The European Court of Justice Kadi Decision and the Future of UN Counterterrorism Sanctions

Introduction

The UN Security Council’s use of “targeted sanctions” against suspected terrorists – an important counter-terrorism tool designed to immobilize assets and limit travel – has come under increasing challenge by regional and national courts.[1] The challenge is simple: the sanctioning of a person amounts to the imposition of a penalty, yet the normal due process afforded alleged criminals does not apply.

The most serious challenge, a 2008 decision by the European Court of Justice (ECJ), Kadi & Al Barakaat Int’l Found. v. Council of the E.U. & Comm’n of the E.C. (Kadi),[2] nullified the implementation of the sanctions regime with regard to two parties for violations of constitutionally protected rights. Kadi challenges the core framework of UN terrorist sanctions and forces UN member states to tackle difficult legal questions or else face possible collapse of the UN’s terrorist sanctions regime. This Insight explores those concerns and considerations affecting fundamental reform.

I. The UN Terrorist Sanctions Regime

In 1999, UN Security Council Resolution 1267 required all states to impose aircraft and financial sanctions and an arms embargo against the Taliban. In addition, to monitor implementation of the measures, the resolution mandated the creation of the so-called Sanctions Committee.[3] In subsequent measures, Osama Bin Laden and persons and entities associated with him were added to the list of designated persons, as were other alleged financiers and facilitators.[4] Subsequent resolutions arising out of the 1267 terrorist sanctions regime require enforcement by UN Member States against any person or entity designated on the “Consolidated List” created by the Sanctions Committee.[5] While the United States and a handful of other countries maintain their own national blacklists of alleged terrorists, many countries rely solely on the UN Consolidated List as the legal authority to impose the sanctions against these suspects.[6]

II. Challenges to the 1267 Regime

Although there is strong evidence that the sanctions regime has had a serious impact on terrorist operations, controversy has accompanied the UN sanctions success.[7] The Security Council’s power to enforce and compel has generally been used against states, not individuals, even after the establishment of international criminal tribunals for the former Yugoslavia and Rwanda beginning in 1993. Yet in the case of the 1267 regime, Security Council resolutions directing an asset freeze or travel ban on a person or entity intrude on perhaps the most sensitive sovereign power of a state: deciding on the liberty and property rights of citizens.

When it has authorized direct action against individuals on other occasions, such as in the statutes of the international criminal tribunals, the Security Council has built elaborate protections for the rights of the accused.[8] But the 1267 regime contains minimal allowance for due process: decisions to list or de-list a party are by Committee consensus; little information about the grounds for being listed is shared with the listed parties; listees are not represented before the Sanctions Committee; and no judicial review or remedy is available.[9] The lack of procedural protections has sparked widespread criticism from governments, international organizations[10] and human rights advocates.[11]

III. The Genesis and Inevitable Dilemma of UN Terrorist Sanctions

The United States’ long established framework for blacklisting terror suspects and freezing their assets provided the model for the UN regime.[12] For example, the U.S., judicial review of sanction decisions is deferential to the executive branch, affected parties lack discovery rights and face a low standard of proof, and assets may be frozen before investigations produce sufficient evidence to designate.[13] The fact that many countries participating in the UN 1267 regime now follow the U.S. approach has created a structural problem: although most persons and entities on the UN Consolidated List were designated by the U.S., they and their assets may be located elsewhere. When designations originating in a U.S. legal setting must be enforced in another, where different legal standards operate, there is a risk they may be overturned.

IV. Kadi

The Kadi decision illustrates this weakness at the heart of the 1267 regime.[14] At U.S. insistence, Yassin Abdullah Kadi, a Saudi national, and Al Barakaat International Foundation (Barakaat), registered in Sweden, were designated by the Sanctions Committee[15] and thereafter added to the EC blacklist.[16] Both challenged the Council of the European Union and the Commission of the European Communities and lost at the Court of First Instance (CFI),[17] thereafter appealing to the ECJ and prevailing on most counts.[18]

The ECJ held that the procedure followed by the EU Council afforded the appellants no opportunity to be heard upon initial listing[19] or de-listing, did not disclose the reasons for listing,[20] used extrajudicial means (the UN Sanctions Committee) to make listing decisions,[21] and provided for no judicial review.[22] Consequently, the regulation violated the appellants’ rights to defense;[23] to an effective legal remedy;[24] to effective judicial protection;[25] and to property.[26] The Court annulled the regulation as it related to Kadi and Barakaat, but fearing that its decision would “seriously and irreversibly” harm the freezes, which “may be justified,” stayed enforcement for 90 days, allowing the EC time to cure its defects.[27]

Thereafter the Commission conveyed to Kadi and Barakaat general narrative summaries of the reasons for their listing, “carefully considered” the parties’ responses, finally re-listing both.[28] The Kadi plaintiffs re-instituted proceedings in the Court of First Instance arguing that the Commission’s actions failed to correct the defects identified by the judgment.[29]

While the Kadi litigation appears far from over, it may spark a race to court by similarly situated persons. Indeed, the majority of the approximately 500 parties on the UN consolidated list may be able to raise due process objections roughly equivalent to those asserted by Kadi, and similar challenges may therefore produce similar results.[30] For example, in the June 2009 case of a Jordanian national, Mohammed Othman (aka Abu Qatada), the CFI found that the EU Council “at no time informed the applicant of the evidence adduced against him,”[31] denying him a chance to defend himself and obtain a legal remedy.[32] In annulling the EU regulation as it related to Mr. Othman, the CFI declared him to be “in a factual and legal situation in every way comparable to that of Mr. Kadi.”[33] And like the ECJ in Kadi, the Othman court noted that because the grounds for applying the regulation were not disclosed to the court, no review of its lawfulness was possible, a violation of “the fundamental right to an effective legal remedy.”[34]

Similar due process challenges have arisen in U.S. cases. One of these involves a suit against the U.S. Treasury by the Oregon branch of the Al Haramain Islamic Foundation (AHIF), an international network of charities.[35] The court upheld the Treasury’s designation of the Ashland, Oregon chapter of AHIF as a Specially Designated Global Terrorist (SDGT) entity in 2004 and again in 2008.[36] However, in an echo of the Kadi and Othman judgments, it found the Treasury Department’s notice to AHIF of its intent to designate and re-designate was insufficiently timely or specific to give the organization a basis to defend itself.[37] It also found that the order blocking AHIF’s assets was a “seizure” for purposes of the Fourth Amendment of the U.S. Constitution and ordered further argument as to whether the seizure was reasonable and constitutional.[38] The court voiced significant reservations about the designation methodology followed by Treasury in the case. Since the Treasury Department applies the same framework to asset freezes pursuant to UN designations, a final decision in the case may carry implications similar to the judgments in Kadi and Othman.

V. Fixing the System

The UN’s key contribution to anti-terrorism cooperation is to act as the legal trigger for international enforcement action. If UN designations fail to sustain judicial scrutiny, the UN trigger will also prove unsuccessful. Indeed, while Kadi is the most far-reaching blow to the UN sanctions regime, along with Othman and AHIF, it is one among dozens of recent challenges,[39] including similar cases before U.S. and other national courts.[40] And while the Security Council has added procedural protections over the years, the 1267 regime’s reliance on intelligence limits the degree of procedural standards major powers are willing to accept.[41]

A proposal by the European Commission currently before the EU Parliament offers one potential solution.[42] Under the Commission’s proposal, upon notification by the UN Sanctions Committee of a new listing decision and receipt of the statement of reasons, the Commission would provisionally freeze the economic resources of the party concerned, while at the same time sending the party a statement of reasons and inviting its views. Finally, aided by an advisory committee, the Commission would examine the views and adopt a final decision confirming or rescinding the provisional freeze.

A drawback of the EC proposal is that it demotes UN Sanctions Committee decisions to the status of proposals. Yet as an agent of the Security Council, the Committee’s authority to make terrorist designations derives from resolutions with which compliance is compulsory.[43] Thus, any decision to rescind a freezing order would violate the rescinding state’s UN Charter obligations. Once European states treat terrorist designations as mere proposals, others would do the same.

No single path leads from this quandary, but a few considerations may suggest a direction. First, Kadi means the inevitable erosion of the 1267 status quo. The task lies with the international community to construct improved UN listing and de-listing procedures capable of attracting more support and judicial deference. Otherwise, there is a possibility that the regime will continue to be fragmented as courts in different jurisdictions impose different due process standards, resulting in the blocking of assets in some countries and un-blocking in others. Such a result would enable listed parties to shop, as before, for a safe harbor.

Second, in Kadi, the court, hinting at flexibility, noted that procedural modifications to the 1267 regime occurring after the “contested regulation” “cannot be taken into consideration,” implying that subsequent changes may overcome judicial scrutiny.[44] The Court also stressed that the de-listing procedure was defective because it was essentially political, conducted by diplomats acting on instructions from their capitals, not because it was not conducted by an EU court.[45] And, finally, the ECJ emphasized that “overriding considerations,” such as public safety or the conduct of international relations, may limit procedural protections, including the right to be informed and/or the right to be heard before being listed.[46]

Third, given the grave risks associated with an unraveling sanctions regime and the ECJ’s stance toward the Security Council, it would be prudent for the United States and its partners to think creatively about ways to protect, or in some cases reduce the need for confidentiality. For example, one commentator suggests empowering an independent party, INTERPOL for example, to propose designations on behalf of states wishing to protect intelligence sensitivities.[47] Similarly, designations might be made on a provisional basis, pending in-camera review by a panel of jurists with security clearances from designating and enforcing states (i.e. where assets are located).

VI. Conclusion

A better balance between the UN counter-terrorism sanctions regime and the rights of those it targets must be found. If UN member states fail to address this conflict, domestic courts will surely get involved. Such a result would leave a legal patchwork that frustrates the purpose of multilateral sanctions and casts a shadow over Security Council authority.

About the Author

Peter Fromuth, a former State Department official, practices law in Washington D.C. and Maryland.

Endnotes