European Court of First Instance dismisses action by Swedish plaintiffs against EU Council and Commission to annul Regulations that not only restrict travel and exports to Afghanistan but also freeze plaintiffs' funds
Ahmed Ali Yusuf and Al Barakaat International Foundation (plaintiffs or applicants) are based in Spanga, Sweden, and are allegedly linked to the Taliban in Afghanistan. On December 10, 2001, plaintiffs filed an action in the European Court of First Instance (CFI) against the EU Council and the Commission. The suit asked the CFI to annul two European Union (EU) Regulations enacted by the Council. The first was Regulation No. 467/2001. Based on Articles 60 EC and 301 EC, it barred the export of certain goods and services to Afghanistan, strengthened the flight ban and extended the freeze of funds and other financial resources with respect to the Taliban of Afghanistan (as amended).
The second was Regulation No. 881/2002; adopted based on Articles 60, 301 and 308 EC, it imposed certain specific restrictions directed against certain persons and entities associated with Usama bin Laden, the Al-Qaeda network and the Taliban. It also repealed Regulation No. 467/2001. The Council had adopted these measures following resolutions of the U.N. Security Council about the Taliban's harboring of terrorists. The regulations had the effect of freezing the plaintiffs' funds. In particular, the plaintiffs argued that the EU Council lacked the power to adopt the regulations. They relied in part on Article 60 EC which provides that "in cases envisaged in Article 301, ... the Council may, in accordance with the procedure provided for in Article 301, take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned." Article 301 EC declares that "where there is a common position or joint action for 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."
According to plaintiffs, these provisions only authorize the Council to take action against third countries, not against nationals living in a Member State such as Sweden. Moreover, these Regulations are inconsistent with Article 249 EC which says that "EU regulations are directly applicable in Member States." Finally, the plaintiffs urge that they violate their fundamental rights.
Unpersuaded, the CFI dismisses the case. In its view, nothing prevents the Council from taking measures that directly affect individuals or organizations, within and outside the EU, with the goal of reducing economic relations with one or more third countries. The measures at issue here are known as "smart sanctions" developed within the U.N. in the 1990s. These are more targeted sanctions to replace general trade embargoes to reduce the suffering of everyday civilians in the countries concerned.
The Council urges that Articles 60 EC and 301 EC do permit restrictive measures against entities or person who control parts of a third country (as in the case of sanctions imposed on UNITA in Angola), and against entities and persons who control the government of a third country (as in the case of sanctions imposed on the Federal Republic of Yugoslavia). The Court agrees and finds that Articles 60 EC and 301 EC authorize such measures.
"In fact, just as economic or financial sanctions may legitimately be directed specifically at the rulers of a third country, rather than at the country as such, they may be directed at the persons or entities associated with those rulers or directly or indirectly controlled by them, wherever they may be. As the Commission has rightly pointed out, Articles 60 EC and 301 EC would not provide an efficient means of applying pressure to the rulers with influence over the policy of a third country if the Community could not, on the basis of those provisions, adopt measures against individuals who, although not resident in the third country in question, are sufficiently connected to the regime against which the sanctions are directed."
"Furthermore, as the Council has emphasised, the fact that some of those individuals so targeted happen to be nationals of a Member State is irrelevant, for, if they are to be effective in the context of the free movement of capital, financial sanctions cannot be confined solely to nationals of the third country concerned."
"That interpretation, which is not contrary to the letter of Article 60 EC or Article 301 EC, is justified both by considerations of effectiveness and by humanitarian concerns. Furthermore, the Court finds that based on the Taliban's control of Afghanistan and Usama bin Laden's close relationship with the Taliban, the sanctions were in fact directed at a third country." [¶¶ 115-116]
"In so far as the applicants complained that Regulation No 467/2001 was directed at Usama bin Laden and not the Taliban regime, the Council has added that Usama bin Laden was in fact the head and "˜Ã©minence grise' of the Taliban and that he wielded the real power in Afghanistan. His temporal and spiritual titles of Sheikh' (head) and Emir' (prince, governor or commander) and the rank he held beside the other Taliban religious dignitaries can leave little doubt on that score." [¶ 118].
Moreover, even before 11 September 2001, Usama bin Laden had sworn an oath of allegiance (Bay'a') making a formal religious bond between him and the Taliban theocracy. He was thus in a situation comparable to that of Mr. Milosevic and the members of the Yugoslav Government at the time of the economic and financial sanctions taken by the Council against the Federal Republic of Yugoslavia. With regard to Al-Qaeda, the Council has observed that it was common knowledge that it had many military training camps in Afghanistan and that thousands of its members had fought beside the Taliban between October 2001 and January 2002, during the intervention of the international coalition.
"There are no grounds for challenging the validity of those considerations as to which there exists, within the international community, a broad consensus expressed, inter alia, by the several resolutions adopted unanimously by the Security Council and which have not been specifically rebutted or even challenged by the applicants."
"More particularly, the chief object of the sanctions at issue in this case was to prevent the Taliban regime from obtaining financial support from any source whatsoever, as is apparent from Paragraph 4(b) of Resolution 1287 (1999). The sanctions might have been circumvented if the individuals who were thought to maintain that regime had not been affected by them. As regards the relations between the former Taliban regime and Usama bin Laden, the Security Council considered that the latter, during the period in question, received assistance, at this point crucial, from the regime of which he could be regarded as forming part."
"Thus it is that, in the 10th recital in the preamble to Resolution 1333 (2000), the Security Council deplored the fact that the Taliban continued to provide safe haven to Usama bin Laden and to allow him and others associated with him to operate a network of terrorist training camps from Taliban-controlled territory and to use Afghanistan as a base from which to sponsor international terrorist operations. Furthermore, in the seventh recital in the preamble to Resolution 1333 (2000), the Security Council reaffirmed its conviction that the suppression of international terrorism was essential for the maintenance of international peace and security." [¶¶ 119-120].
"Thus, contrary to what the applicants maintained, the measures at issue were indeed intended to interrupt or reduce economic relations with a third country, in connection with the international community's fight against international terrorism and, more specifically, against Usama bin Laden and the Al-Qaeda network." [¶ 121]. In sum, the Council was in fact competent to adopt Regulation No 467/2001 on the basis of Articles 60 EC and 301 EC.
The CFI then turns to the plaintiffs' argument from Article 308 EC. It provides that "if 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 ... take the appropriate measures." In the plaintiffs' view, this does not authorize the Council to impose sanctions on individuals. The Court agrees with plaintiffs that Article 308 EC, without more, is an insufficient basis. Nevertheless, other provisions show that the Regulation was properly implemented.
"In this instance, the fight against international terrorism and its funding is unarguably one of the Union's objectives ... as they are defined in Article 11 EU, even where it does not apply specifically to third countries or their rulers. Furthermore, it is not disputed that Common Position 2002/402 was adopted by the Council acting unanimously in relation to that fight and that it prescribes the imposition by the Community of economic and financial sanctions in respect of individuals suspected of contributing to the funding of terrorism, where no connection whatsoever has been established with the territory or governing regime of a third country."
"Against that background, recourse to Article 308 EC, in order to supplement the powers to impose economic and financial sanctions conferred on the Community by Articles 60 EC and 301 EC, is justified by the consideration that, as the world now stands, States can no longer be regarded as the only source of threats to international peace and security. Like the international community, the Union and its Community pillar are not to be prevented from adapting to those new threats by imposing economic and financial sanctions not only on third countries, but also on associated persons, groups, undertakings or entities developing international terrorist activity or in any other way striking a blow at international peace and security."
"The institutions ... are therefore right to maintain that the Council was competent to adopt the contested regulation which sets in motion the economic and financial sanctions provided for by Common Position 2002/402, on the joint basis of Articles 60 EC, 301 EC and 308 EC." [¶¶ 167-170].
The Court therefore holds (1) that it does not have to adjudicate the application for annulment of Regulation 467/2001 because Regulation 881/2002 has repealed it; and (2) that it is proper to dismiss the action as to Regulation 881/2002.
Citation: Yusuf and Al Barakaat International Foundation v. Council and Commission (C.F.I. Case T-306-01) (2005/C 281/31).
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