Case T‑492/10

Melli Bank plc

v

Council of the European Union

(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)

Summary — Judgment of the General Court (Fourth Chamber), 20 February 2013

1.      Procedure — Decision or regulation replacing the contested measure in the course of proceedings — New factor — Extension of the initial pleadings

2.      European Union — Common foreign and security policy — Restrictive measures against Iran — Freezing of funds of persons, entities or bodies identified by the Council as being engaged in nuclear proliferation — Obligation to extend that measure to entities owned or controlled by such an entity — Whether an entity is owned or controlled — Implementation of relevant provisions of EU law — Council’s lack of discretion

(Council Regulations No 961/2010, Art. 16(2)(a), and No 267/2012, Art. 23(2)(a); Council Decision 2010/413, Art. 20(1)(b))

3.      Acts of the institutions — Statement of reasons — Obligation — Scope — Restrictive measures against Iran — Freezing of funds of persons, entities or bodies engaged in or supporting nuclear proliferation — Minimum requirements

(Art. 296, second para., TFEU; Council Regulations No 961/2010, Art. 36(3), and No 267/2012, Art. 46(3); Council Decision 2010/413, Art. 24(3))

4.      EU law — Principles — Rights of defence — Right to effective judicial protection — Restrictive measures against Iran — Freezing of funds of persons, entities or bodies engaged in or supporting nuclear proliferation — Obligation to disclose incriminating evidence — Scope

(Charter of Fundamental Rights of the European Union, Art. 47; Council common position No 2001/931, Art. 1(4) and (6))

5.      EU law — Principles — Rights of defence — Restrictive measures against Iran — Freezing of funds of persons, entities or bodies engaged in or supporting nuclear proliferation — Right of access to documents — Right subject to request for access being made to the Council

(Council Regulations No 423/2007, No 961/2010 and No 267/2012; Council Decision 2010/413)

1.      See the text of the judgment.

(see para. 42)

2.      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 or which belong to it, in order to circumvent the effect of the measures applying to it. Consequently, as regards restrictive measures against Iran such as the freezing of the funds of such entities, as imposed by the Council by Article 20(1)(b) of Decision 2010/413, Article 16(2) of Regulation No 961/2010 and Article 23(2)(a) of Regulation No 267/2012, that is necessary and appropriate in order to ensure the effectiveness of the measures adopted and to ensure that those measures are not circumvented. Further, where an entity is wholly owned by an entity regarded as being engaged in nuclear proliferation, the ownership test contained in Article 20(1)(b) of Decision 2010/413 and in Article 16(2)(a) of Regulation No 961/2010 is satisfied. 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. 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 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 961/2010 and Regulation No 267/2012, as interpreted by the Courts of the European Union.

(see paras 55-57, 96)

3.      See the text of the judgment.

(see paras 67-69)

4.      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, that entity must be afforded the opportunity effectively to make known its view on that evidence.

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.

Further, as regards the principle of effective judicial protection, 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 paras 71, 72, 74)

5.      See the text of the judgment.

(see para. 73)