Case T-256/07

People’s Mojahedin Organization of Iran

v

Council of the European Union

(Common foreign and security policy – Restrictive measures directed against certain persons and entities with a view to combating terrorism – Freezing of funds – Actions for annulment – Rights of the defence – Statement of reasons – Judicial review)

Summary of the Judgment

1.      Procedure – Decision or regulation replacing the contested measure during the course of proceedings

2.      Acts of the institutions – Presumption of validity – Non-existent measure – Concept

(Art. 249 EC)

3.      Actions for annulment – Judgment annulling a measure – Effects – Obligation to adopt implementing measures

(Art. 233 EC)

4.      Acts of the institutions – Statement of reasons – Obligation – Scope

(Art. 253 EC; Council Common Position 2001/931, Art. 1(6); Council Regulation No 2580/2001, Art. 2(3))

5.      European Union – Common foreign and security policy – Specific restrictive measures directed against certain persons and entities with a view to combating terrorism

(Council Common Position 2001/931, Art. 1; Council Regulation No 2580/2001, Art. 2(3))

6.      European Union – Common foreign and security policy – Specific restrictive measures directed against certain persons and entities with a view to combating terrorism

(Council Common Position 2001/931, Art. 1(4) and (6); Council Regulation No 2580/2001, Art. 2(3))

7.      European Communities – Judicial review of the legality of the acts of the institutions

(Arts 60 EC, 301 EC and 308 EC)

1.      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 Community judicature, 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 the latter.

(see para. 46)

2.      Measures of the Community institutions, even though irregular, are in principle presumed to be lawful and accordingly produce legal effects until such time as they are withdrawn, declared void in an action for annulment or declared invalid following a reference for a preliminary ruling or a plea of illegality.

By way of exception to that principle, measures tainted by an irregularity whose gravity is so obvious that it cannot be tolerated by the Community legal order must be treated as having no legal effect, even provisional, that is to say, they must be regarded as legally non-existent. The purpose of this exception is to maintain a balance between two fundamental, but sometimes conflicting, requirements with which a legal order must comply, namely, stability of legal relations and respect for legality. The gravity of the consequences attaching to a finding that a measure of a Community institution is non-existent means that, for reasons of legal certainty, such a finding may be reserved for quite extreme situations.

(see paras 55-57)

3.      In order to comply with an annulling judgment and to implement it fully, the institution that is the author of the measure is required to have regard not only to the operative part of the judgment but also to the grounds constituting its essential basis, in so far as they are necessary to determine the exact meaning of what is stated in the operative part. It is those grounds which, on the one hand, identify the precise provision held to be illegal and, on the other, indicate the specific reasons which underlie the finding of illegality contained in the operative part and which the institution concerned must take into account when replacing the annulled measure.

However, although a finding of illegality in the grounds of a judgment annulling a measure primarily requires the institution which adopted the measure to eliminate that illegality in the measure intended to replace the annulled measure, it may also, in so far as it relates to a provision with specific scope in a given area, give rise to other consequences for that institution.

Concerning the annulment for formal and procedural defects of a decision freezing funds which, by virtue of Article 1(6) of Common Position 2001/931 on the application of specific measures to combat terrorism, must be reviewed at regular intervals, the institution which adopted the measure is first of all under an obligation to ensure that subsequent fund-freezing measures adopted after the annulling judgment and governing periods subsequent to that judgment are not vitiated by the same defects.

When, however, a measure has been annulled for formal or procedural defects, the institution concerned is entitled to adopt afresh an identical measure, this time observing the formal and procedural rules in question, and even to give that measure retroactive effect, if that is essential to the attainment of the public-interest objective pursued and if the legitimate expectations of the persons concerned are duly protected. While the measures necessary to comply with a judgment annulling an act, in accordance with Article 233 EC, may involve the institution’s amending or withdrawing, as the case may be, measures repealing and replacing the annulled decision, after the close of the oral procedure, the institution concerned has the right to maintain those measures in force for so long as is absolutely necessary for it to adopt a new measure satisfying the formal and procedural rules concerned.

(see paras 60-62, 64-66)

4.      Both the statement of reasons for an initial decision to freeze funds and the statement of reasons for subsequent decisions must refer not only to the legal conditions of application of Regulation No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, in particular the existence of a national decision taken by a competent authority, but also to the actual and specific reasons why the Council considers, in the exercise of its discretion, that the person concerned must be made the subject of a measure freezing funds.

Furthermore, it is clear from Article 1(6) of Common Position 2001/931 on the application of specific measures to combat terrorism, also referred to by Article 2(3) of Regulation No 2580/2001, that, while subsequent fund-freezing decisions must indeed be preceded by ‘review’ of the situation of the person concerned, that is not solely for the purpose of establishing whether he is still engaged in terrorist activity, as the applicant incorrectly maintains, but in order to check whether continuing to include him in the list at issue ‘remains justified’, where appropriate on the basis of new information or evidence. In this regard, when the grounds of a subsequent decision to freeze funds are in essence the same as those already relied on when a previous decision was adopted, a mere statement to that effect may suffice, particularly when the person concerned is a group or entity.

(see paras 81-82)

5.      Neither Article 2(3) of Regulation No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism nor Article 1(2), (3) and (6) of Common Position 2001/931 on the application of specific measures to combat terrorism precludes the imposition of restrictive measures on persons or entities that have in the past committed acts of terrorism, despite the lack of evidence to show that they are at present committing or participating in such acts, if the circumstances warrant it.

First, although Article 1(2) of that Common Position uses the present indicative (‘persons who commit …’) to define what is meant by ‘persons, groups and entities involved in terrorist acts’, that is in the sense of a general truth particular to the legal definition of offences, and not by reference to a given period of time. The same is true of the present participle used in the French (‘les personnes … commettant’) and English (‘persons committing) texts of Article 2(3) of Regulation No 2580/2001, which is confirmed by the use of the present indicative for the equivalent form used in other language versions. Furthermore, Article 1(4) of that Common Position permits the adoption of restrictive measures against, inter alia, persons who have been convicted of acts of terrorism, which would normally imply terrorist activity in the past and not actively pursued at the time the finding is made in the decision to convict. Lastly, Article 1(6) provides that the names of persons and entities in the list at issue are to be reviewed at regular intervals and at least once every six months to ensure that there are grounds for keeping them in the list. If that provision is not to be rendered redundant, it must be considered to allow the continued inclusion in the list at issue of persons and entities not having committed any fresh act of terrorism during the six-month period or periods before the review, if that continued inclusion is still justified in the light of all relevant circumstances.

Secondly, Regulation No 2580/2001 and Common Position 2001/931, like Resolution 1373 (2001) of the Security Council of the United Nations to which they give effect, are intended to combat the threats to international peace and security posed by acts of terrorism. Attainment of that objective, which is of fundamental importance to the international community, would be at risk of being jeopardised if the measures to freeze funds provided for by those acts could be applied only to persons, groups or entities at present committing acts of terrorism or having done so in the very recent past.

Furthermore, those measures, being intended essentially to prevent the perpetration of such acts or their repetition, are based more on the appraisal of a present or future threat than on the evaluation of past conduct. In this regard, experience has shown that temporary cessation of activities by an organisation with a terrorist past is not in itself a guarantee that the organisation concerned will not resume them at any moment, and that a purported renunciation of violence expressed in that context ought not necessarily to be believed. It follows that the broad discretion enjoyed by the Council with regard to the matters to be taken into consideration for the purpose of adopting or of maintaining in force a measure freezing funds extends to the evaluation of the threat that may be represented by an organisation having in the past committed acts of terrorism, notwithstanding the suspension of its terrorist activities for a more or less long period, or even their apparent cessation.

(see paras 107-112)

6.      Although it is indeed for the Council to prove that freezing of the funds of a person, group or entity is or remains legally justified, in the light of Article 1(4) and (6) of Common Position 2001/931 on the application of specific measures to combat terrorism and of Article 2(3) of Regulation No 2580/2001 on specific restrictive measures directed against certain persons and entities with a view to combating terrorism, that burden of proof has a relatively limited scope in respect of the Community procedure for freezing funds. In the case of an initial decision to freeze funds, the burden of proof essentially relates to the existence of precise information or material in the relevant file which indicates that a decision by a national authority meeting the definition laid down in Article 1(4) of Common Position 2001/931 has been taken with regard to the person concerned. Furthermore, in the case of a subsequent decision to freeze funds, after review, the burden of proof essentially relates to whether the freezing of funds is still justified, having regard to all the relevant circumstances of the case and, most particularly, to the action taken upon that decision of the competent national authority.

(see para. 134)

7.      The Council has broad discretion as to what to take into consideration for the purpose of adopting economic and financial sanctions on the basis of Articles 60 EC, 301 EC and 308 EC, consistent with a common position adopted on the basis of the common foreign and security policy. This discretion concerns, in particular, the assessment of the considerations of appropriateness on which such decisions are based.

However, although the Community judicature acknowledges that the Council possesses broad discretion in that sphere, that does not mean that the Court is not to review the interpretation made by the Council of the relevant facts. The Community judicature must not only establish whether the evidence relied on is factually accurate, reliable and consistent, but must also ascertain whether that evidence contains all the relevant information to be taken into account in order to assess the situation and whether it is capable of substantiating the conclusions drawn from it. Nevertheless, when conducting such a review, it must not substitute its own assessment of what is appropriate for that of the Council.

In addition, where a Community institution enjoys broad discretion, the review of observance of certain procedural guarantees is of fundamental importance. Those guarantees include the obligation for the competent institution to examine carefully and impartially all the relevant elements of the individual case and to give an adequate statement of the reasons for its decision.

(see paras 137-139)