JUDGMENT OF THE GENERAL COURT (Seventh Chamber)
25 June 2015 (*)
(Common foreign and security policy — Restrictive measures against Iran with the aim of preventing nuclear proliferation — Freezing of funds — Error of assessment — Obligation to state reasons — Right to effective judicial protection — Misuse of power — Right to property — Equal treatment)
In Case T‑95/14,
Iranian Offshore Engineering & Construction Co., established in Tehran (Iran), represented by J. Viñals Camallonga, L. Barriola Urruticoechea and J. Iriarte Ángel, lawyers,
applicant,
v
Council of the European Union, represented by Á. de Elera-San Miguel Hurtado and V. Piessevaux, acting as Agents,
defendant,
APPLICATION for annulment of Council Decision 2013/661/CFSP of 15 November 2013 amending Decision 2010/413/CFSP concerning restrictive measures against Iran (OJ 2013 L 306, p. 18), and of Council Implementing Regulation (EU) No 1154/2013 of 15 November 2013 implementing Regulation (EU) No 267/2012 concerning restrictive measures against Iran (OJ 2013 L 306, p. 3), in so far as they concern the applicant,
THE GENERAL COURT (Seventh Chamber),
composed of M. van der Woude (Rapporteur), President, I. Wiszniewska-Białecka and I. Ulloa Rubio, Judges,
Registrar: J. Palacio González, Principal Administrator,
having regard to the written procedure and further to the hearing on 22 January 2015,
gives the following
Judgment (1)
Background to the dispute
1 The applicant, Iranian Offshore Engineering & Construction Company, established in Tehran (Iran), is active in the field of engineering, constructing and installing infrastructures, at sea and on land, for oil and gas projects.
2 On 9 June 2010, the United Nations Security Council adopted Resolution 1929 (2010) (‘Resolution 1929’) which widened the scope of the restrictive measures imposed by Security Council Resolutions 1737 (2006), 1747 (2007), and 1803 (2008) and introduced additional restrictive measures against the Islamic Republic of Iran.
3 On 17 June 2010, the European Council underlined its deepening concern about Iran’s nuclear programme and welcomed the adoption of Resolution 1929. Recalling its Declaration of 11 December 2009, the European Council invited the Council of the European Union to adopt measures implementing those contained in Resolution 1929 as well as accompanying measures, with a view to supporting the resolution of all outstanding concerns regarding the Islamic Republic of Iran’s development of sensitive technologies in support of its nuclear and missile programmes, through negotiation. Those measures were to focus on the areas of trade, the financial sector, the Iranian transport sector, key sectors in the oil and gas industry and additional designations in particular for the Islamic Revolutionary Guards Corps.
4 On 26 July 2010, the Council adopted Council Decision 2010/413/CFSP concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP (OJ 2010 L 195, p. 39), Annex II to which decision lists the persons and entities — other than those designated by the United Nations Security Council or by the Sanctions Committee created by Resolution 1737 (2006), mentioned in Annex I — whose assets are to be frozen. Recital 22 in the preamble to that decision refers to Resolution 1929 and states that that resolution notes the potential connection between the revenues derived by Iran from its energy sector and the funding of its proliferation-sensitive nuclear activities.
5 In the context of the sanctions that the European Union has imposed on Iran in recent years, Council Decision 2011/783/CFSP of 1 December 2011 (OJ 2011 L 319, p. 71) amended Decision 2010/413/CFSP, by including the names of additional persons and entities on the list of persons subject to the restrictive measures set out in Annex II to Decision 2010/413.
6 Accordingly, by Decision 2011/783, the name of the applicant was included for the first time in the list set out in Annex II to Decision 2010/413 for the following reasons:
‘Energy sector firm involved in the construction of the uranium enrichment site at Qom/Fordow. Subject to UK, Italian and Spanish export denials’.
7 Similarly, on 1 December 2011 the Council adopted Implementing Regulation (EU) No 1245/2011 implementing Regulation (EU) No 961/2010 on restrictive measures against Iran (OJ 2011 L 319, p. 11), which amends, pursuant to Decision 2011/783, Annex VIII to 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), by including therein, inter alia, the applicant’s name for the same reasons as those set out in Decision 2011/783.
8 On 27 February 2012, the applicant challenged the inclusion of its name on the lists at issue, by bringing an action for annulment of Decision 2011/783 and Regulation No 1245/2011 in so far as they concern the applicant. That action was registered as Case T‑110/12.
9 On 23 January 2012, the Council adopted Decision 2012/35/CFSP amending Decision 2010/413 (OJ 2012 L 19, p. 22). Recital 8 of that decision reproduces, in essence, the content of recital 22 of Decision 2010/413 (see paragraph 4 above). Moreover, according to recital 13 of Decision 2012/35, the restrictions on admission and the freezing of funds and economic resources should be applied to additional persons and entities providing support to the Government of Iran allowing it to pursue proliferation-sensitive nuclear activities or the development of nuclear weapon delivery systems, in particular persons and entities providing financial, logistical or material support to the Government of Iran.
10 Article 1(7)(a)(ii) of Decision 2012/35 added a point to Article 20(1) of Decision 2010/413, providing for the freezing of funds belonging to the following persons and entities:
‘(c) other persons and entities not covered by Annex I that provide support to the Government of Iran, and persons and entities associated with them, as listed in Annex II’.
11 Consequently, on 23 March 2012 the Council adopted Regulation (EU) No 267/2012 concerning restrictive measures against Iran and repealing Regulation No 961/2010 (OJ 2012 L 88, p. 1). In order to implement Article 1(7)(a)(ii) of Decision 2012/35, Article 23(2) of Regulation No 267/2012 provides for the freezing of funds of persons, entities and bodies listed in Annex IX thereto, identified as:
‘(d) being other persons, entities or bodies that provide support, such as material, logistical or financial support, to the Government of Iran, and persons and entities associated with them’.
12 On 15 October 2012, the Council adopted Decision 2012/635/CFSP amending Decision 2010/413 (OJ 2012 L 282, p. 58). According to recital 16 of that decision, the names of additional persons and entities should be included in the list of persons and entities subject to restrictive measures as set out in Annex II to Decision 2010/413, in particular Iranian State-owned entities engaged in the oil and gas sector, since they provide a substantial source of revenue for the Iranian Government.
13 Article 1(8)(a) of Decision 2012/635 amended Article 20(1)(c) of Decision 2010/413, which consequently provides that restrictive measures are to be imposed on:
‘(c) other persons and entities not covered by Annex I that provide support to the Government of Iran and entities owned or controlled by them or persons and entities associated with them, as listed in Annex II’.
14 On 21 December 2012, the Council adopted Regulation (EC) No 1263/2012 amending Regulation No 267/2012 (OJ 2012 L 356, p. 34). Article 1(11) of Regulation No 1263/2012 amended Article 23(2)(d) of Regulation No 267/2012, which consequently provides for the freezing of funds of persons, entities and bodies listed in Annex IX thereto, identified as:
‘(d) being other persons, entities or bodies that provide support, such as material, logistical or financial support, to the Government of Iran and entities owned or controlled by them, or persons and entities associated with them’.
15 In its judgment of 6 September 2013 in Iranian Offshore Engineering & Construction v Council (T‑110/12, ‘the judgment of 6 September 2013’, EU:T:2013:411), the Court annulled Decision 2011/783 and Regulation No 1245/11 in so far as they concerned the applicant.
16 On 10 October 2013, the Council sent a letter to the applicant informing it that the Council took note of the judgment of 6 September 2013 (see paragraph 15 above (EU:2013:411)) and that the Council considered that the applicant fulfilled the conditions necessary for the restrictive measures at issue to be imposed on it in accordance with Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012, which cover persons or entities that provide support, such as financial or logistical support, to the Government of Iran, on account of its activities in the energy sector and in particular its important role in the development of the South Pars field.
17 On 14 October 2013, the applicant asked the Council to give it access to the file containing the evidence on the basis of which the Council had decided to again include the applicant’s name in the lists of persons and entities subject to restrictive measures (‘the lists at issue’).
18 On 31 October 2013, the applicant submitted its observations and stated that there were no legal or factual grounds to justify the inclusion of its name in the lists at issue for the reasons relied on by the Council.
19 On 15 November 2013, the Council adopted Decision 2013/661/CFSP amending Decision 2010/413/CFSP (OJ 2013 L 306, p. 18). By that decision, the applicant’s name was included in the list set out in Annex II to Decision 2010/413.
20 On the same day, the Council adopted Implementing Regulation (EU) No 1154/2013 implementing Regulation No 267/2012 (OJ 2013 L 306, p. 3), which included the applicant’s name in Annex II to Regulation No 267/12.
21 In Decision 2013/661 and Regulation No 1154/2013 (‘the contested measures’), the inclusion of the applicant’s name on the lists at issue is reasoned as follows:
‘Important entity in the energy sector which provides substantial revenues to the Government of Iran. As such, IOEC provides financial and logistical support to the Government of Iran’.
22 On 18 November 2013, the Council sent a letter to the applicant in which the Council stated that it considered that it once again had reasons to include the applicant’s name in the lists at issue.
Procedure and forms of order sought
23 By application lodged at the Court Registry on 7 February 2014, the applicant brought the present action.
24 The applicant claims that the Court should:
– annul the contested measures, in so far as they concern the applicant;
– remove its name from the respective annexes to those measures;
– order the Council to pay the costs.
25 The Council contends that the Court should:
– dismiss the action;
– order the applicant to pay the costs.
Law
26 In support of its action, the applicant relies, in essence, on the following three pleas in law. First, the applicant submits that the contested measures do not state the reasons on which they are based, and therefore complains of an infringement of Article 296 TFEU and of the principle of effective judicial protection. Secondly, the applicant alleges that the Council committed an error of assessment, misused its powers and infringed the applicable legal rules and the principle of equal treatment by including its name in the lists at issue without any factual basis and without having provided any evidence. Thirdly, the applicant argues that, by including its name for a second time, the Council infringed its right to property and the principle of proportionality.
27 Before addressing those various pleas, it is appropriate to observe that, by its second head of claim, the applicant is requesting that the Court remove its name from the annexes to the contested measures. In that regard, it should be recalled that, according to Article 263 TFEU, the Court’s powers are limited to reviewing the legality of acts adopted by the institutions and that, pursuant to Article 266 TFEU, it is for the institution whose act has been declared void to take the necessary measures to comply with the judgments of the Court. In the light of those provisions, which do not allow the Court to withdraw a measure, it is necessary to interpret the second head of claim as merely providing clarification to the first head of claim.
The first plea, relating to the statement of reasons for the contested measures
…
The second plea, relating to the merits of the grounds for the contested measures
40 The applicant puts forward three arguments in contesting the merits of the grounds for the contested measures. First, it submits that it is not an undertaking in the energy sector, but an engineering and assembly undertaking, specialising in the construction and maintenance of fixed and mobile marine installations. Secondly, the applicant submits that it has been a fully privatised company since 2010. Its financial support to the Iranian Government is limited, as with any other business, to the payment of taxes and its share of social security contributions. It states in that regard that EU rules do not allow restrictive measures to be imposed on an undertaking merely because it fulfils its statutory obligations. Thirdly, the applicant maintains that the Council has provided no evidence to suggest that it provides logistical support to the Iranian Government.
41 With regard to the first argument, it is true that the applicant neither sells nor markets energy products, such as oil or gas. The fact remains that its engineering, construction and maintenance activities are essential for the exploitation of those resources. It is clear both from the applicant’s website, excerpts of which are provided in the annex to the application, and from its articles of association, and in particular the second article thereof, that the applicant’s area of expertise relates to the extraction and transportation of oil and gas, in particular the construction of offshore platforms and gas and oil pipelines. Those excerpts not only state that the applicant is the leading Iranian general contractor for the production and installation of offshore infrastructures for the Iranian oil and gas industry, as well as providing offshore and onshore services at international level, but also provide numerous examples of projects, such as the development of the South Pars field.
42 It is therefore necessary to reject the first argument, according to which the applicant is not an ‘important entity in the energy sector’, as the Council asserts in the statement of reasons for the contested measures.
43 With regard to the second argument relating to financial support to the Government of Iran, first of all, it must be recalled that that criterion relates not to every form of support to the Government of Iran, but only to the forms of support which, by their quantitative or qualitative significance, contribute to the pursuit of Iran’s nuclear activities.
44 Such support may result, inter alia, from capital links connecting an undertaking to the Iranian State, with the consequence that the latter ultimately benefits from the dividends and capital gains deriving from the activities carried out by that undertaking.
45 Next, it is clear from the case-law that it is the task of the competent European Union authority to establish, in the event of challenge, that the reasons relied on against the person concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded (judgment of 18 July 2013 in Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 121).
46 Finally, it must be borne in mind that the legality of the contested measures may be assessed only on the basis of the elements of fact and law on which they were adopted and not on the basis of information which was brought to the Council’s knowledge after the adoption of those measures, even if the latter takes the view that that information could legitimately be the basis for the adoption of those measures. In short, the Court cannot accept the Council’s invitation to substitute the grounds on which those measures are based (see, to that effect, judgment of 26 October 2012 in Oil Turbo v Council, T‑63/12, EU:T:2012:579, paragraph 29).
47 In this case, the Council acknowledges that the Iranian State was no longer the sole shareholder of the applicant when the Council included the applicant’s name in the lists at issue. It submits, however, that the applicant provided evidence of the identity of its shareholders only at the reply stage. It is clear from that information provided out of time that 51% of the shares of the applicant are owned by Oil Pension Fund Investment Company, which is also an entity whose name is included in the lists at issue on account of the financial support which it provides to the Iranian Government. The Council therefore considers that the applicant is controlled by a parastatal entity ultimately controlled by the Iranian Government, which the applicant disputes.
48 In the light of the case-law referred to in paragraph 46 above, it must be stated that the Council’s line of argument cannot be accepted.
49 It follows from the Council’s fluctuating line of argument that it had no clear idea as to the identity of the applicant’s shareholders at the time of adopting the contested acts and that it is, in essence, asking the Court to replace the initial statement of reasons for the contested measures with that put forward in its rejoinder.
50 It follows that the Council has not substantiated to the requisite legal standard the ground according to which the applicant provides substantial revenues to the Government of Iran.
51 However, in so far as the statement of reasons for the contested measures is based not only on the ground of financial support to the Iranian Government, but also on the ground concerning logistical support, it is still necessary to examine that last ground. With regard to the review of the lawfulness of a decision adopting restrictive measures, the Court of Justice has held that, having regard to their preventive nature, if the Courts of the European Union consider that, at the very least, one of the reasons mentioned is sufficiently detailed and specific, that it is substantiated and that it constitutes in itself sufficient basis to support that decision, the fact that the same cannot be said of other such reasons cannot justify the annulment of that decision (judgment of 28 November 2013 in Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, ECR, EU:C:2013:776, paragraph 72).
52 As regards the third argument, the applicant submits that it is not a logistics undertaking and therefore it cannot be accused of providing logistical support to the Iranian Government.
53 In that regard, contrary to what the applicant maintains, the definition of ‘logistics’ referred to in Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012 must be regarded as not being limited to the activities of transporting goods or persons. That term is commonly understood as including any activity that relates to the organisation and implementation of a complex operation or process. Logistics is thus a transversal concept which may include different types of operations, such as the supply of raw materials, materials management, the delivery of goods or even handling. Accordingly, it is necessary to regard as logistical support within the meaning of the abovementioned provisions any activity which — even though it has, in itself, no direct or indirect link with nuclear proliferation — is nevertheless likely, by its quantitative and qualitative significance, to favour nuclear proliferation by allowing the Iranian Government to meet specific logistical needs, as in the present case in the oil and gas sector, which generates substantial revenue for that Government.
54 However, as has already been observed above, the engineering, construction and maintenance activities of the applicant, which presents itself as the leading Iranian contractor in the field of the construction and installation of offshore infrastructures, are indispensable to the proper functioning of Iran’s oil and gas industry. Without drilling, extraction and transportation installations, in particular oil and gas pipelines, that industry cannot operate. The applicant’s installations and activities, by their qualitative and quantitative significance, are therefore required to meet the needs of the oil and gas sector in Iran, which is controlled by the Iranian Government through various State-owned undertakings. Such logistical support provided by the applicant therefore fulfils the criterion laid down in Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation No 267/2012, since, according to recital 22 of Decision 2010/413 and recital 8 of Decision 2012/35, Iran derives substantial revenues from its energy sector, which allow it to fund its proliferation-sensitive nuclear activities.
55 The Council has therefore committed no error of assessment by including the applicant’s name in the lists at issue on the ground that it provides logistical support to the Iranian Government.
56 Therefore, it is also necessary to reject the applicant’s claims that the Council misused its powers and infringed the principle of equal treatment. Those claims are in fact based in essence on the fact that there was no ground for freezing the applicant’s funds. However, as held in paragraph 55 above, by including the applicant’s name in the lists at issue on the ground that it provides logistical support to the Iranian Government, the Council correctly applied the inclusion criterion provided for in Article 20(1)(c) of Decision 2010/413, as amended by Decision 2012/635 (see paragraph 13 above), and Article 23(2)(d) of Regulation No 267/2012 (see paragraph 14 above).
57 Consequently, the second plea in law must be rejected as unfounded.
The third plea, relating to the right to property and to the principle of proportionality
…
67 The application must therefore be dismissed in its entirety.
Costs
68 Under Article 87(2) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been asked for in the successful party’s pleading. Since the applicant has been unsuccessful in all its claims, it must be ordered to pay the costs of the present proceedings, in accordance with the form of order sought by the Council.
On those grounds,
THE GENERAL COURT (Seventh Chamber)
hereby:
1. Dismisses the action;
2. Orders Iranian Offshore Engineering & Construction Co. to bear its own costs and to pay the costs of the Council of the European Union.
Delivered in open court in Luxembourg on 25 June 2015.
[Signatures]