European Court of Justice holds that EU Council should not have frozen funds of the People's Mujahidin of Iran for lack of a fair hearing; decision affects ability to freeze assets of suspected terrorist organizations
On December 12, 2006, the Court of First Instance of the European Court of Justice held in the case of Organisation des Modjahedines du peuple d'Iran v. Council of the European Union that the Council improperly ordered the freezing of Plaintiff's funds.
The Organisation des Modjahedines du peuple d'Iran (People's Mujahidin of Iran) (OMPI) was established in 1965 to purportedly introduce democracy in Iran. It has an armed branch operating in Iran, but reportedly renounced all military activity in June 2001.
The basis for the freeze was a 2001 United Nations Security Council resolution requiring Member States to combat terrorism and its financing by freezing terrorist funds. The European Union implemented that resolution through a common position and a regulation (Common Position 2001/931/CFSP, 2001 O.J. (L 344) 93; Council Regulation No. 2580/2001, 2001 O.J. (L 344) 70). Through Council decisions, there is a list of affected entities and individuals, including OMPI. OMPI brought action before the European Court of Justice, seeking to be removed from the list.
The Court of First Instance of the European Court of Justice finds that certain fundamental rights and safeguards, such as the right to a fair hearing, the obligation to state reasons for a decision, and the right of effective judicial protection, apply to a Community decision to freeze funds.
Here, the Security Council let the various Member State organizations decide which organizations and individuals should be affected. This involves the exercise of the Community's own powers. Under such circumstances, the Council must consider the fundamental rights guaranteed within the Community.
The Court distinguishes, however, the present case from the cases related to Osama bin Laden and Al-Qaeda, as well as the Taleban, which are Yusuf and Kadi (21 September 2005), and Ayadi and Hassan (12 July 2006). There, the Council had merely transposed United Nations Security Council Resolutions. The Community institutions did not have any discretion as to what entities and individuals should be affected.
The Court then defines the scope of rights under these circumstances, as well as the restrictions that may be imposed when the Community freezes funds. The right to a fair hearing does not require that the affected entities and persons be heard by the Council when the initial decision to freeze their funds is made.
"119. The right of the party concerned to a fair hearing must be effectively safeguarded in the first place as part of the national procedure which led to the adoption, by the competent national authority, of the decision referred to in Article 1(4) of Common Position 2001/931. It is essentially in that national context that the party concerned must be placed in a position in which he can effectively make known his view of the matters on which the decision is based, subject to possible restrictions on the right to a fair hearing which are legally justified in national law, particularly on grounds of public policy, public security or the maintenance of international relations (see, to that effect, Eur. Court H.R., Tinnelly & Sons Ltd and Others and McElduff and Others v United Kingdom, judgment of 10 July 1998, Reports of Judgments and Decisions, 1998-IV, Section 78)."
"120. Next, the right of the party concerned to a fair hearing must be effectively safeguarded in the Community procedure culminating in the adoption, by the Council, of the decision to include or maintain it on the disputed list, in accordance with Article 2(3) of Regulation No 2580/2001. As a rule, in that area, the party concerned need only be afforded the opportunity effectively to make known his views on the legal conditions of application of the Community measure in question, namely, where it is an initial decision to freeze funds, whether there is specific information or material in the file which shows that a decision meeting the definition laid down in Article 1(4) of Common Position 2001/931 was taken in respect of him by a competent national authority and, where it is a subsequent decision to freeze funds, the justification for maintaining the party concerned in the disputed list."
Furthermore, unless there are overriding security concerns, the affected parties must be informed what information or material was used for making the decision. The affected parties must have an opportunity to explain their point of view.
"139. The statement of reasons must ... in principle be notified to the person concerned at the same time as the act adversely affecting him. A failure to state the reasons cannot be remedied by the fact that the person concerned learns the reasons for the act during the proceedings before the Community Courts (Case 195/80 Michel v Parliament [1981] ECR 2861, paragraph 22, and Dansk Rorindustri and Others v Commission, paragraph 138 above, paragraph 463). The possibility of regularising the total absence of a statement of reasons after an action has been started might prejudice the right to a fair hearing because the applicant would have only the reply in which to set out his pleas contesting the reasons which he would not know until after he had lodged his application. The principle of equality of the parties before the Community Courts would accordingly be affected (Case T-132/03 Casini v Commission [2005] ECR II-0000, paragraph 33, and Napoli Buzzanca v Commission, paragraph 138 above, paragraph 62)."
"140. If the party concerned is not afforded the opportunity to be heard before the adoption of an initial decision to freeze funds, compliance with the obligation to state reasons is all the more important because it constitutes the sole safeguard enabling the party concerned, especially after the adoption of that decision, to make effective use of the legal remedies available to it to challenge the lawfulness of that decision (Case T-237/00 Reynolds v Parliament [2005] ECR II-0000, paragraph 95; see also, to that effect, Joined Cases T-371/94 and T-394/04 British Airways and British Midland Airways v Commission [1998] ECR II-2405, paragraph 64)."
The Court then applies these principles to the case at bar. The relevant rules for freezing funds do not provide for a hearing or any notification of the material that was used in making the decision. OMPI was not informed of what prompted the decision, and did not have an opportunity to present its point of view.
Therefore, the freezing of OMPI's funds lacks a sufficient statement of reasons and was decided without a fair hearing. Thus, the Court cannot review the lawfulness of the freezing at this point. Consequently, the freezing of OMPI's funds is annulled.
Citation: European Court of Justice, Court of First Instance (Second Chamber), Organisation des Modjahedines du peuple d’Iran v. Council of the European Union, Judgment in Case T-228/02 (12 December 2006); European Court of Justice Press Release No. 97/06 (12 December 2006). The judgment is available on the Court’s website curia.europa.eu.
USA visa and immigration information is available at www.immigrationtelevision.com.
|
