NEW ARMS EMBARGO ON CENTRAL AFRICAN REPUBLIC

The United Nations Security Council adopted  resolution 2127 (2013) on 5 December 2013, which (among other things) imposes an arms embargo on the Central African Republic (CAR) for an initial period of a year.  All UN Member States must take “necessary measures” to prevent the sale and supply of “arms and related material of all types” to the CAR (with certain specified exceptions). The resolution establishes a committee to monitor the implementation of the UN measures, to report back on its work within 60 days.

The resolution also expresses the UN’s “strong intent” to consider imposing “targeted measures, including travel bans, and asset freezes, against individuals who act to undermine the peace, stability and security”, including by threatening or violating transitional agreements.

The European Union expressed concerns about the situation in the CAR in a meeting of its foreign affairs committee on 16 December 2013.  On 23 December 2013 the EU adopted Decision 2013/798 which implements the UN arms embargo in the European Union.

REVIEWER REPORTS ON UK TERRORIST ASSET FREEZING ACT

The Independent Reviewer of Terrorism Legislation, David Anderson QC, has published his third report on the operation of the Terrorist Asset-Freezing etc Act 2010.  Link here.  It updates his first report (of December 2011).

The report provides a summary of the people and entities designated by HM Treasury in the United Kingdom under the TAFA 2010 (which implements UN Security Council Resolution 1373) and by the EU  under Council Implementing Regulation 1375/2011 (see the “sanctions in force” section of this blog).  It summarises the numbers and characteristics of of designations and de-lisings, the quantity of assets frozen in the UK and EU, and the process for new designations and HM Treasury’s annual reviews of designations.

The recommendations in David Anderson’s previous reports have been accepted by HM Treasury, which publishes quarterly reports on the Act’s operation.  There is lots of useful material for those interested in terrorist asset freezing and sanctions policy.  The following are a few of interesting points made in the report:

(1) Overall “what is most striking about the operation of the Act is how lightly it has been used in its first three years.  Of the 31 individuals designated at the end of the period under review, only four were at liberty in the UK… The 8 designated entities, who have not been added to since 2001, are all based overseas.  The total assets frozen amount to less than £100,000”.  David Anderson does not suggest that this is necessarily a bad thing, but now recommends that consideration be given to the practical role of these powers.

(2) There is a useful review of the licensing process (exceptions to the asset freezes).  The report notes that some licensing decisions “display a welcome flexibility” of the kind he recommended.  The report considers HM Treasury’s Terrorist Asset Freezing Licensing Policy Review of last year, and in particular submissions illustrating the different policies of banks to designated persons and the difficulties of dealing with frozen accounts and licenses.  David Anderson notes that his recommendation that there be dialogue between financial institutions, regulators and HM Treasury for a dialogue about these issues has not been followed.  He drew attention to the helpful frequently asked questions (see previous blog).

(3) The report notes that there have been no TAFA prosecutions, and two appeals against designations. In one of the appeals, (R (Bhutta) v HM Treasury [2011] EWHC 1879 (Admin)), the  High Court held, importantly, that Article 6 ECHR applies to proceedings under the TAFA, and therefore an “irreducible minimum” level of disclosure has to be given to enable a fair hearing.  Each of the 4 individuals that has appealed in the last 2 years has been de-designated.

(4) David Anderson states that he will be looking into the constraints placed by counter terrorist laws of (inter alia) the EU and UK on the activities of NGOs and others who seek to provide aid to territories which are under de facto control of designated or proscribed groups, and welcomes input – “if asset freezing and proscription laws are to be accepted as necessary tools in the fight against terrorism, it is important that they should be flexible enough to allow vital humanitarian aid to be distributed where it is needed”.

(5) The report also notes that the European Commission has since 2009 been considering a new EU terrorist sanctions regime under Article 75 TFEU, to enable the EU to freeze terrorist assets without  links to an EU country, but that no concrete steps have yet been taken.

EU INTENDS TO AMEND REASONS FOR TUNISIAN SANCTIONS

tunisiaThe European Union’s restrictive measures against Tunisia currently apply to people that the Council has identified as being “responsible for misappropriation of Tunisian State funds”.  They are available on the ‘sanctions in force’ section of this blog.

The European Council has just published a notice saying that it intends to amend the reasons for listing some people on the Tunisia list so that instead the reasons for each entry in the annex will say:

 ‘Person subject to judicial investigations by the Tunisian authorities for complicity in the misappropriation of public monies by a public office-holder, [complicity in the] misuse of office by a public office-holder to procure an unjustified advantage for a third party and to cause a loss to the administration, and [complicity in] exerting wrongful influence over a public office-holder with a view to obtaining directly or indirectly an advantage for another person.’

Although the reason for this change is unclear, it is possible that the Council has considered the General Court judgments in three Tunisian cases in May 2013 (see earlier blog) in which the Court suggested that being prosecuted for misappropriating State funds might be a sufficient basis for concluding that the applicants were responsible for such misappropriation.

 The individuals in question may submit observations to the Council by 7 January 2014.

FULMEN REMOVED FROM EU SANCTIONS LIST

We previously reported that Fulmen and Mr Mahmoudian won their actions to annul their designations on the European Union’s restrictive measures against Iran in the General Court and on appeal in the Court of Justice (recent blog here).

The European Council has just published a Regulation confirming that Fulmen and Mr Mahmoudian are no longer included in the EU’s sanctions against Iran. HM Treasury in the United Kingdom has published a notice to the same effect.

EUROPEAN COURT SAYS LISTING OF 11 INDIVIDUALS SAID TO BE LINKED WITH IRISL WAS UNLAWFUL

195px-european_court_of_justice_insignia-svgThe General Court of the European Union (4th Chamber) gave judgment on 12 December 2013 in Case T-58/12 Nabipour & Ors v CouncilThe case concerns the designation of 11 individuals on the EU’s restrictive measures against Iran (an asset freeze and travel ban) in December 2011.  All were added to the list because of positions they were alleged to have held with the Islamic Republic of Iran Shipping Line (IRISL) or companies said to be owned or controlled by IRISL; most worked for shipping management companies.

The General Court has ordered their designations to be annulled for the following reasons:

(1) IRISL’s own designation was unlawful (see previous blog on this) and therefore no listings on the basis of connections with IRISL could be lawful – all were annulled on this basis.

(2) The only basis on which the Council could lawfully have included individuals on the basis that they hold jobs in entities alleged to be involved in nuclear proliferation or assisted designated entities to evade sanctions would be if the Council could show that the individual was in a “principal managerial position” in a company, and was “capable of influencing the activities alleged against the company or entity employing him”.  The Court considered the evidence relating to the 11 applicants in some detail, and concluded that the Council had failed to show this in relation to 7 of the 11 individuals.  Their designations would have been unlawful even if IRISL (and companies alleged to be owned or controlled by it) had not won its own case.

(3) Although generally the Council had given sufficiently clear reasons, some of the Council’s reasons were too vague (e.g. references to “front companies”).

The European Council has two months in which to appeal to the European Court of Justice.  Maya Lester acted for the applicants, and also for 5 of the same applicants in their ongoing judicial review proceedings against the UK Foreign & Commonwealth Office in relation to their designations (Sarkandi & Ors v FCO)

EU AMENDS SANCTIONS AGAINST SYRIA

The European Union  introduced a new Decision and Regulation on 13 December 2013 amending its  regime of restrictive measures relating to Syria in order to achieve the following:

(1) To enable Member States to support the activities of the Organisation for the Prohibition of Chemical Weapons to eliminate chemical weapons in Syria in accordance with UN Security Council Resolution 2118 (2013).

(2) To help the United Nations to deliver humanitarian aid to Syria.

(3) To allow the processing of payments for medical supplies, food, shelter and sanitation for civilian use.

There is also a new prohibition on trade in items of archaeological, historical, cultural, scientific and religious importance that have been illegally removed from Syria.

The EU’s restrictive measures against Syria are on the “EU sanctions in force” section of this blog.  HM Treasury in the UK has published a useful Financial Sanctions Notice clarifying the nature of these amendments – link here.

ECJ SIGNALS ITS APPROACH TO IRAN SANCTIONS CASES IN 2 APPEALS

195px-european_court_of_justice_insignia-svgOn 28 November 2013, the European Court of Justice (5th Chamber) handed down two long-awaited judgments in appeals against General Court (GC) judgments annulling the listings of two companies included in the EU’s sanctions against Iran since July 2010.  The two cases are Case C-280/12 P Council v Fulmen & Fereydoun Mahmoudian and Case C-348/12 P Council v Manufacturing Support & Procurement Kala Naft.

These appeals are interesting because there have recently been a large number of GC (lower court) judgments in Iran sanctions cases (many annulling designations, see e.g. previous blog) and it is important to know whether the ECJ agrees with the GC’s approach to those cases.  The answer from Fulmen (in which the ECJ upheld the GC’s judgment annulling Fulmen’s designation) and Kala Naft (in which it overturned the GC’s judgment annulling Kala Naft’s designation) is that the ECJ seems to agree with the GC’s approach to some of those cases but not to others.

The ECJ’s main disagreement with the GC (which we discuss below) is that the ECJ has said that the Council can satisfy the criterion of having to prove that entities provide “support” for nuclear proliferation by showing simply that they are involved in the oil and gas sectors in Iran; the GC had previously said that involvement in that sector was not in itself enough, and that the Council had to show some kind of conduct demonstrating actual support for nuclear proliferation.  However, in Fulmen – type cases, which are not about entities involved in oil and gas, the ECJ has upheld the GC’s approach of requiring evidential support for allegations of involvement in nuclear proliferation.

ECJ largely upholds General Court’s approach to Iran cases: Fulmen

The Fulmen appeal indicates that the ECJ upholds the approach that the GC has recently been taking to actions for annulment.  Fulmen was listed for being “involved in the installation of electrical equipment on the Qom/Fordoo site at a time when the existence of the site had not yet been revealed” and Mr Mamoudian was included for being its Director.  The ECJ agreed with the General Court that although those reasons were specific enough for Fulmen and Mr Mamoudian to be able to understand and contest, and the procedure had complied with their rights of defence and to effective judicial protection, the listings should be annulled for lack of evidence supporting the allegations.

Fulmen had provided evidence that the Council’s reasons were incorrect, and the Council provided no evidence to show that its allegations were well founded.  The ECJ, applying its judgment in Kadi II (see previous blog), rejected the Council’s argument that it did not have to provide evidence because of the clandestine nature of the activities alleged or because Member States said evidence was confidential, and said the applicants had to be in a position to defend themselves and the Courts to review whether the allegations were well founded.

Involvement in oil and gas industries is enough to show support for nuclear proliferation: Kala Naft

By contrast to Fulmen, which was listed because of allegations about installing electrical equipment at a nuclear site, one of the reasons for Kala Naft’s designation was an allegation that it “sells equipment for the oil and gas sector which could be used for Iran’s nuclear programme”.

The ECJ agreed with the General Court that that reason was specific.  Where the courts disagreed was as to whether selling equipment for the oil and gas sector is sufficient in itself for inclusion in the EU’s sanctions against Iran, which requires that an entity has (inter alia) provided “support” for nuclear proliferation.

The General Court had held it was not sufficient; “support” presupposes that a company “has previously adopted a course of conduct” showing support for proliferation, and “the mere risk of the entity concerned providing support for nuclear proliferation in the future is not sufficient”.  Here the “general fact that the goods acquired by the applicant within the gas, oil and petrochemical sectors” may be used for nuclear proliferation was insufficient.

The ECJ disagreed, and held that “trading in key equipment and technology for the gas and oil industry” is in itself “capable of being regarded as support for the nuclear activities” because the EU’s restrictive measures of October 2010 (when Kala Naft was re-listed) themselves establish a link between the oil and gas industry and nuclear proliferation, particularly where oil and gas companies are “involved in the procurement of prohibited goods and technology”.

Other notable points about Kala Naft:

First, the ECJ found that link between the oil and gas sector and support for proliferation was justified and proportionate, given the Council’s broad discretion to decide on sanctions measures, and given that sanctions against Iran are “progressive and justified by the lack of success of the measures adopted previously”, and “owing to the risk” that the oil and gas industry present, for proliferation, “both by virtue of the revenue generated and through the use of equipment and materials which have much in common with those used for certain sensitive nuclear fuel cycle activities”.

Second, the ECJ therefore also disagreed with the General Court that the Council had erred by not giving Kala Naft evidence supporting its allegations; the only evidence needed was that Kala Naft was the central purchasing body for NIOC.  The ECJ also stated that “support” for nuclear proliferation “implies a lesser degree of connection to Iran’s nuclear activities than ‘engagement’ or ‘direct association’”.

Third, the ECJ agreed with the GC that it had no jurisdiction to decide the other part of Kala Naft’s challenge, which was to the EU’s sanctions measures prohibiting the sale of equipment and technology to the oil and natural gas industry in Iran, because Article 275 TFEU only gives jurisdiction to consider the legality of “decisions providing for restrictive measures against natural or legal persons” and not CFSP measures more generally.  In other words, the Court only has jurisdiction to annul the targeted part of EU sanctions, not the more general prohibitions.

There is an interesting blog on the Kala Naft judgment on EJIL: Talk! here.

General Court judgment 2 weeks earlier in North Drilling Co

The General Court handed down another Iran oil-related sanctions judgment on 12 November 2013, Case T-552/12 North Drilling Co v Council (judgment here, available only in French).  The reason given for North Drilling’s designation was that it was said to be a 100% subsidiary of the National Iranian Oil Company.

The General Court annulled that listing because North Drilling said it had been privatized and had had no connection with NIOC since 2011, and therefore the Council had been acting on the basis of mistaken facts when it listed it.  The Council argued that even after privatization the company was still under State control and still provided resources to the Iranian government, but the Court held that it would be unfair to permit the Council to rely on this new reason that had never been put to the applicant.