On 18 July the Grand Chamber of the European Court of Justice (ECJ) handed down judgment in favour of the Saudi businessman and philanthropist Sheikh Yassin Abdullah Kadi in a case known as Kadi II. The decision is the second decision in Mr Kadi’s favour by the ECJ and follows the ECJ’s annulment in September 2008 of the European Regulation under which Mr Kadi was originally listed in 2001 (Kadi I).
In this most recent decision, the ECJ upheld the September 2010 decision of the General Court annulling the European Regulation relisting Mr Kadi in 2008, and dismissed the appeals against that decision brought by the European Commission, the Council of the European Union and the UK. The ECJ held that none of the reasons for listing Mr Kadi set out in the UN Narrative Summary was substantiated by the evidence. Mr Kadi was represented by Carter-Ruck’s international law team.
It is important to note that by the time of the oral hearing before the ECJ, Mr Kadi had already been delisted by the EU following the removal of his name from the UN Al-Qaida Sanctions List on 5 October 2012.
The issues of principle upon which the Court pronounced are set out below.
No immunity from jurisdiction for EU Regulations implementing UN measures
The Council argued that the General Court erred in law by refusing to recognise that the contested regulation had immunity from jurisdiction and that this refusal was contrary to both international law and European Union law. The ECJ, following its decision in Kadi I and other case law, held that the General Court had been correct to rule that the contested regulation did not enjoy immunity from jurisdiction. It stated that in light of the fundamental rights which form part of the European legal order, the requirement for EU institutions to pay due regard to UN institutions must not result in there being no review of the lawfulness of EU measures.
This principle is now firmly supported by the case law.
Rights of defence and right of effective judicial protection
The ECJ noted that the Commission was not in possession of evidence supporting Mr Kadi’s listing other than the UN Narrative Summary of reasons for listing. It was apparent from the recitals of the contested regulation that this was the basis upon which Mr Kadi had been relisted.
The ECJ reiterated its finding in Kadi I that the competent EU authority must disclose to the individual concerned the evidence upon which the authority has decided to list them. At the very least, that will be the UN Narrative Summary which is provided by the Sanctions Committee to the EU authority in question.
The EU authority must make sure the individual can effectively respond to the allegations made against them, and that must be done before the decision is adopted. The EU authority must then “examine, carefully and impartially” whether the alleged reasons are well founded, and it must do so in light of comments and any exculpatory evidence provided by the individual concerned.
The General Court had held that the UN Narrative Summary provided by the UN to the Commission, and subsequently to Mr Kadi, was insufficient to satisfy the duty to give reasons. The ECJ disagreed. It confirmed that the statement of reasons must identify the “individual, specific and concrete” reasons why the authorities consider that the individual must be subject to restrictive measures. However, it held that the General Court had erred in law by finding that Mr Kadi’s rights of defence and right to effective judicial protection had been infringed on the basis of the Commission’s failure to disclose to Mr Kadi and to the General Court the information and evidence underlying the reasons for the listing, particularly as the Commission was not in possession of that information and evidence. The ECJ did not agree with the General Court that all of the allegations were vague and lacking in detail, finding that all but one of the allegations were sufficiently detailed. This was so even though one of the allegations was expressed as a possibility, since reasons for listing may be based on suspicions of involvement of terrorist activities.
The ECJ also clarified the intensity of judicial review required, an issue upon which much of the argument between the parties was focused. The ECJ held that as well as considering procedural rules, the legal basis for the listing, and whether the duty to give reasons was satisfied, the Court, in considering a challenge to EU restrictive measures, must ensure that the listing decision is taken on a “sufficiently solid factual basis”. This, the ECJ made clear, involves an examination of the factual allegations underlying the listing, i.e. whether on the basis of the evidence provided at least one of the reasons for the listing is substantiated.
It was not necessary for the authority to produce all of the evidence underlying the reasons, but the information or evidence produced must support the reasons relied upon. If the material disclosed did not support a finding that a reason was well founded, then the Court must disregard that reason as a basis for the listing. If material was disclosed, then the Court must assess the probative value of that information or evidence in the circumstances of the case, and determine whether the facts alleged were made out on the basis of that information.
The ECJ thus rejected the recommendation made in Advocate-General Bot’s Opinion that the Court should carry out a “limited” review in cases arising from UN counter-terrorist sanctions. The ECJ usually follows the Advocate-General’s opinion, but is not obliged to do so.
The Court examined the reasons why Mr Kadi had been listed, i.e. the allegations set out in the UN Narrative Summary. The Court concluded that none of the allegations had been substantiated by evidence and it was on this basis that it held that the regulation listing Mr Kadi should be annulled.
Whilst reaching the same result, the ECJ’s reasoning thus differed from that of the General Court. The General Court had held that in providing Mr Kadi with the UN Narrative Summary and nothing more, the Commission had not satisfied the duty to give reasons. In contrast, the ECJ held that the duty to give reasons had been satisfied by the provision of the UN Narrative Summary, but that the allegations contained in it were not substantiated by the evidence.
The legal effect of Kadi I and Kadi II is that Mr Kadi was never validly listed by the EU.