14 Restrictive measures against Iran:
nuclear issues
| Committee's assessment
| Legally and politically important |
| Committee's decision | Not cleared from scrutiny; further information requested
|
| Document details | Council Decision concerning restrictive measures against Iran
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| Legal base | Article 29 TEU; unanimity
|
| Department
Document number
| Foreign and Commonwealth Office
(36568), —
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Summary and Committee's conclusions
14.1 As well as implementing the measures contained in UNSCR 1929
of 9 June 2010, Council Decision 2010/413/CFSP imposed additional
EU sanctions in the energy sector, the financial sector,
trade, the Iranian transport sector in particular
the Islamic Republic of Iran Shipping Line (IRISL) and its subsidiaries
and air cargo; and new visa bans and asset freezes,
especially on the Islamic Revolutionary Guard Corps.
14.2 Council Decision 2014/829/CFSP of 25 November
2014, amending Decision 2010/413/CFSP concerning restrictive measures
against Iran, extended the suspension of restrictive measures
specified in the Joint Plan of Action, agreed between the E3+3
and Iran, from 24 November 2014 until 30 June 2015.
14.3 This Council Decision relists one individual,
Gholam Hossein Golparvar (Golparvar) and one entity, the National
Iranian Tanker Company (NITC). Their original listings had been
annulled by the General Court.[38]
Solicitors acting for both entities have expressed objections
to the relisting of their clients direct to the Committee. Further
challenge to any relisting is likely and indeed it is understood
that NTIC has been given leave to bring domestic judicial review
proceedings in the United Kingdom.
14.4 When we last considered this proposal at our
meeting of 21 January 2015 we held the matter under scrutiny,
and in doing so:
· Noted
that a lack of urgency on the part of the Council in relisting
resulted in the original listings expiring and therefore the risk
of asset flight;
· Sought
an explanation why open-source information provided to Golparvar
and NITC could not be provided to Parliament; and
· In the
light of the sensitive history of these listings sought confirmation
from the Minister for Europe (Mr David Lidington) that he considered
the reasons for the relisting and the underlying evidence sufficiently
robust to deter or withstand further legal challenge. We specifically
did not seek to put ourselves in the place of a court in judging
the detailed evidence supplied direct by the entities.
14.5 The Minister wrote on 4 February 2015 in response
to our questions and others posed by the European Select Committee
of the House of Lords.
14.6 On 12 February the Council adopted a Decision
relisting Golparvar and NITC.[39]
It also adopted two Regulations coving the same ground in respect
of matters falling within the TFEU: one extending until 30 June
2015 the exceptions to the restrictive measures originally granted
by Regulation 267/2012 until 31 December 2014[40];
and another relisting Golparvar and NITC.[41]
We therefore held back consideration of his letter of 4 February
in order to deal with an anticipated letter from the Minister
addressing the override of scrutiny. This was forthcoming on 12
March.
14.7 In his letter of 12 March the Minister says,
"the responsibility to keep your Committee informed on issues
concerning Iran sanctions is something I take seriously and the
need for the override of scrutiny on this occasion was regrettably
unavoidable". We do not accept that the override of scrutiny
was unavoidable or justified, and we consider that he Minister's
engagement with this Committee is below the standard that this
House should expect. It has been characterised by mistakes, omissions,
and unsatisfactory responses as set out in more detail in this
chapter. We therefore ask that the handling of this matter be
reviewed in the light of this chapter and the outcome, particularly
steps taken to improve the engagement with Parliament, be reported
to our successor Committee in the new Parliament. In the meantime
we hold this matter under scrutiny.
14.8 As we indicated in our Report of 21 January
2015 it is important that a relisting of an entity or individual
should be legally robust as multiple failures to withstand legal
challenge undermines the credibility of the sanctions regime.
14.9 The Minister has expressed his belief that
these relistings are "proportionate, adequately supported
by open-source evidence, and consistent with the broader Government
policy towards Iran". In contrast to his response concerning
Syria which report at chapter 29, this falls short of providing
the confirmation he was invited to give.
14.10 Unfortunately, the history of this matter
does not inspire confidence in the handling of this matter by
either the Government or the Council.
14.11 We strongly doubt that the Council or the
Government will be able to enforce the confidentiality of open
source material or sustain it if challenged.
14.12 We consider that the Minister's statement
in his original Explanatory Memorandum that no fundamental rights
issues apply was an inadequate assessment and we welcome the Minister's
assurance, in his letter of 4 February, that future Explanatory
Memoranda concerning the imposition of restrictive measures will
include a more expansive description of why it is felt that fundamental
rights are not breached.
14.13 We do not invite the Minister to deposit
retrospectively drafts or provide Explanatory Memoranda in respect
of Regulations 2015/229 and 2015/230 as they do not add, in substance,
to Decision 2015/236 which is the subject of the present scrutiny.
The Minister's letter of 12 March fails to mention Regulation
2015/229 and offers no explanation or apology for the fact that
neither of these Regulations had been mentioned in his Explanatory
Memorandum or previous correspondence. We therefore ask that the
review we have requested to include why these matters were not
made subject to scrutiny. We also ask for an analysis of the effect
of allowing the exceptions to the restrictive measures to expire
on 31 December 2014 until the extension adopted by Regulation
2015/ 229.
Full
details of the document:
Council Decision amending Council Decision 2010/413/CFSP concerning
restrictive measures against Iran: (36568), —.
The Minister's letter of 4 February 2015
14.14 The substance of this letter is set out in
full as the responses to issues raised by the European Select
Committee of the House of Lords provide a full picture of the
Government's approach to restrictive measures:
"In your letters, a number of questions
were posed which I seek to address below. In summary, I believe
that the relistings of NITC and Mr Golparvar are appropriate,
proportionate, adequately supported by open-source evidence, and
consistent with our broader Government policy towards Iran. Whilst
I understand the desire for the Parliamentary Scrutiny Committees
to have access to the open-source evidence which supports relisting
proposals, I am unfortunately not in a position to share such
information. This is a consistent position which is taken in respect
to all such requests, the reasons for which I set out below.
"I will first elaborate the processes both
within Her Majesty's Government and the EU, by which individuals
or entities are proposed for listing or relisting under an EU
restrictive measures regime, with a focus on Parliamentary Scrutiny.
"It is clearly desirable for Government
processes to be as transparent as possible, and I confirmed my
intention in this regard during my recent evidence session in
the Commons on scrutiny reform. However, as the Committees are
aware, there are particular sensitivities with regard to EU restrictive
measures whic limit the instances in which the normal Parliamentary
Scrutiny process may be followed. By way of example, the risk
of asset flight, if a designated individual or entity becomes
aware that they are being proposed for listing under a sanctions
regime, precludes scrutiny in most instances of new listings;
the use of a Ministerial override is well established in this
scenario.
"It is not unusual for the decision to relist
an individual or entity to be the subject of a scrutiny override.
This may be due to time pressures (often dictated by EU business)
involved in negotiating and adopting a revised Statement of Reasons,
which will also need to be supported by evidence for the relisting.
It is preferable for agreement to have been reached before the
effect of any annulment by the Court is realised (usually two
months and ten days post notification of judgment). Failure to
relist the individual or entity within this timeframe risks asset
flight and can undermine the effectiveness of restrictive measures.
"With regards to the scrutiny history for
NITC and Mr Golparvar, the situation is unusual for two reasons.
First, the risk of asset flight was considerably reduced (both
had been delisted since the Court's annulment decisions had taken
effect). Second, the sensitivity and timing of nuclear negotiations
between the E3 + 3 and Iran were significant factors in considering
proposals for relisting, and when proposals could be negotiated
and adopted by the Council.
"I recall my previous letter of 20 January
2015 to the European Union Committee, copied to the European Scrutiny
Committee, in which I elaborated on the EU process for sanctions
listings and reviews.
"I should here like to clarify a particular
point. Listing decisions require unanimity by the Council. Agreement
may be reached at meetings of the Foreign Affairs Committee (FAC)
but agreement may also be reached at any time by way of the Council's
written procedure. In circumstances where Ministers judge it appropriate
to do so, for example where there are pressures of timing, a scrutiny
override may be used in conjunction with the written procedure
at any time. For the avoidance of doubt that option is available
in the case of NITC and/or Mr Golparvar.
"The Committees have asked for access to
the open-source evidence which supports the relisting proposals
for certain individuals and entities. The Government adopts a
consistent policy of declining to provide the evidence which supports
listing, or relisting, proposals to the Parliamentary Scrutiny
Committees. The reasons for this I set out below.
"The listing proposals which the Parliamentary
Scrutiny Committees scrutinise may be put forward by the UK or
one of the other EU Member States, or the EEAS. The underlying
evidence is made available to the Council and held on file. Information
that forms part of the Council's internal decision making can
be shared between Member States, however the Council decides collectively
on the sharing of information externally.
"Member States are bound by a duty of professional
secrecy with respect to Council documents unless they have been
made publicly available, as set out in the Council's Rules of
Procedure. Article 6 (1) states "...the deliberations of
the Council shall be covered by the obligation of professional
secrecy, except in so far as the Council decides otherwise".
Professional secrecy maintains non-disclosure of the identity
of the proposing Member State, and limits the scope for third
countries to play divide and rule with the EU's sanctions policy.
"There are specific procedures for sharing
information with the designated individual or entity. All open-source
evidence is disclosed to them, upon their request, by the Council.
They may share this information with their legal representatives
in preparing their defence.
"The sharing of information externally with
other actors is a collective decision for the Council. The Council
Secretariat holds the responsibility to disclose such documents,
or not, in accordance with applicable EU law.
"In its letter of 22 January 2015, the European
Union Committee of the House of Lords note that Explanatory Memoranda
on EU restrictive measures commonly conclude that 'no fundamental
rights issues apply'. The designation of an individual under a
regime of restrictive measures may engage fundamental rights,
however any interference with those rights is considered to be
proportionate which is why, on analysis, no fundamental rights
issues apply. Consideration is given to this during the process
of targeting an individual or entity and gathering the evidence
to support their listing.
"Restrictive measures against an individual
often include a travel ban and an asset freeze. It is standard
practice to make exemptions to both of these constraints in order
to address humanitarian needs, such as travel for medical treatment
or access to funds to pay for basic expenses.
"The fundamental right of defence has been
the focus of many sanction related court cases; notably Kadi II,
OMPI I and OMPI II. The Kadi II judgment created the requirement
for a listing to be supported by open-source evidence in order
to provide for the individual's right of defence. I consider that
current practice does not breach the fundamental rights of a designated
individual.
"Future Explanatory Memoranda will include
a more expansive description of why it is felt that fundamental
rights are not breached.
"NITC open-source evidence
"You ask us to explain the extent to which
listings and relistings are based on open- source versus confidential
information. Specifically you enquire whether the relisting of
NITC is supported exclusively by open-source material.
"The European Court of Justice's (ECJ) judgment
in Kadi II made clear that the relevant EU institution must substantiate
at least one of the reasons for listing with open-source material.
There is, however, no requirement for all supporting evidence
to be open-source. I am unable to go into the details of specific
cases.
"You note that 'a significant burden rests
on the Council to ensure that evidence exists to show that the
shareholders... provide financial support to the Iranian Government'.
On this point, the Statement of Reasons reads, 'The National Iranian
Tanker Company provides financial support to the Government of
Iran through its shareholders the Iranian State Retirement Fund,
the Iranian Social Security Organization, and the Oil Industry
Employees Retirement and Savings Fund, which are State-controlled
entities'. The Council takes its responsibilities with regard
to relisting individuals and entities extremely seriously.
"Consistency of NITC relisting with
Joint Plan of Action
"The Joint Plan of Action (JPoA) agreed
between the E3+3 and Iran in November 2013 does not have the effect
of suspending in their entirety U.S. and EU sanctions on oil exports
and related sectors; it allows Iran to maintain, at current levels,
oil exports to existing customers, consistent with U.S. measures
under the National Defense Authorisation Act (NDAA). In support
of that, the EU suspended articles of the EU Regulation related
to transport, insurance, and related finance. This was, however,
entirely without prejudice to listings, or relistings, where an
individual or entity meets the criteria for designation under
Article 23 of the Council EU Regulation 267/2012, as amended.
JPoA suspensions do not apply to designated persons or entities,
unless an explicit exemption is made in the legislation. The relisting
of NITC is therefore consistent with the JPoA.
"Mr Golparvar's evidence to the Council
"I understand, from your letter, that you
have been made aware by Mr Golparvar's solicitor that he has provided
documents to the Council explaining that the proposed reason for
his relisting is factually incorrect and that a link with the
Islamic Republic of Iran Shipping Lines (IRISL) is out of date.
"The Council takes all material provided
to them into consideration when determining the evidential basis
supporting an individual's relisting. When an individual is proposed
for relisting, a pre-notification letter is sent to them; the
Council usually provides some supporting documents to the individual
at this time. If an individual asks for access to their file,
all open-source evidence held by the Council will be provided
to them, upon their request, in order that they may prepare their
defence.
"EU full time sanctions staff
"With regard to your query on staffing,
we have been informed that there are eight staff in the EEAS sanctions
unit who work full-time on sanctions. There are no staff in the
CLS / Council Secretariat who work full time on sanctions. There
are three CLS lawyers and two Council Secretariat (RELEX) staff
who work mainly but not exclusively on sanctions, with an additional
three CLS lawyers (including a Director) who work partly on sanctions
and a further five lawyers whose work focuses partly on sanctions
litigation. These figures we understand do not include secretarial
assistants.
"Smarter Sanctions Policy and other
Member States
"The UK's Smarter Sanctions Policy codifies
our desire to use appropriately targeted and legally robust restrictive
measures as a foreign policy tool. The views of the CLS, which
demonstrate great awareness of legal risk, weigh heavily in decision
making. EU sanction regimes are usually subject to annual review
and decisions are adopted by unanimity; the UK can, and has, significantly
influenced proceedings where necessary. The evolving jurisprudence
around EU sanctions regimes have necessitated all Member States
to adhere to similar best practices. Elements of the UK's approach
to sanctions are followed by other Member States.
"'Controversial' listings
"You note that where the UK proposes a listing
or relisting, the decision is taken by FCO Ministers if it is
'controversial', and ask for clarification of what is meant by
this term. I will illustrate by way of example. Decisions pertaining
to listings or re-listings under the Iran sanctions regime are
taken by FCO Ministers, in view of the sensitivity of the nuclear
talks and the effects of considering a listing or relisting on
the negotiations process at a given moment. Further examples may
be where a proposed listing carries a small risk of unintended,
detrimental humanitarian impact for instance. In clear cut cases,
where broader political considerations are not in play, the decision
to propose a listing is made by a Civil Servant at a senior level;
Head, or Deputy Head of Department.
"There is extensive Ministerial involvement
in decisions relating to sanctions, I am unable, however, to provide
a clear indication as to the actual proportion of UK listing proposals
directly considered by FCO Ministers. Listing proposals are worked
up by a range of officials across the FCO and data on Ministerial
involvement is not centrally held nor systematically collected
at present."
The Minister's letter of 12 March 2015
14.15 This letter deals with the override of scrutiny:
"The Council Decision and Regulation relisting
NITC and Mr Golparvar were adopted by written procedure on 12
February 2015 and published in the Official Journal of the EU
on 14 February 2015. I regret that it was not possible to complete
parliamentary scrutiny.
"Following the annulment of the listings
by the General Court the Council decided not to appeal the judgments
but opted instead to relist both. The relistings were not considered
within the EU process until November 2014 due to other pressures
on the Council, most obviously the Ukraine crisis, which had worsened
in the preceding months.
"Political considerations regarding the
E3+3 negotiations on the Iranian nuclear programme also informed
thinking about timing of relisting. We had argued for delaying
the relisting to avoid getting in the way of the E3+3 talks. After
those talks concluded in November, the issue was revisited by
the EU. The initial Explanatory Memorandum relating to the relisting
of NITC and Mr Golparvar was submitted for Parliamentary Scrutiny
on 15 December 2014 once we had the draft EU texts required for
Parliamentary Scrutiny. The document was under scrutiny for ten
weeks prior to adoption. During this time we came under increasingly
significant pressure from other Member States to agree the listings
for the following reasons.
"The increasing time gap between annulment
and relisting risked opening the possibility of other parties
portraying the imposition of restrictive measures against NITC
and Mr Golparvar as new listings, rather than relistings. Any
claim that new listings were being imposed could have negatively
impacted on the Iran nuclear negotiations. Furthermore, it was
desirable to relist NITC and Mr Golparvar before negotiations
reached a more sensitive stage.
"This explains why I felt I had to agree
these relistings without completing the scrutiny process. However,
be in no doubt that the UK only agreed to relisting of this individual
and entity following careful consideration of the relevant judgments
of the General Court and a thorough assessment of the evidence
presented by the proposing Member State. We can only disclose
that it was not the UK that proposed these two listings following
a court hearing on 06 February 2015."
Our Analysis
Engagement with Parliament
14.16 The engagement with Parliament has been characterised
by mistakes, omissions and unsatisfactory responses.
14.17 The Minister's original Explanatory Memorandum
was inaccurate as to the date of the judgment in respect of Gholan
Golparvar. This was a significant mistake as it helped obscure
the fact that the failure to relist either Golpavar or NTIC had
led to a gap in the restrictive measures and therefore the risk
of asset flight. The Minister failed to mention this important
risk at all in his Explanatory Memorandum, although in a letter
to Lord Boswell of 19 January 2015, copied to our Chairman, he
erroneously suggested that the delay in relisting NITC had been
raised in his Explanatory Memorandum, when in fact he had only
provided this explanation when asked to do so by this Committee.
He has since declined to indicate whether this risk has materialised.
14.18 In his letter of 4 February the Minister said
'The Kadi II judgment created the requirement for a listing to
be supported by open-source evidence in order to provide for the
individual's right of defence" and The European Court of
Justice's (ECJ) judgment in Kadi II made clear that the
relevant EU institutions must substantiate at least one of the
reasons for listing with open source information. There is no
requirement for all supporting evidence to be open-sourced. Both
these statements are incorrect. Whilst it is true that this judgment[42]
requires a listing to be supported by evidence if challenged (which
need justify only one of the reasons given for the listing), it
is not the case that the Court has required this evidence to be
open source information. That is the choice of the Council.
14.19 The Minister declines to provide Parliament
with the open source information used to justify the relistings,
on the basis that it would be contrary to the Council Rules of
Procedure preventing disclosure of the "deliberations of
the Council". In particular it might disclose which Member
State has requested the restrictive measures. However our request
did not seek information as to which Member State proposed restricted
measures, nor the deliberations of the Council in respect such
information. As it happens, we understand from the Minister's
correspondence with Lord Boswell, which he copied to our Chairman,
that during proceedings brought by NTIC against the Government
on 6 February, it was disclosed that the UK was not the proposing
Member State. In any event, it lacks credibility that information
available to the public should become clothed in confidentiality
simply because it is included in a document considered by the
Council. We strongly doubt that the Council or the Government
will be able to enforce the confidentiality of open source material
or sustain it if challenged.
14.20 The correspondence of the Minister perpetuates
the uncertainty as to the status of the open source information
provided to Golparvar and NTIC. In his letter of 14 January he
indicated that the EU Council can share with the individual or
entity concerned information which has informed the decision-making
process but that "this information is not for public consumption.
This is why the underlying evidence for these relistings cannot
be shared with either the ESC or the House of Lords Select Committee".
However in a letter to Lord Boswell of 4 March 2015, copied to
our Chairman, he has indicated that "Where there is additional
open source evidence, which does not form an integral part of
the listing proposal then it may be disclosed by the listed person
without any caveat" and that "Some additional information
on the Council file on NITC was shared without that caveat so
has effectively now been made publicly available".
The scrutiny override
14.21 The background is that Council acted throughout
2014 with a notable lack of urgency, allowing the risk of asset
flight. The reasons given for not pursing these relistings in
2014 were given by the Minister in his letter of 14 January 2015
as (a) that the Council prioritised other business, (b) that the
summer break intervened and (c) that decision was taken not to
pursue relisting until the end of the E3+3 negotiations with Iran.
14.22 In his letter of 12 March the Minister asserts
that the document was held under scrutiny for ten weeks from 15
December to its adoption on 12 February. This is another incorrect
statement. This period amounts to eight weeks and three days and
included the Christmas break. The reason why this matter could
not be cleared sooner was the poor quality of the Explanatory
Memorandum he originally provided and the lack of credibility
in his subsequent explanations. Having written to the Committee
on 4 February he left it to the Committee to discover for itself
that the Decision (and Regulations) had been adopted on 12 February.
Neither the Explanatory Memorandum nor the letters from the Minister
of 14 January or 4 February indicate any urgency. This is not
surprising given the failure of the Council to act with any urgency
throughout 2014.
14.23 The reason given in the letter of 12 March
for the override, being pressure from other Member States, lacks
credibility given the previous lengthy period of inaction - in
Golpavar's case over a year since the judgment annulling his original
listing. Furthermore these relistings had already been delayed
so as not to get in the way of E3+3 talks. During 2014 it was
clearly regarded as beneficial to negotiations to delay these
relistings. However by February 2015 the Minister indicates that
the opposite was the case. It is therefore not clear to us why
waiting a short while longer to complete Parliamentary scrutiny
would have significant adverse impact on negotiations.
14.24 The Minister's explanation that the matter
had become urgent enough to override Parliamentary scrutiny because
further delay may have changed perception of this matter from
a being a "relisting" to a "new listing" is
not, in our opinion, significant. These are simply labels making
an unhelpful distinction. As the original listings had ended,
the reality was that listing them again was both "relisting"
them and imposing "new listings."
Previous Committee Reports
Thirtieth Report HC 219-xxix (2014-15), chapter 4
(21 January 2015), Twenty-eighth Report HC 219-xxvii (2014-15),
chapter 6 (7 January 2015).
38 Cases T-58/12, judgment of the 12 December 2013
and T-565/12, judgment of 3 July 2014. Back
39
Decision 2015/236. Back
40
Regulation 2015/229. Back
41
Regulation 2015/230 Back
42
Kadi II, Joined cases C-584/10 P, C-593/10 P and C-595/10 P. Back
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