Akhras v Council, and the observations of the other parties. The oral procedure was again closed on 4 October 2012.
29 The applicant claims that the General Court should:
– annul, with immediate effect, point 7 of Table B of Annex II to Decision 2010/413, point 5 of Table B of the Annex to Implementing Regulation No 668/2010, point 7 of Table I.B of the Annex to Decision 2010/644, point 7 of Table B of Annex VIII to Regulation No 961/2010, Decision 2011/783, Implementing Regulation No 1245/2011 and Regulation No 267/2012, in so far as those measures concern the applicant;
– declare that Article 7(2)(d) of Regulation No 423/2007, Article 16(2)(a) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012 are not applicable to it;
– order the Council to pay the costs.
30 The Council and the Commission contend that the Court should:
– dismiss the action;
– order the applicant to pay the costs.
Law
31 In its written pleadings, the applicant relies on five pleas in law. The first plea in law is a claim of infringement of the obligation to state reasons, the principle of respect for the rights of the defence and the right to effective judicial protection. The second plea in law is a claim of an error of assessment as regards whether the applicant is owned or controlled by BSI. The third plea in law is a claim that Article 20(1)(b) of Decision 2010/413, Article 7(2)(d) of Regulation No 423/2007, Article 16(2)(a) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012 are disproportionate and therefore unlawful. The fourth plea in law is a claim of an error of assessment as regards BSI’s involvement in nuclear proliferation. The fifth plea in law is a claim of a breach of the principle of proportionality and the applicant’s right to property and right to conduct a business.
32 As stated in paragraph 26 above, the applicant has abandoned in the course of the proceedings its third plea in law and part of its complaint relied on within the first and second pleas. Since the third plea in law was the sole plea relied on in support of the second head of claim, seeking a declaration that Article 7(2)(d) of Regulation No 423/2007, Article 16(2)(a) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012 are not applicable to it, the partial abandonment by the applicant means, furthermore, that that head of claim has become devoid of purpose.
33 The Council and the Commission consider that the applicant’s pleas are unfounded. Further, in its rejoinder, the Council contended that the applicant could not validly plead a breach of its fundamental rights.
34 In the first place, it is appropriate to examine the admissibility of, first, the adaptations to the applicant’s claims, next, of the fourth plea in law and, lastly, of the Council’s arguments that the applicant is not entitled to rely on the protection of fundamental rights.
Admissibility
Admissibility of the adaptations to the applicant’s claims
35 As is clear from paragraphs 10, 11 and 19 above, since the date when the application was brought the list in Annex II to Decision 2010/413 has been replaced by a new list, adopted in Decision 2010/644, and Regulation No 423/2007, as amended by Implementing Regulation No 668/2010, has been repealed and replaced by Regulation No 961/2010, which has itself been repealed and replaced by Regulation No 267/2012. Further, in the recitals in the preamble of Decision 2011/783 and Implementing Regulation No 1245/2011, the Council explicitly stated that it had carried out a complete review of the list in Annex II to Decision 2010/413 and in Annex VIII to Regulation No 961/2010 and that it had concluded that the persons, entities and bodies listed therein, including the applicant, should continue to be subject to restrictive measures. The applicant has adapted its initial claims so that its action is directed to the annulment not only of Decision 2010/413 and Implementing Regulation No 668/2010 but also of Decision 2010/644, Regulation No 961/2010, Decision 2011/783, Implementing Regulation No 1245/2011 and Regulation No 267/2012 (together, ‘the contested measures’). The Council and the Commission have not objected to that adaptation.
36 In that regard, it is to be borne in mind that, when a decision or a regulation of direct and individual concern to an individual is replaced, during the proceedings, by another measure with the same subject matter, this is to be considered a new factor allowing the applicant to adapt its claims and pleas in law. It would be contrary to the principle of due administration of justice and to the requirements of procedural economy to oblige the applicant to make a fresh application. Moreover, it would be inequitable if the institution in question were able, in order to counter criticisms of a measure contained in an application to the Courts of the European Union, to amend the contested measure or to substitute another for it and to rely in the proceedings on such an amendment or substitution in order to deprive the other party of the opportunity of extending his original pleadings to the later measure or of submitting supplementary pleadings directed against it (see, by analogy, Case T‑256/07 People’s Mojahedin Organization of Iran v Council [2008] ECR II‑3019, paragraph 46 and case-law cited).
37 The same conclusion applies in respect of measures, such as Decision 2011/783 and Implementing Regulation No 1245/2011, which declare that a decision or a regulation is to continue to affect directly and individually certain individual parties, further to a process of review expressly required by the decision or regulation concerned.
38 It is therefore appropriate, in the present case, to hold that the applicant may seek the annulment of Decision 2010/644, Regulation No 961/2010, Decision 2011/783, Implementing Regulation No 1245/2011 and Regulation No 267/2012, in so far as those measures concern the applicant.
Admissibility of the fourth plea in law: error of assessment as regards the involvement of BSI in nuclear proliferation
39 By its fourth plea, the applicant maintains that the adoption of restrictive measures with respect to BSI is not justified. The applicant refers, in that regard, to actions brought before the Courts of the European Union by BSI and states that, if BSI is no longer the subject of restrictive measures at the time when judgment in this case is delivered, the measures to which it itself is subject ought to be annulled.
40 That said, the applicant pleads no specific ground of complaint in order to challenge the lawfulness of the restrictive measures against BSI. In particular the applicant expresses no view, with a sufficient degree of detail, on the reasons concerning the alleged involvement of BSI in nuclear proliferation, since the applicant does not even indicate whether it disputes the truth of what BSI is accused of having done or the classification of such conduct as support for nuclear proliferation.
41 In those circumstances, the Court is not in a position to rule on the fourth plea in law, in the absence of sufficiently detailed argument from the applicant. Consequently, that plea in law must be declared to be inadmissible pursuant to Article 44(1)(c) of the Rules of Procedure, as contended by the Commission.
Admissibility of the Council’s arguments on the admissibility of pleas claiming breach of the applicant’s fundamental rights
42 In its rejoinder, the Council contended that the applicant should be regarded as an emanation of the Iranian State and therefore could not have the benefit of fundamental rights protection and safeguards. The Council therefore considers that the pleas in the action concerning an alleged breach of those rights must be declared to be inadmissible.
43 On that point, it must be observed, first, that the Council does not dispute the actual right of the applicant to seek the annulment of the contested measures. The Council denies only that it has certain rights upon which it relies in order to obtain that annulment.
44 Secondly, the question whether the applicant does or does not have the right which it relies on in support of a plea for annulment does not concern the admissibility of that plea, but its merits. Consequently, the Council’s argument that the applicant is an emanation of the Iranian State must be dismissed in so far as it is aimed at obtaining a declaration that the action is partly inadmissible.
45 Thirdly, that argument was raised, for the first time, in the rejoinder, but the Council did not claim that it was based on matters of law or fact which had come to light in the course of the procedure. Therefore, so far as the substance of the case is concerned, it is a new plea in law within the meaning of the first subparagraph of Article 48(2) of the Rules of Procedure, from which it follows that it must be ruled to be inadmissible.
Substance
46 Following the applicant’s partial abandonment of its action and given the inadmissibility of the fourth plea in law, the Court need examine solely some of the grounds of complaint submitted within the first, second and fifth pleas.
47 The Court considers that, first, it should examine together the second plea, claiming an error of assessment as regards whether the applicant is owned or controlled by BSI, and the fifth plea, claiming an infringement of the principle of proportionality, the right to property and the right to conduct a business. Secondly, the first plea, claiming an infringement of the obligation to state reasons, the principle of respect for the rights of the defence and the right to effective judicial protection, should be examined.
The second plea in law: error of assessment as regards whether the applicant is owned or controlled by BSI; and the fifth plea: infringement of the principle of proportionality, the applicant’s right to property and right to conduct a business
48 In its reply to the Court’s questions, lodged at the Court’s Registry on 8 June 2012, the applicant stated that, following the judgment in Joined Cases T‑246/08 and T‑332/08 Melli Bank v Council, paragraph 25 above, it no longer maintained that it was not owned by BSI for the purposes of Article 20(1)(b) of Decision 2010/413, Article 7(2) of Regulation No 423/2007, Article 16(2) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012. The applicant considers nonetheless that the adoption and continuation of the restrictive measures against it constitutes a disproportionate restriction on its right to property and its right to conduct a business.
49 The Council, supported by the Commission, contends that the applicant’s arguments are unfounded.
50 In that regard, it is clear from the case-law that when the funds of an entity identified as being engaged in nuclear proliferation are frozen, there is a not insignificant danger that that entity may exert pressure on the entities it owns or controls in order to circumvent the effect of the measures applying to it. Consequently, the freezing of the funds of such entities, as imposed on the Council by Article 20(1)(b) of Decision 2010/413, Article 7(2)(d) of Regulation No 423/2007, Article 16(2) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012 is necessary and appropriate in order to ensure the effectiveness of the measures adopted and to ensure that those measures are not circumvented (see, to that effect and by analogy, judgment of 13 March 2012 in Case C‑380/09 P Melli Bank v Council, paragraph 25 above, paragraphs 39 and 58).
51 Again, in accordance with the case-law, where an entity is wholly owned by an entity regarded as being involved in nuclear proliferation, the ownership test contained in Article 20(1)(b) of Decision 2010/413 Article 7(2)(d) of Regulation No 423/2007 and Article 16(2)(a) of Regulation No 961/2010 is satisfied (see, by analogy, Melli Bank v Council, paragraph 25 above, paragraph 79). The same conclusion must apply to the concept, to be found in Article 23(2)(a) of Regulation No 267/2012, of an entity ‘belonging’ to an entity considered to be involved in nuclear proliferation.
52 It follows that the adoption of restrictive measures against an entity wholly owned by, or wholly belonging to, an entity considered to be involved in nuclear proliferation (an ‘owned entity’) is not a consequence of an assessment by the Council as to the risk that that owned entity might be led to circumvent the effect of the measures adopted against the parent entity, but is the direct result of the implementation of the relevant provisions of Decision 2010/413, Regulation No 423/2007, Regulation No 961/2010 and Regulation No 267/2012, as interpreted by the Courts of the European Union.
53 Accordingly, arguments which dispute the proportionality of freezing the funds of an owned entity are not directed to the lawfulness of any assessment that may have been made by the Council of the circumstances of the case. Such arguments concern the lawfulness of general provisions, such as Article 20(1)(b) of Decision 2010/413, Article 7(2)(d) of Regulation No 423/2007, Article 16(2) of Regulation No 961/2010 and Article 23(2) of Regulation No 267/2012, which require the Council to freeze funds of all owned entities.
54 Consequently, where an owned entity seeks to dispute the proportionality of the restrictive measures against it, it is required to invoke, within an action aimed at the annulment of the acts whereby those measures were adopted or continued, the inapplicability of those general provisions, by means of a plea of illegality under Article 277 TFEU.
55 In the present case, it is not disputed that the applicant is wholly owned by BSI or that it wholly ‘belongs’ to BSI. It is also not disputed that BSI was considered by the Council to be involved in nuclear proliferation.
56 It cannot however be held that the applicant has raised a plea of illegality based on the arguments relied on within the second and fifth pleas in law.
57 First, a plea of illegality based on those arguments was not expressly stated either in the applicant’s written pleadings, or in its reply to the Court’s questions, lodged at the Court’s Registry on 8 June 2012, or at the hearing.
58 Secondly, the arguments relied on by the applicant within the second and fifth pleas in law are based on circumstances which are peculiar to it, since they have been presented in such a way as to refer to the applicant’s actual situation and to the specific measures which it proposed to the Council. Consequently, those arguments have no relevance to examination of the lawfulness of the general rules laid down in Article 20(1)(b) of Decision 2010/413, Article 7(2)(d) of Regulation No 423/2007, Article 16(2)(a) of Regulation No 961/2010 and Article 23(2)(a) of Regulation No 267/2012.
59 That being the case, the second and fifth pleas in law must be rejected as being ineffective.
The first plea in law: infringement of the obligation to state reasons, the principle of respect for the rights of the defence and the right to effective judicial protection
60 By its first plea, the applicant maintains that the Council is in breach of the obligation to state reasons, its rights of defence and its right to effective judicial protection since (i) the statement of reasons in the contested measures is inadequate, (ii) the Council did not provide it with sufficient information to enable it to make effective representations on the adoption of restrictive measures against it and to afford it a fair hearing and (iii) both the assessment prior to the adoption of restrictive measures against it and the regular review of those measures are vitiated by a number of errors.
61 The Council, supported by the Commission, contends that the applicant’s arguments are unfounded. They maintain, in particular, that the applicant may not validly rely on the principle of respect for the rights of the defence.
62 First, it must be recalled that the purpose of the obligation to state the reasons for an act adversely affecting a person, as provided for by the second paragraph of Article 296 TFEU and, more particularly in this case, by Article 24(3) of Decision 2010/413, Article 36(3) of Regulation No 961/2010 and Article 46(3) of Regulation No 267/2012, is, first, to provide the person concerned with sufficient information to make it possible to determine whether the measure is well founded or whether it is vitiated by an error which may permit its validity to be contested before the Courts of the European Union and, secondly, to enable the latter to review the lawfulness of that measure. The obligation to state reasons therefore constitutes an essential principle of European Union law which may be derogated from only for compelling reasons. The statement of reasons must therefore in principle be notified to the person concerned at the same time as the act adversely affecting him, for failure to state the reasons cannot be remedied by the fact that the person concerned learns the reasons for the act during the proceedings before the Courts of the European Union (see, to that effect, Case T‑390/08 Bank Melli Iran v Council [2009] ECR II‑3967, paragraph 80 and case-law cited).
63 Consequently, unless there are compelling reasons relating to the security of the European Union or its Member States or the conduct of their international relations which preclude the disclosure of certain information, the Council is required to inform an entity against which restrictive measures are directed of the actual and specific reasons why it considers that they had to be adopted. It must therefore state the facts and points of law on which the legal justification of the measures concerned depend and the considerations which led the Council to adopt them (see, to that effect, Case T‑390/08 Bank Melli Iran v Council, paragraph 62 above, paragraph 81 and case-law cited).
64 Moreover, the statement of reasons must be appropriate to the measure at issue and to the context in which it was adopted. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. It is not necessary for the statement of reasons to specify all the relevant matters of fact and law, since the question whether the statement of reasons is adequate must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. In particular, the reasons given for a decision are sufficient if it was adopted in circumstances known to the party concerned which enable him to understand the scope of the measure adversely affecting him (see Bank Melli Iran v Council, paragraph 62 above, paragraph 82 and case‑law cited).
65 Secondly, according to settled case-law, observance of the rights of the defence, especially the right to be heard, in all proceedings initiated against an entity which may lead to a measure adversely affecting that entity, is a fundamental principle of European Union law which must be guaranteed, even when there are no rules governing the procedure in question (Bank Melli Iran v Council, paragraph 62 above, paragraph 91).
66 The principle of respect for the rights of the defence requires, first, that the entity concerned must be informed of the evidence adduced against it to justify the measure adversely affecting it. Secondly, it must be afforded the opportunity effectively to make known its view on that evidence (see, by analogy, Case T‑228/02 Organisation des Modjahedines du peuple d’Iran v Council [2006] ECR II‑4665, paragraph 93).
67 Consequently, as regards an initial measure whereby the funds of an entity are frozen, unless there are compelling reasons touching on the security of the European Union or of its Member States or the conduct of their international relations which preclude it, the evidence adduced against that entity should be disclosed to it either concomitantly with or as soon as possible after the adoption of the measure concerned. At the request of the entity concerned, it also has the right to make known its view on that evidence after the adoption of the measure. Subject to the same proviso, any subsequent decision to freeze funds must as a general rule be preceded by disclosure of further evidence adduced against the entity concerned and a further opportunity for it to make known its view (see, by analogy, Organisation des Modjahedines du peuple d’Iran v Council, paragraph 66 above, paragraph 137).
68 It must also be observed that, when sufficiently precise information has been disclosed, enabling the entity concerned effectively to state its point of view on the evidence adduced against it by the Council, the principle of respect for the rights of the defence does not mean that the institution is obliged spontaneously to grant access to the documents in its file. 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 (see Bank Melli Iran v Council, paragraph 62 above, paragraph 97 and case-law cited).
69 Thirdly, the principle of effective judicial protection is a general principle of European Union law, stemming from the constitutional traditions common to the Member States, which has been enshrined in Articles 6 and 13 of the Convention on the Protection of Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950, and in Article 47 of the Charter of Fundamental Rights of the European Union (OJ 2010 C 83, p. 389). The effectiveness of judicial review means that the European Union authority in question is bound to disclose the grounds for a restrictive measure to the entity concerned, so far as possible, either when that measure is adopted or, at the very least, as swiftly as possible after that decision, in order to enable the entity concerned to exercise, within the periods prescribed, its right to bring an action. Observance of that obligation to disclose the grounds is necessary both to enable the persons to whom restrictive measures are addressed to defend their rights in the best possible conditions and to decide, with full knowledge of the relevant facts, whether there is any point in their applying to the Courts of the European Union, and also to put the latter fully in a position to carry out the review of the lawfulness of the measure in question which is the duty of those courts (see, to that effect and by analogy, Joined Cases C‑402/05 P and C‑415/05 P Kadi and Al Barakaat International Foundation v Council and Commission [2008] ECR I‑6351, paragraphs 335 to 337 and case-law cited).
70 In the light of that case-law, the Court considers that the arguments submitted by the parties in respect of the first plea in law should be examined in four stages, as follows. First, the Court must examine the preliminary argument of the Council and the Commission that the applicant cannot rely on the principle of respect for the rights of the defence. Secondly, the Court must examine the arguments relating to the statement of reasons in the contested measures. Thirdly, the Court must examine the claimed infringement of the obligation to state reasons, the applicant’s rights of defence and its right to effective judicial protection as a consequence of the fact that it was not given sufficient information concerning the adoption of restrictive measures against it. Fourthly, the Court will examine the arguments relating to the defects allegedly affecting the assessment prior to the adoption of restrictive measures against the applicant and the regular review of those measures.
– Whether the applicant may rely on the principle of respect for the rights of the defence
71 The Council and the Commission dispute the applicability of the principle of respect for the rights of the defence to the present case. Referring to Case T‑181/08 Tay Za v Council [2010] ECR II‑1965, paragraphs 121 to 123, they claim that the applicant was not the subject of restrictive measures because of its own activities, but because of its membership of a general category of persons and entities which had supported nuclear proliferation. Consequently, the procedure for the adoption of the restrictive measures was not initiated against the applicant within the meaning of the case-law cited in paragraph 65 above and the applicant can consequently not rely on the rights of the defence or can do so to only a limited extent.
72 That argument cannot be accepted.
73 First, the judgment of the General Court in Tay Za v Council was set aside on appeal, in its entirety, by the judgment of the Court of Justice of 13 March 2012 in Case C‑376/10 P Tay Za v Council. Consequently, what is stated in that judgment is no longer part of the legal order of the European Union and cannot validly be relied on by the Council and the Commission.
74 Secondly, Article 24(3) and (4) of Decision 2010/413, Article 15(3) of Regulation No 423/2007 and Article 36(3) and (4) of Regulation No 961/2010 and Article 46(3) and (4) of Regulation No 267/2012 set out provisions to safeguard the rights of the defence of entities which are subject to restrictive measures adopted under those acts. Respect for those rights is subject to review by the Courts of the European Union (see, to that effect, Bank Melli Iran v Council, paragraph 62 above, paragraph 37).
75 In those circumstances, it must be concluded that the principle of respect for the rights of the defence, as stated in paragraphs 65 to 68 above, may be relied on by the applicant in this case.
– The statement of reasons for the contested measures
76 In its reply to the Court’s questions, lodged at the Court’s Registry on 8 June 2012, the applicant stated that, following the judgment in Melli Bank v Council, paragraph 25 above, it no longer claimed that the Council was in breach of the obligation to state reasons in that the Council had not disclosed to it the reasons why the Council considered that it was owned by BSI.
77 The applicant nonetheless claims that the grounds relied on by the Council in relation to the alleged involvement of BSI in nuclear proliferation are excessively vague. The applicant considers that that infringement of the obligation to state reasons further implies an infringement of its rights of defence.
78 The Council, supported by the Commission, contends that the applicant’s arguments are unfounded.
79 It must be observed at the outset that in order to examine the applicant’s arguments there must be taken into consideration not only the reasons stated in the contested measures, but the four proposals for the adoption of restrictive measures sent by the Council to the applicant.
80 First, it is apparent from those proposals, as disclosed to the applicant, that they were submitted to the delegations of the Member States in the context of adoption of the restrictive measures affecting BSI and the applicant and that those proposals constitute, consequently, evidence on which those measures were based.
81 Secondly, it is true that the four proposals were disclosed to the applicant after the action was brought and, as regards the proposal annexed to the rejoinder, after the adaptation of claims following the adoption of Decision 2010/644 and Regulation No 961/2010. Consequently, those proposals cannot validly supplement the reasons stated in Decision 2010/413, Implementing Regulation No 668/2010, and, as regards the proposal annexed to the rejoinder, Decision 2010/644 and Regulation No 961/2010. They may, however, be taken into consideration for the assessment of the lawfulness of the later measures, namely Decision 2011/783, Implementing Regulation No 1245/2011 and Regulation No 267/2012 as regards the four proposals, and Decision 2010/644 and Regulation No 961/2010 as regards the proposals disclosed on 28 October 2010.
82 The contested measures state the following four reasons as regards BSI :
– BSI is owned by the Iranian State, either 94%, according to Decision 2010/413 and Implementing Regulation No 668/2010, or partly, according to the subsequent measures;
– BSI provided financial services to entities procuring on behalf of Iran’s nuclear and ballistic missile programmes; among those entities are entities subject to United Nations Security Council Resolution 1737 (2006);
– in March 2009 BSI was still handling payments and letters of credit of Defence Industries Organisation and Iran Electronics Industries, which are the subject of restrictive measures;
– in 2003 BSI handled letters of credit on behalf of Mesbah Energy Company, which is linked to the Iranian nuclear programme.
83 The reasons stated in the proposals for the adoption of restrictive measures annexed to the Council’s letter of 28 October 2010 entirely overlap the reasons stated in the contested measures.
84 As regards the fourth proposal for the adoption of restrictive measures, which was annexed to the rejoinder, it adds a fifth reason, that BSI provided financial services to Sanam Industrial Group.
85 The first reason is sufficiently detailed, since it enables the applicant to appreciate that the allegation made against BSI by the Council is that part of its share capital is held by the Iranian State.
86 As regards the second reason, it must be said that it is not clear, at first sight, whether this is a general allegation supplemented and illustrated by the following reasons or whether this is in fact an independent reason. In the absence of any explicit linking of the various reasons, the latter interpretation of the reasons stated in the contested measures must be adopted.
87 Thus interpreted, the second reason is excessively vague, since it contains no detail of the identity of the entities to which the financial services concerned were supplied.
88 The third, fourth and fifth reasons are sufficiently detailed, since they specify the names of the entities concerned, and, in the case of the third and fourth reasons, the type of financial services provided and when they were provided.
89 In the light of the foregoing, it must be held that, as regards the second reason on which it relies, the Council is in breach of the obligation to state reasons and the obligation to disclose to the applicant, as the entity concerned, the evidence adduced against it. On the other hand, as regards the other reasons, those obligations were respected.
– Infringement of the obligation to state reasons, the applicant’s rights of defence and its right to effective judicial protection as a consequence of its not having obtained sufficient information on the adoption of restrictive measures against it
90 In its reply to the Court’s questions, lodged at the Court’s Registry on 8 June 2012, the applicant stated that, further to the judgment of 13 March 2012 in Melli Bank v Council, paragraph 25 above, it no longer claimed that the Council had infringed its rights of defence and its right to effective judicial protection on the ground that the Council had not disclosed to it the evidence supporting the Council’s finding that the applicant was owned by BSI.
91 The applicant nonetheless claims that, notwithstanding repeated requests for information, it did not receive sufficient information on the adoption of restrictive measures with respect to BSI and, in particular, it did not receive any evidence relating to the alleged involvement of BSI in nuclear proliferation. The applicant emphasises, in this context, both the inadequacy of the proposals for the adoption of restrictive measures sent to it by the letter of 28 October 2010 and annexed to the rejoinder and the lateness of their disclosure.
92 The applicant concludes that the disclosure of that information did not allow it to make effective representations on the adoption of restrictive measures both against it and against BSI and was not such as to afford it a fair hearing.
93 The Council, supported by the Commission, contends that the applicant’s arguments are unfounded. In particular, the Council maintains that it disclosed to the applicant the proposals for the adoption of restrictive measures as soon as it obtained the agreement of the Member States which submitted the proposals.
94 First, it follows from the analysis in paragraphs 79 to 89 above that the first, third, fourth and fifth reasons relied on by the Council against BSI are sufficiently detailed. On the other hand, the vagueness of the second reason provided by the Council constitutes an infringement of the applicant’s right of defence and of its right to effective judicial protection.
95 Secondly, as regards disclosure of the proposals for the adoption of restrictive measures, the Council’s argument cannot be accepted. Where the Council intends to rely on information submitted by a Member State in order to adopt restrictive measures affecting an entity, it is obliged to ensure, before the adoption of those measures, that the entity concerned can be notified of the information in question in good time so that it is able effectively to make known its point of view.
96 In the present case, it must be noted that the period within which the applicant was required by the Council to submit its observations further to the adoption of Decision 2010/413 and Implementing Regulation No 668/2010 expired on 15 September 2010.
97 Since the Council disclosed the proposals to the applicant only after the expiry of that period, the Council did not give the applicant access to the material in its file in good time, contrary to the rights of the defence and the right to effective judicial protection. Since those proposals were relied on by the Council as justification of all the contested measures against the applicant, and taking into account the date when the last of those proposals was notified, that defect affects the lawfulness of Decision 2010/413, Implementing Regulation No 668/2010, Decision 2010/644 and Regulation No 961/2010, in so far as those measures concern the applicant.
98 Thirdly, as regards the failure to disclose evidence, it must be observed that, according to the principle of respect for the rights of the defence, the Council is not required to disclose information other than that contained in its file. In the present case, the Council states, without contradiction by the applicant, that its file contains no additional evidence concerning the involvement of BSI in nuclear proliferation. In those circumstances, it cannot be claimed that the Council infringed the applicant’s rights of defence and its right to effective judicial protection by not disclosing such evidence.
– The defects affecting the assessment prior to the adoption of the restrictive measures against the applicant and the regular review of those measures
99 The applicant claims that the Council did not carry out a genuine assessment of the circumstances of the case, but did no more than adopt the proposals submitted by Member States. That defect affects both the assessment prior to the adoption of the restrictive measures against the applicant and the regular review of those measures.
100 Further, according to the applicant, it is clear from diplomatic cables, made public through the Wikileaks organisation (‘the diplomatic cables’), that Member States, in particular the United Kingdom of Great Britain and Northern Ireland, were subject to pressure from the United States Government to ensure the adoption of restrictive measures against Iranian entities. That fact, it is claimed, casts doubt on the lawfulness of the measures adopted and of the procedure for their adoption.
101 The Council, supported by the Commission, contends that the applicant’s arguments are unfounded. It contends, in particular, that no account should be taken of the diplomatic cables.
102 First, it must be observed that acts which establish restrictive measures against entities allegedly involved in nuclear proliferation are acts of the Council, which must, therefore, ensure that their adoption is justified. Consequently, when adopting an initial act establishing such measures, the Council must assess the relevance and the validity of the information and evidence submitted to it, pursuant to Article 23(2) of Decision 2010/413, by a Member State or by the High Representative of the Union for Foreign Affairs and Security Policy. When adopting subsequent acts affecting the same entity, the Council is required, in accordance with Article 24(4) of that decision, to review the need to maintain those measures in the light of observations submitted by that entity.
103 In the present case, on the one hand, the incorrect statement, in Decision 2010/413 and Implementing Regulation No 668/2010, on the extent of the Iranian State’s holding in the share capital of BSI, the inaccuracy of which is not denied by the Council, is an indication that the Council did not check the relevance and the validity of the evidence, concerning BSI and the applicant, submitted to it before the adoption of those measures.
104 On the other hand, as regards the adoption of the subsequent contested measures, the information in the file suggests that the Council did review the circumstances of the case in the light of the applicant’s observations. Accordingly, the Council stated, in the letter of 28 October 2010, that it remained of the view that the restrictive measures against the applicant were justified by the fact that it was wholly owned by BSI, which was itself involved in nuclear proliferation. The Council restated that position in the letter of 5 December 2011. Further, it is not disputed that the Council corrected the reference to the Iranian State’s holding in the share capital of BSI, the accuracy of which was challenged by the applicant.
105 Secondly, as regards the diplomatic cables, the fact that some Member States were subject to diplomatic pressure, even if proved, does not imply, by itself, that such pressure affected the contested measures which were adopted by the Council or the assessment carried out by the Council when they were adopted.
106 In those circumstances, the Court must uphold the applicant’s arguments as to the defects affecting the assessment and review carried out by the Council in relation to Decision 2010/413 and Implementing Regulation No 668/2010, but must reject those arguments for the remainder.
107 In the light of the foregoing, it must first be observed that the Council infringed the applicant’s rights of defence and its right to effective judicial protection in that it did not notify the applicant, in good time, of the proposals for the adoption of restrictive measures (see paragraph 97 above). Since those proposals were relied on by the Council as justification of all the contested measures against the applicant, and taking into account the date when the last of those was disclosed, that defect affects the lawfulness of Decision 2010/413, Implementing Regulation No 668/2010, Decision 2010/644 and Regulation No 961/2010, in so far as those measures concern the applicant.
108 Next, when adopting Decision 2010/413 and Implementing Regulation No 668/2010, the Council did not comply with the obligation to assess the relevance and the validity of the information and evidence against the applicant submitted to it, with the consequence that those measures are tainted by illegality (see paragraphs 103 and 106 above).
109 Lastly, the Council infringed the obligation to state reasons, the applicant’s rights of defence and its right to effective judicial protection as regards the second reason relied on against BSI (see paragraphs 89 and 94 above). Nonetheless, taking into account the fact that the various reasons relied on by the Council are independent of each other and that other reasons are sufficiently detailed, that fact does not justify the annulment of Decision 2011/783, Implementing Regulation No 1245/2011 and Regulation No 267/2012.
110 In the light of all the foregoing, the Court must uphold the first plea in law to the extent that it concerns the annulment of Decision 2010/413, Implementing Regulation No 668/2010, Decision 2010/644 and Regulation No 961/2010 in so far as those acts concern the applicant, and reject that plea for the remainder.
The effects of annulment of the contested measures
111 The applicant claims that the annulment of the contested measures should be with immediate effect and should not, therefore, be suspended pending the outcome of any appeal proceedings.
112 The Council contends that the applicant’s claim is unfounded.
113 In that regard, first, it must be observed that Implementing Regulation No 668/2010, which amended the list in Annex V to Regulation No 423/2007, produced no legal effects after the latter regulation was repealed by Regulation No 961/2010 with effect from 27 October 2010. Consequently, on the date when its claim was lodged, on 26 January 2012, the applicant had no interest in requesting the annulment with immediate effect of Implementing Regulation No 668/2010, and its claim must therefore be rejected as being inadmissible in so far as it is directed against the latter regulation.
114 Secondly, Regulation No 961/2010, as amended by Implementing Regulation No 1245/2011, was itself repealed by Regulation No 267/2012, with effect from 24 March 2012. Consequently, those measures no longer produce legal effects, with the result that the applicant no longer has an interest in requesting their annulment with immediate effect. In those circumstances, it is no longer necessary to adjudicate on its claim in so far as Regulation No 961/2010, as amended by Implementing Regulation No 1245/2011, is concerned.
115 Thirdly, consideration of the pleas in law relied on by the applicant has not indicated that Regulation No 267/2012, in so far as it concerns the applicant, is vitiated by illegality. Consequently, the applicant’s claim that that regulation should be annulled with immediate effect must be rejected.
116 Fourthly, as regards Decision 2010/413, as amended by Decision 2010/644, it must be observed that the defects which justify the annulment of those two decisions in so far as they concern the applicant, namely, first, the failure to disclose, in good time, the proposals for the adoption of restrictive measures (see paragraph 97 above) and, secondly, in relation to Decision 2010/413, the infringement of the obligation to examine the relevance and validity of the information and evidence submitted to the Council (see paragraphs 103 and 106 above), did not recur when the continuation of restrictive measures was subject to the regular review in the context of adoption of Decision 2011/783. That being the case, those defects do not affect the lawfulness of Decision 2010/413, as amended by Decision 2010/644, after the entry into force of Decision 2011/783. Consequently, the effects of annulment of Decision 2010/413 and Decision 2010/644 must be limited to the period preceding the entry into force of Decision 2010/783, pursuant to the second paragraph of Article 264 TFEU.
Costs
117 Under Article 87(3) of the Rules of Procedure, the General Court may order that the costs be shared or that each party bear its own costs where each party succeeds on some and fails on other heads. In the circumstances of this case, it is appropriate that each party should bear its own costs.
118 Under the first subparagraph of Article 87(4) of the Rules of Procedure, institutions which have intervened in the proceedings are to bear their own costs. Consequently, the Commission shall bear its own costs.
On those grounds,
THE GENERAL COURT (Fourth Chamber)
hereby:
1. Annuls the following measures in so far as they concern Bank Saderat plc :
– point 7 of Table B of Annex II to Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP;
– point 5 of Table B of the Annex to Council Implementing Regulation (EU) No 668/2010 of 26 July 2010 implementing Article 7(2) of Regulation (EC) No 423/2007 concerning restrictive measures against Iran;
– point 7 of Table I.B of the Annex to Council Decision 2010/644/CFSP of 25 October 2010 amending Decision 2010/413;
– point 7 of Table B of Annex VIII to Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation No 423/2007.
2. Orders the effects of annulment of Decision 2010/413 and Decision 2010/644 to be limited to the period preceding the entry into force of Council Decision 2011/783/CFSP of 1 December 2011 amending Decision 2010/413.
3. Declares that there is no need to adjudicate on the claim by Bank Saderat that Regulation No 961/2010 and Council Implementing Regulation (EU) No 1245/2011 of 1 December 2011, implementing Regulation No 961/2010, should be annulled with immediate effect.
4. Dismisses the action as to the remainder.
5. Orders each party to bear its own costs.
Pelikánová | Jürimäe | Van der Woude |
Delivered in open court in Luxembourg on 20 March 2013.
[Signatures]
Table of contents
Background to the dispute
Procedure and forms of order sought by the parties
Law
Admissibility
Admissibility of the adaptations to the applicant’s claims
Admissibility of the fourth plea in law: error of assessment as regards the involvement of BSI in nuclear proliferation
Admissibility of the Council’s arguments on the admissibility of pleas claiming breach of the applicant’s fundamental rights
Substance
The second plea in law: error of assessment as regards whether the applicant is owned or controlled by BSI; and the fifth plea: infringement of the principle of proportionality, the applicant’s right to property and right to conduct a business
The first plea in law: infringement of the obligation to state reasons, the principle of respect for the rights of the defence and the right to effective judicial protection
– Whether the applicant may rely on the principle of respect for the rights of the defence
– The statement of reasons for the contested measures
– Infringement of the obligation to state reasons, the applicant’s rights of defence and its right to effective judicial protection as a consequence of its not having obtained sufficient information on the adoption of restrictive measures against it
– The defects affecting the assessment prior to the adoption of the restrictive measures against the applicant and the regular review of those measures
The effects of annulment of the contested measures
Costs