The ECJ’s judgment in Kadi II

The background to the Kadi case is summarised in a previous blog. The ECJ has dismissed the appeals in Kadi (II) and upheld the General Court’s annulment of Yassin Kadi’s EU designation, on the grounds that none of the reasons given in the UN’s summary for linking Mr Kadi with terrorism (all of which Mr Kadi refuted) was substantiated. This blog highlights some interesting aspects of the judgment.

No suggestion of immunity from review

The Court first laid to rest the argument that European courts cannot review the legality of EU measures implementing UN Security Council asset freezing resolutions. The ECJ said it had already decided this point in Kadi I and in Bank Melli Iran, and that judicial review of EU implementing measures does not threaten the primacy of the Security Council.

The majority of reasons must be “individual, specific and concrete”

The Court’s case law on the duty to give reasons in sanctions cases is relatively consistent – reasons must be “individual, specific, and concrete”. Two notable points in Kadi (II): (1) The ECJ states that reasons can be expressed as “possibilities”, because “the reasons for listing on a European Union list may be based on suspicions of involvement in terrorist activities, without prejudice to the determination of whether those suspicions are justified”. Again this seems consistent with the Court’s approach to other sanctions measures. (2) The ECJ held that the duty to give reasons had been complied with because the majority of the UN’s reasons for listing Mr Kadi were sufficiently specific and concrete. Here the ECJ differed from the General Court, which had found the reasons too vague.

Rights of defence requires disclosure of evidence

Again consistently with the Court’s recent case law on “autonomous” sanctions (sanctions imposed by the EU, not the UN), the ECJ states that rights of defence requires (1) the European authorities to disclose the evidence it relies on as the basis for a listing decision, and must do so in advance in the case of a re-listing; (2) an opportunity for the listed party effectively to make observations on that evidence.

European authorities to assess whether UN listings are well founded

The ECJ rejected the argument that the EU institutions only rubber stamp UN designations. The EU authorities are “under an obligation to examine, carefully and impartially, whether the alleged reasons are well founded”, in the light of any observations and exculpatory evidence submitted by the listed person. They must decide whether to ask for more information (from the UN or the proposing State) in order to do so. This seems to be in line with the Court’s case law on autonomous sanctions, at least those against Iran, where the European court has said that the European institutions must assess the evidence for themselves. However, this may be more controversial in the case of the EU checking the basis for UN designations.

“Full” judicial review of the factual basis for listing decisions

Most of the arguments in the appeals were about what the General Court meant when it said that there should be “in principle full review” of the lawfulness of EU measures implementing UN sanctions. The ECJ has now said that the Court (in an application for annulment) must review not only that there has been a proper procedure, legal basis, and reasons. It must also conduct a “verification of the allegations” to check whether the reasons are “substantiated” and “well founded” and have a “solid factual basis”. The Court must “assess the probative value of the information or evidence”, “whether the facts alleged are made out”, “whether the accuracy of the facts relating to the reason concerned has been established”. If a particular reason is unfounded or unsubstantiated, the Council may not rely on it to justify a listing decision, and the Court will base its assessment only on the evidence disclosed to it – if insufficient evidence is disclosed to substantiate a reason, the Court will disregard that reason.

The ECJ went through each reason for the decision to re-list Yassin Kadi in 2008, and Mr Kadi’s evidence in response, and found none of the reasons to have been substantiated with evidence. That was why the listing had to be annulled (not, as the General Court had said, because of the Commission’s failure to disclose supporting evidence, since the Commission did not possess any evidence other than the UN’s summary of reasons).

A few observations on this point, which is perhaps the most far-reaching part of the judgment in Kadi (II):

1. By setting out this full, factual review, the ECJ may have gone further than the General Court towards reviewing the basis for the UN’s decision. The Court did not follow Advocate General Bot’s opinion that it should restrict its review in UN cases (see previous blog).
2. This is consistent with the General Court’s approach to judicial review of autonomous sanctions against Iran, and indeed the General Court in Iran Transfo has said the same standard of review should apply to sanctions against Iranian proliferation and terrorism. Advocate General Bot has criticised this approach for being too intrusive and unrealistic in the context of Iran – see previous blog – there are a large number of Iranian appeals pending in the ECJ on this point. However, it may be less consistent with with the Court’s arguably less rigorous review of the evidential basis for other types of sanctions – see eg previous blogs on Ivory Coast and Tunisia cases.
3. The judgment underlines the importance for applicants of submitting evidence refuting reasons for their designation.
4. The ECJ did not follow the Advocate General’s view that the existence of the UN Ombudsperson for the 1267 list should result in a weaker intensity of review by the European court. The ECJ said the fact that the Ombudsperson still does not provide effective judial protection makes its review more essential. The ECJ regards effective protection as requiring a court declaration that an annulled measure never existed – see previous blogs on Abdulrahim and Ayadi. The ECJ does not say that the Ombudsperson reviewed the evidence and recommended that Mr Kadi be de-listed by the Security Council (which he was,just before the ECJ oral hearing – there is no discussion of the potential mootness of the appeals).

Closed material procedures in Luxembourg?

The ECJ said (not uncontroversially) that there can be no “overriding security considerations” that would preclude disclosure of security sensitive information to the Court (as opposed to the listed applicant).  Accordingly, if the European institutions wish to withhold evidence from disclosure, the European Court must assess (a) whether the reasons for withholding disclosure are well founded (the Court does not say the applicant plays any part in that assessment) – if they are, the Court must apply “techniques” which accommodate legitimate security considerations and procedural rights (eg a summary of the evidence) – and (b) whether not disclosing the evidence to the listed party undermines its “probative value”.

None of this applies to Kadi’s case, since it was never suggested that security concerns would prevent disclosure of further evidence about his listing. The ECJ has made these comments while it is considering amending the General Court’s rules of procedure to permit some form of closed material procedure – see previous blog. The potential impact such a procedure might have on rights of defence is illustrated by Mr Kadi’s own continued OFAC listing in the USA, upheld by the DC Circuit on the basis of US classified material not shown to Mr Kadi. The ECJ judgment does not record same objections to closed procedures recently expressed by the Supreme Court in Bank Mellat – see previous blog – and the implications for rights of defence. It does not rule out the possibility that a person listed on the basis of a “suspicion” of involvement in terrorist activities could have his or her application for annulment decided on the basis of material he never sees.