Case T‑288/15

Ahmed Abdelaziz Ezz and Others

v

Council of the European Union

(Common foreign and security policy — Restrictive measures taken in view of the situation in Egypt — Freezing of funds — Admissibility — Objectives — Criteria for inclusion of persons targeted — Renewal of designation of the applicants on the list of persons targeted — Factual basis — Plea of illegality — Legal basis — Proportionality — Right to fair trial — Presumption of innocence — Right to good administration — Error of law — Manifest error of assessment — Right to property — Rights of the defence — Right to effective judicial protection)

Summary — Judgment of the General Court (Fifth Chamber, Extended Composition), 27 September 2018

1.      Procedure — Application initiating proceedings — Formal requirements — Identification of the subject-matter of the dispute — Reference, in the application, to an act distinct from the act cited because of a typographical error — Reference not excluding the possibility of identifying the subject-matter of the dispute

(Rules of Procedure of the General Court, Art. 76)

2.      Procedure — Res judicata — Decisions of the EU judicature concerning the designation of an applicant on a list of persons targeted by restrictive measures — Scope

3.      EU law — Values and objectives of the Union — Values — Respect for the rule of law — Rule of law — Concept

(Art. 2 TEU)

4.      Common foreign and security policy — Restrictive measures against certain persons and entities in view of the situation in Egypt — Freezing of funds of persons involved in the misappropriation of public funds and of natural or legal persons, bodies or organisations associated with them — Nature of those measures — Purely protective measures — No criminal character

(Arts 21 TEU and 29 TEU; Council Decision 2011/172/CFSP)

5.      European Union — Judicial review of the legality of the acts of the institutions — Restrictive measures against certain persons and entities in view of the situation in Egypt — Freezing of funds of persons involved in the misappropriation of public funds and of natural or legal persons, bodies or organisations associated with them — Ambit of the review — Proof the measure well-founded — Obligation, for the Council, to assess whether it is necessary to seek disclosure of further information or evidence from the national authorities — Scope

(Arts 2 TEU, 3 TEU, 21(1), first para., and (2)(b) TEU and 23 TEU; Council Decisions 2011/172/CFSP, (CFSP) 2015/486, (CFSP) 2016/411 and (CFSP) 2017/496)

6.      Acts of the institutions — Choice of legal basis — Decision concerning the adoption of restrictive measures directed against certain persons and entities in view of the situation in Egypt — Freezing of funds of persons involved in the misappropriation of public funds and of natural or legal persons, bodies or organisations associated with them — Article 29 TUE — Lawfulness

(Arts 21 TEU, 23 TEU, 24 TEU and 29 TEU; Council Decisions 2011/172/CFSP, Art. 1, (CFSP) 2015/486, (CFSP) 2016/411 and (CFSP) 2017/496)

7.      European Union — Judicial review of the legality of the acts of the institutions — Restrictive measures against certain persons and entities in view of the situation in Egypt — Freezing of funds of persons involved in the misappropriation of public funds and of natural or legal persons, bodies or organisations associated with them — Ambit of the review — Restricted review for general rules — Review extending to the assessment of facts and verification of evidence for measures applying to specific entities

(Charter of Fundamental Rights of the European Union, Art. 47; Council Decisions 2011/172/CFSP, (CFSP) 2015/486, (CFSP) 2016/411 and (CFSP) 2017/496)

8.      European Union — Judicial review of the legality of the acts of the institutions — Restrictive measures against certain persons and entities in view of the situation in Egypt — Freezing of funds of persons involved in the misappropriation of public funds and of natural or legal persons, bodies or organisations associated with them — Ambit of the review — Assessment of the legality by reference to the information available at the time of adoption of the decision

(Art. 263 TFEU; Council Decisions 2011/172/CFSP, (CFSP) 2015/486, (CFSP) 2016/411 and (CFSP) 2017/496)

9.      Common foreign and security policy — Restrictive measures against certain persons and entities in view of the situation in Egypt — Freezing of funds of persons involved in the misappropriation of public funds and of natural or legal persons, bodies or organisations associated with them — Misappropriation of public funds — Concept — Independent and uniform interpretation — Broad interpretation

(Council Decision 2011/172/CFSP, Art. 1(1))

10.    EU law — Principles — Rights of defence — Right to effective judicial protection — Restrictive measures against certain persons and entities in view of the situation in Egypt — Subsequent decision maintaining the name of the applicant on the list of persons covered by those measures — Obligation to disclose individual and specific grounds for the decisions adopted — Obligation to enable the person concerned effectively to put forward his point of view on the grounds held against him — Scope

(Council Decisions 2011/172/CFSP, (CFSP) 2015/486, (CFSP) 2016/411 and (CFSP) 2017/496)

11.    EU law — Principles — Rights of defence — Right to be heard — Obligation on the institutions to adhere to the point of view of the parties concerned — None — Obligation to reply to all the arguments of the parties — None

(Charter of Fundamental Rights of the European Union, Arts 41(2) and 48)

1.      The requirement that, under Article 76 of the Rules of Procedure, the application must contain the subject matter of the proceedings implies that the statement must be sufficiently clear and precise as to enable the defendant to prepare its defence and the Court to decide the case, if necessary without other supporting information.

However, where the content of the application makes it possible to identify the contested act or acts, it is possible to reclassify the heads of claim that designate in an imprecise or erroneous manner the act or acts in question. This is the case in the event of a typographical error, in cases where an applicant mentions in his application the number of an act but refers to the provisions of another act and to the full title of that other act and attaches a copy thereof to that application.

(see paras 38-40)

2.      The lawfulness of the original designation or of the renewal of the designation of an applicant on a list of persons subject to restrictive measures, already challenged in previous actions, cannot be called into question by submitting to the General Court questions already decided by decisions of the European Union judicature, as such a challenge is incompatible with the relative authority of res judicata which attaches not only to the operative part of those decisions, but also to the ratio decidendi on which they are based.

(see para. 52)

3.      See the text of the decision.

(see para. 61)

4.      See the text of the decision.

(see para. 64)

5.      Respect for those values and for the principles on which the European Union is founded and for human rights and human dignity is required of all actions of the European Union, including those in the area of the common foreign and security policy, as is apparent from the provisions, read together, set out in the first subparagraph of Article 21(1), Article 21(2)(b) and (3) TEU, and Article 23 TEU. 

With regard more particularly to the right to a fair trial and to respect for the presumption of innocence, the breach of which is alleged in the present case, it holds a prominent place in a democratic society, particularly in criminal matters. Similarly, the principles of independence and impartiality of justice and the right to effective judicial review are essential standards for respect for the rule of law, which itself forms one of the primary values on which the European Union is founded, as is clear from Article 2 TEU, the preambles of the EU Treaty and of the Charter. The requirements arising from the right to a fair trial and respect for the presumption of innocence aim, in particular in criminal matters, to guarantee that the final decision on the merits of the charges against the person concerned is reliable and to prevent it from being vitiated by a denial of justice or even arbitrariness, which would constitute the very denial of the rule of law.

The characteristics of the scheme set out in Decision 2011/172, concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt, do not justify an exception to the Council’s general obligation, when adopting restrictive measures, to respect fundamental rights that form an integral part of the EU legal order, which would have the effect of exempting it from any verification of the protection of fundamental rights in Egypt.

Consequently, first, in so far as Decision 2011/172 is part of a policy of support for the Egyptian authorities based, in particular, on the objectives of consolidating and supporting democracy, the rule of law, human rights and the principles of international law, the hypothesis that that decision is manifestly inappropriate in the light of those objectives owing to the existence of serious and systematic fundamental rights infringements cannot be completely ruled out.

Secondly, whereas the existence of ongoing legal proceedings in Egypt constitutes, in principle, a sufficiently solid factual basis for the designation of the persons on the list annexed to Decision 2011/172 and its renewal, that is not the case when the Council must form a reasonable presumption that the decision taken at the end of those proceedings will not be reliable, especially since it is not, in principle, for the Council to assess the accuracy and relevance of the evidence on which those proceedings are based.

Therefore, in the context of the scheme of restrictive measures such as those provided for in Decision 2011/172, it cannot be excluded that the Council is obliged to assess whether the legal proceedings on which they are based can be considered as reliable in the light of the evidence submitted by the persons concerned relating to infringements of the rule of law and fundamental rights, in particular the right to a fair trial, provided that there is objective, reliable, specific and consistent evidence such as to raise legitimate questions concerning the observance of that right.

In the light of those principles, it is therefore for the General Court to carry out, in principle, a full review of whether the Council fulfilled its duty of careful and impartial examination by ensuring that it could consider the criminal proceedings against the applicant concerned to be reliable. In particular, that review implies verifying whether the Council rightly considered that it had sufficient evidence to consider that that was the situation in the present case, notwithstanding that applicant’s allegations to the contrary.

Moreover, notwithstanding its precautionary nature, the freezing of assets under Decision 2011/172 has a substantial negative impact on the freedoms and rights of the persons concerned so that, in order to ensure a fair balance between the objectives of the freezing of assets and the protection of those rights and freedoms, it is essential that the Council should be able, where necessary, to assess appropriately, under the supervision of the EU courts, the risk of such infringements occurring.

(see paras 58-63, 66-71, 213, 214)

6.      Article 1 of Decision 2011/172, concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt, as renewed by Decisions 2015/486, 2016/411 and 2017/496, can legally be adopted on the basis of Article 29 TEU. 

Review of the legal basis of an act enables the competence of the author of the act to be verified and the procedure for the adoption of that act to be verified as to whether it is vitiated by any irregularity. Furthermore, the choice of the legal basis for an EU measure must rest on objective factors amenable to judicial review, which include the aim and content of that measure.

In that respect, it is sufficient for that measure to pursue objectives related to those set out in Article 21 TEU for it to be considered as falling within the CFSP. Moreover, in view of the broad scope of the aims and objectives of the common foreign and security policy (CFSP), as expressed in Article 3(5) TEU and Article 21 TEU and in the specific provisions relating to the CFSP, in particular Articles 23 and 24 TEU, disputing the validity of that measure in the light of the objectives defined in Article 21 TEU does not establish a lack of legal basis for that measure.

On that basis, Decisions 2015/486, 2016/411 and 2017/496, which merely renewed Decision 2011/172 and are part of the same policy aimed, as stated in recital 1 of the latter decision, at supporting Egypt’s political and economic stabilisation process, while respecting the rule of law and fundamental rights, meet those requirements.

In that regard, even supposing that the situation in Egypt in respect of which the Council adopted Decision 2011/172 has evolved, and in a manner contrary to the democratisation process which the policy underpinning that decision is intended to support, that circumstance cannot, in any event, have the result of affecting the competence of that institution to renew that decision on the basis of Article 29 TFEU. Notwithstanding that circumstance, the purposes pursued by Decisions 2015/486, 2016/411 and 2017/496 and the rules whose validity they renew nevertheless fall within the scope of the CFSP.

(see paras 118, 122-124)

7.      In general, the Council has a broad discretion to adopt acts in the framework of the common foreign and security policy, which is an area involving political, economic and social choices on its part, in which it is called upon to undertake complex assessments.

Furthermore, the Council has a broad margin of discretion in defining the general criteria defining the circle of persons who may be the subject of restrictive measures, in the light of the objectives on which those measures are based.

A margin of discretion of the same scope must therefore be recognised in respect of renewal of the application of those criteria.

In that regard, in so far as the sole purpose of the scheme of restrictive measures laid down by Decision 2011/172 is to assist the Egyptian authorities with establishing any misappropriation of state funds that has taken place and to ensure that it remains possible for those authorities to recover the proceeds of misappropriation, it cannot be excluded that the renewal of that scheme is still valid, even in the event of political and judicial developments unfavourable to the progress of democracy, the rule of law or respect for fundamental rights. Accordingly, it was for the Council to assess whether, in order to renew the original designation of the applicants, made by that decision, on the list of persons covered by the contested decisions, in the light of the evidence at its disposal, it could reasonably consider that continued assistance to the Egyptian authorities in the fight against the misappropriation of state funds remained, even in such a context, an appropriate means of promoting the objectives of political stability and respect for the rule of law in the country.

On the other hand, when adopting restrictive measures which are of individual scope for the persons concerned, the Council is bound by the principle of sound administration which requires, inter alia, that it examine carefully and impartially the evidence provided to it, in particular, of the observations and any exculpatory evidence that may have been submitted by those persons.

Consequently, the effectiveness of the judicial review guaranteed by Article 47 of the Charter requires, in principle, a full review of the legality of the grounds on which the decision to include a person’s name on the list of persons subject to restrictive measures is based. In particular, the Courts of the European Union must ensure that that decision, which affects that person individually, is taken on a sufficiently solid factual basis.

(see paras 130, 155, 211, 212)

8.      See the text of the decision.

(see para. 205)

9.      In the context of the scheme of restrictive measures provided for in Decision 2011/172, the concept of misappropriation of state funds, within the meaning of Article 1(1) of Decision 2011/172, concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Egypt, must be interpreted as encompassing any unlawful use of resources belonging to public authorities or under their control for purposes contrary to those for which they were intended, in particular for private purposes, and which results in a financially quantifiable loss for those public authorities.

In that regard, in a situation in which the national authorities have made a criminal characterisation of the facts alleged against the applicant corresponding to the concept of misappropriation of state funds, the fact that the concept of misappropriation of state funds, within the meaning of Article 1(1) of Decision 2011/172, must be interpreted autonomously and independently of any national system, does not mean that that concept could possibly exclude acts that have been thus criminally characterised by the Egyptian authorities. On the contrary, that concept refers, at the very least, to acts which may be characterised as such under Egyptian criminal law.

(see paras 253, 255, 266)

10.    The courts of the European Union must, in accordance with the powers conferred on them under the TFEU, ensure the review, in principle the full review, of the lawfulness of all European Union acts in the light of the fundamental rights forming an integral part of the European Union legal order, which includes in particular respect for the rights of the defence and the right to effective judicial protection.

In particular, in proceedings relating to the adoption of the decision to designate an individual on a list of individuals and entities whose assets have been frozen or the decision to renew that designation, respect for the rights of the defence requires that the competent European Union authority disclose to the individual concerned the evidence against that person available to that authority and relied on as the basis of its decision, so that that individual may defend his rights in the best possible conditions and may decide, with full knowledge of the relevant facts, whether there is any point in bringing an action before the Courts of the European Union. In addition, when that disclosure takes place, the competent European Union authority must ensure that that individual is placed in a position in which he may effectively make known his views on the grounds advanced in the case at hand. Lastly, where the decision is one whereby the name of the individual concerned is to be maintained on such a list, compliance with that dual procedural obligation must, contrary to the position in respect of an initial listing, precede the adoption of that decision. However, that dual procedural obligation only applies when, in the context of the renewal of the designation of the persons concerned, the competent authority relies on fresh evidence. Furthermore, the persons concerned shall have a right always available to them to submit observations, in particular during the periodic review of the restrictive measures concerning them.

In that regard, the corollary of the right to be heard is that the competent authority must give reasons for its decision by identifying the individual, specific and concrete reasons why the competent authorities consider that the person concerned should continue to be subject to restrictive measures despite any exculpatory evidence presented by that person.

Furthermore, it should be taken into account that the question of whether there is an infringement of the rights of the defence and of the right to effective judicial protection must be examined in relation to the specific circumstances of each particular case, including the nature of the act at issue, the context of its adoption and the legal rules governing the matter in question.

In a situation where the ground for designating the applicant is based on the existence of ongoing judicial proceedings, it is for the Council to ascertain, in particular on the occasion of the periodic review of that designation with a view to its possible renewal, the stage reached in those judicial proceedings and, where appropriate, their outcome.

Consequently, in order to respect the applicant’s rights of defence and the right to effective judicial protection, it is for the Council to provide him with that updated information, to allow him, before adopting the contested decisions, to submit observations in that respect and to indicate to him, in the grounds for those decisions, the reasons why it continued to consider that the renewal of his designation was justified.

(see paras 312-316)

11.    Although, for those rights of defence to be observed, the EU institutions must enable the persons concerned to make their views known effectively, those institutions cannot be required to accept them. In order for the submission of views by those persons to be effective it is necessary only that they have been submitted in good time so that the EU institutions may take cognisance of them and assess, with all the requisite attention, their relevance for the content of the measure being adopted.

(see para. 330)