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Kadi II, or the happy ending of K’s trial – Court of Justice of the European Union, 18 July 2013

By on 29 Luglio, 2013

On July 18, 2013, the Grand Chamber
of the Court of Justice of the European Union (“the Court”) handed down the judgment
in the so-called Kadi II dispute
.
With this decision, the Court dismissed the appeals brought by the Council, the
Commission and the UK against the General Court’s judgment of September 30,
2010 (find here
a comment, in Italian). In so doing, the Court has confirmed that Mr. Kadi’s
inclusion in the list of subjects whose resources must be frozen on account of
their potential relationship with Al Qaida was in breach of his fundamental
rights. Therefore, the Court upheld the annulment of the Commission
Regulation No 1190/2008
, in the part providing for Kadi’s renewed enlisting
in the blacklist found in Annex 1 to Regulation No 881/2002.

*          *          *

The two-level Kadi II litigation follows at the heels of the famous Kadi proceedings (also two-folded: Tribunal
of First Instance, 2005; ECJ, 2010). Before turning to the reasoning of the
Court in the 2013 judgment, the factual and legal scenario in which the three
previous judgments took place will be sketched out briefly to provide some
perspective.

In 1999 the Security Council of the
United Nations passed Resolution
1267
under Chapter VII of the UN Charter. This act provided for the
freezing of the assets of individuals and organisations suspected of having
links with terrorist activities run by the Taliban. States can submit to the
Sanctions Committee a request for inclusion of a subject in the Consolidated
List, together with the relevant supporting evidence. In 2006 (see Resolution
1730
) the Security Council established a ‘focal point’ to deal with
delisting requests. Since 2009 (see Resolution 1904)
the Office of the Ombudsperson has assisted the Sanctions Committee in dealing
with delisting requests. Shortly after the 9/11 attacks, Mr Kadi, upon request of
the USA, was included in the Consolidated List by the Sanctions Committee, on
grounds of his suspected association with Usama bin Laden. His name was
subsequently included in the EC Council Regulation implementing the UN Security
Council resolution (No 467/2001, then repealed and substituted by No
881/2002
, see Annex I).


Mr Kadi brought proceedings in 2001
before the (then) Tribunal of First Instance seeking annulment of these EC
Regulations, in so far as he was directly concerned. He claimed violation of
his right to be heard, respect for property, and effective judicial review, as
well as breach of the principle of proportionality. In 2005, the TFI dismissed Mr
Kadi’s claim (see judgment here).
It held, in essence, that the Regulations challenged enjoyed immunity from judicial
review, since they were designed to give implementation to international
obligations which left no margin of discretion to the EC. The Tribunal declined
to exercise its judicial review on the determinations made by the Security
Council and was content to note that no breach of jus cogens had occurred, which could have possibly justified an
exception to the immunity principle.

In 2008, on appeal, the Court of
Justice reversed the TFI’s decision (see judgment here).
The Luxembourg judges famously referred to a core of constitutional principles
that buttress the rule of law within the EU and cannot be prejudiced by
unconditional compliance with international obligations. Since the legality of
EU acts depend on their conformity with the minimum standards of fundamental rights
protection, EU judicial bodies can review them, using the jurisdictional
mechanisms set in the Treaties. As to the nature of such review, the ECJ held
that it must ensure ‘in principle the full review’ of EU legal acts, including
those designed to implement UN Security Council’s resolutions (para. 326). In
performing such review, the ECJ concluded that Mr Kadi’s rights to property and
judicial protection had been breached, mainly due to the EU’s absolute failure
to communicate to him any of the information upon which the listing had been
decided. As a consequence, he was unable to submit his views effectively with
the purpose of challenging the listing measure: he was in other words deprived
of the right to defence and of effective judicial review. The ECJ thus annulled
the challenged Regulation, allowing for the maintenance of its effects for
three months, so as to give some time to the EU institutions to remedy the procedural
wrongdoing.

Shortly after this judgment, the Sanctions Committee authorised the
transmission to Mr Kadi of the narrative summary of the reasons for his
listing. They are reported in full at par. 28 of the Court’s 2013 decision. In
a nutshell, Mr Kadi was listed because he had founded and directed the Muwafaq
Foundation, which was alleged to belong to the Al Qaida network and to support
to mujahidin in Bosnia during the war in Yugoslavia. Moreover, a director of
the Foundation was alleged to have regular contacts with Usama bin Laden for
the purpose of providing military training to Tunisian mujahidin. Mr Kadi was
also shareholder of a Bosnian bank where a terroristic plot might have been
planned, as well as of other Albanian firms which allegedly funnelled money
from and to extremists.

The Commission referred to these reasons to motivate the decision
not to remove Mr Kadi from the list annexed to Regulation No 881/2002, and gave
him the possibility to submit comments. This procedure, in the Commission’s
intentions, was clearly designed to meet the procedural requirements indicated
by the ECJ and therefore to obliterate the human rights deficiencies tainting
Mr Kadi’s listing. In Regulation No 1190/2008, the Commission acknowledged Mr Kadi’s
submissions but concluded that they could not warrant delisting.

Mr Kadi then brought new proceedings
before the General Court, seeking annulment of Commission’s Regulation 1190/08. In its 2010 decision (found here),
the General Court referred – not without some perplexity – to the dictum of the ECJ, which had called in
2008 for ‘in principle full review’ of all EU acts. It therefore held that the
delisting procedure available before the Sanctions Committee failed to offer
the minimum guarantees of judicial protection, nor had the system set up at the
EU level offered any additional protection of Mr Kadi’s rights. The General
Court also noted that the judicial review could not be limited to
the merits of the contested measure but should necessarily extend to the evidence
on which it was adopted. The kind of review advocated by the Commission, the
General Court noted, would be tantamount to ‘a simulacrum’ of effective
judicial review (par. 123). In the instant case, this required an examination
of the information available to justify the listing, which could not be barred
by reasons of secrecy or confidentiality. Ultimately, the General Court
considered that the process put in place by the Commission to allow Mr Kadi to submit
his views was superficial and formalistic. The main flaw of that procedure was
that Mr Kadi had not been given access to the any of the information used
against him, other than what was contained in the summary of reasons. As a
consequence, the fundamental rights violations highlighted by the ECJ had not
been healed and the General Court annulled the 2008 Regulation.

K poster

*          *          *

The Council, the Commission and the UK appealed the judgment of the
GC. Thirteen member states intervened in support of the appellants, asking the
CJEU to set aside the 2010 judgment of the General Court. The grounds of
appeal can be summarised as follows: 1) the GC erred because it failed to
recognise that the challenged Regulation is immune from judicial review; 2) the
GC’s review of the contested Regulation was too intrusive, and should have
rather been deferential; 3) the GC erred in assessing the merits of the
annulment claim, failing to appreciate the counterbalancing measures that
prevent a violation of Mr Kadi’s fundamental rights (such as the need for confidentiality
and the procedures available to allow Mr Kadi to submit his views).

In October 2012, Mr Kadi was delisted by the Sanctions Committee,
following a request for delisting channelled through the Ombudsperson. As noted
in this great post, Mr
Kadi did not give up on the proceedings before the Court, seeking to obtain a
pilot-judgment.

The Court dismissed the first claim very swiftly, borrowing the
reasoning from its own precedent in Kadi
I
: the EU is a legal order based on the rule of law, and protection of
fundamental rights is an essential component thereof (par. 66). It follows that
all EU acts must be amenable to judicial review for compliance with fundamental
rights, without prejudice to the primacy of UN Security Council’s resolutions (par.
67). This brief remark represents the consecration of the dualist approach
inaugurated in Kadi I: maintenance of
the constitutional values of the EU prevails over the risk of incurring
international responsibility for failure to comply with international
obligations. When push comes to shove, the Court will strike down abhorrent EU
acts, regardless of their UN imprimatur.
Likewise, the Court was not particularly impressed by the argument regarding
the intensity of the review: review must be full, in principle, and Art. 275(2)
TFEU squarely empowers the Court to carry it out (par. 97).

The thrust of the decision concerned the merits of the claims, ie,
whether Mr Kadi’s rights to judicial protection and property had been
unjustifiably restricted. The Charter of Fundamental Rights lists the right to
be heard, the right to have access to the file and the right to ascertain the
reasons upon which a decision is taken (see Articles 41(2) and 47). Art. 52(1),
on the other hands, allows for the necessary restrictions of Charter’s rights,
subject to a requirement of necessity, proportionality and contribution to
objectives of general interest.

Within this legal framework, the Court turned to the listing
procedure, and identified the major cause for problems: whereas the EU is bound
to respect fundamental rights (in all circumstances, and therefore also) when
it implements Security Council’s resolutions, the Sanctions Committee is under
no obligation to disclose the information used to adopt its decisions to the subjects
listed or to the EU, the only exception being the summary of reasons (par. 107).
All issues arise from this gulf between the duties of the EU and the lack of
duties of UN bodies. In particular, the Court noted that the right to effective
judicial protection under Art. 47 of the Charter requires an ascertainment that
decisions affecting individuals are taken on sufficiently solid factual bases
(par. 119). Hence, the review cannot stop at the logical cogency of the reasons
stated in the decision, but must ascertain whether they are substantiated on
the basis of reliable evidence. In the instant case, all that the Commission
could rely on was the summary of reasons. The task of the Court, therefore, was
to ascertain whether any one of those reasons, in the absence of further
supporting information, could be sufficient to justify the listing of Mr Kadi.

Significantly, the Court did not equate the failure to disclose the
evidence supporting the summary of reasons with an automatic violation of the
right to defence (par. 137): the EU institutions are under no general
obligations to submit this information to the Court. However, if they chose not
to do so (or, like in the instant case, are simply unable to do so because the
Sanctions Committee will refuse to share it), the risk of violation increases
together with the summary’s vagueness. The Court did not disregard the
possibility that the confidentiality of the information require its
non-disclosure for security reasons, but reserved for itself the power to
ascertain whether a claim of non-disclosure is founded. If secrecy is not justified,
the Court will examine the lawfulness of the contested measures solely on the
basis of the disclosed information (par. 127). Otherwise, a balance must be
struck between the need for confidentiality and the principle of equality of
arms – the Court will again be the subject entrusted with the determination of
whether the balance was reached or, to the contrary, the rights of the person
concerned are unduly restricted (par. 129).

The Court then criticised the General Court for dismissing wholesale
the probative value of the summary of reasons for lack of detail (par. 140) and
for inferring the breach of Mr Kadi’s rights from the sole fact that the
information held by the Sanctions Committee were not disclosed to anyone, let
alone to Mr Kadi. In fact, it is possible, in the abstract, that the summary of
reasons be sufficient evidence to justify the listing, and the simple fact that
more detailed information are not disclosed is not per se decisive. The Court agreed with the General Court that one
of the reasons of the summary was irredeemably vague (the one regarding the unspecified
Albanian firms) but found on the contrary that the other reasons were
sufficiently detailed, as they referred to the identity of the persons involved
and the nature of the wrongdoing alleged.

The Court then examined the other allegations contained in the
summary of reasons, together with Mr Kadi’s comments and the Commission’s
replies (paras. 151 to 163). It noted that, invariably, the Commission had not
been able to answer Mr Kadi’s comments satisfactorily. In the face of detailed exculpatory
submissions by Mr Kadi, the Commission’s failure to substantiate further the
reasons for listing was tantamount to a failure to discharge the necessary
burden of proof. Therefore, the contested Regulation, as previously held by the
General Court, is unlawful, and the errors committed in first instance did not
affect the correctness of the order of annulment (paras. 164-165).

The Court appeared to stand by its 2008 precedent, in spite of the mounting
pressure by all Member States and of the obvious risk that its reasoning be
used in countless similar delisting cases in the future. Far from being a decision
of principle, it is nevertheless a decision based on principles
: its value
lies squarely in its systemic impact (beyond the instant case), as it
incarnates the idea that certain fundamental rights cannot be silenced under
the cover of generic security concerns.

*          *          *

The simple recapitulation of the court vicissitudes endured by Mr Kadi
and his legal team is so dense that no further comments should be added here.
Commentaries, of course, will flourish and some of them are already in the
making (here
an example). Readers are warmly encouraged to share their views in the comment
section, below.

As a final thought, suffice it here to justify the title of the
post, hinting at the striking parallel between Kadi’s saga and Mr K’s
trial
. Both Messrs K. faced everlasting and frustrating judicial
proceedings based on allegations that were never fully communicated to them. Regardless
of whether the Court’s decision is correct (let alone just in a wider sense),
it is somewhat comforting to note that the rule of law in the EU is alive and
kicking. An individual, suspected of connections with Al Qaida, can succeed
against the aggregate hostility of the Council, the Commission and a plethora
of member states, with no other weapon than the set of guarantees listed in the
Charter of Fundamental Rights (an apparently unfrozen wealth also helped, at
least if one reads the names featuring in his all-star legal team).

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