European Court criticises Commission for failure to act on post-Kadi review of terrorist sanctions listing

24 Mar 2014 | by Caroline Sweeney

Case T‑306/10 Yusef v Commission, judgment of the General Court of the European Union (Second Chamber; President: Judge Forwood), 21 March 2014

The applicant’s funds and economic resources were frozen on 5 October 2005 by his inclusion on a list drawn up by the UN Sanctions Committee and his subsequent listing by the EU Commission in Annex I to Regulation No 881/2002. By letter of 18 March 2010 the applicant called upon the Commission to remove his name from the list at issue, following a number of events including the delivery of judgment in Joined Cases C‑402/05 P and C-415/05 P Kadi I in 2008 and the UK altering its stance on the applicant’s case in 2009, subsequently supporting his delisting by the UN (which was however blocked by the undisclosed listing state). When the Commission failed to respond the applicant brought this action for failure to act.

The General Court rejected the Commission and Council’s arguments that the action was an inadmissible attempt to circumvent the time limit for actions for annulment. It held that there were in reality new circumstances, arising well after the adoption of the listing regulation, which led the applicant to call upon the Commission to remove his name from the list at issue and, in the absence of any reaction by the Commission within the period of two months laid down in Article 265 TFEU, to bring this action for failure to act.

On the substance, Court upheld the applicant’s complaint of the persistent failure by the Commission to observe the principles stated by the Court of Justice in its Kadi I and Kadi II judgments.

On this first occasion when it has had the opportunity to do so, the Court emphasised that the Commission, post-Kadi, far from regarding itself as strictly bound by the assessments of the UN Sanctions Committee, must on the contrary envisage calling those findings into question in the light of the observations of the person concerned, failing which that person’s rights of the defence will be observed only in the most formal and superficial sense. The Court held that the Commission was clearly under an obligation to act with regard to the applicant, if not immediately after the Court had delivered its judgment in Kadi I, or in 2009, then at the very least and at the latest in reply to the applicant’s calling upon it to act of 18 March 2010. The Commission was at least obliged to examine the fresh evidence, in order to assess whether it amounted to a change of circumstances such as to warrant, if appropriate, the revocation of the regulation, if necessary without retroactive effect.

The General Court went on to find that it is not acceptable that, more than four years after the ruling in Kadi I, the Commission is still not in a position to discharge its obligation to examine the applicant’s case carefully and impartially, where appropriate in ‘effective cooperation’ with the Sanctions Committee. Furthermore, according to the statements made at the hearing, the Commission continues to regard itself as strictly bound by the findings of the Sanctions Committee and as not having any discretion in that regard. This, the Court held, is in contradiction with the principles laid down by the Court in Kadi I and Kadi II.

Accordingly, it held that the way in which the Commission purports, by implementing the review procedure with regard to the applicant’s case, to remedy the infringements of the same kind as those found by the Court of Justice in its judgment in Kadi I, is formal and artificial in nature.

The Court accordingly granted a declaration that the Commission’s failure to remedy the procedural deficiencies and substantive irregularities affecting the freezing of the applicant’s funds is unlawful.

Philip Moser QC of Monckton Chambers appeared for the successful applicant, instructed by Birnberg Peirce.

A link to the full judgment is here.