30Restrictive measures against Iran
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Committee’s assessment |
Legally and politically important |
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Cleared from scrutiny; drawn to the attention of the Foreign Affairs, Treasury and International Trade Committees |
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Document details |
(a) Council Decision 2016/09 concerning restrictive measures against Iran; (b) Council implementing Regulation 2016/603 concerning restrictive measures against Iran; (c) Council Decision 2017/83 amending Decision 2010/413/CFSP concerning restrictive measures against Iran; (d) Council implementing Regulation 2017/77 implementing Regulation 267/2012 concerning restrictive measures against Iran |
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Legal base |
(a) Article 29 TEU and Council Decision 2010/413/CFSP, unanimity; (b) Article 215 TFEU and Article 46(2) of Council Regulation 267/2012, QMV; (c) Article 29 TEU and Council Decision 2010/413/CFSP, unanimity (d) Article 46(2) of Council Regulation 267/2012, QMV |
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Department |
Foreign and Commonwealth Office |
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Document Numbers |
(a) (37715),—; (b) (37716),—; (c) (38477),—; (d) (38476 ),— |
Summary and Committee’s conclusions
30.1Since 2006 the EU has been engaged in a “dual track strategy” in relation to Iran’s nuclear capability—both engagement and restrictive measures (sanctions). At one time Bank Saderat was one of the entities subject to sanctions. This Bank challenged its listing and on 5 February 2013 secured a judgment from the General Court annulling its listing. That judgment did not take effect before the Council appealed to the Court of Justice (CJEU), which had the effect of suspending the judgment until the appeal was disposed of.
30.2On 18 April 2016, and less than a week before the CJEU was expected to deliver its judgment the Council “relisted” Bank Saderat by separate and new legal instruments—documents (a) and (b).360 When it considered this legislation on 11 May 2016, the previous Committee concluded that “it was barely discernible whether the extra words [in the stated reasons for the restrictive measures] provide any strengthening of the reasons for continuing the restrictive measures which were found unacceptable by the General Court as far back as February 2013” and drew attention to the fact that that the CJEU, when it dismissed the Council’s appeal, noted its failure to support the original reasons with evidence. It therefore drew attention to the possibility that the relisting was an artificial device to prolong the restrictive measures with only a weak legal foundation, and sought clarification from the then Minister (Mr David Lidington) as to (a) how the re-listing was more robust than the flawed original listing and (b) the effect on the credibility of the EU’s sanctions regime. It also invited the Minister to supplement the reasons he had given to justify the override of scrutiny.
30.3The response from the then Minister of 21 June gave no explanation as to why the relisting took over three years from the General Court judgments, but did indicate that the process had to be speeded up when, on a date not specified, the date of the forthcoming CJEU judgment became known. His response to the other clarifications sought by the previous Committee was that the relisting was time-limited and under review.
30.4In a letter of 27 October 2016 (which has only recently come to the attention of the Committee) the Minister (Sir Alan Duncan) declined to provide any further details of timing of the relisting which gave rise to the override of scrutiny. The Ministers also declined any further clarifications on the strength of the reasons supporting it on the grounds that the Bank Saderat had challenged the relisting, although he also indicated that the Council had decided to not to renew the restrictive measures.
30.5The withdrawal of the relisting was given effect by further legislation, which also delisted three other Iranian entities—documents (c) and (d). The adoption of this legislation also resulted in an override of scrutiny which the Minister justified by indicating that the proposal was not a document that was put into the public domain.
30.6When it considered these documents on 8 February the previous Committee continued to seek the Minister’s assessment of the credibility of the EU sanctions regime in the light of the manner in which the relisting of Bank Saderat had pre-empted the annulment. There has been no response.
30.7On 2 February 2017 the House of Lords EU Select Committee published it Report The legality of EU sanctions361 reviewing the EU sanctions regime in the light of the high number of EU sanctions cases resulting in annulment by the General Court.
30.8In April 2017 the Foreign and Commonwealth Office, HM Treasury and the Department for International Trade issued a consultation document, the closing date for responses being 23 June 2017. The Government has announced legislation on international sanctions which will complement the legislation repealing the European Communities Act 1972. A Government analysis of the consultation responses was published on 2 August 2017.
30.9Given the history of restrictive measures against Bank Saderat and the Government’s coyness in justifying them, it comes as no surprise to this Committee that the Council ultimately decided to cease restrictive measures against this entity.
30.10As the de-listing legislation has been adopted, we clear all these documents from scrutiny. In doing so we draw this Report to the attention of the Foreign Affairs Committee, the Treasury Committee and the International Trade Committee as a background example of the way the EU sanctions regime was operated.
Full details of the documents
(a) Council Decision 2016/09 concerning restrictive measures against Iran: (37715),—; (b) Council implementing Regulation 2016/603 concerning restrictive measures against Iran: (37716),—; (c) Council Decision 2017/83 amending Decision 2010/413/CFSP concerning restrictive measures against Iran: (38477),—; (d) Council implementing Regulation 2017/77 implementing Regulation 267/2012 concerning restrictive measures against Iran: (38476 ),—.
The letter of 21 June 2016
30.11The then Minister (Mr David Lidington) provided background information in response to the previous Committee’s first consideration of documents (a) and (b) as follows:
“The report requested substantive reasons for the override of scrutiny on this occasion. The Council keeps listings under continuous review to ensure that they continue to be appropriate and legally robust. Bank Saderat is a “phase two listing” under the Joint Comprehensive Plan of Action, and as such was identified as a listing that would remain in place until “Transition Day” (expected to be 18 October 2023, or at an earlier moment on the basis of a report from the Director-General of the International Atomic Energy Agency (IAEA) to the IAEA Board of Governors and in parallel to the UN Security Council stating that the IAEA has concluded that all nuclear material in Iran remains in peaceful activities). Phase two listings are an important aspect of ensuring the integrity of the nuclear deal with Iran.
“In light of this, and the impending judgment, the Council reviewed the listing and subsequently decided to amend the Statement of Reasons for the listing. While the process of reviewing the Bank’s listing had commenced earlier, once the date of the judgment was known, it was important to ensure the amended Statement of Reasons was adopted as quickly as possible.
“The report requested further clarification on a number of other issues including the strength of the amended statement of reasons. The Council Decision was expressly adopted on a time-limited basis, and the Council is currently reviewing the listing in light of the European Court of Justice judgment. In these circumstances it would not be appropriate for me to comment whilst the Council’s deliberations are ongoing. However, I will write again addressing these points following the conclusion of the Council’s review.”
The letter of 27 October 2016
30.12The Minister responded to the follow up enquiries of the previous Committee:
“As you are aware, the Council Decision and lmplementing Regulation supplemented the statement of reasons in respect of Bank Saderat under the restrictive measures, taking into account the original General Court judgment, and set the date to which the supplemented statement of reasons should apply as 22 October 2016. The EU Council has subsequently decided not to renew Bank Saderat’s listing.
“ln your letter of 13 July 2016, you requested further explanation on the need for the override of Parliamentary scrutiny and the timing of the legal acts. On the timing issue, I do not have anything further to add to the letter of 21 June 2016. As my officials noted at an evidence session on 11 October 2016 with the House of Lords EU Justice Sub-Committee, there is jurisprudence from the European General Court to the effect that it is possible for a person or entity to be re-listed on the basis of new evídence or under different criteria. This was recently confirmed in National lranian Tanker Company v Council of the EU (14 September 2016,T-207115).
“Your report requested further clarification on a number of other issues including the strength of the amended statement of reasons. As Bank Saderat has challenged the amended statement of reasons and there is an ongoing legal challenge, on which the Council has filed its defence, it would not be appropriate for me to comment further at this time.
“Sanctions remain a key part of ensuring lran abides by its obligations under the Joint Comprehensive Plan of Action and we will continue to work with international partners to protect the integrity of the nuclear deal with lran.”
Previous Committee Reports
In respect of documents (a) and (b): Thirty-third Report HC 342–xxxii (2016–17), chapter 9, (11 May 2016). In respect of (c) and (d): Thirty-second Report HC 71–xxx (2016–17), chapter 10, (22 February 2017).
360 A listing normally takes the form of a CFSP Decision (agreed by unanimity and a Council Implementing Regulation (agreed by qualified majority vote).
1 December 2017