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13/05/2011 11:52:37.188C05482009GCENL_Cnc_Mess_Fr.xmlTRA-DT-FR-CONCL-C-0548-2009-201103925-01_00.xmlCNCPVLitige0DEFEDITION PROVISOIRE DU 17/03/20110Texte pour publication0-0Document2C:\TEMP\canevas\Litige.xml7/7/20111CNC§233;pos=113478:lng=ENBDU@TRA-DOC-EN-CONCL-C-0548-2009-201103925-06_00Doc2XML SUIVI2 TRAD ProdC:\Program Files\Doc2XML\XML\Serveur_SUIVI2_TRAD.xmlO:\Flux\Suivi_II\conversion\doc2xml_trad\In\UNCLASSIFIEDNormalIREC00()Doc2XML TRAD 2003C:\Program Files\Doc2XML\xml\Serveur_TRAD.xmlO:\Flux\Conversion\doc2xml\In\OPINION OF ADVOCATE GENERAL

MENGOZZI

delivered on 28 June 2011 (2)

Case C‑548/09P

Bank Melli Iran

v

Council of the European Union

(Appeal – Restrictive measures against the Islamic Republic of Iran to prevent nuclear proliferation – List of persons and entities to which the freezing of funds imposed by Community legislation applies – Economic and financial sanctions regime adopted to combat a policy conducted by a third State – Inclusion of the appellant’s name – Infringement of essential procedural requirements – No individual notification – Consequences – Lack of legal basis – Infringement of the right to property – Breach of the rights of the defence and of the principles of effective judicial protection and proportionality)

Table of contents

I–Background to the case and judgment under appeal

II - Procedure before the Court and forms of order sought by the parties

II–Legal analysis

A– First principal ground of appeal alleging that the General Court erred in law with regard to the assessment of the consequences of non-compliance with the obligation of notification

1. The judgment under appeal

2. Arguments of the parties

3. Assessment

(a) Existence of an obligation to notify the contested decision individually

(b) Consequences of infringing the obligation to make notification

B– Second principal ground of appeal alleging an error of law in the interpretation of the legal bases of Regulation No423/2007

1. The judgment under appeal

2. Arguments of the parties

3. Assessment

C– Third principal ground of appeal alleging an error of law in the assessment of the obligation to state reasons, the rights of the defence and the right to effective judicial protection

1. The judgment under appeal

2. Arguments of the parties

3. Assessment

D– First alternative ground of appeal alleging misuse of the Council’s discretionary power

1. Judgment under appeal

2. Arguments of the parties

3. Assessment

E– Second alternative ground of appeal alleging that the General Court made an error of assessment of law with regard to the appellant’s right to property

1. Judgment under appeal

2. Arguments of the parties

3. Assessment

(a) Preliminary observation

(b) Analysis of the ground of appeal

F– Third alternative ground of appeal alleging that the Council made a manifest error of assessment by including the appellant in the list of entities whose assets were to be frozen

1. Arguments of the parties

2. Assessment

III–Costs

IV–Conclusion

1.By the present appeal, Bank Melli Iran (‘Bank Melli’ or ‘the appellant’) seeks to have set aside the judgment of 14 October 2009 in Bank Melli Iran v Council (3) (‘the judgment under appeal’), by which the Court of First Instance of the European Communities (now ‘the General Court’) dismissed the appellant’s action for annulment of paragraph 4 of Table B of the Annex to Council Decision2008/475/EC of 23 June 2008 implementing Article 7(2) of Regulation (EC) No423/2007 concerning restrictive measures against Iran (4) (‘the contested decision’), by which the Council of the European Union included the appellant’s name in the list of entities whose assets are to be frozen.

2.This is the first appeal against fund-freezing measures adopted in connection with a sanctions regime imposed against a third State. It also raises a number of important questions, in particular with regard to the extent of the rights of defence available to the persons and entities affected by the measures in such a context.

I– Background to the case and judgment under appeal

3.It is apparent from paragraph 1 et seq. of the judgment under appeal that Bank Melli is an Iranian commercial company owned by the Iranian State and that the origin of the case before the General Court is to be found in the regime of restrictive measures introduced in order to apply pressure on the Islamic Republic of Iran to put an end to proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems (‘nuclear proliferation’). That regime has its origin in Resolution 1737(2006), (5) of the United Nations Security Council (‘the Security Council’), the annex to which listed persons and entities which, according to the Security Council, engaged in nuclear proliferation in Iran and whose funds and economic resources (‘funds’) were to be frozen. The list has been regularly updated by the Security Council in various resolutions. The appellant itself has not, however, been the subject of any fund-freezing measures adopted by the Security Council.

4.Resolution 1737(2006) was given effect, so far as the European Union is concerned, by Council Common Position 2007/140/CFSP of 27February 2007 concerning restrictive measures against Iran. (6) Article 5(1)(a) of that common position provided that all funds owned, held or controlled, directly or indirectly, by persons and entities designated in the resolution were to be frozen. Article5(1)(b) of that common position extended that measure to persons and entities recognised by the Council as being engaged in, directly associated with, or providing support for, nuclear proliferation. Article 7(2) of that common position also provided that the list of persons or entities to whom and to which the fund‑freezing measures apply, by virtue of Article 5(1)(b) of that common position, was to be established and amended by the Council, acting by unanimity.

5.In so far as the powers of the European Community too were concerned, Common Position 2007/140 was followed by the adoption, on the basis of Articles60EC and 301EC, of Council Regulation No423/2007 of 19 April 2007. (7) In terms very similar to those of the common position, Article 7(1) of that regulation provides that funds belonging to the persons, entities and bodies designated in Resolution 1737(2006), and also all the funds which those persons, entities or bodies own, hold or control, are to be frozen. Article 7(2) of Regulation No423/2007 extends that possibility of the freezing of funds to the persons, entities and bodies designated by the Council and recognised, in accordance with Article 5(1)(b) of Common Position 2007/140, as being engaged in, directly associated with, or providing support for, nuclear proliferation. The persons, entities and bodies designated by the Council under Article 7(2) ofRegulation No423/2007 are listed in Annex V to that regulation.

6.Article 15(2) of Regulation No423/2007 provides, moreover, that ‘[t]he Council, acting by qualified majority, shall establish, review and amend [Annex V] in full accordance with the determinations made by the Council [under Article5(1)(b) of Common Position 2007/140]’. According to the same provision, moreover, the Council must review that list at regular intervals, and at least every 12 months.

7.Article 15(3) of Regulation No423/2007 provides that ‘[t]he Council shall state individual and specific reasons for decisions taken pursuant to paragraph 2 and make them known to the persons, entities and bodies concerned’.

8.Some time after the adoption of Regulation No423/2007, the Security Council adopted Resolution 1803(2008), (8) of 3 March 2008, whereby it called upon ‘all States to exercise vigilance over the activities of financial institutions in their territories with all banks domiciled in Iran, in particular with [Bank] Melli and Bank Saderat, and their branches and subsidiaries abroad, in order to avoid such activities contributing to nuclear proliferation’. (9)

9.By adopting, on 23 June 2008, Common Position 2008/479/CFSP, (10) the Council amended Common Position 2007/140. Pursuant to the annex to the new common position, the appellant was included among the entities whose funds were frozen in accordance with Article 5(1)(b) of Common Position 2007/140. The freezing of its funds was maintained by Common Position 2008/652/CFSP (11) which, in turn, amended Common Position 2007/140.

10.On 23 June 2008, in other words on the same date as the adoption of Common Position 2008/479, the Council adopted the contested decision. According to paragraph 4 of Table B of the annex to that decision, the appellant was included in the list in Annex V to Regulation 423/2007. Its funds were frozen as a result of that inclusion.

11.Thus, paragraph 4 of Table B of the annex to the contested decision mentions the appellant’s name, its postal address in Tehran and the date of its inclusion (26 June 2008). Among the reasons prompting the Council to include the appellant in the list, paragraph 4 states that Bank Melli was: ‘[p]roviding or attempting to provide financial support for companies which are involved in or procure goods for Iran’s nuclear and missile programmes (AIO, SHIG, SBIG, AEOI, Novin Energy Company, Mesbah Energy Company, Kalaye Electric Company and DIO). Bank Melli serves as a facilitator for Iran’s sensitive activities. It has facilitated numerous purchases of sensitive materials for Iran’s nuclear and missile programmes. It has provided a range of financial services on behalf of entities linked to Iran’s nuclear and missile industries, including opening letters of credit and maintaining accounts. Many of the above companies have been designated by [United Nations Security Council] Resolutions 1737 and 1747’.

12.By application lodged at the Registry of the General Court on 18September 2008, Bank Melli brought an action for annulment, claiming that the Court should, principally, annul paragraph 4 of Table B in the Annex to the contested decision in so far as it concerned the bank, its subsidiaries and branches or, in the alternative, declare that Articles7(2) and 15(2) of Regulation No423/2007 are inapplicable to this case, and, in any event, order the Council to pay the costs. As is clear from paragraph 22 of the judgment under appeal, Bank Melli nevertheless withdrew its second head of claim at the hearing, stating that the plea of illegality raised against Articles 7(2) and 15(2) of Regulation No423/2007 must be considered to be a claim seeking annulment of the contested decision for want of a legal basis. It also withdrew its first head of claim seeking annulment of the contested decision in so far as the latter concerned its subsidiaries. (12)

13.In support of its amended heads of claim, the appellant relied on a number of heads of challenge which the General Court grouped in five pleas in law. Firstly, the appellant relied on a plea in law alleging infringement of essential procedural requirements of the EC Treaty, of the rules of law relating to its application and of Article 7(2) of Common Position 2007/140, misuse of power and want of a legal basis for the contested decision; the second plea in law alleged breach of the principle of equal treatment; the third plea in law alleged breach of the principle of proportionality and of the right to property; fourthly, the appellant relied on a plea in law alleging breach of the rights of the defence, of the right to effective judicial protection and of the obligation to state reasons laid down in Article 15(3) of Regulation No423/2007; and finally, the fifth plea in law alleged that the Community lacked competence.

14.In the judgment under appeal, the General Court rejected all the pleas in law and ordered the appellant to pay the costs incurred by the Council.

II– Procedure before the Court and forms of order sought by the parties

15.On 23 December 2009, Bank Melli lodged an appeal against the judgment under appeal.

16.In its appeal, the appellant claims that the Court should:

–

set aside the judgment under appeal;

–

grant the forms of order sought by the appellant in the proceedings at first instance;

–

order the Council to pay the costs of both sets of proceedings.

17.In its reply, the Council contends that the Court should:

–

dismiss the appeal;

–

order the appellant to bear the costs.

18.In its response, the French Republic, intervener at first instance in support of the Council, contends that the Court should:

–

dismiss the appellant’s appeal;

–

effect a replacement of grounds in respect of paragraphs 86 to 88 of the judgment under appeal in which the General Court considered that the Council was required to notify individually the persons and entities concerned of the fund-freezing measures adopted on the basis of Regulation No423/2007;

–

order the appellant to bear the costs.

19.In its response, the United Kingdom, intervener at first instance in support of the Council, contends that the Court should dismiss the appeal.

20.The Commission, intervener at first instance in support of the Council, contends, in its response, that the Court should:

–

find that none of the submissions made by the appellant gives cause to set aside the judgment under appeal and, consequently, dismiss the appeal;

–

order the appellant to bear the costs.

21.With the exception of the United Kingdom, the parties presented oral argument at the hearing before the Court of 29 March 2011.

III– Legal analysis

22.The appellant raises three principal grounds of appeal and three alternative grounds.

23.The first principal ground of appeal alleges that the General Court erred in law by not finding the obligation of individual notification in Article 15(3) of Regulation No423/2007 to be an essential procedural requirement, non‑compliance with which entails annulment of the measure. The second alleges an error of law in the interpretation of the legal bases of Regulation No423/2007. The third alleges an error of law in the interpretation of the concept of the rights of the defence and of the right to effective judicial protection.

24.In the alternative, the first ground of appeal alleges that the General Court erred in law in interpreting the Council’s discretionary power under Article 7(2) of Regulation No423/2007, which resulted in a contradiction in reasoning. The second alleges that the General Court made an error of assessment of law with regard to the appellant’s right to property. Finally, the third alleges that the Council made a manifest error of assessment by including and maintaining the appellant in the list in Annex V to Regulation No423/2007.

A– First principal ground of appeal alleging that the General Court erred in law with regard to the assessment of the consequences of non-compliance with the obligation of notification

1. The judgment under appeal

25.In paragraph 86 of the judgment under appeal, the General Court found that the contested decision produced its effects erga omnes, being directed to a body of addressees determined in a general, abstract manner, which were required to freeze the funds of the persons and entities listed. Even so, that decision was not of an exclusively general nature in that those persons and entities were designated by name. They were, therefore, directly and individually concerned by the contested decision. Furthermore, the General Court considered that the freezing of funds had considerable consequences for the entities concerned, for it might restrict the exercise of their fundamental rights. In the circumstances, the General Court considered it necessary to ensure that those rights, both substantive and procedural, were respected and, to that end, it considered that the Council was bound, in so far as might be possible, to apprise those entities of the fund-freezing measures adopted against them. That being the case, the Council ought to have notified the appellant of the contested decision individually. In the following paragraph, the General Court considered that the Council could not maintain that individual notification was impossible, in view of the fact that the contested decision mentioned the appellant’s postal address. The rule that ‘ignorance of the law is no excuse’ could not be applied either for, in the case in question, the contested decision had the nature of an individual measure. Moreover, the Council’s argument that the reason why the restrictive measures adopted in the campaign against terrorism had to be notified individually lay in the possibly defamatory nature of the publication of the reasons in the Official Journal of the European Union (which would not be the case in respect of the publication of the reasons for a decision adopted under Regulation No423/2007) was irrelevant. On the contrary, as the effects of those two types of restrictive measure were comparable, since they affect the persons and entities concerned individually and to a considerable extent, they had to be notified to them individually in both cases. The General Court concluded that the Council had not fulfilled its obligation of individual notification stemming from Article 15(3) of Regulation No423/2007. (13)

26.However, in paragraphs 89 and 90 of the judgment under appeal, the General Court held that, on 24 June 2008, the French banking commission had informed the French branch of Bank Melli of the existence of the contested decision and of its publication in the Official Journal of the European Union. It inferred from this that the appellant had been informed by an official source in good time and was thus able to consult the statement of reasons for that decision, which it obviously did, for the contested decision was annexed to the application. The General Court considered that there were exceptional circumstances leading it to conclude that the Council’s failure to notify the appellant individually of the contested decision was not such as to justify its annulment.

2. Arguments of the parties

27.The appellant considers that the General Court erred in law by not ruling that the Council’s infringement of the obligation to make notification must result in the annulment of the contested decision. The obligation to make notification is a constitutional principle enshrined in primary law. Notification was all the more important in this case because the appellant had not been given a hearing before the adoption of the contested decision. It was, moreover, an essential procedural requirement, the non-fulfilment of which had to result in the non‑existence or annulment of the act, as stated by the Hoechst v Commission judgment. (14) Being an absolute ground for invalidity, the breach of the obligation to make notification could not be regularised by the intervention of another entity or institution. Furthermore, no possibility of delegating the obligation to make notification was provided for by Regulation No423/2007. In these circumstances, the General Court ought to have annulled the contested decision for want of notification.

28.The Council has not stated its position on whether an obligation of individual notification actually exists in this case. However, it notes that the General Court considered the decision to be generally applicable in that it was directed at various financial institutions and economic operators, although it recognised that the decision was not exclusively general in nature. Accordingly, the General Court never stated that the decision had an addressee for the purpose of Article 254 EC. The Hoechst v Commission case-law was not applicable in so far as, in this case, the Court was dealing with a decision specifying addressees, which, moreover, had not been published in the Official Journal of the European Union. The General Court therefore rightly considered that, as the French banking commission’s notification enabled the appellant to be informed immediately of the existence of the contested decision, the lack of individual notification by the Council itself was not such as to lead to annulment of the contested decision.

29.The French Republic requests the Court of Justice, principally, to effect a replacement of grounds in respect of paragraphs 86 to 88 of the judgment under appeal. In fact, although the French Republic does not contest the operative part of the General Court’s judgment, it opposes the General Court’s finding that the Council was required to notify the appellant individually of the contested decision. The French Government’s argument is based, in essence, on two main elements. Firstly, Article 15(3) of Regulation No423/2007 merely requires the Council to inform the entities concerned of the decisions adopted without imposing an obligation of individual notification. Secondly, account must be taken of the difference in nature between those sanctions regimes that are adopted in the campaign against terrorism and freeze the assets of persons and entities acting autonomously and the sanctions regime in this case, which was adopted against a third country and freezes the assets of persons and entities only because of their participation in a State programme. The general regime established by Regulation No423/2007 is comparable to an embargo imposed on a third country; however, it has never been required that such a country should be individually notified of an embargo. In the alternative, if the Court decides to reject the request for the replacement of grounds, the French Republic considers that the lack of individual notification by the Council did not deprive the appellant of its right to be informed in good time of the contested decision adopted against it as the French banking commission had informed it of its existence. Finally, the Court’s case-law indicates that decisions to freeze funds are regulatory in nature and therefore enter into force solely as a result of their publication in the Official Journal of the European Union, within the meaning of Article 254 EC. The lack of notification of such a decision does not therefore constitute an infringement of an essential procedural requirement. The first ground of appeal must therefore be rejected as unfounded.

30.The Commission develops a line of argument very similar to that of the French Republic, since it too maintains that neither Article 15(3) of Regulation No423/2007 nor primary law imposes an obligation to notify the contested decision individually. The contested decision is an act that amends Regulation No423/2007. According to Article 254(1) EC, that regulation or any decisions amending it have only to be published, but no individual notification of regulations which adversely affect individual persons is required. Where an individual is individually and directly affected by a regulation, it may bring an action for annulment before the General Court, but this possibility of bringing an action is not accompanied by a legal obligation to notify individually regulations that adversely affect individuals. The only requirement is that the persons concerned should be informed of the individual and specific reasons that caused the decision to be adopted so that they can assert their rights, which the appellant was able to do since it brought an action for annulment against the contested decision. The Commission therefore suggests that the rejection, at first instance, of the plea alleging lack of notification as unfounded should be confirmed and requests the Court to effect a replacement of grounds, as the General Court erred in law by establishing an obligation of individual notification in the present case.

31.The United Kingdom also considers that neither Article 254 EC nor Article15(3) of Regulation No423/2007 contains any precise indications of the actual procedures under which the contested decision should have been notified and maintains that direct notification by the Council is not the only way of providing for proper notification. The French banking commission’s notification of the contested decision had the same effects as if the decision had in fact been notified by the Council. The bringing of proceedings for annulment shows that the appellant was aware of that decision. Moreover, it is difficult to argue that notification is the only way in which the appellant could have been informed of the decision taken against it in that, firstly, the international community’s concerns about the development of the Iranian nuclear programme were quite public and, secondly, the freezing of funds had immediate effects felt at once by the appellant. In these circumstances, because it would be decidedly disproportionate to annul the contested decision, even when the appellant was not adversely affected by the lack of direct notification by the Council, the General Court’s assessment should be confirmed on appeal.

3. Assessment

(a)Existence of an obligation to notify the contested decision individually

32.Before dealing with the plea raised by the appellant, the Court of Justice is called upon to adopt a position on the General Court’s assessment as to whether the Council was obliged to notify the appellant individually of the contested decision and, therefore, on the request for replacement of grounds submitted by the French Republic and the Commission.

33.For this purpose, it must be noted that Article 15(3) of Regulation No423/2007 (15) requires the Council to state individual and specific reasons for decisions taken pursuant to paragraph 2 (in other words, those that establish, review and amend the list of persons, entities and bodies whose assets are to be frozen under Article 7(2)) and to make them known to those persons, entities and bodies. Two lessons may be drawn from the wording alone of Article 15(3). Firstly, it states that the acts adopted pursuant to Article 7(2) of Regulation No423/2007 are decisions. Secondly, it is not possible, on the basis of Article 15(3) alone, to plead the existence of a clear, explicit obligation to notify the entities whose assets are to be frozen of those decisions.

34.In these circumstances, recourse must be had to the relevant provisions of primary law and to the principles contained therein. According to the first paragraph of Article 254 EC, ‘Regulations, directives and decisions adopted in accordance with the procedure referred to in Article 251[EC] shall be … published in the Official Journal of the European Union’. Paragraph 2 provides that ‘[r]egulations of the Council and of the Commission … shall be published in the Official Journal of the European Union’. Paragraph 3, in turn, states that ‘decisions shall be notified to those to whom they are addressed …’. As the Treaty lays down, the criteria to be used to determine the publicity requirements (publication or notification) are indeed the nature of the act and the existence of any addressees.

35.What is the situation of the contested decision?

36.The contested decision is a decision taken pursuant to Article7(2) of Regulation No423/2007 amending an annex thereto. Since it was not adopted under Article 251 EC, the publicity rules for such a decision cannot be defined in the light of Article 254(1) EC. Therefore, in order to determine whether the Council was obliged to notify the appellant of that decision, it must be ascertained whether the conditions of Article 254(3) EC were fulfilled and, in particular, whether the appellant is an addressee of the decision.

37.When the General Court based the existence of the Council obligation’s to notify the contested decision individually on, in particular, the fact that that decision directly and individually concerned the appellant, (16) it then applied the condition of direct and individual concern laid down by Article 230 EC and required on order for an action for annulment brought by an individual to be held to be admissible.

38.This apparent confusion between the condition for the admissibility of an action for annulment and determining the addressee of a decision in order to ascertain whether the decision is actually individual originates from an ambiguity in the judgment in Kadi and Al Barakaat International Foundation v Council and Commission (‘Kadi’). (17) Dealing with a plea alleging a breach of Article 249 EC and being thus called upon to rule on the classification of the act then called into question, the Court of Justice considered that ‘the fact that the persons and entities who are the subject of the restrictive measures imposed by the contested regulation are expressly named in Annex I thereto, so that they appear to be directly and individually concerned by it, within the meaning of the fourth paragraph of Article 230 EC, does not mean that that act is not of general application within the meaning of the second paragraph of Article 249 EC or that it is not to be classified as a regulation. In fact, while it is true that the contested regulation imposes restrictive measures on the persons and entities whose names appear in the exhaustive list that constitutes Annex I thereto … the fact remains that the persons to whom it is addressed are determined in a general and abstract manner. The contested regulation … lays down a prohibition, worded exceptionally broadly, of making available funds and economic resources to those persons or entities … [T]hat prohibition is addressed to whoever might actually hold the funds or economic resources in question’. (18) However, later in the judgment, when called upon to rule on the alleged infringement of the rights of the defence, the Court of Justice referred to its settled case‑law on the communication of the grounds of a decision to its addressee (19) and stated that ‘[o]bservance of that obligation to communicate the grounds is necessary… to enable the persons to whom restrictive measures are addressed to defend their rights in the best possible conditions’. (20) According to that case-law, the regulation imposing restrictive measures against persons, entities and bodies designated by name in the annex is addressed to persons determined in a general and abstract manner and yet, still according to that same case‑law, the grounds for a restrictive measure must be communicated to its addressee, by which the Court of Justice means the person concerned by that measure.

39.The apparent inconsistency in the Court of Justice’s statements regarding the status of addressees can nevertheless be overcome if one is willing to take into account the extremely hybrid nature of acts adopting restrictive measures such as those at issue in this case. In that respect, I agree with the General Court’s statement that the contested decision ‘is not of an exclusively general nature’. (21)

40.Firstly, the addressees of the obligation to freeze funds must be identified. They are actually determined in a general and abstract manner by measures of general application contained in the body of the regulation itself. In this respect, the first part of the Court of Justice’s reasoning in the Kadi judgment can, without difficulty, be applied by analogy to Regulation No423/2007. It is undoubtedly a measure of general application that is addressed in a general and abstract manner to whoever is subject to Community legislation and may actually hold the funds belonging to a person, an entity or a body mentioned in one of the annexes to the regulation.

41.At the same time, however, it may also be considered that, where such regulations are accompanied by annexes that provide a detailed list of natural and legal persons whose assets are to be frozen, those lists are to be regarded as a set of individual decisions to include each of the persons, entities or bodies entered in those lists. Accordingly, the persons, entities or bodies which, by means of the contested decision, were added to the list contained in Annex V to Regulation No423/2007 are indeed the addressees of the decision taken by the Council to include them in that list, the date of effect of which is, moreover stated in respect of each one of them in a separate column in the annex.

42.As well as being appropriate to the sensitivity of the areas in which the restrictive measures are likely to be implemented, this approach would also conform to the historic case-law of the Court of Justice, according to which ‘the essential characteristics of a decision arise from the limitation of the persons to whom it is addressed, whereas a regulation, being essentially of a legislative nature, is applicable not to a limited number of persons, defined or identifiable, but to categories of persons viewed abstractly and in their entirety’. (22) The decisions to include are undeniably limited to the persons, entities and bodies identified in the annex, whereas the obligations imposed by the regulation are addressed to specific addressees in a general and abstract manner. The individual nature of what I consider to be decisions to include is, in my view, confirmed by the fact that the Council is obliged, under Article 15(3) of Regulation No423/2007, to state the individual and specific reasons for entry in the list.

43.Recognition of the hybrid nature of the Community legislation establishing restrictive measures, whether in the context of the campaign against terrorism or in the context of an action conducted against a third country, also appears to be necessary in order to provide the persons, entities and bodies entered in the lists with a minimum of guarantees, for, in fact, a certain number of consequences for the rights of the defence might result from the legal status that the Court gives to the contested decision. (23)

44.In these circumstances, even though I do not consider the General Court’s use of the criterion relating to whether the appellant is directly and individually concerned to be relevant in determining whether the contested decision must be notified, I suggest that the Court of Justice should confirm the positive conclusion that it reached regarding the existence of an obligation of individual notification on the part of the Council.

45.If the Court of Justice were to confirm the existence of an obligation of individual notification, I would make two further observations.

46.Firstly, in view of the fact that the restrictive measures are to be implemented in areas frequently involving a high degree of sensitivity and may be directed at persons, entities or bodies whose exact location is not always known or even determined, this duty to notify ought to be imposed on the Council only when it is possible for notification to be effected. However, the fact remains that, in the present case, the appellant’s postal address was stated in the contested decision.

47.Secondly, in response to the French Republic’s argument that a parallel cannot be drawn between the restrictive measures adopted in the campaign against terrorism and those adopted as part of a sanctions regime aimed at third countries, I consider that it is only the obligation of individual notification that should be assessed differently depending on the context in which the restrictive measure was adopted. Where restrictive measures are adopted as part of a sanction regime against a third country, those measures may be aimed both at the rulers of that country and at persons or entities that have supported State action. By the imposing on the Council of a duty to make individual notification, it is first and foremost the individual rights of the persons or entities targeted by restrictive measures that it is necessary to seek to preserve. Since the intention here is to guarantee those rights for individuals, even when there is a suspicion of support for public policy, those persons or entities must be informed of the existence of the restrictive measures against them decided by the European Union. Conversely, those individual rights are not at stake in respect of the rulers of the third country who are themselves targeted by restrictive measures and the persons who participate in the decision-making and government of that country, in so far as they have access to their State’s official channels of information which enable them to be informed of the international action taken against that State. In the present case, according to the General Court’s factual finding, which it is not for me to reverse, Bank Melli’s activities being commercial in nature, (24) it must be held that, although it is wholly owned by the Iranian State, Bank Melli does not directly participate in or have decision-making power in respect of the public policy conducted by the Iranian State which it merely supported. I therefore consider that the Council ought to have notified it of the contested decision.

48.I therefore propose that the request for replacement of grounds submitted by the French Republic and the Commission should not be granted.

(b) Consequences of infringing the obligation to make notification

49.It goes without saying that, if the Court of Justice were led to take a position on what the legal consequences are of an irregularity in the notification procedure, it would, first, have confirmed that the contested decision did indeed present the characteristics of an act that must be notified by the Council. For the purposes of the following argument, I shall start from the premiss that Bank Melli is indeed the addressee of an act, individual in nature, that was not, however, individually notified by the institution that adopted the measure.

50.There can be no doubt that making Community acts known or public (and by making known or public, I mean both publication in the Official Journal of the European Union and individual notification) is a fundamental principle, long established in the case-law of the Court of Justice, according to which the said principle ‘requires that a measure adopted by the public authorities shall not be applicable to those concerned before they have the opportunity to make themselves acquainted with it’. (25) Therefore, the raison d’être of publication or notification, depending on the case, is to enable the person concerned to be informed of the act in question, thereby to assess the validity of the reasoning and, where appropriate, to contest its legality before the European Union judicature.

51.Notification (that being what is at issue here) is, therefore, a stage that, in principle, immediately follows the adoption of the act: the act was adopted according to a given procedure, its content is fixed but it must still be made known to its addressee.

52.According to an initial line of case-law and more specifically in Geigy, (26) the Court considered that ‘irregularities in the procedure for notification of a decision are extraneous to that measure and cannot therefore invalidate it. In certain circumstances such irregularities may prevent the period within which an application must be lodged from starting to run’. (27) However, the Court ruled in that same case that it was ‘established that the applicant … had full knowledge of the text of the decision and that it … exercised its right to institute proceedings within the prescribed period. In these circumstances the question of possible irregularities concerning notification ceases to be relevant’. (28) The Court concluded that the submission had to be rejected as inadmissible for want of relevance. (29) It adopted the same reasoning in the ICI v Commission judgment which was delivered on the same day. (30) Two lessons can be drawn from that case-law. Firstly, any penalisation of the lack of notification will be decided, not with regard to annulment of the act but to whether the time-limit for bringing the action is enforceable, which leads me to believe that the Court did not then consider notification to be an essential procedural requirement within the meaning of the Treaty. Secondly, the Court, ready to adopt a less rigid approach to the duty to notify, examined the extent to which lack of notification had adversely affected the addressee of the act and, in particular, whether the addressee could have brought an action within the prescribed time-limits. (31)

53.In a second line of case-law, the Court seems to have adopted a different approach in Hoechst. (32) In response to a complaint alleging the lack of effect of an unnotified act, it ruled that ‘lack of notification … could have no consequence other than a finding of the non-existence or annulment of the act … As regards notification of an act, like any other essential procedural requirement, either the irregularity is so grave and manifest that it entails the non-existence of the contested act, or it constitutes a breach of essential procedural requirements that may lead to its annulment’. (33) The Court considers here that notification is an essential procedural requirement and that, accordingly, the penalty for non‑compliance is annulment of the act. Then, in Spain v Council, (34) the Court, while referring to Hoechst, stated that the concern for transparency ‘is the reason why failure to notify alone can in certain circumstances justify the annulment of an act of a Community institution^’. (35) It therefore confined the Hoechst solution to ‘certain circumstances’, without, however, providing further clarification.

54.Nevertheless, the mere fact that this second line of case‑law was adopted after the Court’s considerations in Geigy v Commission and ICI v Commission (36) cannot alone, in my view, justify pursuing that approach in this case. On the contrary, this appeal should enable the Court to review its position and reactivate its older line of case-law.

55.In fact, I am not convinced that notification is an essential procedural requirement of an act. As stated by the Court’s most classic case-law on this concept, essential procedural requirements are, according to the Treaty, requirements ‘laid down by the Treaty for the adoption of the contested decisions…As they were intended to ensure that the measures concerned were formulated with all due care and prudence these procedural requirements may be regarded as essential’. (37) This is the case, in particular, with the voting procedures of the institutions, (38) the obligation to consult the European Parliament during the procedure, (39) authentication of the acts (40) and indeed the obligation to state reasons. (41) In general, therefore, essential procedural requirements are conditions which, if not fulfilled, may have affected the actual content of the act, while still pertaining to its procedural legality. However, in my view, lack of notification does not have that effect on the content of the act, but has merely the effect of depriving the addressee of the information that a decision concerning him has been adopted by a Community institution.

56.To avoid all misunderstanding, I should point out that there is no question here of casting doubt on the importance, for their addressees, of the rules regarding notification which must apply to any act of an individual nature adopted by the European Union. None the less, it is quite as important to confer on them an appropriate legal status. Moreover, although notification is not an essential procedural requirement, that does not mean that a breach of the obligation to make notification will not be penalised, only that it is not a defect which affects the very legality of the act but merely its applicability.

57.I should point out in this regard that Article 254(3) EC states that decisions that are to be notified to their addressees take effect upon such notification. However, the extremely hybrid nature of the restrictive measures having already been demonstrated, (42) the Court ruled, in Kadi, that ‘such measures must, by their very nature, take advantage of a surprise effect and … apply with immediate effect’. (43) Therefore, if the Court were to establish that the Council was obliged to notify the applicant of the contested decision, the penalty for non-fulfilment of the obligation to make notification cannot take the form of preventing the decision in question from taking effect. On the other hand, it would be contrary to the most basic principles of the Community legal order to regard as time-barred an action for annulment brought out of time by a person or an entity subject to a decision to freeze funds which, notwithstanding the lack of notification, might have begun to produce effects.

58.Consequently, in the light of the foregoing considerations, it is indeed the Court’s reasoning in the Geigy v Commission and ICI v Commission (44) line of case-law that seems to me to be the most appropriate, in that it enables the so elusive balance to be maintained between the need for restrictive measures to be effective and the right of persons affected by them to be informed in good time of their existence. By following the requirements laid down by the Court, it will also be possible to adapt the assessment of the consequences of lack of notification to the particular circumstances of the case. (45)

59.In the line of decisions following from Geigy and Imperial Chemical Industries, (46) the General Court therefore rightly took account of the information communicated by the French banking commission to the Paris branch of Bank Melli in order to determine whether, despite the lack of individual notification by the Council, the applicant was put in a position to take cognisance of the contested decision in sufficient time to be able to bring an action within the time-limits. In those particular circumstances, it also rightly considered that the fact that the Council did not individually notify the applicant of the contested decision did not result in the applicant being deprived of the possibility of being informed in good time of the reasons for the contested decision and of assessing their validity and that, accordingly, the Council’s omission did not justify annulment of the contested decision.

60.The first ground of appeal must therefore be rejected as unfounded.

B– Second principal ground of appeal alleging an error of law in the interpretation of the legal bases of Regulation No423/2007

1. The judgment under appeal

61.In paragraph 44 et seq. of the judgment under appeal, the General Court considered that, as regards the matter of the legal basis, and contrary to the applicant’s submission, the judgment in Kadi (47) could properly be invoked in that the Court defined the scope of Articles 60 EC and 301 EC (48) in that judgment. It then stated that those articles formed a bridge between the actions of the Community involving economic measuresand the objectives of the EU Treaty in the sphere of external relations. Those articles expressly envisaged the possibility that action by the Community might be necessary to fulfil one of the objectives referred to in Article 2 TEU. However, the Community and the Union – at the time – formed two integrated but separate legal orders so that, where an action was undertaken within the Community in order to give effect to one of the objectives of the Union, the lawfulness of the Community measures was assessed in relation to the conditions specific to the first pillar, including the voting rules. Common Position 2007/140, which forms part of the second pillar of the Union, was not a legal basis for the Community regulation and, therefore, the voting rule applicable to the adoption of that common position was not a legal basis for Regulation No423/2007. The existence of a common position was simply a condition laid down by Article 301 EC, which itself defines the voting rule applicable. Consequently, that regulation and the contested decision could be adopted by a qualified majority in accordance with Article 301 EC, the adoption of the regulation having been preceded by the unanimous adoption of Common Position 2007/140 and the contested decision having been preceded by the unanimous adoption of Common Position 2008/479. The General Court accordingly concluded that the conditions laid down by Article 301 EC had been complied with.

62.The General Court subsequently ruled that, contrary to the applicant’s submission, Articles 60 EC and 301 EC did not permit the inference that the powers thus conferred on the Community had to be limited to the implementing of measures decided by the Security Council and that the Council was, therefore, competent to adopt, on the basis of Articles 60 EC and 301 EC alone, Articles7(2) and 15(2) of Regulation No423/2007, pursuant to which the contested decision was adopted.

2. Arguments of the parties

63.The applicant claims that the General Court erred in law by finding that the regulation, and incidentally the contested decision, could be adopted by a qualified majority on the basis of Articles 60 EC and 301 EC alone. Firstly, the scope of those articles is limited to the implementation of measures against third States, whereas the regulation provides for restrictive measures adopted against persons and entities that are deemed to be engaged in, directly associated with or providing support for nuclear proliferation in Iran. The criterion applied is not, therefore, that of being controlled by a third State or associated with its rulers but that of being engaged in, directly associated with or providing support for activities connected with nuclear proliferation. Accordingly, Article 308 EC (49) too ought to have been mentioned as a legal basis for Regulation No423/2007. Secondly, and moreover, the applicant considers that the General Court wrongly considered that Common Position 2007/140 did not constitute a relevant legal basis for that regulation, while the Council, by adopting Regulation No423/2007 and the decisions intended to put it into effect by a qualified majority, was guilty of a misuse of powers which enabled it to adopt the contested decision with direct effect, although that type of instrument does not exist in the field of common foreign and security policy. In so doing, the General Court drew a distinction which is not made in the Treaty by stating that Common Position 2007/140 does not constitute a legal basis for the regulation, but only a condition laid down by Article 301 EC.

64.The Council, the French Republic, the United Kingdom and the Commission contend that this plea must be rejected. In line with the Court of Justice’s ruling in Kadi, (50) the General Court correctly assessed the legal basis of the regulation by regarding Articles 60 EC and 301 EC as sufficient, the restrictive measures adopted indeed being directed at the Iranian State. Moreover, the General Court’s reasoning was quite blameless as regards the exclusion of Common Position 2007/140 from the legal basis.

3. Assessment

65.As a preliminary point, it should be noted that the Council considers that the argument relating to Article 308 EC was not raised before the General Court. The Commission, for its part, maintains that, when a part of this ground of appeal is interpreted as meaning that the appellant disputes that it is an entity linked to the Iranian rulers or that it is directly or indirectly controlled by them, it would be inadmissible as that point was not contested in the proceedings before the General Court.

66.It is true that the application initiating proceedings before the General Court did not contain any mention of the need to base Regulation No423/2007 on Article 308 EC. Nor did the appellant explicitly contest, before the General Court, the fact that the regime of restrictive measures put into effect by that regulation fell within the ambit of Article 301 EC, because the measures were not, strictly speaking, directed against a third country. However, the General Court held, in paragraph 48 of the judgment under appeal, that ‘the conditions laid down by Article 301 EC have been complied with’ and there is also no doubt that the appellant raised a plea before the General Court aimed at contesting the sufficiency of the legal basis of Regulation No423/2007. In these circumstances, it seems to me that the argument based on Article 308 EC and the closely linked argument based on the scope of Articles 60 EC and 301 EC can be considered as a permissible amplification of the plea raised before the General Court. There is, then, no real question as to the plea’s admissibility.

67.Before examining the merits of this ground of appeal, I should stress that the analysis of the legal basis will inevitably lead the Court to rule on whether restrictive measures adopted against a third country, the purpose of which, under the terms of the Treaty, is to reduce economic relations with that country, (51) may also be directed at persons or entities which are not, in themselves, rulers of the country, or even an organisation of that third country, but who are suspected of maintaining or supporting a State policy which the European Union is intent on combating. That question must be assessed independently in relation to the question whether there was an obligation to notify the appellant. In fact, unlike the latter question, the point is not to ensure that individual rights are sufficiently guaranteed. On the contrary, the point is to determine the Council’s competence to adopt such measures on the basis of the provisions of the Treaty invoked. However, the scope afforded by the combination of Articles 60 EC and 301 EC must be assessed on the basis of different criteria and, in particular, in the light of the objectives pursued by the security policy conducted by the European Union which is continued in the Community. It would, therefore, be too limited an approach to adopt, in this regard, only a strictly formal concept of the term ‘third country’. In these circumstances, in line with the case-law of the Court that I shall refer to at the appropriate time, I propose to go beyond a merely formal concept of third country in order to adopt a broader approach, which may help preserve the effectiveness of the restrictive measures in view of the fact that public policies are, clearly and increasingly implemented through the action or support of persons or entities that have a personality distinct from that of the State itself but are sufficiently connected to the State and its public policies for it to be possible that they may be covered by restrictive measures actually concerning the third country itself. I therefore consider it to be perfectly conceivable that the appellant may be sufficiently connected with the Islamic Republic of Iran and its policy of nuclear proliferation to be covered by measures adopted on the basis of Articles 60 EC and 301 EC alone, whilst recognising that that connection is insufficient to relieve the Council from its obligation to notify the appellant individually.

68.Having clarified that point, I shall now examine the merits of the present ground of appeal, which requires the Court to adopt a position on two sets of questions. Firstly, it must be determined whether the General Court was correct in ruling that Common Position 2007/140 did not constitute one of the legal bases of Regulation No423/2007. Secondly, it must be examined whether the General Court’s assessment of the scope of Articles 60 EC and 301 EC is correct.

69.Under Article 301 EC, ‘[w]here it is provided, in a common position or in a joint action adopted according to the provisions of the Treaty on European Union relating to the common foreign and security policy, for an action by the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries, the Council shall take the necessary urgent measures. The Council shall act by a qualified majority on a proposal from the Commission’. It already follows from the wording of Article 301 EC alone that the existence of a measure adopted on the basis of the Treaty on the European Union is a condition precedent for Community action. In other words, Community action is possible only if a common position or a common action has previously been adopted, which must provide that a Community measure is necessary to achieve the objective pursued. In this respect, I would point out that Common Position 2007/140 provides that action by the Community is needed in order to implement certain measures. (52) Therefore, the Council was fully authorised to adopt measures in respect of the Community on the basis of Article 301 EC, which explicitly provides that the voting rule applicable in such a case (that is, after a common position providing for Community action has been adopted) is that of qualified majority voting.

70.This is, in addition, borne out by the wording of Article 60 EC, paragraph 1 of which provides that ‘[i]f, in the cases envisaged in Article 301 [EC], action by the Community is deemed necessary, the Council may, in accordance with the procedure provided for in Article 301 [EC], take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned’. Therefore, a fund-freezing measure adopted against a third State and giving effect to a common position must, in the light of the primary law applicable, be adopted by a qualified majority. Moreover, Article 15(2) of Regulation No423/2007 provides that the Council, acting by qualified majority, is to establish, review and amend Annex V in accordance with the determinations made by the Council in respect of Annex II to Common Position 2007/140. From that point of view, too, the adoption of the contested decision is perfectly proper: in fact, Common Position 2008/479 amended Annex II to Common Position 2007/140 by entering the applicant, among others, in the list of entities whose assets are to be frozen. At the same time, the Council adopted the contested decision, by qualified majority, as authorised by Regulation No423/2007. In the light of the wording of Article 15(2) of the said Regulation No423/2007, it would be quite contradictory to interpret the reference to Common Position 2007/140 contained in that article as a voting rule.

71.In these circumstances, the General Court’s reasoning regarding the voting rule applicable and the non-relevance of Common Position 2007/140 to determining the proper legal basis for Regulation No423/2007 is perfectly correct.

72.As regards the argument alleging that the measures provided for by Regulation No423/2007 cannot be based on Articles 60 EC and 301 EC alone in that they are not directed against a third country, the General Court pertinently recalled that, in Kadi, (53) the Court of Justice ruled that ‘having regard to the wording of Articles 60 EC and 301 EC, especially to the expressions “as regards the third countries concerned” and “with one or more third countries” used there, those provisions concern the adoption of measures vis-à-vis third countries, since that concept may include the rulers of such a country and also individuals and entities associated with or controlled, directly or indirectly, by them’. (54) However, the appellant was entered in the list of entities whose assets are to be frozen on the basis of Article 7(2) of Regulation No423/2007, which does not contain any explicit reference to the Islamic Republic of Iran.

73.Nevertheless, it seems to me that the ratio legis of that regulation shows very clearly that the Community’s whole attention was focused on the Islamic Republic of Iran, as is indicated by the very title of the regulation. Article 7(2) cannot be removed from its context but must, on the contrary, be read in the light of the other provisions of the regulation and of the preamble thereto. Without claiming to be exhaustive, I note that the first recital in the preamble to Regulation No423/2007 refers to the fact that the Security Council decided that ‘Iran should without further delay suspend all … activities’ related to nuclear proliferation and that the international community should ensure ‘the exclusively peaceful purpose of Iran’s nuclear programme’. The second recital refers, inter alia, to the action undertaken by the European Union which provides for ‘certain restrictive measures against Iran’ and to the need for ‘restrictions on exports and imports of goods and technology which could contribute to Iran’s enrichment-related, reprocessing, or heavy water-related activities, or to the development of nuclear weapon delivery systems’. That same recital states that it is necessary to freeze the funds ‘of persons, entities and bodies engaged in, directly associated with or providing support for such activities or development’. This indicates that the restrictive measures are intended to combat the development of what is very much a State policy. The Community legislature perceives the nuclear proliferation activity as an activity determined and conducted by the Iranian regime, so that the entities that support its implementation do not participate in an action that can in any way be separated from the rulers’ will but, on the contrary, contribute to the implementation of a State plan.

74.In this respect, the situation is clearly different from the situation before the Court in Kadi. In fact, the Court held that it was dealing with ‘measures notable for the absence of any link to the governing regime of a third country’ because those measures were aimed directly at Usama bin Laden, the Al-Qaeda network and the persons and entities associated with them. (55) It therefore rejected the argument that ‘it is enough for the restrictive measures at issue to be directed at persons or entities present in a third country or associated with one in some other way’ (56) for it to be possible for them to be based on Articles 60 EC and 301 EC alone, for that would give ‘those provisions an excessively broad meaning and would fail to take any account at all of the requirement, imposed by their very wording, that the measures decided on the basis of those provisions must be taken against third countries’. (57)

75.The stated intention of Regulation No423/2007 is to combat not nuclear proliferation in general, but the risks inherent in the Iranian nuclear development programme. The link between the activity targeted and the Iranian State seems to me to be obvious upon reading the regulation. It would then remain to be established that the appellant is, itself, actually and sufficiently linked to the Iranian State and its nuclear proliferation policy for it to be possible that it should be subject to the contested decision.

76.As to the matter of whether the appellant is linked to the Iranian State, it is sufficient to recall the uncontested finding in paragraph 1 of the judgment under appeal that the appellant is an ‘Iranian commercial bank owned by the Iranian State’ which might be giving essential support for the financing of the Iranian nuclear programme. As regards the second paragraph, the fact remains that the appellant did not submit an admissible plea before the General Court aimed at contesting the Council’s finding that it provides financial support for nuclear proliferation by the Iranian State. (58)

77.In these circumstances, it may, therefore, legitimately be decided to freeze the appellant’s funds on the basis of a regulation having as a legal basis Articles60 EC and 301 EC alone. Recourse to Article 308 EC was unnecessary in respect of the appellant’s inclusion in Annex V to Regulation No423/2007, as the restrictive measure taken against it was therefore actually directed, in accordance with the Court’s case-law in the matter, against an entity associated with the Iranian rulers or controlled by them as part of a general regime of sanctions adopted against the Islamic Republic of Iran, the objective of which was the cessation of development of the Iranian nuclear programme or, at the very least, placing it under the control of the international community.

78.Thus, the General Court’s reasoning regarding the legal basis of Regulation No423/2007 is beyond reproach. The second principal ground of appeal must therefore be rejected as unfounded.

C– Third principal ground of appeal alleging an error of law in the assessment of the obligation to state reasons, the rights of the defence and the right to effective judicial protection

1. The judgment under appeal

79.Paragraphs 79 to 85 of the judgment under appeal show that the General Court considered the statement of reasons provided in the contested decision to be sufficient in view of its title, the content of the second recital in the preamble thereto and the statement of reasons contained in paragraph 4 of Table B in the annex to that decision.

80.The General Court then recalled its case-law on the rights of the defence developed in the context of actions relating to restrictive measures adopted to combat terrorism. Although the right to be heard is, in principle, guaranteed beforehand for any person that may be concerned by an act capable of causing injury, the surprise effect which must be present in the implementation of restrictive measures may prevail over the requirement to communicate beforehand the inculpatory evidence and over the right to be heard during the procedure for adoption of the act in question. The General Court also pointed out that, in the case in question, precise information had been communicated to the appellant when the decision was published in the Official Journal of the European Union, so that it was able to ascertain the reasons why the Council considered Article 7(2)(a) and (b) of Regulation No423/2007 to be applicable against it.

81.In paragraph 97 et seq. of the judgment under appeal, the General Court held that, contrary to the appellant’s view, the Council was not required to communicate the file to Bank Melli spontaneously when the latter had not asked it to do so.

82.Finally, paragraphs 105 to 107 show that the General Court found that there had been no breach of the right to effective judicial protection. After noting the importance of that principle in the Community legal order, it considered that the effectiveness of the judicial review had not been jeopardised by the fact that the Council had not produced evidence. In fact, it was unnecessary to produce such evidence, firstly, because the appellant did not raise an admissible plea contesting the Council’s finding that the appellant is engaged in, directly associated with or providing support for Iran’s proliferation-sensitive nuclear activities or the development by that State of nuclear weapon delivery systems and, secondly, because the General Court considered that it had sufficient information to carry out its review fully.

2. Arguments of the parties

83.The appellant criticises the General Court for interpreting too strictly the concepts of the rights of the defence and the right to effective judicial protection. In fact, according to the settled case-law of the Court, (59) the rights of defence of the person concerned must be respected from the stage of the administrative procedure preceding the adoption by an institution of a sanction against him. The person concerned must be able to express his views on the accuracy of the facts and circumstances. He must be provided with all the information necessary for his defence and must be able to make his point of view known. He must also be granted right of access to the file, for this is intended to guarantee that his rights of defence can be exercised effectively. Breach of the right of access to the file cannot, moreover, be regularised at the stage of the judicial proceedings. On any view, the rights of the defence and the right to effective judicial protection have not been respected once access to the appellant’s file has not even been granted by the time of the proceedings before the General Court. As the decision was not justified by evidence to which the appellant and the General Court had access, the reasoning of the contested decision should also have been regarded as insufficient.

84.The General Court’s own case-law also indicates that the restrictions imposed by the Council on the rights of the defence must be offset by a strict and impartial judicial review. (60) Moreover, the European Court of Human Rights imposes the same requirements. (61)

85.The General Court’s judgment was also vitiated by a contradiction in reasoning since, although it recognised in paragraphs 91 and 92 of the judgment under appeal that observance of the rights of the defence is a fundamental principle of the Community legal order, it held that the Council did not have to communicate the evidence in the judicial proceedings. The General Court could not consider, as it did in paragraph 106 of the judgment under appeal, that it had sufficient information to carry out its review when no evidence had been presented to it.

86.The Council and the other parties intervening in the proceedings contend that the ground of appeal should be rejected as unfounded. They consider the General Court’s reasoning to be beyond reproach from the legal point of view, with the exception of the French Republic, which does not consider that the Court’s case-law on restrictive measures adopted as part of the campaign against terrorism is applicable in this case, as the restrictive measures in question here were adopted as part of a regime directed at a third country. Nevertheless, the French Republic draws no particular legal inferences from it in respect of the present plea and contends, in any event, that it should be rejected.

3. Assessment

87.I propose to consider the present ground of appeal to consist of two parts alleging, respectively, an error of law in the assessment of the observance of the rights of the defence and an error of law in the assessment of the right to effective judicial protection. The appellant also alleges that the judgment under appeal is vitiated by a contradiction in reasoning.

88.As to the first part, the appellant disputes, firstly, the General Court’s assessment of the statement of reasons provided by the Council in support of the contested decision. It considers both that the contested decision does not contain the reasons that led the Council to adopt the act and that it was impossible for the General Court to consider the reasoning to be sufficient inasmuch as no evidence was submitted by the Council during the proceedings to justify its adopting the contested decision.

89.As the General Court pointed out, the obligation to state reasons is a requirement laid down by primary law (62) and re-affirmed by Article 15(3) of Regulation No423/2007. (63) In order to assess whether the obligation to state the reasons for a decision adopted by an EU institution has been fulfilled, it must be ascertained whether the statement of reasons made it possible for the entity concerned to be made aware of the justification for the measure taken and for the competent court to carry out its review. It is not, generally, necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons is sufficient must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. (64) I note that these basic principles were reaffirmed by the General Court in paragraph 82 of the judgment under appeal.

90.The General Court also pointed out that the obligation to state reasons is an essential principle of EU law which may be derogated from only for compelling reasons (65) and that the Council is bound to apprise the entity concerned of the ‘actual specific’ reasons when it adopts a decision to freeze funds. (66) The obligation to state reasons for an act varies according to the area in which the institution is operating and the effect that it intends to give to that act. In this regard, the General Court transposed, by analogy, the reasoning employed by the Court of Justice when dealing with restrictive measures adopted in the context of the fight against terrorism whereby, taking into account the particular context in which such measures were adopted and put into effect, the Council fulfils its obligation to state reasons if it informs the entity concerned of the reasons which prompted it to adopt a fund-freezing decision against it when the measure is adopted or as soon as possible thereafter. (67) If one accepts the principle that restrictive measures may be adopted against entities where they are deemed to be acting for or serving the cause of a policy attributable to a third country which the European Union intends to combat, and contrary to the view of the French Republic, I see no reason why the Court’s case-law on the rights of the defence of persons and entities concerned by a restrictive measure adopted in connection with the campaign against terrorism cannot be applied in the present case.

91.By applying the criteria I have just mentioned, the General Court established, in paragraph 84 of the judgment under appeal, that the contested decision did indeed contain the individual and specific reasons that prompted the Council to exercise its power under Article 7(2)(a) and (b) against the appellant. As the General Court’s assessment was based on ascertaining whether the statement of reasons contained in the contested decision had enabled the appellant to understand the reasons why its funds had been frozen and was sufficient for that Court to be able to carry out its review of the legality of the contested decision, while taking into account the particular context in which that decision was taken, the General Court’s analysis seems to me to be wholly without any error of law.

92.Secondly, I cannot accept the appellant’s assertion that a statement of reasons that is not justified by documentary evidence, the addressee not having access to it either before or after the decision was adopted, cannot be regarded as adequate and sufficient. (68) The appellant here attempts to make the sufficiency of the statement of reasons dependent on the right to a prior hearing or, at the very least, on access to the file, whereas those two corollaries of the rights of the defence must be considered separately. Firstly, the requirement to state reasons, the purpose of which is simply to ensure that the entity concerned is sufficiently informed of the reasons that prompted the institution to freeze its funds, so that it may know why the measure has been taken against it, and, where appropriate, can contest the validity of those reasons, must be distinguished from the requirement that there be serious and credible evidence. Secondly, the validity of the statement of reasons can be examined only in the context of judicial proceedings (especially where, as in this case, access to the file was not requested by the person concerned), and it is such an examination that will require the production of evidence. However, that examination must be requested and, in this regard, the competent court cannot be required to compensate for the applicant’s failure to act. The fact is that the appellant has not raised an admissible plea disputing the reasons relied on by the Council in support of the contested decision (69) and that such a plea relating to the substantive legality of the contested decision can be examined only if it is raised by the appellant. (70) The appellant therefore criticises a failure to produce evidence that it alone could cause to be produced during the pre-litigation and litigation procedures.

93.This situation is clearly distinct from that in the PMOI case (71) cited by the appellant. Firstly, in that case, the applicant contested the legality of a Council decision to maintain it in the list of entities whose assets were to be frozen, whereas, in the present appeal, what must be examined is the legality of the initial decision to include Bank Melli in the list. Although some flexibility on the rights of the defence may be justified at the stage of the preliminary procedure when the person or entity is included in the list for the first time, as I will go on to show, such flexibility ought to be less easily admissible in the case of a decision to maintain a person or an entity in a list. (72) Secondly, the Council had refused in that case to communicate to the General Court the information which provided the basis for the decision to maintain the entity on the list, (73) thereby preventing it, when it had been asked to do so, from reviewing the lawfulness and merits of the fund-freezing measures. (74)

94.The extent of the rights of the defence that must be guaranteed by the institution that drew up the act is undeniably more limited in the stage prior to, or immediately following, its adoption where it provides for restrictive measures such as those in question in this case, at least when they are adopted for the first time against the person or entity concerned. Although the case-law on which the appellant’s argument is based relates to the rights of the defence that must be guaranteed by the institutions in the context of the preliminary administrative procedure where it may result in the adoption of a sanction, it was developed in the context of European Union competition law. However, I consider the present situation to be more comparable to that applicable where the Council intends to adopt restrictive measures against persons or entities in the context of the campaign against terrorism. In that context, the Court has developed case-law to the effect that the rights of the defence that must be guaranteed at the stage of the preliminary procedure are not absolute and has accepted that, with regard to restrictive measures, communicating the grounds before the name of a person or entity is entered in a list ‘would be liable to jeopardise the effectiveness of the freezing of funds’ (75) and that ‘such measures must, by their very nature, take advantage of a surprise effect and … apply with immediate effect’. (76) The case-law relied on by the appellant is therefore irrelevant and the Council was clearly not bound, before adopting the contested decision, to communicate the reasons for the decision or the file to the appellant spontaneously or to give it a hearing. (77) The General Court was therefore perfectly correct in its interpretation in paragraph 93 of the judgment under appeal of the extent of the rights of defence of an entity affected for the first time by a restrictive measure such as that defined by the case-law.

95.Thirdly, as to the appellant’s argument based on the failure to provide evidence, it must be pointed out straightaway that the case-law of the ECtHR relied on in support of that ground is completely irrelevant. In fact, both the Saadi v. Italy and Saadi v. United Kingdom judgments (78) concern Article 3 of the European Convention on Human Rights (‘the ECHR’). Even assuming that the ECtHR had decided in those two judgments that a fundamental right could not be weighed against an objective such as combating terrorism, it would have done so in connection with the prohibition of torture which, unlike the other rights enshrined in the ECHR, is absolute in nature and cannot be restricted. (79)

96.Otherwise, as regards the second part of this plea, the appellant’s argument that the Council’s failure to produce evidence either before or during the action had infringed its right to effective judicial protection must inevitably be rejected for two reasons.

97.Firstly, I will confine myself to stating that, as paragraph 99 of the judgment under appeal indicates, the appellant did not ask the Council to grant it access to its file before bringing the action before the General Court. (80) Secondly, the appellant did not lodge an admissible plea before the General Court aimed at disputing the veracity of the Council’s finding that, in view of the reasons stated in paragraph 4 of table B of Annex V, it is considered to be engaged in, associated with or providing support for activities linked to nuclear proliferation in Iran. (81) However, if such a plea had been correctly raised, the Council would then have actually been required to produce evidence so that the General Court could carry out a review of that evidence. As the General Court did not have to rule on the validity of the reasons alleged, the failure to produce evidence during the proceedings could not vitiate the General Court’s judgment or infringe the appellant’s right to effective judicial protection. As to the examination of the other pleas, the General Court is in control of the procedure and may, only where it deems necessary, order additional measures of inquiry. (82)

98.Finally, on the alleged existence of a contradiction in reasoning, I note that the General Court rightly affirmed, in paragraphs 91 and 92 of the judgment under appeal, as mentioned by the appellant, the existence of the fundamental principle of observance of the rights of the defence as well as the possibility of flexibility with regard to those rights, and in particular of the right to be informed of the evidence adduced against it where there are overriding considerations to do with the safety of, or the conduct of the international relations of, the Community. (83) In any event, paragraphs 96 to 102 of the judgment under appeal, which are alleged to contradict the General Court’s finding referred to above, merely contain the finding that the appellant was placed in a position to understand the reasons for its inclusion in the list without the Council being required automatically to offer it access to the material in its fileor automatically to conduct a hearing. Contrary to the appellant’s claim, the General Court never stated that the rights of the defence do not oblige the Council to communicate its evidence, even within the context of judicial proceedings. (84) I further note that, in paragraphs 100 and 101 of the judgment under appeal, the General Court also examined the reasons relied on by Bank Melli to justify its failure to request access to its file, but concluded that the arguments submitted in that regard were not admissible. I therefore find it difficult to establish any contradiction in reasoning in the passages of the judgment under appeal in question.

99.Consequently, the third principal ground of appeal must be rejected in its entirety as unfounded.

D– First alternative ground of appeal alleging misuse of the Council’s discretionary power

1. Judgment under appeal

100.In paragraphs 51 and 52 of the judgment under appeal, where the General Court examined the first plea of the action, it considered that nothing in Articles 60 EC or 301 EC permitted the inference that the powers conferred on the Community by those provisions were limited to the implementing of measures decided by the Security Council. The Council was, therefore, competent to adopt Article 7(2) of Regulation No423/2007, which authorises the freezing of the assets of entities which, though not designated by the Security Council, are, in the Council’s opinion, directly associated with or provide support for nuclear proliferation. The General Court then recognised that Recital 6 in the preamble to Regulation No423/2007 required the Council to exercise the power conferred on it by Article 7(2) of the regulation in view of the objectives of Resolution 1737(2006). However, it considered that that obligation did not imply that the Council had to implement restrictive measures only in respect of entities referred to by the Security Council pursuant to a resolution.

101.In paragraphs 64 and 65 of the judgment under appeal, in which the General Court delivered its assessment of the third plea of the action alleging infringement of the principle of proportionality and of the right to property, the General Court considered that Article 7(2) of Regulation No423/2007 conferred on the Council an autonomous power, the object of which is not to give effect to the Security Council resolutions adopted in respect of nuclear proliferation. The objective of that article and of the contested decision that gives it effect is to ensure that the ends pursued by Resolution 1737(2006) are attained by means of adopting autonomous restrictive measures. The General Court therefore concluded that the object of Article 7(2) of Regulation No423/2007 was not to give effect to the second resolution that the Council adopted in the matter, namely Resolution 1803(2008), in which it confined itself to requesting the Member States to exercise vigilance in respect of the appellant. (85) In those circumstances, the content and objectives of that resolution could not constitute criteria against which the proportionality of the contested decision had to be assessed.

2. Arguments of the parties

102.The appellant claims that the General Court erred in law by rejecting the relevance of Security Council Resolutions 1737(2006), 1747(2007) (86) and 1803(2008) to the determination of the Council’s discretionary power. The link between Regulation No423/2007 and the resolutions is indicated by the very wording of the regulation, in particular Recitals 1, 2, 5 and 6 in the preamble thereto. The appellant submits that Resolution 1803(2008) predates the contested decision and that the Council should therefore have taken into account the fact that the Security Council required vigilance alone in its regard. In finding otherwise, the General Court erred in law.

103.Moreover, according to the appellant, the General Court, on the one hand, pointed out the relevance of the Security Council resolutions (in paragraph 52 of the judgment under appeal) and, on the other hand, described the Council’s power as autonomous in respect of those same resolutions (paragraphs 64 and 65). This amounts to a contradiction which vitiates the judgment under appeal. The Council’s power is a power bound by the Security Council resolutions and the General Court should have taken this into account when determining whether the contested decision had infringed the principle of proportionality and the appellant’s right to property.

104.The other parties to the proceedings contend that the plea is unfounded. In its reply, the Council maintained in particular that the European Union is free to adopt autonomous measures in pursuit of the objectives laid down by the resolution. When the Council adopts an act following a Security Council resolution, the autonomous measures adopted by the Council must pursue the objectives laid down by the resolution. In the present case, the autonomous decision to freeze the funds of entities not designated by the Security Council is in conformity with the Security Council’s objective, namely to prevent Iran from pursuing the development of its nuclear programme.

3. Assessment

105.In order to rule on the present ground of appeal, it seems necessary to re‑establish the normative context in which the contested decision was adopted.

106.Common Position 2007/140 implemented, in the EU legal order, Resolution 1737(2006). The implementation of that resolution is based solely on the EU’s desire to take action to help to attain the objectives pursued by the United Nations and not hinder the fulfilment of the international obligations of its Member States, but not on the existence of a positive, direct obligation on the part of the EU to implement the resolutions of the Security Council, since the EU is not a party to the Charter of the United Nations.

107.As well as putting that resolution into effect, the common position also provided in Article 5(1)(b) that the Council could decide to freeze the funds of persons, entities or bodies not designated by Resolution 1737(2006) but which have been found to be ‘engaged in, directly associated with, or providing support for, Iran’s proliferation sensitive nuclear activities or for the development of nuclear weapon delivery systems, or persons or entities acting on their behalf or at their direction, or entities owned or controlled by them, including through illicit means’. Recital 10 in the preamble to Common Position 2007/140 explains the reasons why the Council wished to go beyond the requirements of the resolution, stating that ‘[i]n line with the [European] Council conclusions [of 22 January 2007] and in order to fulfil the objectives of UNSCR 1737(2006)’ the freeze should be extended to persons and entities identified by the Council ‘using the same criteria as those applied by the Security Council or the Committee’.

108.Regulation No423/2007 was adopted shortly after Common Position 2007/140 as that common position provided that action by the Community was needed in order to implement certain of its measures. (87) Accordingly, Regulation No423/2007 implements, so far as the Community is concerned, Resolution 1737(2006) whilst extending the approach of Common Position 2007/140: in fact, under Article 7(2) of Regulation No423/2007, the Council is recognised as having a specific unilateral power, that of identifying, using the criteria established by the Security Council, persons, entities and bodies engaged in, directly associated with, or providing support for Iran’s proliferation-sensitive nuclear activities and the development by Iran of nuclear weapon delivery systems. Therefore, the autonomous power conferred on the Council, in that it is not dependent on the adoption by the Security Council of restrictive measures against the persons, entities or bodies designated by it, pursues the initial objective of Resolution 1737(2006), which the European Union and subsequently the Community have meanwhile espoused. It is perfectly clear from both Common Position 2007/140 and the regulation that the Council’s autonomous power must be exercised solely in order to achieve the UN objective. The General Court’s statement in this regard (88) is beyond reproach.

109.Consequently, as regards the assessment of the Council’s power in the matter, a clear distinction must be drawn between two situations.

110.On the one hand, Article 7(1) of Regulation No423/2007 strictly refers to the list of persons, entities and bodies drawn up by the Security Council or the Sanctions Committee in accordance with paragraph 12 of Resolution 1737(2006), to which the regulation at this point expressly refers.

111.On the other hand, Article 7(2) of the said regulation confers a power which, although designed to achieve the same objective as that of Resolution 1737(2006), is, from the point of view of identification and inclusion in the lists, autonomous. Only the UN objective pursued constitutes an (indirect) parameter of the legality of the Council’s action under Article 7(2) of the said regulation. Therefore, the fact that the appellant was not identified by the Security Council or the Sanctions Committee as an entity whose assets are to be frozen but only, according to paragraph 10 of Resolution 1803(2008), as an entity over which the Member States must exercise vigilance is immaterial in that an autonomous power to include entities in the lists has clearly been conferred on the Council at Community level.

112.It should be noted in this regard that the aim of the contested decision, according to its very title, is to implement Article 7(2) of Regulation No423/2007. The adoption of Resolution 1803(2008) certainly had an effect on that regulation, since it was the cause of one of its amendments, (89) but only in so far as the Security Council included new persons, entities and bodies. The only effect of adopting that new resolution was, therefore, in respect of Article 7(1) of Regulation No423/2007, in that it allowed the annex to that regulation listing the entities designated by the Security Council to be updated. It is therefore perfectly correct to state that the proportionate nature of the appellant’s inclusion in the list of entities designated by the Security Council cannot be assessed in the light of Resolution 1803(2008).

113.Finally, contrary to the appellant’s claim, the General Court’s reasoning is not vitiated by any contradiction. Paragraph 52 of the judgment under appeal seeks to clarify the nature of the relationship between the regulation and Resolution 1737(2006), and the General Court rightly considered that the autonomous power conferred on the Council by Article 7(2) of Regulation No423/2007 must be exercised having regard to the objectives of that resolution. Paragraph 65 of the judgment under appeal dismisses the relevance of Resolution 1803(2008) as a yardstick for assessing the proportionate nature of the Council’s action. It is therefore clear that, as those two paragraphs related to two distinct resolutions, the General Court did not contradict itself.

114.In the light of all of the foregoing, the first alternative ground of appeal must be rejected in its entirety as unfounded.

E– Second alternative ground of appeal alleging that the General Court made an error of assessment of law with regard to the appellant’s right to property

1. Judgment under appeal

115.In paragraphs 70 and 71 of the contested judgment, the General Court considered, in essence, that the observance of fundamental rights was a condition of the lawfulness of acts of the European Union. However, those rights were not, for all that, absolute and their exercise could be made subject to restrictions provided that they were justified by an objective of public interest pursued by the European Union. The importance of that objective could be such as to justify substantial negative consequences for some operators, as the Court of Justice had already recognised. In the present case, the infringement of the right to property and of the freedom to carry on economic activity was manifest, for Bank Melli could not dispose of its funds situated within the territory of the Community or held by Community nationals. However, the importance of the objective justifying the measure concerning the appellant, namely, the maintenance of international peace and security, was such as to justify the extent of the disadvantages caused, which were not inordinate in relation to that objective, especially because that restriction concerned only part of Bank Melli’s assets and Articles 9 and10 of Regulation No473/2007 provided for possible exceptions and derogations with regard to the freezing of funds.

2. Arguments of the parties

116.The second alternative ground of appeal alleges that the General Court made an error of assessment with regard to the appellant’s right to property. It claims that, in paragraphs 70 and 71 of the judgment under appeal, the General Court wrongly rejected, in its examination of the fourth plea of the action, the argument alleging an unjustified infringement of the appellant’s right to property. In fact, it follows from the case-law of the European Court of Human Rights, in particular Saadi v. Italy (90) and A. v. United Kingdom, (91) that the protection of fundamental rights cannot be weighed against the campaign against terrorism. The same applies to the maintenance of international peace and security. Therefore, the General Court erred in law by disregarding the appellant’s fundamental rights. Moreover, the General Court erred in its statement of reasons by considering the restrictive measures to be justified without taking into account the importance accorded to the protection of human rights in the case-law of the Court of Justice since the Internationale Handelsgesellschaft judgment, (92) which was further increased by the entry into force of the Treaty of Lisbon and the prospect of the EU’s accession to the ECHR.

117.The Council, the French Republic, the United Kingdom and the Commission have unanimously referred to the Court’s case-law whereby the exercise of fundamental rights may be subject to restrictions, (93) which they consider to be in conformity with the case‑law of the ECtHR in the matter. (94) Moreover, the judgments of that Court relied on by the appellant in its appeal are completely irrelevant to the examination of the right to property. The General Court having logically held that the objective pursued was such as to justify restrictions on the appellant’s right to property, the second alternative ground of appeal should be rejected.

3. Assessment

(a) Preliminary observation

118.The parties were asked at the hearing to state their views on whether any natural or legal person, including a government organisation within the meaning of the case-law of the ECtHR, enjoys the fundamental right to protection of property, and on whether the General Court should, when it examined the plea alleging infringement of the appellant’s right to property, have considered whether Bank Melli could actually rely on the infringement of such a fundamental right when it is a legal person situated in a third State apparently sufficiently linked to the nuclear proliferation policy conducted by the Iranian State (which wholly owns it) for its funds to have been frozen under Article 7(2) of Regulation No423/2007.

119.Without disputing the interest of the matter, I doubt whether the present case lends itself to such considerations.

120.None of the parties disputed whether the appellant has such a right either during the proceedings before the General Court or during the written proceedings before the Court of Justice. (95) Nor did the General Court question the fact that the appellant was entitled to rely on the right to property as guaranteed by the EU legal order. (96) The General Court’s silence should not necessarily be interpreted as a failure on its part to consider the issue, as it may equally be regarded as an implicit recognition of the appellant’s status as the holder of a right to property. Therefore, the fact that the parties to the proceedings (and I am referring here essentially to the Council) did not dispute it in their written observations leads me to consider that the General Court did not err in law in the present case by finding, implicitly but necessarily, that the appellant is the holder of a right to property.

121.It then remains to be determined whether the General Court should have raised the matter of its own motion, which presupposes that the plea is a matter of public policy. I have already had occasion in this regard, following Advocate General Jacobs in his Opinion in Salzgitter v Commission, (97) to state the criteria for determining whether a plea is a matter of public policy, (98) which are reproduced below:

–

the rule infringed must be designed to serve a fundamental objective of the Community legal order and play a significant role in the achievement of that objective, and

–

the rule infringed must have been laid down in the interest of third parties or the public in general and not merely in the interest of the persons directly concerned.

Advocate General Jacobs also added the condition that the breach of EU law should be manifest, which I am more inclined to regard as a precondition for the existence of an obligation on the court to raise the matter of its own motion. (99)

122.Even assuming that the General Court did infringe a rule of law by wrongly considering that the appellant was the holder of a fundamental right to property, I note two things. The first is that the matter of whether the appellant is the holder of a fundamental right raises questions that are unrelated to the second criterion mentioned above. The second is that the matter is delicate enough to resolve for it to be considered that we are not dealing with a manifest breach of EU law, which alone can justify the Court raising the matter of its own motion. In these circumstances, I consider that it did not fall to the General Court to raise such a matter of its own motion. Nor, therefore, is it for the Court of Justice to entertain it. If the Court of Justice were, nevertheless, to deal with the matter, I do not see how it could avoid the criticism for ruling ultra petita.

123.Thus, in my view, the Court of Justice may not and must not deal with this question. To remove any concern about any lingering doubt that one may have, I would point out that, on any view, in the present case, the General Court ruled in the way most favourable to the appellant by assuming that it could in fact assert its right to property.

124.For all the above reasons, without denying the interest of such a matter or prejudging the Court’s response when it actually comes to consider it, I suggest that its analysis should be confined, in this case, to the ground of appeal as worded by the appellant.

(b) Analysis of the ground of appeal

125.As to the examination of this ground as relied on by the appellant, I note two things.

126.Firstly, once again, the case-law of the ECtHR relied on is irrelevant in the context of this appeal. In Saadi v. Italy, the matter raised was whether the Italian Republic could execute an expulsion order issued against a Tunisian national because of the active role that he had played in an organisation providing logistical and financial support to persons belonging to fundamentalist Islamist cells in Italy and who, consequently, was disturbing public order in Italy when it was alleged that execution of the order would expose the appellant to treatment contrary to Article 3 of the ECHR. The ECtHR stated in that case that ‘[s]ince protection against the treatment prohibited by Article3 is absolute, that provision imposes an obligation not to extradite or expel any person who, in the receiving country, would run the real risk of being subjected to such treatment’ (100) and concluded that ‘it is not possible to weigh the risk of ill-treatment against the reasons put forward [in this instance, the campaign against terrorism] for the expulsion in order to determine whether the responsibility of a State is engaged under Article 3, even where such treatment is inflicted by another State’. (101) As for the A. v. United Kingdom judgment, which was again delivered in relation to Article 3 of the ECHR, the ECtHR confined itself to stating, in the paragraph mentioned by Bank Melli, that ‘Article 3 enshrines one of the most fundamental values of democratic societies. Unlike most of the substantive clauses of the Convention and of Protocols Nos. 1 and 4, Article3 makes no provision for exceptions and no derogation from it is permissible under Article 15 § 2 [of the ECHR] notwithstanding the existence of a public emergency threatening the life of the nation. Even in the most difficult of circumstances, such as the fight against terrorism, and irrespective of the conduct of the person concerned, the Convention prohibits in absolute terms torture and inhuman or degrading treatment and punishment’. (102)

127.It is therefore clear from those two judgments that the impossibility of weighing a fundamental right against the campaign against terrorism is strictly limited to the prevention of torture and inhuman or degrading treatment. The aforementioned paragraph of the A. v. United Kingdom judgment also clearly indicates that such a balance can also, in principle, be struck in respect of the other rights enshrined, in particular, by Protocol No 1 to the ECHR. In fact, the right to property is, specifically, enshrined in Article 1 of that Protocol. It is, moreover, settled case-law that the exercise of the right to property can be restricted. (103)

128.Secondly, it is also accepted within the Community legal order that the right to property can be restricted. (104) The Court of Justice has already ruled that the right to property ‘is not … absolute, but must be viewed in relation to its function in society. Consequently, the exercise of the right to property may be restricted, provided that those restrictions in fact correspond to objectives of public interest pursued by the Community and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very substance of the right so guaranteed’. (105) There is no doubt that Bank Melli is suffering, as a consequence of the restrictive measure adopted against it, a restriction of the exercise of its right to property. (106) The appellant contests the General Court’s reasoning as to the justification of that restriction, which considered that ‘given the primary importance of maintaining international peace and security’, the measure affecting the appellant is not inordinate. (107)

129.I note, for my part, that, when the Community intended to combat terrorism by adopting restrictive measures, its aim was none other than the maintenance of international peace and security. (108) The same was held when the objective of measures was to put an end to a state of war and to massive violations of human rights. (109) It cannot be otherwise when the Community is engaged in the endeavours of the international community to combat nuclear proliferation and to have the Islamic Republic of Iran place the development of its nuclear programme under the control of the international community. The public interest of such an aim is self-evident.

130.In these circumstances, contrary to the appellant’s claim, the General Court’s assessment is not inconsistent with either the case-law of the European Court of Human Rights or the settled case-law of the Court of Justice regarding fundamental rights, as relied on by the appellant.

131.Inasmuch as it is unfounded, the second alternative ground of appeal must be rejected.

F– Third alternative ground of appeal alleging that the Council made a manifest error of assessment by including the appellant in the list of entities whose assets were to be frozen

1. Arguments of the parties

132.The appellant considers that the adoption of Council Regulation (EC) No1100/2009 of 17November 2009 implementing Article 7(2) ofRegulation No423/2007 and repealing the contested decision (110) constitutes a new factor which, under the first subparagraph of Article 42(2) of the Rules of Procedure, (111) would enable it to submit a new plea. It alleges that it is, in fact, clear from the letter notifying the appellant of Regulation No1100/2009 that the Council based its decision both on the reasons that initially caused it to include the appellant in the list in Annex V to Regulation No423/2007 and on new factors. In these circumstances, if the Court were to consider that the appellant had not already challenged, even implicitly, the Council’s allegation that it was engaged in nuclear proliferation merely by filing an application for annulment against the contested decision, the appellant is now entitled to contest that allegation expressly.

133.In this plea, the appellant therefore complains that the Council made a manifest error of assessment by including and maintaining it in Annex V to Regulation No423/2007. It relies for this purpose on documents that it had itself submitted in the proceedings before the General Court on 4 February 2009 and on the correspondence exchanged with the Council after the publication, on 25 June 2009, of a new notice informing persons, entities and bodies included in the list under Article 7(2) of Regulation No423/2007 of the possibility of requesting that the decision to include them on the abovementioned list should be reconsidered. (112) According to the appellant, all these documents would show that the appellant never contributed to the Iranian nuclear programme and was never associated with entities that had themselves contributed to it.

134.The Council, the French Republic and the Commission unanimously contend that the plea is inadmissible.

2. Assessment

135.This plea is unquestionably directed against the Council itself and alleges that it was guilty of a manifest error of assessment when it adopted Regulation No1100/2009 and, in turn, when it adopted Regulation No423/2007.

136.The fact that this plea is so directed inclines me to the view that the appellant does not dispute the General Court’s statement that the action brought before it contained no plea challenging the Council’s finding that the applicant had provided financial support for nuclear proliferation, ‘even though that finding forms the basis of the contested decision so far as it concerns the applicant and, in consequence, could have been raised as soon as the action was brought’. (113) The appellant has barely attempted to justify that original lacuna in the action by stating, at the appeal stage, (114) that the Court of Justice should hold that the mere bringing of an action for annulment implied contestation, albeit implicit, of the Council’s finding that the appellant provides support for nuclear proliferation.

137.That argument cannot be accepted. Annulment of the contested decision could be requested for various reasons, which could be (and have actually been) unrelated to the allegation of engagement in nuclear proliferation. It is neither for the General Court nor for the Court of Justice to presume the reasons which caused appellants to contest the validity of an act, for which they are, on the contrary, solely responsible. In any event, I repeat that the present plea is directed against the Council.

138.Since, ‘[i]n an appeal, the jurisdiction of the Court of Justice is … confined to review of the findings of law on the pleas argued before the General Court’, (115) and in view of the fact that the appellant did not raise a plea on this point before the General Court, the only reason that could induce the Court of Justice to take a position on the merits of that finding concerning the appellant would be the emergence of new matters of law or of fact in the course of the procedure. That is why the appellant pleads the adoption of Regulation No1100/2009. (116) Annex V to Regulation No423/2007 was replaced by the Annex to Regulation No1100/2009. The appellant is still included in paragraph 4 of table B of the annex so amended, but the reasons for its inclusion have been supplemented.

139.It should be pointed out from the outset that, contrary to the Council’s argument in its defence, Article 42(2) of the Rules of Procedure can also be applied to the procedure on appeal under Article118 of those rules. (117)

140.As regards the question whether a new factor has emerged during the procedure, the appellant itself recognises that it is clear from the Council’s letter notifying it of Regulation No1100/2009 that the Council, which has continued to include it in the list, bases its decision on the reasons that initially led it to include the appellant in the list in Annex V to Regulation No423/2007. Even if, when adopting Regulation No1100/2009, the Council could have taken new factors into account, I fail to see how Regulation No1100/2009 constitutes, in itself, a new factor within the meaning of the first subparagraph of Article 42(2) of the Rules of Procedure that could authorise the appellant, at the appeal stage, to rely on a new plea, when it was already manifestly able to dispute the finding on which the contested decision is based at the stage of the proceedings before the General Court. (118)

141.In any event, if a new plea were accepted at this stage, it could only, where appropriate, be directed against an aspect of the assessment that has been made by the General Court. By directing this plea against the Council without actually establishing the existence of a new matter of fact or of law when it has not raised a plea on this point before the General Court, the appellant seeks to broaden, in an inappropriate manner, the subject-matter of the dispute and, therefore, to alter the course of the appeal. (119)

142.The third alternative ground of appeal must therefore be declared inadmissible.

IV– Costs

143.Under the first paragraph of Article 122 of the Rules of Procedure, where the appeal is unfounded, the Court is to make a decision as to costs. According to Article 69(2) of those rules, which applies to the appeal procedure pursuant to Article 118 thereof, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. As the Council has applied for costs and the appellant should, in my view, be unsuccessful, the appellant should be ordered to pay the costs of the appeal. As the French Republic, the United Kingdom and the Commission have taken part in the proceedings before the Court on the basis of Article 115 of the Rules of Procedure, they must bear their own costs, pursuant to Article 69(4) of the Rules of Procedure.

V– Conclusion

144.Having regard to the foregoing considerations, I propose that the Court should:

(1)

Dismiss the appeal;

(2)

Order Bank Melli Iran to pay the costs incurred by the Council of the European Union;

(3)

Order the other parties to bear their own costs.

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2 –

Original language: French.

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3 –

Case T-390/08 ECR II-3967.

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4 –

OJ 2008 L163, p.29.

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5 –

S/RES/1737 (2006)*.

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6 –

OJ 2007 L61, p.49.

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7 –

OJ 2007 L103, p.1.

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8 –

S/RES/1803 (2008).

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9 –

See paragraph 10 of that Resolution.

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10 –

OJ 2008 L163, p.43.

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11 –

Council Common Position of 7 August 2008 (OJ 2008 L213, p.58).

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12 –

The funds of the appellant’s British subsidiary were frozen on the basis of the same decision that affected its parent company. After its action, which was separate from that brought by the parent company, was dismissed by the General Court (see Joined Cases T‑246/08 and T‑332/08 Melli Bank v Council [2009] ECR II‑2629), it lodged an appeal before the Court of Justice, which is therefore being dealt with separately and is registered by the Court Registry as Case C‑380/09P.

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13 –

Article cited in point 7 of this Opinion.

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14 –

Case C-227/92P [1999] ECR I‑4443.

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15 –

Article cited in point 7 of this Opinion.

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16 –

See paragraph 86 of the judgment under appeal.

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17 –

Joined Cases C-402/05P and C-415/05P [2008] ECR I‑6351.

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18 –

Ibid., paragraphs 241 to 244.

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19 –

Ibid., paragraph 336.

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20 –

Ibid., paragraph 337; emphasis added.

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21 –

See paragraph 86 of the judgment under appeal.

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22 –

Joined Cases 16/62 and 17/62 Confédération nationale des producteurs de fruits et légumes and Others v Council [1962] ECR 901.

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23 –

On this point, see point 88 et seq. of this Opinion.

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24 –

See paragraph 1 of the judgment under appeal.

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25 –

Case 98/78 Racke [1979] ECR 69, paragraph 15.

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26 –

Case 52/69 [1972] ECR 787.

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27 –

Ibid, paragraph 18.

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28 –

Ibid.

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29 –

Ibid.

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30 –

Case 48/69 [1972] ECR 619, paragraphs 39 to 44.

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31 –

I would point out that the General Court has continued to be guided by that case-law: see, inter alia, Joined Cases T-78/96 and T-170/96 W v Commission [1998] ECR‑SC I‑A‑239 and II‑745, paragraph 183, and Case T-323/00 SAT.1 v OHIM (SAT. 2) [2002] ECR II‑2839, paragraph 12.

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32 –

Cited above.

---

33 –

Cited above (paragraphs 68 and 72).

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34 –

Case C-398/00 [2002] ECR I‑5643.

---

35 –

Ibid (paragraph 33); emphasis added.

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36 –

Cited above in footnotes 25 and 29, respectively.

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37 –

Case 6/54 Kingdom of the Netherlands v High Authority [1955] ECR 103.

---

38 –

Case 68/86 United Kingdom v Council [1988] ECR 855.

---

39 –

Case 203/86 Spain v Council [1988] ECR 4563.

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40 –

See, in particular, Case C‑137/92P Commission v BASF and Others [1994] ECR I‑2555, paragraph 76, and Joined Cases C‑287/95P and C‑288/95 P Commission v Solvay [2000] ECR I‑2391, paragraph 55.

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41 –

See, in particular, Case C‑265/97P VBA v Florimex and Others [2000] ECR I‑2061; Case C‑390/06 Nuova Agricast [2008] ECR I‑2577, paragraphs 79 et seq.; and Joined Cases C‑341/06P and C‑342/06P Chronopost and La Poste v UFEX and Others [2008] ECR I‑4777, paragraphs 88 et seq.

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42 –

See point 39 of this Opinion.

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43 –

Cited above (paragraph 340 and case-law cited).

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44 –

Cited above in footnotes 25 and 29, respectively.

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45 –

In any event, were the Court to consider, notwithstanding my proposal, that the obligation to make notification is indeed an essential procedural requirement for the act, and, contrary to what the applicant maintains, the non-fulfilment of such an obligation cannot automatically lead to the annulment of the contested decision as, in fact, the Court has held, since the Hoechst v Commission judgment cited above, that the infringement of such an essential procedural requirement might (and not had to) lead to the annulment of the act which failed to be notified. The wording used in Spain v Commission cannot be clearer since the Court limits the cases in which lack of notification leads to annulment to ‘certain circumstances’ (see paragraph 33 of that judgment).

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46 –

Cited above in footnotes 25 and 29, respectively.

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47 –

Cited above, footnote 16.

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48 –

Cited below in points 69 and 70 of this Opinion.

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49 –

Which provides that, ‘[i]f action by the Community should prove necessary to attain, in the course of the operation of the common market, one of the objectives of the Community, and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, take the appropriate measures’.

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50 –

Cited above, footnote 16.

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51 –

According to Article 301 EC; see point 69 of this Opinion.

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52 –

See Recital 12 in the preamble to Common Position 2007/140.

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53 –

Cited above.

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54 –

Ibid., paragraph 166.

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55 –

Ibid. (paragraph 167).

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56 –

Ibid. (paragraph 168).

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57 –

Ibid.

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58 –

In this regard, see paragraph 30 of the judgment under appeal and point 136 et seq. of this Opinion.

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59 –

In paragraph 4.21 of its appeal, the appellant cites, in this regard, Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, paragraphs 9 and 11; Case 322/81 Nederlandsche Banden-Industrie-Michelin v Commission [1983] ECR 3461, paragraph 7; Case C‑310/93P BPBIndustries and British Gypsum v Commission [1995] ECR I-865, paragraph 21; and Case C‑185/95P Baustahlgewebe v Commission [1998] ECR I‑417, paragraph 89.

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60 –

In paragraph 4.22 of its appeal, the appellant cites, in this regard, Case T‑284/08 People’s Mojahedin Organization of Iran v Council [2008] ECR II‑3487.

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61 –

In paragraph 4.22 of its appeal, the appellant relies, in this regard, on the judgments of the ECHR in Saadi v. Italy, no. 37201/06, §138 and 139, ECHR 2008, and in A. v United Kingdom, no. 3455/05, §126, ECHR 2009.

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62 –

Article 253 EC.

---

63 –

See paragraph 7 of this Opinion.

---

64 –

See, inter alia, Case C‑266/05P Sison v Council [2007] ECR I‑1233, paragraph 80.

---

65 –

See paragraph 81 of the judgment under appeal.

---

66 –

Idem.

---

67 –

.Kadi and Al Barakaat International Foundation v Council and Commission, cited above (paragraph 336).

---

68 –

See the end of paragraph 4.21 of the appeal.

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69 –

See paragraphs 30 and 107 of the judgment under appeal.

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70 –

On the impossibility of the Courts of the European Union raising such pleas of their own motion, see Case C‑89/08P Commission v Ireland and Others [2009] ECR I‑11245, paragraph 40 and the case-law cited.

---

71 –

Cited above, footnote 59.

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72 –

The Court will soon be called upon to state its position on this point, as an appeal has been lodged against the General Court’s judgment in People’s Mojahedin Organization of Iran v Council (see France v People’s Mojahedin Organization of Iran, which has been registered by the Court Registry as Case C‑27/09P), and against the General Court’s judgment in Case T‑181/08 Tay Za v Council [2010] ECR II‑00000, which has been registered by the Court Registry as Case C‑376/10P.

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73 –

.People’s Mojahedin Organization of Iran v Council, cited above, paragraph 76.

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74 –

Ibid. (paragraph 75). The adoption of such an attitude by the Community institution entailed a clear likelihood that the right to effective judicial protection of the entity concerned at that time by the restrictive measure would be infringed.

---

75 –

.Kadi and Al Barakaat International Foundation v Council and Commission, cited above, paragraph 339.

---

76 –

Ibid. (paragraph 340 and the case-law cited).

---

77 –

Ibid. (paragraph 341).

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78 –

Cited in footnote 60 of this Opinion.

---

79 –

See paragraph 126 of this Opinion.

---

80 –

It is also worth noting in this regard that the Council published on the same day as the contested decision a notice informing the persons, entities and bodies to which Article 7(2) of Regulation No423/2007 applies of the possibility of requesting the Council to reconsider the decision to include them in Annex V to that regulation (see OJ 2008 C159, p.1 and paragraph 98 of the judgment under appeal). However, the appellant only availed itself of that possibility following the publication of the notice of 25 June 2009: see paragraph 133 of this Opinion.

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81 –

As will be seen below, the appellant tried to challenge it in the context of the appeal, but without any more success (see paragraphs 132 et seq. of this Opinion concerning the examination of the third alternative plea).

---

82 –

In particular, Article 66(1) of the Rules of Procedure of the General Court provides that the General Court ‘shall prescribe the measures of inquiry that it considers appropriate by means of an order setting out the facts to be proved’ (emphasis added).

---

83 –

In accordance with the case-law of the Court of Justice: see Kadi and Al Barakaat International Foundation v Council and Commission, cited above, paragraph 342.

---

84 –

See the end of paragraph 4.22 of the appeal.

---

85 –

See point 8 of this Opinion.

---

86 –

S/RES/1747(2007).

---

87 –

See Recital 12 of Common Position 2007/140.

---

88 –

See paragraph 52 of the judgment under appeal.

---

89 –

Commission Regulation (EC) No219/2008 of 11 March 2008 amending Regulation No423/2007 (OJ 2008 L68, p.5) refers to Resolution 1803(2008) only in Recital 2 of the preamble thereto. The sole purpose of that amendment was to replace Annex IV to Regulation No 423/2007 (annex listing the persons, entities and bodies designated by the Security Council) by an updated list. Resolution 1803 (2008) will be taken into account, as regards the European Union, only through Council Common Position 2008/652/CFSP of 7 August 2008 amending Common Position 2007/140/CFSP (OJ 2008 L213, p.58), which was adopted subsequent to the contested decision and which, in any event, in no way called into question the Council’s autonomous power to identify and include entities that fulfilled the conditions laid down by the common position.

---

90 –

Cited above, paragraphs 138 and 139.

---

91 –

Cited above, paragraph 126.

---

92 –

Case 11/70 [1970] ECR 1125.

---

93 –

They refer, in particular, to Joined Cases T‑37/07 and T‑323/07 ElMorabit v Council [2009], not published in the ECR; Case C‑84/95 Bosphorus [1996] ECR I‑3953; and Kadi and AlBarakaat International Foundation v Council and Commission.

---

94 –

See judgment of the ECtHR in Bosphorus Hava Yollari Turizm Ve Ticaret Anonim Sirketi v. Ireland, no. 45036/98, ECHR 2005.

---

95 –

In fact, the parties present at the hearing raised the matter only after the Court asked them to state their position on this issue.

---

96 –

See paragraphs 70 and 71 of the judgment under appeal.

---

97 –

Case C‑210/98 P [2000] ECR I-5843.

---

98 –

See point 102 et seq. of my Opinion in Case C‑443/05P Common Market Fertilizers v Commission [2007] ECR I‑7209 and point 78 of my Opinion in Case C‑362/08P Internationaler Hilfsfonds v Commission [2010] ECR I‑00000.

---

99 –

See point 143 of the Opinion of Advocate General Jacobs in Salzgitter v Commission, footnote 54 in my Opinion in Common Market Fertilizers v Commission, and footnote 16 in my Opinion in Internationaler Hilfsfonds v Commission.

---

100 –

Cited above, paagraph 138.

---

101 –

Idem.

---

102 –

Cited above, paragraph 126.

---

103 –

In the judgment of 7 December 1976 in Handyside v. United Kingdom, no. 5493/72, ECHR 1976, the European Court of Human Rights ruled that measures to seize possessions of a temporary nature momentarily preventing the owner from enjoying and using his possessions as he pleases fall within the ambit of the second paragraph of Article 1 of Protocol No 1 to the ECHR (see paragraph 62 of that judgment). The national measures falling within the ambit of that second paragraph may be justified only on the basis of the existence of a public interest that must be preserved and provided that the means employed are reasonably proportionate to the objective pursued (see judgments of the ECtHR in Marckx v. Belgium no. 6833/74, §§63 and 64, ECHR 1979, in AGOSI v. United Kingdom no. 9118/80, §§48 to 52, ECHR 1986, in Bosphorus Hava Yollari Turizm Ve TicaretAnonim Sirketi v. Ireland, cited above, §§141, 142 and 149, in Rosenzweig and Bonded WarehouseLtd. v. Poland no. 51728/99, §48, ECHR 2005, and in Uzan and Others v. Turkey no. 18240/03, §§82 and94, ECHR 2011).

---

104 –

See, in particular, Case C‑84/95 Bosphorus [1996] ECR I-3953, paragraph 21 and case-law cited, as well as paragraphs 22 and 23.

---

105 –

.Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 355 and the case-law cited.

---

106 –

By analogy, see ibidem (paragraph 358).

---

107 –

See paragraph 71 of the judgment under appeal.

---

108 –

See Kadi and Al Barakaat International Foundation v Council and Commission, paragraph 363.

---

109 –

.Bosphorus, paragraph 24.

---

110 –

OJ 2009 L303, p.31.

---

111 –

According to which ‘[n]o new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure’.

---

112 –

Notice for the attention of those persons, entities and bodies that have been included by the Council on the list of persons, entities and bodies to which Article7(2) of Council Regulation (EC) No423/2007 applies (Annex V) (OJ 2009 C145, p.1). That notice should be distinguished from the notice referred to by the General Court in paragraph 98 of the contested judgment. The file, in fact, shows that Bank Melli availed itself of the possibility of reconsideration only after the publication of the notice of 25 June 2009 (see Annex No 18 to the Appeal), although it obviously could have done so following the publication of the notice subsequent to the adoption of the contested decision of 24 June 2008.

---

113 –

Paragraph 30 of the judgment under appeal.

---

114 –

I refer here to the appellant’s somewhat laconic statement in paragraph 5.12 of its appeal.

---

115 –

Joined Cases C‑514/07P, C‑528/07P and C‑532/07P Sweden and Others v API and Commission [2010] ECR I-00000, paragraph 126 and the case-law cited.

---

116 –

It should be noted that Article 2 of Regulation No1100/2009 repealed Decision2008/475, which is, however, irrelevant to the present proceedings.

---

117 –

See, in particular, Case C‑321/99P ARAP and Others v Commission [2002] ECR I‑4287, paragraph 112, and Case C‑229/05P PKK and KNK v Council [2007] ECR I‑439, paragraph 61.

---

118 –

See paragraph 30 of the judgment under appeal.

---

119 –

See, in an extensive body of case-law, Sweden v API and Commission, cited above, paragraph 126 and the case-law cited.