Opinion of Advocate General Sharpston delivered on 13 September 2018.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Date: 13 September 2018

OPINION OF ADVOCATE GENERAL

SHARPSTON

delivered on 13 September 2018(1)

Case C‑225/17 P

Islamic Republic of Iran Shipping Lines,

Hafize Darya Shipping Lines (HDSL),

Khazar Sea Shipping Lines Co.,

IRISL Europe GmbH,

IRISL Marine Services and Engineering Co.,

Irano Misr Shipping Co.,

Safiran Payam Darya Shipping Lines,

Shipping Computer Services Co.,

Soroush Sarzamin Asatir Ship Management,

South Way Shipping Agency Co. Ltd,

Valfajr 8th Shipping Line Co.,

v

Council of the European Union

(Appeal — Restrictive measures taken against Iran — Criteria for including in a list of persons and entities subject to asset-freezing — Plea of illegality — Admissibility —The Joint Comprehensive Plan of Action — Effect on interest in bringing appeal proceedings — Legal basis — Legitimate expectations — Legal certainty — Ne bis in idem — Res judicata — Right to effective judicial remedy — Misuse of powers — Rights of the defence — Proportionality — Fundamental rights — Manifest error of assessment)

1. The Islamic Republic of Iran (‘Iran’) is engaged in a programme of proliferation-sensitive nuclear activities and of nuclear weapons delivery systems (‘nuclear proliferation programme’). The United Nations and the European Union have sought in various ways to respond to the threat that such a programme has posed and continues to pose.

2. By this appeal, the appellants (2) seek the annulment of the judgment of the General Court of 17 February 2017 in Islamic Republic of Iran Shipping Lines and Others v Council, (3) in so far as that court dismissed as unfounded, first, their actions for annulment challenging, pursuant to Article 263 TFEU, two measures by which their names were included in the lists of persons and entities whose assets were to be subject to freezing in the context of restrictive measures against Iran, (4) and second, the pleas of illegality that those entities had raised, pursuant to Article 277 TFEU, against two measures laying down the general criteria for inclusion of individuals in those lists. (5)

3. The pleas put forward by the appellants raise important institutional and constitutional questions. In particular, what discretion does the Council of the European Union enjoy with regard to restrictive measures applied against persons and entities when it decides, after the measures it had initially adopted unlawfully have been annulled, to adjust the criteria for applying such measures or to make the same entity subject to them? To what extent do the general principles of EU law and the Charter of Fundamental Rights limit that discretion?

International law

Resolutions of the United Nations Security Council

4. Nuclear proliferation is uncontestably one of the most dangerous threats to international peace and security in the 21^st century. Since the beginning of this millennium, Iran appears to have sought to develop a nuclear proliferation programme in breach of international obligations, in particular of the 1968 Treaty on the Non-Proliferation of Nuclear Weapons.

5. On 23 December 2006 the United Nations Security Council (‘the Security Council’) adopted Resolution 1737 (2006), in which it expressed serious concern with regard to the nuclear proliferation programme developed by Iran and sought to apply pressure on that State to ‘constrain’ the programme and to ‘suspend’ some of its components with a view to maintaining international peace and security. (6)

6. To that end the Security Council stated in paragraph 12 of that resolution that all States should freeze the funds, other financial assets and economic resources owned or controlled by the persons or entities designated as being engaged in, directly associated with or providing support for Iran’s proliferation programme. That asset-freezing should also concern the persons or entities acting on their behalf or at their direction, as well as the entities owned or controlled by them, including through illicit means.

7. On 24 March 2007, the Security Council adopted Resolution 1747 (2007). Paragraph 5 of that resolution stated that ‘Iran shall not supply, sell or transfer directly or indirectly from its territory or by its nationals or using its flag vessels or aircraft any arms or related materiel, and that all States shall prohibit the procurement of such items from Iran by their nationals, or using their flag vessels or aircraft, and whether or not originating in the territory of Iran’ (‘the arms embargo’).

8. On 3 March 2008, the Security Council adopted Resolution 1803 (2008). Paragraph 11 called upon all States ‘to inspect cargoes to and from Iran, of aircraft and vessels … owned or operated by Iran Air Cargo and [IRISL], provided reasonable grounds exist for believing that the aircraft or vessel is transporting goods prohibited under this resolution or resolution 1737 (2006) or resolution 1747 (2007)’.

9. By Resolution 1929 (2010) of 9 June 2010, the Security Council introduced a series of additional measures with regard to IRISL. In particular, paragraphs 14 to 22 of that resolution extend the asset-freezing measures specified in Resolution 1737 (2006) to ‘entities of [IRISL] as specified in Annex III and to any person or entity acting on their behalf or at their direction, and to entities owned or controlled by them, including through illicit means, or determined by the Council or the [United Nations Sanctions] Committee to have assisted them in evading the sanctions of, or in violating the provisions of, [its] resolutions’. (7)

10. None of the appellants was the subject of any asset-freezing measures adopted by the Security Council.

11. On 14 July 2015 representatives of the international community reached an agreement with Iran concerning the long term solution to its nuclear proliferation programme (the Joint Comprehensive Plan of Action, ‘JCPOA’). One of the elements of the JCPOA was relief from international sanctions imposed on Iran. On 20 July 2015, the Security Council endorsed the JCPOA by Resolution 2231 (2015).

12. Each of the Nations Security Council Resolutions has been implemented in the European Union by means of secondary legislation.

EU law

13. On 17 June 2010, in order to comply with Resolution 1929 (2010), the European Council adopted the ‘Declaration on Iran’. (8) Paragraph 4 invited the Council to adopt measures implementing those contained in that resolution as well as accompanying measures, with a view to supporting the resolution of all outstanding concerns regarding Iran’s nuclear proliferation programme through negotiation. Those measures were to be focused on several key sectors of Iran’s economy, including ‘the Iranian transport sector, in particular the [IRISL] and its subsidiaries’. (9)

Initial listing of the appellants in 2010

14. By Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP (OJ 2010 L 195, p. 39), the Council acted on that declaration and adopted additional restrictive measures. Article 20(1)(b) provided for an obligation to freeze assets of entities ‘directly associated with, or providing support for, Iran’s proliferation [programme]’, ‘entities that have assisted designated persons or entities in evading or violating the provisions of [Security Council Resolutions] … 1737 (2006), … 1747 (2007), … 1803 (2008) and … 1929 (2010)’ and ‘entities of … IRISL and entities owned or controlled by them or acting on their behalf’, as specified in Annex II. The appellants’ names appeared in the list in Annex II.

15. IRISL’s listing in Annex II to Decision 2010/413 was based on the following grounds: ‘IRISL has been involved in the shipment of military-related cargo, including proscribed cargo from Iran. Three such incidents involved clear violations that were reported to the Security Council Iran Sanctions Committee. IRISL’s connection to proliferation was such that the [Security Council] called on States to conduct inspections of IRISL vessels, provided there are reasonable grounds to believe that the vessel is transporting proscribed goods, in [Security Council Resolutions] 1803 and 1929.’ The other appellants were listed because they were companies that were owned or controlled by IRISL or acting on its behalf.

16. On the same day, in order to give effect erga omnes to that decision, the Council adopted Implementing Regulation (EU) No 668/2010 of 26 July 2010 implementing Article 7(2) of Regulation No 423/2007 (OJ 2010 L 195, p. 25) by which the appellants’ names were entered on the list in Annex V to Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1) (the ‘2010 listings’). The appellants’ assets were thus effectively frozen as of 26 July 2010. The grounds for listing indicated by the Council were essentially the same as those stated for the purpose of including the appellants in Annex II to Decision 2010/413.

First proceedings before the General Court

17. By application lodged with the General Court on 8 October 2010, the appellants (10) brought an action seeking the annulment of the decision to list their names in Annex II to Decision 2010/413 and in Annex V to Regulation No 423/2007.

18. By judgment of 16 September 2013, Islamic Republic of Iran Shipping Lines and Others v Council, (11) the General Court annulled Annex II to Council Decision 2010/413 and related measures in so far as they concerned the applicants in that case for three principal reasons. First, the General Court held that the Council had not stated to the requisite legal standard the reasons for its assertion that IRISL had, by the actions of which it was accused, assisted a listed person, entity or body in infringing the provisions of the relevant EU legislation and the Security Council resolutions, as referred to in Article 20(1)(b) of Decision 2010/413. Second, the Council had not established that, by having transported — on three...