CURIA - Documents

ORDER OF THE PRESIDENT OF THE SECOND CHAMBER OF THE COURT OF FIRST INSTANCE

2 August 2000 (1)

(Application for interim measures - Freeze of funds and ban on investment in relation to the Federal Republic of Yugoslavia - Regulation (EC) No 1147/2000 - Fumus boni juris)

In Case T-189/00 R,

'Invest Import und Export GmbH, established in Neuss (Germany), Invest Commerce SARL, established in Alfortville (France), represented by R. Wägenbaur, Rechtsanwalt, Brussels, with an address for service in Luxembourg at the offices of Messrs Arendt & Medernach, 8-10 Rue Mathias Hardt,

applicants,

Commission of the European Communities, represented by M.-J. Jonczy, legal adviser, and B. Brandtner, of its legal service, acting as Agents, with an address for service in Luxembourg at the office of C. Gómez de la Cruz, of its Legal Service, Wagner Centre, Kirchberg,

defendant,

THE PRESIDENT OF THE SECOND CHAMBER OF THE COURT OF FIRST INSTANCE

OF THE EUROPEAN COMMUNITIES

makes the following

Order

Legal framework

1.

Having regard to several common positions under Title V of the Treaty on European Union concerning provisions on a common foreign and security policy, the Council on 15 June 1999 adopted Regulation (EC) No 1294/99 concerning a freeze of funds and a ban on investment in relation to the Federal Republic of Yugoslavia (FRY) and repealing Regulations (EC) No 1295/98 and (EC) No 1607/98 (OJ 1999 L 153, p. 63 - hereinafter the 'basic regulation). That was intended to step up the economic pressure on the governments of the Federal Republic of Yugoslavia and the Republic of Serbia against which continuous infringements of the relevant resolutions of the United Nations Security Council and serious violations of human rights were alleged.

2.

By Council Regulation (EC) No 723/2000 of 6 April 2000 amending Regulation No 1294/1999 (OJ 2000 L 86, p. 1, hereinafter the 'amending regulation) the Community further reinforced its economic sanctions in order to exert the greatest possible pressure on President Milosevic.

3.

The sanctions provided for concern the 'Government of the Federal Republic of Yugoslavia and the 'Government of the Republic of Serbia. Under Article 1(1) and (2) of the basic regulation, as amended by the amending regulation, those Governments are defined as including:

'- any company, undertaking, institution, including any financial institution, and entity owned or controlled by that Government,

- any socially-owned entity organised in the Federal Republic of Yugoslavia,

- any successor to such companies, undertakings, institutions and entities as of 26 April 1999,

- any subsidiary or branch, wherever located, of such companies, undertakings, institutions and entities.

4.

Under Article 2(2) of the basic regulation companies located, registered or incorporated outside the territory of the Federal Republic of Yugoslavia and listed in Annex II to the regulation (so-called 'black list broken down by Member State of the Community), are deemed to be owned or controlled by the respective governments.

5.

Under Article 2(5), as amended by the amending regulation

'- companies ... located ... in the FRY, with the exception of the Province of Kosovo and ... of Montenegro, and listed in Annex VI shall be deemed to be neither owned or controlled by the Government of the FRY or the Government of the Republic of Serbia nor socially owned,

- all other companies ... located ... in the FRY, with the exception of the Province of Kosovo and ... of Montenegro, shall be deemed to be owned or controlled by the Government of the FRY or the Government of the Republic of Serbia or to be socially owned.

Under Article 1 of Council Regulation (EC) No 1059/2000 of 18 May 2000 amending Regulation No 723/2000 (OJ 2000 L 119, p. 1) those provisions are to apply only as from 30 June 2000 as the drawing up of Annex VI ('white list) required a considerable amount of time.

6.

Under Article 3 of the basic regulation all funds held outside the territory of the Federal Republic of Yugoslavia and belonging to the Government of the FRY and/or to the Government of the Republic of Serbia are to be frozen, and no funds are to be made available, directly or indirectly, to or for the benefit of those Governments.

7.

Article 7 provides for exceptions to the prohibition under Article 3 for certain funds intended for example to cover the expenses of Yugoslav or Serbian diplomatic missions, social security payments, the payment of taxes and fees or for normal salaries in the Community.

8.

Under Article 8 the Commission is empowered to grant authorisations in specific cases if not to do so would cause serious damage to the interests of the Community, and also to amend Annexes I and II

9.

Under Article 8(4) inserted by the amending regulation applications for exemptions or to alter the annexes are to be made to the competent authorities of the Member States listed in Annex III, which are to verify with the greatest possible care the information given by applicants.

Facts and procedure

10.

By a letter from the German Bundesausfuhramt (Federal Office for Exports) dated 8 September 1999 the Federal Republic of Germany requested the Commission to include the first applicant in Annex II to the basic regulation since that undertaking was directly owned by the firm, Invest-Import Belgrade. By a letter from the French Ministry for the Economy, Finances and Industry dated 27 October 1999 the French Republic made an analogous request in regard to the second applicant which belonged to Invest-Import Belgrade and its German subsidiary company, the first applicant.

11.

On 29 May 2000 the Commission adopted Regulation (EC) No 1147/2000 amending Annex II to Regulation (EC) No 1294/1999 concerning a freeze of funds and a ban on investment in relation to the Federal Republic of Yugoslavia (OJ 2000 L 129, p. 15, hereinafter the 'contested regulation) pursuant to which the applicants were included in Annex II to the basic regulation.

12.

In substantiation reference was made to the relevant requests by Germany and France. On the applicants argument that their parent companies were owned by the workers and former workers of those parent companies, it is stated in the ninth recital in the preamble to the regulation that that argument disregards the fact that a company owned by its workers and former workers is a 'socially owned entity (French version: entité détenue collectivement) and that, as a result, such a company is subsumed under the definition of the Governments of the FRY and the Republic of Serbia, irrespective of factors such as the composition of its board, thestake in the social capital held, directly or indirectly, by the FRY or the Republic of Serbia.

13.

In an application which was received at the Registry on 18 July 2000 the applicants sought the annulment under the fourth paragraph of Article 230 EC of the contested regulation in so far as they were included in Annex II to the basic regulation.

14.

In a separate document received at the Registry on the same date the applicants sought suspension of the operation of the contested regulation, in so far as it concerned them, and requested that their application be decided as a matter of urgency under Article 105(2) of the Rules of Procedure.

15.

Since the President of the Court of First Instance is prevented from sitting, he is replaced, in accordance with the directions contained in Article 106(2) of the Rules of Procedure, by the President of the Second Chamber.

16.

By order of 25 July 2000 and in accordance with Article 105(2) of the Rules of Procedure, the President of the Second Chamber, prior to lodgment of the Commission's observations, suspended the operation of the contested regulation, in so far as it concerned the applicants, until the adoption of the order terminating the proceedings for interim relief, to the extent that the Commission was required to grant without delay an authorisation for each import and export operation notified to it by the applicants - without complying with the procedure under Article 9 of the basic regulation, as amended in the amending regulation - and the applicants, notwithstanding Article 3(1) of that regulation, were to have at their disposal the funds necessary for each of the corresponding operations.

17.

In a pleading received at the Registry on 26 July 2000 the Commission gave its views on the application for interim relief. It contends that the application should be dismissed as unfounded.

18.

Oral argument was presented by the parties on 31 July 2000.

19.

On the urgency of the interim order applied for the applicants whose business includes the import, inter alia, of vinegar, methanol, electric cables and metal-working tools and the export of, inter alia, raw materials, insulation materials as well as spare parts for machines and industrial plant from and to Serbia, Macedonia, Bulgaria, Montenegro and Bosnia-Herzegovina, submit that since the entry into force of the contested regulation on 30 May 2000 their company accounts in Germany and France have been blocked for the making of payments and book-keeping entries thereof, which has extensively paralysed their business activity. If operation of the contested regulation were not suspended with immediate effect, their existence would be acutely threatened. They are currently unable to operate and run the risk of having to disclose their inability to make payments.

20.

It is true that under Article 7(1) of the basic regulation the applicants were able to make normal salary payments so long as their accounts showed a positive balance. However, they were not allowed to debit to their accounts rental and leasing expenditure and transfer it to the recipients. They thereby ran the risk that the lessors would terminate the corresponding contracts at short notice, which would thus deprive the applicants of any possibility of resuming their business in the foreseeable future.

21.

The applicants had, they submit, endeavoured to avert or mitigate the damage. They requested the Commission under Article 8(1) and (2) of the basic regulation, as amended by the amending regulation, to exempt certain payments from the ban on payments. However, hitherto, they had received no reply to their request. Nor, moreover, had it been possible hitherto for their parent company, Invest-import Belgrade, in spite of numerous endeavours and requests, to persuade the Commission to include them on the white list under Annex VI of the basic regulation, as amended by the amending regulation.

22.

In the case itself the applicants claim first that the contested regulation is in breach of the basic regulation. They are indeed subsidiaries of Invest-Import. However, their Belgrade parent company is neither a state-owned company nor a socially-owned entity. Rather it has for a long time been majority-owned by the workers and former workers of the undertaking, as is apparent from the annexed articles of association and certificates of the companies register. The legal situation precluded the Yugoslavian or Serb Governments from having recourse to the financial resources of the company. Nor had any attempt ever been made to exert pressure in this direction on the undertaking.

23.

Nor would the applicants' inclusion in Annex II have been justified if the parent company were still today (which is not the case) in social ownership. Even this form of undertaking is framed in such a way as to allow government bodies no access to the financial resources of the undertaking.

24.

In so far as the contested regulation is based on the fact that the applicants' parent company is a 'socially owned undertaking and thus refers to the basic regulation as amended by the amending regulation, the applicants are alleging on an ancillary basis under Article 241 EC the inapplicability of the basic regulation. Both the latter and the contested regulation are said to be in breach of the Community-law principle of proportionality. For less stringent means could be considered in order to attain the objective pursued, that is to say to exert increased pressure on the current regime in Yugoslavia. For example a system of selective export bans or the imposition of conditions on export licences could be envisaged. Measures of that kind would have been decidely more in keeping with the situation and would have avoided unnecessarily jeopardising the applicants' existence.

25.

At the hearing the applicants went on in that connection to submit that if the basic regulation, which they deny, were indeed to be interpreted as being independent of the ownership arrangements of the parent company and the latter's legal form,

then that regulation is in serious breach of fundamental principles of law. Such discriminatory and sweeping conduct of the Council constituted an abuse of power.

26.

Furthermore, the applicants are alleging a breach of their defence rights: in no way, they allege, did the Commission fulfil its duty to grant them a comprehensive and lawful hearing prior to adoption of the measures adversely affecting them. Even if an undertaking is entered on the black list in Annex II to the basic regulation on application by the competent national authorities and the corresponding procedure therefore consists of two stages, in the end it is the Commission which is responsible for ensuring that the undertakings concerned receive a lawful hearing.

27.

On the Commission's argument that the punitive intent pursued by the contested regulation must contain a certain element of surprise which precludes a comprehensive prior hearing in accordance with the law, the applicants observed at the hearing that in the present case there was no element of surprise for any of them. Both applicants had knowledge of their imminent inclusion in the black list. That is why they ought to have been heard by the Commission prior to adoption of the contested decision.

28.

Finally, the applicants contend that the reasoning on which the contested regulation is based is inadequate. There is no discussion of the applicants' actual legal situation or of possibilities of public-sector involvement with their parent company. That is true also, as they plead in the alternative, of the basic regulation.

29.

The Commission considers that the interim injunction applied for is neither urgent nor - absent fulfilment of the criteria in regard to the fumus boni Juris - necessary. It stresses that, in issuing the contested regulation, it merely gave effect to the basic regulation. The applicants were put on the black list at the express request of the competent German and French authorities. It was to those authorities that the applicants should in the first instance have turned with their concerns. The Commission as a purely executory body cannot be reproached for any unlawful act or omission.

30.

At the hearing the Commission explained in regard to the exceptional circumstances provided for in Articles 7 and 8(1) of the basic regulation that there was nothing to preclude authorisation of the applicants' substantiated requests for authorisation under paragraph 2 if the latter submitted the corresponding vouchers for the costs incurred or to be incurred by them so as to enable the national authorities and the Commission to carry out the necessary checks.

Findings of the Court

31.

Under Articles 242 and 243 EC, in conjunction with Article 4 of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p.1), in the version contained in Council Decision 93/350/Euratom, ECSC, EEC of 8 June 1993 (OJ 1993 L 144, p. 21), the Court may, if in the circumstances it deems fit, suspend operation of the contested act or order any necessary interim measures.

32.

Under Article 104(2) of the Rules of Procedure applications for suspension of operation must state the circumstances which give rise to urgency; furthermore, a prima facie case in fact and in law must be made out for the necessity of suspension of operation. Those conditions are cumulative, so that an application for interim measures must be dismissed if any one of them is absent (orders of the President of the Court in Case C-286/96P(R) SCK and FNK v Commission [1996] ECR I-4971, paragraph 30, and of the President of the Court of First Instance in Case T-74/00 R Artedogan v Commission [2000] ECR II-2583, paragraph 21).

33.

In the present case the necessity of the order sought must be examined (fumus boni juris).

34.

On the first plea in the action alleging an infringement of the basic regulation by the contested regulation, it should be noted that the applicants are incontestably subsidiaries established in the Community of a parent company which, even if not constituted in Belgrade as a socially-owned entity, at any rate on 26 April 1999 constituted a successor to such an entity. Thus the applicants come under the definition 'Government of the Federal Republic of Yugoslavia and 'Government of the Serb Republic in Article 1(1) and (2) of the basic regulation, as amended in the amending regulation, and within the scope of Article 2 of the basic regulation. Contrary to the applicants' arguments, the basic regulation focuses neither on the ownership arrangements of the parent companies established in Yugoslavia or Serbia nor on their legal form. The privatisation which has apparently occurred in the meantime and the factual independence from the Milosevic regime of the applicants' Belgrade parent company are thus of no significance in regard to the criteria for the application of the basic regulation.

35.

In that context Article 2(5) of the basic regulation, in the version inserted by the amending regulation, is also significant inasmuch as it elucidates the legal position in such a way that all companies, undertakings, institutions or entities located, registered or incorporated in the rest of Yugoslavia (i.e. Yugoslavia with the exception of Montenegro and Kosovo) are deemed to be owned or controlled by the Government, if they are not entered on the white list under Annex VI. It is true that this provision only became applicable after adoption of the contested regulation. However, it already formed part of the amending regulation of 6 April 2000. For that reason the applicants were already in a position at the beginning of April 2000 to ascertain that, after the fresh strengthening of the sanctions, nothing would turn on the actual ownership arrangements concerning its Belgrade parent company.

36.

The entry of the applicants in Annex II to the basic regulation by way of the contested regulation upon application by the competent national authorities thus constitutes the means by which effect was given to Articles 1 and 2 of that regulation and which prima facie does not disclose any legal error on the part of the Commission. In particular, there would appear to have been no infringement of the principle of proportionality by the Commission, since inclusion of the applicants in Annex II to the basic regulation gives rise automatically to the freezing of their assets under Article 3 of the basic regulation, there having been no less stringent sanction available to the Commission.

37.

To the extent to which the applicants are alleging in the alternative that the basic regulation infringed the prohibition on excessiveness, since on the one hand less stringent sanctions, such as selective export bans or imposition of conditions attached to export licences, were available and their Belgrade parent company as a privatised company 'separate from the State is wrongly brought within the scope of the sanctions, it should be recalled that the aim of the basic regulation (second recital in the preamble) is significantly to increase the pressure on the Governments of the Federal Republic of Yugoslavia and the Republic of Serbia by the freezing of funds held abroad by them, and by the prohibition of new investment which would benefit those governments. Those measures are already provided for under Article 2 of Common Position 1999/318/CFSP of 10 May 1999 adopted by the Council on the basis of Article 15 of the Treaty on European Union concerning additional restrictive measures against the Federal Republic of Yugoslavia (OJ 1999 L 123, p. 1). Under the amending regulation it is intended, in view of the political situation, that those sanctions be further strengthened in order to apply maximum pressure on the Milosevic regime (second recital in the preamble); moreover, the effectiveness of the existing financial sanctions is to be enhanced, inter alia, by closing any loopholes that may exist and improving enforcement (fourth recital in the preamble).

38.

In light of the interrelationship and purpose of these measures no manifest infringement by the Council of the principle of proportionality is discernible on the adequate summary review available in the context of interim legal protection. Moreover, in the context of these ancillary allegations the applicants have confined themselves to a blanket assertion of a breach of the law without providing substantive argument as to the extent to which the less stringent sanctions proposed by them including an individual examination of the ownership arrangements of the undertakings concerned would be practicable and might be consistent with the specific purpose of the measures, which is further to strengthen the existing sanctions and to close any loopholes. Also unsubstantiated is the allegation made at the hearing that the basic regulation breaches elementary principles of law and constitutes an 'abuse of power by the Council.

39.

The ancillary allegation to the effect that the basic regulation is in breach of higher-ranking law appears, therefore, at least prima facie, to be unsubstantiated.

40.

That is true also of the alleged breach of the rights of the defence, without its being necessary in the present proceedings for interim legal protection to examine whether the undertakings affected by the sanction measures at issue are in that connection entitled to a prior lawful hearing. For as the Commission has correctly stated, an undertaking is included in Annex II to the basic regulation on the initiative of the competent national authorities in a two-stage administrative procedure in which those authorities under Article 8(4) of the basic regulation, as amended in the amending regulation, play a considerable part. In such a procedure the right of the undertaking concerned to be heard must actually be secured in the first place in the relations between that undertaking and the competent national administrative authority (judgment in Case T-346/94 France-aviation v Commission [1995] ECR II-2841, paragraph 30 et seq.). In the present case the applicants have made no submissions as to any breach by the German and French authorities of their right to be heard.

41.

On the contrary the first applicant incontestably had early contacts with the German authorities which already at the beginning of June 1999 drew its attention to its imminent inclusion in the 'black list and to which it immediately forwarded its detailed counter-arguments. Moreover, in May and June 2000 the first applicant set out its point of view in detail to the German authorities and the Commission. As is borne out by its statement at the hearing the second applicant was also informed of its imminent inclusion in the 'black list.

42.

Under those circumstances no manifest breach of the rights of the defence can be established in the present proceedings.

43.

In so far as the applicants are alleging inadequacy in the reasoning of both the contested regulation and, on an ancillary basis, of the basic regulation, it is sufficient to state that, according to the established case-law of the Court, the statement of reasons required by Article 253 EC must show clearly and unequivocally the reasoning of the Community authority which adopted the contested measure so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review. However, the statement of the reasons on which regulations are based cannot be required to specify the various matters of detail dealt with in the regulations, provided that the latter fall within the general scheme of the body of measures of which they form part (judgment in Case 250/84 Eridania [1986] ECR 117, paragraphs 37 and 38).

44.

In the present case the purpose pursued by the strengthened sanction measures is apparent from the measures as a whole, as stated above. Therefore the basic regulation satisfies the requirement to provide a statement of reasons. This is true also of the contested regulation which in its recitals expressly refutes the applicants' counter-arguments.

45.

Moreover, the application for interim relief and the application show that the applicants are perfectly able to defend their interests before the Court and to claim that the regulations at issue are unlawful. After all, the reasoning on which those regulations are based also permitted a summary examination of the fumus boni juris in the context of these proceedings.

46.

Accordingly, the last plea also has no prospect of success.

47.

In light of all the foregoing the applicants have failed to make out the need for the interim order sought either factually or legally. Consequently, the application must be rejected without there being any need to examine whether the other preconditions for the adoption of interim orders have been met.

48.

At the same time the order of 25 June 2000 adopted under Article 105(2) of the Rules of Procedure must be set aside.

On those grounds,

THE PRESIDENT OF THE SECOND CHAMBER OF THE COURT OF FIRST INSTANCE

hereby orders:

1. The application for interim relief is dismissed.

2. The order of 25 July 2000 is set aside herein.

3. Costs are reserved.

Luxembourg, 2 August 2000.

H. Jung

J. Pirrung

Registrar

President

1: Language of the case: German.