9 Iran sanctions and the EU General
Court
| (a)
(35384)
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(b)
(35385)
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(c)
(35515)
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(d)
(35516)
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(e)
(35578)
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(f)
(35579)
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Council Decision 2013/497/CFSP of 10 October 2013 amending Decision 2010/413/CFSP concerning restrictive measures against Iran
Council Regulation (EU) No. 971/2013 of 10 October 2013 amending Regulation (EU) No. 267/2012 concerning restrictive measures against Iran
Council Decision 2013/661/CFSP of 15 November 2013 amending Decision 2010/413/CFSP concerning restrictive measures against Iran
Council Regulation (EU) No. 1154/2013 of 15 November 2013 amending Regulation (EU) No. 267/2012 concerning restrictive measures against Iran
Council Decision 2013/685/CFSP of 26 November 2013 amending Decision 2010/413/CFSP concerning restrictive measures against Iran
Council Regulation (EU) No. 1203/2013 of 26 November 2013 implementing Regulation (EU) No. 267/2012 concerning restrictive measures against Iran
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| Legal base | (a) Article 29 TEU; unanimity; —
(b) Article 215 TFEU ; QMV ; —
(c) Article 29 TEU; unanimity; —
(d) Article 46(2) of Council Regulation (EU)
267/2012; QMV ;—
(e) Article 29 TEU; unanimity; —
(f) Article 46(2) of Council Regulation (EU)
267/2012; QMV ;—
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| Document originated | (a)-(b) 10 October 2013
(c)-(d) —
(e)-(f) 26 November 2013
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| Deposited in Parliament | (a)-(b) 15 October 2013
(c)-(d) 21 November 2013
(e)-(f) 28 November 2013
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | (a)-(b) EM of 25 October 2013; Minister's letter of 25 October 2013
(c)-(d) EM of 28 November 2013; Minister's letter of 15 November 2013
(e)-(f) EM of 2 December 2013; Minister's letter of 2 December 2013
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| Previous Committee Report | None; but see (35042) — and (35043) —: HC 83-vi (2013-14), chapter 18 (19 June 2013)
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| Adoption in Council | (a)-(b)12 October 2013
(c)-(d) 15 November 2013
(e)-(f) 26 November 2013
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Documents (a) and (b)
9.1 This Council Decision and implementing Regulation expand
the existing EU Iran sanctions listing criteria regarding the
Islamic Republic of Iran Shipping Lines (IRISL, the Iranian state
shipping company) and associated entities or individuals. They
also correct an anomaly to ensure that those who themselves violate
or evade sanctions are targeted, not only those who assist others
to do so. Adoption took place on 12 October 2013.
Documents (c) and (d)
9.2 The Council Decision and implementing Regulation relist
eight entities whose listing was annulled by the General Court
on 6 September 2013. It also relists Hanseatic Trade Trust &
Shipping (HTTS), whose listing was annulled on 3 August 2013 and
amends the listing of Onerbank ZAO. Adoption took place on 15
November 2013.
Documents (d) and (e)
9.3 The Council Decision and Regulation relist Islamic Republic
of Iran Shipping Lines (IRISL) and fifteen of its subsidiaries.
It also amends the listing of MASNA to include additional identifying
information. Adoption took place on 26 November 2013.
The Government's view
Documents (a) and (b)
9.4 In an Explanatory Memorandum dated 25 October the Minister
for Europe (Mr David Lidington) explains that on 16 September,
the EU General Court ruled in favour of a legal challenge by IRISL
and 17 associated entities to their designation under EU Iran
Sanctions. The Court gave the Council two months and ten days
either to appeal this decision or to take remedial action before
the designations' automatic annulment on 24 November. To maintain
IRISL's designation and that of the 17 related entities, the Minister
says it was necessary to expand the existing wording of the Council
Decision and implementing Regulation defining who can be subject
to sanction (the wording is referred to as the "sanctions
criteria"). Amendments were made to Articles 23(2) b, c and
e of Regulation 267/2012. The expansion of the language in these
Articles achieved two things:
— it
allowed for the designation of entities who themselves
evade or violate UN or EU Iran sanctions. This corrects an
anomaly, as only those who assisted others in evading or
violating sanctions were previously captured. This is relevant
to IRISL, which itself breached a UN Resolution regarding the
transport of conventional arms; and
— it added new wording into the sanctions
criteria covering IRISL to capture more comprehensively those
entities assisting IRISL, that is, those who provide essential
services to IRISL or those that act on its behalf. This provides
a basis for several of the associated entities whose designation
had been successfully challenged to be targeted through relisting
under the expanded criteria. Similarly, wording was added to the
Islamic Revolutionary Guard Corps (IRGC) criterion, expanding
it to include entities that provide essential services to the
IRGC or act on its behalf.
9.5 The Minister explains that the UK continues
to support the designation of these entities for their role in
supporting Iran's proliferation activity through IRISL. As nuclear
negotiations with Iran are ongoing, it is essential to retain
existing EU sanctions pressure on Iran. He says "[we] are
currently working with the EU to build the case to relist IRISL
and as many of the 17 associated entities as possible, whilst
addressing the concerns of the EU General Court in its ruling."
9.6 In addition to depositing an Explanatory
Memorandum, the Minister wrote to us on 25 October with more information
about the General Court litigation on the EU sanctions regime
against Iran. He explains that it has taken time to study the
judgement and consider a solution; a draft Council Decision and
Regulation were made available by the European External Action
Service (EEAS) on 27 September, and first discussed by EU Member
States on 1 October. A Decision and Regulation needed to be agreed
by 10 October, as otherwise there would not have been sufficient
time to give notice to the entities and relist them before the
annulment came into effect. He regrets that due to these tight
timings, he had to agree to the adoption of this Council Decision
and Regulation before we had an opportunity to scrutinise these
documents.
DOCUMENTS (C) AND (D)
9.7 In an Explanatory Memorandum dated 28 November
the Minister explains, at the time of writing, significant progress
has been made in recent talks between Iran and the E3+3, with
a first step deal having been agreed. However, in parallel with
providing Iran with some relief from some EU sanctions, the Government
will remain firm in upholding and maintaining existing listings
such as those detailed below. The relisting of these nine entities
occurred prior to the deal that was reached over the weekend of
23/24 November 2013.
9.8 On 6 September 2013 the General Court ruled
in favour of the Council in the case of Iranian bank Melli and
EIH, and lost challenges brought by eight entities to their designation
under EU Iran Sanctions (the eight entities are Post Bank of Iran,
Iran Insurance Company, Export Development Bank of Iran, Persia
International Bank, Iranian Offshore Engineering and Construction
Company, Bank Refah Kargaran, Naser Bateni and Good Luck Shipping
Company). The Court gave the EU Council two months and ten days
either to appeal this decision or to take remedial action before
the designations' automatic annulment on 16 November 2013. Separately,
on 3 August 2013 the EU General Court ruled in favour of Hanseatic
Trade Trust & Shipping (HTTS).
9.9 The Council took decisions to relist all
nine entities, on the basis of new statements of reasons concerning
each of them.
9.10 Additionally, the Council amended the reasons
behind the listing of Onerbank ZAO. The Council also allowed the
listing of Qualitest FZE to lapse.
9.11 The UK continues to support the designation
of the nine entities for their role in supporting Iran's proliferation
activity either through the provision of support to the Government
of Iran or to IRISL, or in the case of Persia International Bank,
by being owned by another listed entity (Banks Mellat and Tejarat).
9.12 The Minister's Explanatory Memorandum was
accompanied by a letter of the same date which covers much of
the same ground.
DOCUMENTS (E) AND (F)
9.13 In an Explanatory Memorandum dated 2 December
the Minister explains that this Council Decision and Regulation
relist IRISL plus 15 of its subsidiaries (Bushehr Shipping Co.
Ltd, Hafize Darya Shipping Lines (HDSL), Irano — Misr Shipping
Co., Irinvestship Ltd, IRISL (Malta) Ltd, IRISL Europe GmbH, IRISL
Marine Services and Engineering Co., ISI Maritime Ltd, Khazar
Shipping Lines, Marble Shipping Ltd, Safiran Payam Darya Shipping
Lines (SAPID), Shipping Computer Services Co., Soroush Saramin
Asatir Ship Management, South Way Shipping Agency Co. Ltd and
Valfajr 8th Shipping Line Co). The Council decided not to relist
IRISL Club and Leadmarine as it did not feel there was a strong
enough case to support relisting. The documents also amend the
listing of MASNA (the Managing Company for the Construction of
Nuclear Power Plants) to include additional identifying information.
Adoption took place on 26 November 2013.
9.14 The Minister says that the relisting of
these 16 entities occurred prior to the deal that was reached
between E3+3 and Iran over the weekend of 23/24 November 2013.
9.15 The Minister's Explanatory Memorandum was
accompanied by a letter of the same date which covers much of
the same ground.
The decisions of the General Court
The decisions of the General Court[32]
on 6 September can be summarised as follows:
- with regard to Post Bank Iran,
Iran Insurance Company, Good Luck Shipping and Export Development
Bank of Iran, the Court found that the Council had not proved
the facts of which it accuses those four companies and that the
Council could not, therefore, properly establish that they had
provided support for nuclear proliferation. Consequently, the
acts of the Council requiring the funds of those companies to
be frozen were annulled;
- the Court also annulled the relevant acts in
so far as they concern Mr Bateni, Persia International Bank and
Iranian Offshore Engineering and Construction Co. In each of those
cases, the Court found that the Council made an error of assessment
inasmuch as the facts and evidence on which it relied (in the
case of Mr Bateni, the fact that he is or was director of a designated
company; in the case of Persia International Bank, the fact that
Bank Mellat, a designated company, owns 60% of its share capital;
and in the case of Iranian Offshore Engineering & Construction,
the fact that it was subject to three export denials) did not
by themselves justify the adoption and/or maintenance of the restrictive
measures;
- in the case of Bank Refah Kargaran, the Court
found that the Council breached the obligation to state reasons
and the obligation to disclose to Bank Refah Kargaran the evidence
used against it. The single reason given — that Bank "Refah
Kargaran had taken over ongoing operations from Bank Melli after
Bank Melli became subject to restrictive measures — was
not sufficiently detailed, since the Council did not identify
any specific operation purportedly 'taken over' from Bank Melli
and carried out by Bank Refah Kargaran. Accordingly, the Court
annulled the acts of the Council imposing restrictive measures
on Bank Refah Kargaran;
- as regards Europasch-Iranische Handelsbank, the
Court annulled the acts of 23 May 2011 in so far as they concern
that company on the ground that the Council merely adopted the
listing proposal of a Member State without evaluating the allegations
contained within it. However, in adopting the December 2011 acts
maintaining that bank on the list, the Council did not commit
the same procedural error, and all the other arguments on which
the bank relied were also rejected by the Court, which held, inter
alia, that the transactions carried out by Europaïsch-Iranische
Handelsbank on behalf of designated Iranian entities justified
the adoption of restrictive measures against it. Consequently,
those more recent acts were not annulled and the funds of Europaïsch-Iranische
Handelsbank remained frozen; and
- lastly, the Court dismissed the action of Bank
Melli Iran in its entirety, holding in particular that the fact
that Bank Melli Iran ensured that scholarships were paid on behalf
of the Atomic Energy Organisation of Iran (AEOI) after restrictive
measures had been adopted against AEOI by the United Nations Security
Council constituted support for nuclear proliferation.
The decision of the General Court[33]
on 16 September can be summarised as follows:
- the statement of reasons for
the listing of IRISL was excessively vague;
- the Council had not established that, by having
transported on three occasions military material in breach of
a UN Security Council Resolution, IRISL provided support for nuclear
proliferation. The Court concluded that the three incidents in
question did not justify the adoption and maintenance of the restrictive
measures against IRISL; and
- As the Council had not established that IRISL
had provided support for nuclear proliferation, restrictive measures
could not be justified against entities owned or controlled by
IRISL.
Conclusion
9.16 The Minister's Explanatory Memoranda are
pithy to a point and do not help us to understand how the relisting
of entities in documents (a) to (f) will render the listings lawful.
So we ask the Minister to explain how the grounds for annulment
with respect to each of the entities relisted have been addressed,
so that we can better understand the legal basis for the relistings.
For example, in addition to being informed that new statements
of reasons have been submitted, we would like to know how the
new statements cure the defects of the previous statements. The
same goes for new evidence upon which the EU relies.
9.17 We also ask the Government to confirm whether
documents (a) to (f) are subject to further appeal.
9.18 In terms of scrutiny procedure, we understand
for the reasons the Minister sets out why it was not possible
on these three occasions to respect the scrutiny reserve resolution
before adoption in the Council.
9.19 The documents remain under scrutiny pending
the Minister's response.
32 Judgments in Joined Cases T-35/10 and T-7/11 Bank
Melli Iran; Case T-493/10 Persia International Bank plc;
Joined Cases T-4/11 and T-5/11 Export Development Bank of Iran;
Case T-12/11 Iran Insurance Company; Case T-13/11 Post
Bank Iran; Case T-24/11 Bank Refah Kargaran; Case T-434/11
Europäisch-Iranische Handelsbank AG; Joined Cases
T-42/12 and T-181/12 Naser Bateni; Case T-57/12 Good
Luck Shipping, and Case T-110/12 Iranian Offshore Engineering
and Construction Co. v Council. Back
33
Judgement in case T-489/10 IRISL v Council. Back
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