Another Iranian bank released by the EU – Wikileaks here as well
7 February 2013
Bank Saderat Iran v Council of the European Union, EU General Court, 5 February 2013 read judgement
Last week I posted on the Bank Mellat case where an Iranian Bank succeeded in persuading the General Court to unfreeze its assets from orders made by EU institutions. The Bank Saderat case is virtually identical, and annulment was duly granted by the General Court. But it is troubling that the EU Council should go so wrong in wielding its draconian powers more than once. It does rather support the suspicions of the Bank (common to this and the Bank Mellat case) that pressure was brought to bear on the Council ultimately emanating from the US – hence the Wikileaks cables again – such that the EU did not robustly analyse the assertions made to them before making the orders. Basic errors were made again, and, as will emerge, the EU had no evidence for much of what it said.
Most of the arguments are the same as in Bank Mellat case. In a copy-and-paste job, the Court dismissed the contention that Bank ( if state-owned) could not rely upon human rights breaches by a supra-national body such as the EU. Similarly, certain of the reasons were inadequate and thus could not be relied upon.
But it is perhaps worth looking at the passages dealing with the merits. The Court made it clear that in such a case it will look at the substance of the evidence – so the standard of review is quite intense. it put it this way
In accordance with the case-law, the judicial review of the lawfulness of a measure whereby restrictive measures are imposed on an entity extends to the assessment of the facts and circumstances relied on as justifying it, and to the evidence and information on which that assessment is based. In the event of challenge, it is for the Council to present that evidence for review by the Courts of the European Union.
The conclusions on the remaining reasons are crisp, and do not reflect well on the amount of homework done by the Council. Take the first:
108 Further, the fact that part of the applicant’s share capital is owned by the Iranian State does not imply, by itself, that the applicant is providing support to nuclear proliferation. Consequently, the first reason provided by the Council does not justify the adoption of restrictive measures against the applicant on the basis that it provided such support.
Next, the Council said that the Bank had provided services to one Mesbah Energy Company. The Bank denied it. Could the Council prove what they alleged? No:
Yet the Council has produced no evidence or information to establish that such services were provided, or that the applicant was aware of the involvement of Mesbah Energy Company, which in 2003 was not yet the subject of restrictive measures, in nuclear proliferation. Accordingly, it must be concluded that the fourth reason also does not justify the adoption of restrictive measures against the applicant.
And the fifth reason hit the dust for the same reason – the Council adduced no evidence. And so did the third reason. This concerned the fact that the Bank had handled letters of credit for two bodies. Those bodies were engaged in nuclear proliferation. The Bank said that such letters of credit were ordinary banking services – any bank could have provided them.
At which point the Court did the obvious thing
In order to determine whether those arguments are well founded, the Court asked the Council to send to it detailed information on the letters of credit handled by the applicant on behalf of DIO and IEI.
And got a rather unimpressive non-answer:
The Council has not produced any evidence in reply to the Court’s request.
The onus of proof being on the Council, the Court concluded that
in those circumstances, the fact that it is impossible to determine whether the applicant’s arguments, that the services which it provided to DIO and IEI do not justify the adoption of restrictive measures against it, are well founded should not prejudice the applicant. On the contrary, since the reason why it is impossible is the Council’s failure to meet its obligation to submit relevant evidence and information, the second plea in law must be upheld.
All pretty unimpressive stuff.
Finally, as in Bank Mellat, the Court dismissed the point about outside pressure which I raised above, though it is perhaps interesting to see how it did so:
Further, according to the applicant, it is clear from diplomatic cables, made public through the Wikileaks organisation (‘the diplomatic cables’), that Member States, in particular the United Kingdom, were subject to pressure from the United States Government to ensure the adoption of restrictive measures against Iranian entities. That fact, it is claimed, casts doubt on the lawfulness of the measures adopted and of the procedure for their adoption.
Having then observed that there was nothing in the Court file to suggest that the Council checked ” the relevance and the validity of the evidence concerning the applicant submitted to it ” before the adoption of the measures, the Court proceeded not to accept the outside pressure point, in terms which are not exactly robust.
Secondly, as regards the diplomatic cables, the fact that some Member States were subject to diplomatic pressure, even if proved, does not imply, by itself, that such pressure affected the contested measures which were adopted by the Council or the assessment carried out by the Council when they were adopted.
But why the Council did not check the evidence before making the order? The only convincing answer is that it had already decided to make the order – and there is an obvious reason for that.
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