We reported last September on the judgment of the General Court of the European Union in Case T-434/11 Europäisch-Iranische Handelsbank AG (EIH) v Council (6 September 2014). The General Court annulled a previous inclusion of EIH (a German bank) on the EU’s sanctions measures relating to Iran, but did not annul a subsequent version, which listed EIH for assisting Iranian banks to carry out financial transitions with sanctioned entities and circumventing sanctions. The General Court rejected EIH’s argument that those transactions were authorised by the German Bundesbank (the natural authority competent to grant licences to authorise the release of frozen funds) and therefore the Council could not designate it on the basis that it had breached or circumvented sanctions.
EIH appealed to the Court of Justice. Advocate General Mengozzi has just given his Opinion, in Case C-585/13 P. AG Mengozzi’s view is that the General Court was correct, and he recommends that the ECJ should reject all of EIH’s grounds of appeal.
Some of the Opinion is about whether the General Court was right to have held that some of EIH’s arguments were raised too late to be admissible. Of more general significance (whether one agrees with it or not) is his opinion on the relevance and role of the authorisations / licences given by national authorities which permit exceptions to EU asset freezing measures. The Advocate General’s view, in summary, is that the General Court was right to have held that:
1) The Bundesbank should not have been granting general authorisations, as opposed to case-by-case authorisations.
2) Exceptions to asset freezes should be construed narrowly. “What is in issue is an exception to the principle of the freezing of funds which, by its very nature, must be interpreted strictly”.
3) Licensing decisions by national authorities cannot bind the Council in imposing and interpreting EU sanctions measures. A national authorisation “does not provide an absolute guarantee, for the decision of the national authority does not automatically confer a stamp of lawfulness on the authorised transition in the light of the regulations laying down the legal framework of the restrictive measures system. Sight must not be lost of the fact that the national authorities, when deciding on a request for authorisation, may have only limited information at their disposal and it is easily conceivable that an entity making such a request might conceal certain information about the planned transactions in order to secure authorisation”.
4) An entity such as EIH can be held by the Council to have been circumventing sanctions, even where the transactions at issue have been expressly authorised, where the authorisations granted are inconsistent with the purpose of the EU sanctions regulations.
Advocate General’s opinions are not binding on the Court of Justice, but offer an independent analysis. The next step in the case will be a judgment from the Court of Justice.