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The ECJ further clarifies the standard of proof required for restrictive measures taken against Iran

Araceli Turmo , 3 décembre 2013

The Court of Justice ruled on 28 November 2013 on two appeals brought by the Council of the European Union in cases concerning the validity of restrictive measures taken with the aim of preventing Iran from developing a nuclear weapon: Council v Fulmen and Mr Mahmoudian (C-280/12 P) and Council v Kala Naft (C-348/12 P). Two Iranian companies, Kala Naft and Fulmen, and the latter’s majority shareholder, Mr Mahmoudian, were found by the Council to have links to Iran’s nuclear programme, and were subjected to the freezing of funds. The General Court however annulled these measures (in Joined Cases T-439/10 and T-440/10, and Case T-509/10) on the grounds that the Council had not produced sufficient evidence of the applicants’ involvement in the nuclear programme.

The Court of Justice set aside the judgment of the General Court in Case Kala Naft. It rejected the Council’s first plea, by which the institution argued that the company, an offshoot of the Iranian State, should not be entitled to invoke fundamental rights, on procedural grounds. Concerning the main ground of appeal, the ECJ referred to Kadi II (C-584/10 P, C-593/10 P and C-595/10 P) and recalled that respect for the rights of the defence and the right to effective judicial protection requires restrictive measures to be based on at least one sufficiently detailed and substantiated reason, and judicial review ensuring that the decision was taken on a sufficiently solid factual basis.

According to the ECJ, the General Court did not take into account the changes brought to EU legislation after Security Council Resolution 1929 (2010), which must be taken into account when interpreting the acts establishing the link between the company’s activities and Iran’s nuclear programme. Under the applicable provisions, support for nuclear activities through involvement in the procurement of prohibited goods and technology may be subject to restrictive measures. Resolution 1929 explicitly mentions the revenues derived from Iran’s energy sector as potentially connected to the nuclear programme. In the light of the resolution, trading in key equipment and technology for the oil and gas industry may be regarded as support for Iran’s nuclear activities. Therefore, according to the ECJ, the General Court erred in law in ruling that restrictive measures could not be adopted in the case of a mere risk of reprehensible acts.

In the case at issue, since Kala Naft is the central purchasing body of the national oil company of Iran, and is regularly involved in the procurement of allow gates for it and its subsidiaries: its involvement in the trade of goods and technology which may be used for Iran’s nuclear programme was thus sufficiently established. The Court of Justice went on to give final judgment in the matter, and dismissed the action brought by Kala Naft.

However, the ECJ dismissed the appeal in Case Fulmen and Mr Mahmoudian, on the grounds that the applicants were not in a position to defend themselves against the Council’s allegations, and the Courts were not in a position to determine whether the acts were well founded. The Council had refused to provide any evidence beyond the statement of reasons for the acts concerned, arguing that overriding requirements pertaining to the security of the EU prevented the disclosure of any further information. The ECJ held that, in the absence of any evidence such as a summary of the content of the information in question, it must be held that the Council had not provided sufficient proof of the company’s involvement in Iran’s nuclear programme.

Reproduction autorisée avec l’indication: Araceli Turmo, "The ECJ further clarifies the standard of proof required for restrictive measures taken against Iran", www.ceje.ch, actualité du 3 décembre 2013.