Safa Nicu – EU appeal court judgment on damages for sanctions listings

The European Court of Justice has given its judgment on an appeal brought by Safa Nicu, an Iranian company that successfully applied in 2014 to have its listing on the EU’s sanctions against Iran annulled, and on a cross-appeal brought by the EU Council. Case C-45/15 P Safa Nicu v Council [2017].

Safa Nicu appealed against the General Court’s decision to dismiss most of its €7.7m claim for damages resulting from the imposition of EU sanctions, awarding it €50,000 for reputational damage. The Council’s cross-appeal called for the Court to set-aside the decision to award Safa Nicu non-pecuniary damages.  The General Court judgment was the first awarding damages in a sanctions case (see previous blog), and the Court of Justice has upheld the judgment below on all points.  The main points are as follows:

  1. The ECJ upheld the General Court’s reasoning that the Council’s failure to substantiate the reasons for Safa Nicu’s listing with evidence for 3 years was a “sufficiently serious breach” of EU law (the pre-condition for an award of damages from an EU institution). The Court rejected the Council’s argument that the obligations on the Council had not been clear at the relevant time – the principles had been clear from the court’s case law since at least Kadi I.
  2. The ECJ also said the General Court had been correct to have considered all circumstances of the case in deciding whether to award damages, including whether annulment provided sufficient reparation, the gravity of the breach, its duration, the Council’s conduct, and the effect of listing Safa Nicu on third parties.
  3. The Court held that the General Court had also been justified in dismissing Safa Nicu’s claims for material damage, because the company had not provided sufficient evidence on the damage caused by the sanctions or the causal link between the imposition of sanctions and its losses.

Iran imposes reciprocal sanctions on 9 US firms

Iran has imposed sanctions on 9 more US people and companies, allowing the government of Iran to freeze their assets and bar their employees from entering the country.  The new listings follow the US government’s decision to impose new sanctions listings on Iran relating to its ballistic missile programme earlier this month (see previous blog).

The newly sanctioned firms are shipbuilder Huntington Ingalls Industries, cybersecurity firm Kingfisher Systems, military contractor DynCorp, management consultancy Booz Allen Hamilton, which works closely with the US government, McAlester Army Ammunition Plant, and the BIRD and BSF foundations, which are said to have supported cooperation between Israeli and American companies.  Also sanctioned are the CEOs of Booz Allen Hamilton and KingFisher Systems, Horacio Rozanski and Roy Reed.

US renews JCPOA sanctions relief & adds to ballistic missile sanctions

The US has renewed the sanctions relief on Iran that it agreed to under the JCPOA nuclear deal, which must be renewed every 4-6 months.

It has also imposed new sanctions designations on 2 senior Iranian defence officials, one of whom is said to have facilitated the sale of explosives to Syria, 1 person and 3 entities allegedly involved in a China-based network supporting Iran’s military and ballistic missile programme, and an Iran-based firm supporting SHIG, a designated organisation involved in Iran’s liquid-fuel ballistic missile programme. The details of the new designations are here.

Iran signs trade and banking agreement with Pakistan

Trade and banking relations between Pakistan and Iran are set to grow, following the signing of a trade-settlement mechanism between the countries’ central banks. The agreement, signed with the intention of promoting bilateral trade between Pakistan and Iran, was made possible by the lifting of several US sanctions on Iran under the JCPOA last year (see previous blog).

USA – Iran, ISIL, & Al-Qaida designations

Iran

OFAC has sanctioned the Tehran Prisons Organisation and a senior official within Iran’s State Prison Organisation, Sohrab Soleimani, in connection with alleged serious human rights abuses in Tehran’s Evin Prison. Tehran Prisons Organisation, which Soleimani previously headed up and now oversees in his current role, is allegedly responsible for abuses against political prisoners housed in Evin Prison, including an incident in April 2014 in which several political prisoners are said to have been brutally attacked by prison staff.  In its press release, the US Treasury said that the US would “vigorously exercise its sanctions authorities outside the scope of the JCPOA to counter the Iranian government’s support for terrorism, ballistic missile programme, regional destabilisation, and human rights abuses”.

ISIL & Al-Qaida

Two ISIL financial facilitators in Libya, Ali al-Safrani and Abd Zarqun, and Algerian ISIL supporter Hamma Hamani have been designated by OFAC as Specially Designated Global Terrorists.  Al-Safrani and Abd Zarqun are said to be high-level leaders within ISIL, and Hamani is said to have supported ISIL and trafficked weapons in Libya. The Treasury’s press release is here.

In addition, the US State Department has designated 2 Canadian citizens, Tarek Sakr and Farah Shirdon, as Specially Designated Global Terrorists. Sakr is said to have conducted sniper training in Syria and been linked to Syrian al-Qaida affiliate al-Nusrah Front. Shirdon is allegedly a prominent ISIL fighter and recruiter who has also been involved in fundraising. The State Department’s press release is here.

Sharif University’s ECJ appeal rejected

The European Court of Justice has dismissed the appeal brought by Sharif University of Technology against the General Court’s judgment declining to annul its listing on the EU’s sanctions against Iran (see previous blog). SUT was listed for providing support for the government of Iran. See Case C-385/16 P Sharif University of Technology v Council [2017].

The Court dismissed SUT’s first argument, that the General Court had not considered one of SUT’s grounds for annulment, because the ECJ said the University had not raised it before the General Court. The ECJ upheld the General Court’s interpretation of the listing criterion of providing “support, such as material, logistical, or financial support, to the Government of Iran” as not requiring any connection with Iran’s nuclear activities.  It held that the General Court had been correct to find that SUT provided support to the Iranian government for these purposes because it had been involved with the government in military (as opposed to nuclear) or military-related fields, evidenced by agreements between SUT and the government of Iran involving the production of satellites, participation in smart boat competitions, and work for Iran’s air force.

EU renews its human rights sanctions on Iran

The EU has renewed its human rights sanctions on Iran until 13 April 2018.  The sanctions currently impose a travel ban and asset freeze on 82 people and 1 entity, as well as a ban on exports to Iran of equipment which might be used for internal repression or monitoring telecommunications. See Implementing Regulation 2017/685 implementing Regulation 359/2011 and Decision 2017/689 amending Decision 2011/235/CFSP.

US charges against Mehmet Atilla for sanctions evasion

US prosecutors have charged Mehmet Atilla, an executive at a state-owned Turkish bank, with conspiring to evade US sanctions on Iran.  He is alleged to have conspired with several others, including Turkish businessman Reza Zarrab who was arrested as part of the same investigation in March 2016 (see previous blog) and is due to stand trial in October 2017.  Mr Atilla is said to have worked with Mr Zarrab to conceal transfers of currency and gold to Iran from 2010 to 2015, including through the use of fraudulent documents to make the transactions appear as though they involved food that qualified for a humanitarian exemption to US sanctions. In the US Department of Justice’s press release, Acting US Attorney Joon Kim stated that the transactions “illegally funnelled millions of dollars to Iran”.