ORGANISATIONS CALL ON EUROPEAN COURT TO CONSULT ON CLASSIFIED EVIDENCE RULE CHANGE

We previously reported on this blog that the European Court of Justice is currently considering a proposal from the General Court (the first instance European court) to permit the use of classified evidence in actions for annulment.  And that Lord Pannick QC asked the British Government a question in Parliament about its position and whether it would ensure public consultation on this issue.

A number of prominent organisations in the UK have now written to the President of the European Court of Justice suggesting that the Court should consult on this proposed rule change.  The letter was signed by the Bar Councils of England and Wales, the General Council of the Bar of Ireland and Northern Ireland, the Scottish Faculty of Advocates, the Law Societies of England, Wales, Scotland and Northern Ireland, Justice, Liberty, the Bingham Centre for the Rule of Law, and a number of Specialist Bar Associations.

The letter suggests that an amendment to the Court’s rules to permit exceptions to the principle that a person should know the case against him or her “may have a serious impact on the rule of law, natural justice and rights of defence, and may raise serious issues of constitutional and public importance for fundamental rights in the European Union, upon which our organisations (and others) may wish to comment”.

The President of the ECJ has replied saying that the Court has not reached any conclusion about “new provisions allowing the General Court, under certain conditions, to order that it receives and takes into account certain confidential information to which some parties to the proceedings will not have access”, that “if and when it does so, the Court will do so in accordance with the primary law provisions on the protection of Fundamental Rights in the European Union”, and that the procedure for amending the Court’s rules do not provide for a public consultation. In a second letter, the same organisations have explained further why consultation is appropriate in these particular circumstances and have asked the Court to reconsider.

EU RENEWS AND EXTENDS SANCTIONS AGAINST SYRIA AND NORTH KOREA

This week the European Council has renewed and extended its restrictive measures against Syria and North Korea. They (and all other EU measures in force) are in the “EU sanctions in force” section of this blog.

The new Syrian Regulation (EU) No 697/2013 extended the list of items subject to prior authorisation prior to sale/supply/tranfer/export (with exceptions for consumer goods).  It  prohibits opening bank accounts with Syrian credit or financial institutions, or representative offices, branches or subsidiaries in Syria, without authority from a national competent authority.  HM Treasury in the UK has published a notice setting out the terms on which it will grant authorisation.

The new North Korean Regulation (EU) No 696/2013 implements the amendments set out in Council Decision 2013/183/CFSP, which gives effect to measures required by UN Security Council Resolution 2094 (2013). These measures (inter alia) prohibit EU credit and financial institutions from opening new bank accounts with credit or financial instituitons domiciled in North Korea, or new banking relationships in certain circumstances.   The UK’s notice is here.

UK GOVERNMENT BALANCE OF COMPETENCE REVIEW ON SANCTIONS

The British Government has published its Review of the Balance of Competences between the United Kingdom and European Union on Foreign Policy.

The report (link here) concludes that as regards the EU’s Common Foreign and Security Policy, “the balance of competence lies squarely with the Member States”, and that it is in the UK’s interests to work through the EU.

The report paints a rosy picture of EU sanctions / restrictive measures.  It finds that the EU uses sanctions to good effect in order to further “human rights objectives” and that it has taken a “global lead, supported by the UK, in increasing pressure on Iran” by means of the  “most far-reaching” of the EU’s autonomous sanctions regimes.  “The EU has the ability to impose far more painful sanctions than the UK could do alone”, and conversely “without UK influence”, Iranian sanctions “would be much less far-reaching”.  Referring to Burma, the report states that sanctions are at their most powerful, practically and politically, at the points of imposition and lifting”.

EU ADDS HEZBOLLAH’S MILITARY WING TO TERRORIST ASSET FREEZING LIST

European foreign ministers agreed on 22 July 2013 to add the military wing of Hezbollah to the list of designated terrorist organisations.  This makes it illegal for Hezbollah to have access to funds and economic resources in the European Union.

The EU High Representative Catherine Ashton said “due to concerns over the role of Hezbollah, we have agreed to designate its Military Wing on the list of terrorist organisations”. Her remarks are here.

Whether to add Hezbollah / its military wing to the EU terrorist list has been the subject of debate for some time – see previous blog – the United Kingdom proposed its designation in May 2013.  Hezbollah’s military wing is already designated by the United Kingdom, USA, Canada, Australia and the Netherlands.  The notice about its UK listing (and UK implementation of the EU designation) is here.

The restrictive measures adding Hizbollah’s military wing (and continuing the designation of other groups) are a Council Decision, Implementing Regulation, a Notice to designated parties and a specific Notice to the Hizbollah military wing.  The Implementing Regulation states that the Council has concluded that Hizbollah’s military wing (and all the other groups already on the list, which includes Hamas, the PKK, LTTE and FARK) “have been involved in terrorist acts”.

THE ECJ’s JUDGMENT IN KADI II

The background to the Kadi case is summarised in a previous blog.  The ECJ has dismissed the appeals in Kadi (II) and upheld the General Court’s annulment of Yassin Kadi’s EU designation, on the grounds that none of the reasons given in the UN’s summary for linking Mr Kadi with terrorism  (all of which Mr Kadi refuted) was substantiated.  This blog highlights some interesting aspects of the judgment.

No suggestion of immunity from review

The Court first laid to rest the argument that European courts cannot review the legality of EU measures implementing UN Security Council asset freezing resolutions.  The ECJ said it had already decided this point in Kadi I and in Bank Melli Iran, and that judicial review of EU implementing measures does not threaten the primacy of the Security Council.

The majority of reasons must be “individual, specific and concrete”

The Court’s case law on the duty to give reasons in sanctions cases is relatively consistent – reasons must be “individual, specific, and concrete”.  Two notable points in Kadi (II): (1) The ECJ states that reasons can be expressed as “possibilities”, because “the reasons for listing on a European Union list may be based on suspicions of involvement in terrorist activities, without prejudice to the determination of whether those suspicions are justified”.  Again this seems consistent with the Court’s approach to other sanctions measures.  (2) The ECJ held that the duty to give reasons had been complied with because the majority of the UN’s reasons for listing Mr Kadi were sufficiently specific and concrete.  Here the ECJ differed from the General Court, which had found the reasons too vague.

Rights of defence requires disclosure of evidence

Again consistently with the Court’s recent case law on “autonomous” sanctions (sanctions imposed by the EU, not the UN), the ECJ states that rights of defence requires (1) the European authorities to disclose the evidence  it relies on as the basis for a listing decision, and must do so in advance in the case of a re-listing; (2) an opportunity for the listed party effectively to make observations on that evidence.

European authorities to assess whether UN listings are well founded

The ECJ rejected the argument that the EU institutions only rubber stamp UN designations. The EU authorities are “under an obligation to examine, carefully and impartially, whether the alleged reasons are well founded”, in the light of any observations and exculpatory evidence submitted by the listed person.  They must decide whether to ask for more information (from the UN or the proposing State) in order to do so.   This seems to be in line with the Court’s case law on autonomous sanctions, at least those against Iran, where the European court has said that the European institutions must assess the evidence for themselves. However, this may be more controversial in the case of the EU checking the basis for UN designations.

“Full” judicial review of the factual basis for listing decisions

Most of the arguments in the appeals were about what the General Court meant when it said that there should be “in principle full review” of the lawfulness of EU measures implementing UN sanctions.  The ECJ has now said that the Court (in an application for annulment) must review not only that there has been a proper procedure, legal basis, and reasons.  It must also conduct a “verification of the allegations” to check whether the reasons are “substantiated” and “well founded” and have a “solid factual basis”.  The Court must “assess the probative value of the information or evidence”, “whether the facts alleged are made out”, “whether the accuracy of the facts relating to the reason concerned has been established”.  If a particular reason is unfounded or unsubstantiated, the Council may not rely on it to justify a listing decision, and the Court will base its assessment only on the evidence disclosed to it – if insufficient evidence is disclosed to substantiate a reason, the Court will disregard that reason.

The ECJ went through each reason for the decision to re-list Yassin Kadi in 2008, and Mr Kadi’s evidence in response, and found none of the reasons to have been substantiated with evidence.  That was why the listing had to be annulled (not, as the General Court had said, because of the Commission’s failure to disclose supporting evidence, since the Commission did not possess any evidence other than the UN’s summary of reasons).

A few observations on this point, which is perhaps the most far-reaching part of the judgment in Kadi (II):

(1) By setting out this full, factual review, the ECJ may have gone further than the General Court towards reviewing the basis for the UN’s decision. The Court  did not follow Advocate General Bot’s opinion that it should restrict its review in UN cases (see previous blog).

(2) This is consistent with the General Court’s approach to judicial review of autonomous sanctions against Iran, and indeed the General Court in Iran Transfo has said the same standard of review should apply to sanctions against Iranian proliferation and terrorism. Advocate General Bot has  criticised this approach for being too intrusive and unrealistic in the context of Iran – see previous blog – there are a large number of Iranian appeals pending in the ECJ on this point. However, it may be less consistent with with the Court’s arguably less rigorous review of the evidential basis for other types of sanctions – see eg previous blogs on Ivory Coast and Tunisia cases.

(3) The judgment underlines the importance for applicants of submitting evidence refuting reasons for their designation.

(4) The ECJ did not follow the Advocate General’s view that the existence of the UN Ombudsperson for the 1267 list should result in a weaker intensity of review by the European court.  The ECJ said the fact that the Ombudsperson still does not provide effective judial protection makes its review more essential.  The ECJ regards effective protection as requiring a court declaration that an annulled measure never existed – see previous blogs on Abdulrahim and Ayadi. The ECJ does not say that the Ombudsperson reviewed the evidence and recommended that Mr Kadi be de-listed by the Security Council (which he was,just  before the ECJ oral hearing – there is no discussion of the potential mootness of the appeals).

Closed material procedures in Luxembourg?

The ECJ said (not uncontroversially) that there can be no “overriding security considerations” that would preclude disclosure of security sensitive information to the Court (as opposed to the listed applicant).  Accordingly, if the European institutions wish to withhold evidence from disclosure, the European Court must assess (a) whether the reasons for withholding disclosure are well founded (the Court does not say the applicant plays any part in that assessment) – if they are, the Court must apply “techniques” which accommodate legitimate security considerations and procedural rights (eg a summary of the evidence) – and (b) whether not disclosing the evidence to the listed party undermines its “probative value”.

None of this applies to Kadi’s case, since it was never suggested that security concerns would prevent disclosure of further evidence about his listing.  The ECJ has made these comments while it is considering amending the General Court’s rules of procedure to permit some form of closed material procedure – see previous blog. The potential impact  such a procedure might have on rights of defence is illustrated by Mr Kadi’s own continued OFAC listing in the USA, upheld by the DC Circuit on the basis of US classified material not shown to Mr Kadi.  The ECJ judgment does not record same objections to closed procedures recently expressed by the Supreme Court in Bank Mellat – see previous blog – and the implications for rights of defence.  It does not rule out the possibility that a person listed on the basis of a “suspicion” of involvement in terrorist activities could have his or her application for annulment decided on the basis of material he never sees.

KADI WINS 2ND CASE IN THE ECJ

195px-european_court_of_justice_insignia-svgThe Grand Chamber of the European Court has handed down its judgment in the Kadi (II) appeal.  The background to the case is as follows.

Kadi (I)

Yassin Kadi was added to the UN Security Council’s 1267 Committee terrorist asset freezing sanctions list just after 9/11, without giving him any reasons or rights of defence.  He brought an action for annulment challenging the EU implementation of his UN listing (Kadi (I)).  After losing at first instance (on the basis that the Court could not review measures that implement UN resolutions) he won his case on appeal in the ECJ – annulling his designation. In response to the ECJ’s criticisms of the absence of due process at UN level, the UN created the office of Ombudsperson of the 1267 Committee to review the basis for terrorist listings and make recommendations to the Security Council.

Kadi (II)

Mr Kadi was re-listed after Kadi I, this time after receiving a summary of the reasons given by the UN Security Council Sanctions Committee for listing him.  The General Court in Kadi II held that his re-listing (which he challenged in a 2nd application for annulment) was also in breach of the general principles of European law – Kadi II.

Just before the oral hearing in the ECJ on appeal, Mr Kadi was de-listed by the UN (following a recommendation by the Ombudsperson) and by the EU.  13 Member States intervened in the ECJ appeals, all against Mr Kadi.

The ECJ in Kadi (II) has now held that none of the reasons given by the UN Sanctions Committee in its summary of reasons was substantiated, and therefore his designation on the EU measure could not be justified. Here is a link to the judgment and press release.  Maya Lester appeared for Mr Kadi.  A more detailed blog piece on the Court’s reasoning will follow shortly.

EU TO LIFT SANCTIONS AGAINST ZIMBABWE IF JULY ELECTIONS ARE “FREE AND FAIR”

Roelan Van De GeerThe EU’s ambassador to South Africa, Roeland van de Geer, has confirmed that sanctions currently in force against certain individuals and companies in Zimbabwe will be lifted if regional observers declare the elections to be held on 31 July to be “free and fair”.  As EU electoral observers are banned from Zimbabwe, reliance will be placed on reports from regional body, the  Southern African Development Community.

According to van de Geer “If the elections are internationally recognised we will simply do what we have to do and lift our restrictive measures”.

Sanctions against Zimbabwean entities and individuals have been in force since 2002. In March 2013, sanctions against 81 individuals and 8 entities were suspended in recognition of the “peaceful, successful and credible vote to approve a new constitution” (see earlier blog post). 10 individuals and 2 companies remain listed, including President Mugabe.

Peters & Peters, instructing Brick Court Chambers, act for a number of the listed and delisted parties in a challenge pending before the EU General Court.

ADVOCATE GENERAL BOT THINKS THE GENERAL COURT HAS APPLIED THE WRONG STANDARD OF REVIEW IN IRAN SANCTIONS CASES; KALA NAFT

195px-european_court_of_justice_insignia-svgThe French Advocate General in the European Court of Justice (AG Bot) considers that the General Court (the first instance court in Europe) has not been taking adequate account of the preventative nature of the EU’s sanctions against Iranian nuclear proliferation, and has been applying too intrusive a standard of judicial review in the recent annulment cases.

AG Bot’s Opinion in Case C-348/12 P Manufacturing Support and Procurement Kala Naft v Council (11 July 2013) is that the Court of Justice should allow the Council’s appeal against the General Court judgment for the following reasons.

First, in his view the General Court was wrong to have considered the reasons for Kala Naft’s designation one by one and to have concluded that one of them was too vague (that Kala Naft maintained “links” within companies taking part in Iran’s nuclear programme).  It is sufficient in his view for the Council to have stated the risk posed by Kala Naft trading in oil, gas and petrochemicals for a State-owned entity, given the links between the energy sector and nuclear proliferation.

Second, since the Council had confirmed that it was not relying on any evidential support for its assertions, the General Court was wrong to have held that the Council’s failure to respond to Kala Naft’s request for access to file was a breach of its rights of defence. However, the Advocate General rejected the Council’s argument (in this and other cases) that entities owned or controlled by the State cannot rely on fundamental rights in their actions for annulment.

Third, the Advocate General considers that the General has gone too far towards substituting its judgment for that the Council on the facts and the merits, which should be matters for the Council’s broad margin of discretion in the exercise of its Common Foreign and Security Policy.  The Court should not require the Council to prove that individuals and companies have actually been supporting nuclear proliferation (in this case that the alloy doors that Kala Naft attempted to purchase had been used for nuclear proliferation); the Court should instead simply check that the Council has not manifestly erred in its assessment that there is a risk that an individual or company could have access to economic resources that it could use to support nuclear proliferation.

The next step in the case will be for the Court of Justice to decide on the appeal; the Advocate General’s opinion does not bind the Court.  A link to the French version of the opinion (not yet available in English) is here.