The CJEU has dismissed an appeal against EU sanctions against Melli Bank plc, agreeing with the arguments of the European Council, the United Kingdom, France and the Commission. The General Court had previously dismissed Melli Bank plc's challenge to those sanctions (see 09/07/2009 - Court of First Instance dismisses challenges to financial sanctions against Melli Bank plc).
Melli Bank's challenge concerned the position of subsidiaries under the EU sanctions regime regarding Iranian nuclear proliferation-sensitive activities. Melli Bank was included in the restrictive measures by virtue of Article 7(2)(d) of Council Regulation (EC) No 423/2007 because it was "owned or controlled" by an entity identified as engaged in, directly associated with or providing support for nuclear proliferation. Melli Bank plc challenged a number of matters, including the interpretation and proportionality of Article 7(2)(d) and the application of the "owned or controlled" criterion for the imposition of sanctions arguing that it was independent from its parent.
The General Court had rejected Melli Bank's challenge. In doing so it had construed the "owned or controlled" requirement as obliging the Council to ask whether an entity was subject to a degree of ownership and control which made it to a considerable degree likely that it might be prompted to circumvent the measures adopted against its parent company, regardless of the degree of ownership by the sanctioned entity. The General Court relied nevertheless on a presumption that a 100% subsidiary satisfied the test.
The Court of Justice dismissed the appeal and rejected (amongst other things) Melli Bank's arguments concerning interpretation and proportionality. It also agreed with the arguments of the Council, the United Kingdom, France and the Commission that the General Court had been incorrect to interpret the "owned or controlled" requirement as requiring further any enquiry by the Council, once it was shown that the entity was "owned" by an entity subject to sanctions. The Court of Justice held that "ownership" and "control" were two separate tests. An entity which was wholly owned satisfied the "ownership" test without the need for any further enquiry. The Council's decision to impose sanctions on it was not a matter for its discretion; sanctions were mandatory. The General Court had dismissed arguments by Melli Bank plc to the effect that the asset freeze was disproportionate because alternative less restrictive measures existing at the time of the contested decision could have been applied to the Bank, on the basis that it had not been established that they would be adequate or effective, and ruled that arguments relating to other alternative less restrictive measures were inadmissible. The Court of Justice declined to review any of these findings on appeal.
The judgment is here.
In the Court of Justice Melli Bank plc was represented by David Anderson QC, who after his appointment as Independent Reviewer of Terrorism Legislation was replaced by Derrick Wyatt QC, and Richard Blakeley; the United Kingdom was represented by Sarah Lee.
In the General Court Melli Bank plc was represented by David Anderson QC and Mark Hoskins QC, and the United Kingdom was represented by Sarah Lee.
Sarah Lee has also represented the United Kingdom in litigation brought by Bank Melli Iran.