DOMESTIC JUDICIAL REVIEW OF LISTING / DELISTING DECISIONS IN THE UK

Luxembourg is not the only forum for judicial review of decisions relating to EU targeted sanctions.  The English courts have recently been faced with questions about whether and to what extent they will judicially review decisions taken by the UK government in the context of targeted sanctions imposed by the EU.

The first attempt at this kind of judicial review was unsuccessful. In R (El-Maghraby and El Gazaerly) v HM Treasury and Foreign and Commonwealth Office [2012] EWHC 674 (Admin) the claimants argued that the UK regulations implementing the EU’s Egyptian sanctions regime were ultra vires the European Communities Act 1972 and the Human Rights Act 1998.   The Court rejected the argument on the grounds that the claimants’ real attack was on the EU measures not their domestic implementation, there was an alternative (indeed, a primary) remedy, in Luxembourg, where the claimants were challenging the EU regulation.  The domestic courts could not infringe the principle in Case C-314/85 Firma Foto-Frost v Hauptzollamt Lubeck-Ost [1987] ECR 4199 that only the European courts can declare a European law to be invalid.

More recently, judicial review of unlawful listing proposals by the UK and refusals to request de-listing have recently been held to be possible, but difficult, by Ouseley J in R (Bredenkamp) v Secretary of State for Foreign and Commonwealth Affairs [2012] EWHC 3297 (Admin). The Court held a preliminary issue on whether the Foto-Frost principle precluded the challenge, and decided that it does not; the Foto-Frost principle (§§ 43-45) that “leaves the field open, in the interests of justice, to a challenge to what domestic authorities did en route to the enactment of Community decisions”. The case is listed for a hearing on public interest immunity issues in June 2013, with a substantive hearing to be listed after that.

There have been a handful of other judicial reviews along Bredenkamp lines challenging FCO listing proposals and/or refusals to delist.  R (Azizi and Sedghi) v Secretary of State for Foreign & Commonwealth Affairs  and R (Meskarian and Zavvar) v Secretary of State for Foreign & Commonwealth Affairs settled in late 2012 after permission was granted by the Administrative Court and the claimants were  de-listed by the EU.  R (Europäisch-Iranische Handelsbank) v Secretary of State for Foreign & Commonwealth Affairs (CO/10718/2012) is currently pending. The FCO initially argued that Foto-Frost precluded the challenge, but permission for judicial review was granted in February 2013 following the Bredenkamp judgment on that preliminary issue summarized above.  Watch this blog for updates.

An article on this topic by Maya Lester (Brick Court Chambers) and Brian Kennelly (Blackstone Chambers) will be published in Judicial Review (Hart Publishing) in June (issue 18(2)).

EU REMOVES MOST PEOPLE AND COMPANIES FROM ZIMBABWE SANCTIONS

The EU announced today that it has suspended sanctions against 81 individuals and 8 entities in Zimbabwe, with immediate effect, leaving 10 individuals and 2 entities on the list, including President Mugabe and his wife.

The EU stated that this is in recognition of the ‘peaceful, successful and credible vote to approve a new constitution’ on 16 March 2013 (see link- http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/cfsp/136501.pdf

The new constitution was promoted by President Mugabe (Zanu PF) and Prime Minister Tsvangirai (MDC) and overwhelming endorsed by the electorate, paving the way for elections later this year.  21 individuals and 1 entity were removed from the sanctions list in February 2013.

Peters & Peters, instructing Brick Court Chambers, act for a number of those that have been delisted and some of those that remain listed, in a case currently pending before the General Court of the European Union (Tomana v Council and Commission).

ANOTHER JUDGMENT ON THE LISTING OF SUBSIDIARIES: A PARTIAL WIN FOR BANK SADERAT PLC IN THE EUROPEAN COURT

European Court of JusticeBank Saderat Plc is a United Kingdom subsidiary of Bank Saderat Iran.  Bank Saderat Iran (the parent company) recently won its European Court challenge to its designation on the EU Iranian sanctions list on the grounds that the reasons given for including it were too vague and the Council had not assessed the evidence against it; Case T-494/10 Bank Saderat Iran v Council (5 February 2013, see blog below).  Its subsidiary, Bank Saderat Plc, has now won its case too (Case T-495/10), but it remains on the sanctions list.  Points of interest to note are as follows.

First, the Plc argued that its designation should automatically be annulled if its parent company (Bank Saderat Iran) won its action for annulment because the only reason for the Plc’s designation is that it is wholly owned by its parent and therefore their designations should stand or fall together.  The Court declared this point inadmissible (as it did when Melli Bank Plc made the same argument) on the grounds that the subsidiary had not said enough about why the parent’s case should fail.  This leads to the odd result that the parent recently won its challenge (insufficient grounds for its designation – see previously blog piece on Bank Saderat Iran) but the Court did not take that into account in considering its subsidiary’s designation six weeks later.

Second, the Court rejected the Plc’s argument that its designation was a disproportionate restriction on its property rights, on the basis that the EU measures require the automatic designation of all wholly owned subsidiaries, and therefore there is no individual analysis by the Council of the proportionality of adding each subsidiary.

Third, the Court held that the Plc’s rights of defence and right to effective judicial protection had been infringed because one of the four reasons given for its parent’s designation was excessively vague, and the Council had not provided the Member State’s listing proposal to the applicant in sufficient time, and had not assessed all of the evidence.  However, since the Council had given other reasons for designating the parent that were less vague, and since it had provided the Plc with the listing proposal in in advance of subsequent measures, Bank Saderat Plc remains designated under those subsequent measures.

EUROPEAN SANCTIONS AGAINST EGYPT EXTENDED FOR ANOTHER YEAR

The European Union has extended its restrictive measures against Egypt for another year, until 22 March 2014.  The EU’s Egypt sanctions freeze the funds and prohibit travel in the European Union of a list of people that the European Council says it has identified as being “responsible for misappropriation of Egyptian State funds” and their associates.

Some of the designated individuals have challenged their listings in cases now pending before the European Court. Peters and Peters LLP and Brick Court Chambers act for some of them.

FIRST EVER CLOSED HEARING IN THE UK SUPREME COURT – BANK MELLAT’S CASE

Today the Supreme Court of the United Kingdom has held a closed hearing for the first time in its history.  It has been hearing Bank Mellat’s appeal against the Court of Appeal’s judgment refusing to set aside the United Kingdom’s direction preventing people operating in the financial sector in the UK from doing business with the Bank (an Order in Council made under the Counter Terrorism Act 2008).

The Treasury had made that Order on the grounds that the Bank was alleged to provide banking services to a UN listed organisation connected to Iran’s proliferation sensitive activities, and had been involved in transactions related to financing Iran’s nuclear and ballistic missile programme.  The High Court and Court of Appeal rejected the Bank’s arguments that the Order was disproportionate, discriminatory, and procedurally unfair [2012] QB 101.

The General Court of the European Union quashed the Bank’s designation by the EU before the Supreme Court hearing, on the grounds that the reasons given for its designation were too vague and unsupported by evidence (Case T-496/10 – see blogs on Bank Mellat)

The Bank, supported by Liberty, opposed the Government’s application for the Supreme Court to consider the “closed” judgment of the High Court in which secret evidence was considered but not disclosed to the Bank (the statutory scheme permits CMPs in the High Court and Court of Appeal but is silent on the Supreme Court).  The Supreme Court gave a preliminary ruling, holding (by a majority of 6 to 3) that it had jurisdiction to consider the closed judgment and to hold a closed hearing if necessary.

Today it held a closed hearing for the first time in its history, Lord Neuberger describing it as an “unhappy procedure”.  The Bank was represented by a special advocate but the Bank itself could not see the material or attend the closed hearing.  The Court has not yet decided whether to give a closed as well as an open judgment.

THE STANDARD OF JUDICIAL REVIEW IN SANCTIONS CASES: ADVOCATE GENERAL BOT’S OPINION IN KADI II

Advocate General Bot (the French Advocate General at the European Court of Justice) has handed down his Opinion in the Kadi case (on 19 March 2013):  Please click here to read

Mr Yassin Kadi was designated by the UN Security Council Sanctions Committee just after 9/11.  At the request of the USA, he was added to a list of people in UN Resolution 1267 that were alleged to be connected with bin Laden, Al Qaida or the Taliban. The European Union implemented that UN resolution in an EU Regulation which Mr Kadi challenged in an action for annulment, on the grounds that he had been given no reasons for his designation, no chance to make observations, and the regulation had no proper legal basis.

The Court of First Instance (Case T-315/01) held that the Court could not judicially review the EU measure for compliance with fundamental rights unless it violated ‘ius cogens’ (genocide, slavery etc), because to do so would violate the international legal order and the primacy of the United Nations.  On appeal to the Court of Justice (Case C-402/05), Advocate General Poiares Maduro disagreed with the CFI, stating (in a well known opinion) that the European Union is based on the rule of law, and its Courts must ensure that all acts of the EU institutions, including those that derive from international measures, comply with EU fundamental rights.  The Grand Chamber of the Court of Justice followed his opinion, and held (on 3 September 2008, in Kadi I) that Mr Kadi’s listing by the EU breached those principles since it provided no reasons, no evidence, and no opportunity to make representations.  This is now the leading judgment on the relationship between the EU and international legal orders, on EU fundamental rights, and on judicial review of sanctions designations.

After that ECJ judgment, Mr Kadi was re-listed by the EU in a new regulation, and this time was sent the UN’s summary of its reasons for his designation.  He brought a second action for annulment in the General Court (the new name for the CFI), Case T-85/09, and won.  The Court held that it was competent to review the EU measure, and that the summary of the UN’s reasons did not comply with the EU’s duty to give reasons because the reasons were too vague to permit Mr Kadi to respond meaningfully, he was given no evidence, and his comments were not taken into account.  The General Court said that the European Council had only paid “lip service” to the judgment in Kadi I and provided a “simulacrum” of due process, and that his re-listing was a disproportionate restriction on his property rights and reputation.

The Council, Commission, and United Kingdom all appealed against that judgment, and 13 Member States intervened in their favour.  Advocate General Bot’s opinion is a non-binding opinion in that appeal; the ECJ may or may not agree with him.  He has said that the General Court was right to hold (like the ECJ in Kadi I) that EU acts implementing UN resolutions are not immune from review by the Court, but that the General Court has applied the wrong standard of judicial review, and Mr Kadi’s rights were complied with.

The opinion focuses principally on the standard of judicial review.  The Advocate General thinks that the Court should “adapt” or “modify” its usual standard of review when it is dealing with counter-terrorist sanctions deriving from UN resolutions.  It should carry out a “limited” review of what he describes as the “internal lawfulness” of the EU measure, and a “normal” and “rigorous” review only of its “external” lawfulness.

The most obvious question arising from the opinion is what the Advocate General means by review of “internal” and “external” lawfulness.  On one view, “internal” refers to “procedural” grounds of review, and “external” to “substantive” or “merits” review.  The Advocate General suggests that “internal” review includes whether the EU act was adopted by means of a procedure that respects rights of defence (adequate reasons, a chance to comment, a chance for new information and evidence to be presented, and for comments to be “scrupulously examined” and taken into account). “External” lawfulness includes the “merits” of a designation decision, its evidential support factual accuracy, and proportionality.  In the Advocate General’s opinion, these matters should be presumed to be correct, and should only be reviewed by the Court for “manifest error”.

Of the numerous issues likely to arise from this opinion in addition to the standard of review, the following are a few.

First, the application of these standards of review to Mr Kadi’s case.  The Advocate General briefly commented that in his view Mr Kadi was aware of the reasons for his designation in sufficient detail, and had not shown that the Commission had not examined his comments.

Second, Mr Kadi had already been de-listed by the UN and EU by the time these appeals were heard; the UN Ombudsperson proposed his de-listing to the Security Council and the EU delisted him in turn.  The Advocate General does not spend much time on this issue of the appellants’ continuing interest in the appeal.

Third, how far (if at all) the Advocate General’s views apply to “autonomous” and non-terrorist sanctions cases, given his comments that autonomous listings should rely on evidential assessments by national authorities, and his emphasis on the international UN context of his remarks.

Fourth, the Advocate General comments on the need for co-operation and information-sharing between EU and the UN Security Council; in his view, an intensive standard of review would result in less information being shared.

Fifth, he opines on whether decisions of the Security Council are now less “political” and “inter-governmental” given the existence of the UN Ombudsperson for the 1267 list.  In his view, the Ombudsperson’s role should result in a weaker intensity of review by the European court and (as the Advocate General would like) a “presumption of justification”.

The next step will be for the ECJ to give its judgment…

Maya Lester acts for Mr Kadi.

CHATHAM HOUSE EVENT ON SYRIA AND IRAN SANCTIONS

Chatham House held an international law meeting on 12 February 2013 about sanctions against Iran and Syria, chaired by Elizabeth Wilmshurst.  Maya Lester (Brick Court Chambers) spoke, along with Alice Lacourt (UK Foreign and Commonwealth Office) and Sarah Parkes (Freshfields LLP).  A paper summarising the discussion is here:  http://www.chathamhouse.org/publications/papers/view/189883

EU EXTENDS AND AMENDS SYRIA SANCTIONS

On 28 February 2013 the European Council renewed and amended sanctions against Syria in Decision 2013/109/CFSP, renewing Decision 2012/739/CFSP until 1 June 2013.

This amends the arms embargo to “enable the delivery of non-lethal military equipment for the protection of civilians of for the Syrian National Coalition for Opposition and Revolutionary Forces” which the Union has accepted as legitimate representatives of the Syrian people.  It expands the scope of the embargo to include the sale, supply transfer or export of non-lethal military equipment for the purposes of protective use or for the protection of civilians, and also for the Syrian National Coalition for Opposition and Revolutionary Forces, intended for the protection of civilians.

The decision now permits the sale, supply, transfer or export of non-combat vehicles which have been manufactured or fitted with material to provide ballistic protection to the Syrian National Coalition for Opposition and Revolutionary Forces intended for the protection of civilians, and the provision of technical assistance, brokering services and other services for the Syrian National Coalition for Opposition and Revolutionary Forces intended for the protection of civilians.