Kadi & Al Barakaat v. Council of the EU & EC Commission: European Court of Justice Quashes a Council of the EU Regulation Implementing UN Security Council Resolutions

On September 3, 2008, in Yassin Abdullah Kadi and Al Barakaat International Foundation v. Council of the European Union and Commission of the European Communities, the European Court of Justice (ECJ) overruled the Court of First Instance and annulled the regulation of the Council of the European Union (Council of the EU) that froze the funds of Mr. Kadi and Al Barakaat (Appellants). The ECJ ruled that it has jurisdiction to review measures adopted by the European Community (EC) giving effect to resolutions of the United Nations Security Council (UNSC) adopted against the Al-Qaeda and Taliban terrorist networks. The ECJ found that the regulation of the Council of the EU infringed the appellants’ fundamental individual rights under EC law, including the right to be heard before a court of law, the right of effective judicial review, and the right to property.[1] This Insight analyzes the Kadi & Al Barakaat joint cases and their importance to international law.

Background

In its fight against terrorism, the UNSC imposed sanctions under Chapter VII of the UN Charter against individuals and entities allegedly associated with Osama bin Laden, the Al-Qaeda network, and the Taliban.[2] These sanctions included freezing such persons’ and entities’ funds and other financial assets. The UNSC established the Sanctions Committee, made up of all UNSC’s members, to oversee the implementation of these sanctions, and the Sanctions Committee maintains a regularly updated list of designated persons and entities.

The Sanctions Committee is empowered to consider listing and de-listing requests. States and regional organizations may propose names for listing and provide a statement of case in support of the proposed listing. Targeted individuals and entities are entitled to submit a request for de-listing through the State of their residence or citizenship or through a “focal point” in the UN Secretariat. The Sanctions Committee makes decision on listing or de-listing requests by consensus.[3]

In order to give effect to these UNSC resolutions, the Council of the EU adopted a regulation ordering the freezing of the funds and other assets of the persons and entities appearing in a list annexed to the regulation.[4] The Council of the EU has modified this list a number of times to reflect modifications of the UNSC list made by the Sanctions Committee. In 2001, the Sanctions Committee designated both Mr. Kadi, a national of Saudi Arabia, and Al Barakaat, established in Sweden, as being associated with Al-Qaeda.[5] Consequently, the EC imposed sanctions against them, including the freezing of their funds and other financial assets.[6]

In December 2001, Mr. Kadi and Al Barakaat instituted proceedings before the Court of First Instance (CFI) and originally requested annulment of Council Regulation (EC) No 467/2001 of March 6, 2001 and, subsequently, they requested annulment of Council Regulation (EC) No 881/2002 of May 27, 2002 imposing certain specific measures directed against certain persons and entities associated with Osama bin Laden, the Al-Qaeda network and Taliban, which replaced Regulation (EC) No 467/2001.

The Appellants argued that the Council of the EU lacked competence to adopt the regulation and that the regulation infringed several of their fundamental rights, namely the right to respect for property, the right to be heard before a court of law, and the right to effective judicial review.[7] On September 21, 2005, the CFI rejected all the claims of Mr. Kadi and Al Barakaat and confirmed the validity of the regulation.[8]

Specifically, the CFI ruled that it had no jurisdiction to review the validity of the contested regulation and, indirectly, the validity of the relevant UNSC resolution, except in respect of jus cogens norms because the regulation implemented a UNSC resolution adopted under Chapter VII of the UN Charter. Such UNSC resolutions are biding upon the EC Member States and they prevail over their obligations under the EC Treaty by virtue of Article 103 of the UN Charter. The CFI concluded that restrictive measures provided in the contested regulation did not infringe the Appellant’s fundamental rights as protected by jus cogens.[9]

Mr. Kadi and Al Barakaat appealed the CFI’s judgments in November 2005.[10] They put forward three grounds of appeal.[11] First, the Appellants alleged that the contested regulation lacked any legal basis in EC law. Second, the Appellants alleged that in so far as the regulation directly prejudiced the rights of individuals and prescribed the imposition of individual sanctions, it had no general application and therefore contravened Article 294 of the EC Treaty, which provides general application of regulations. Third, they alleged the regulation violated their fundamental rights.

The ECJ dismissed the first two grounds of appeal as unfounded. On the first ground of appeal, the ECJ confirmed the CFI’s ruling that the Council of the EU was competent to adopt the regulation on the basis of Articles 60, 301 and 308 of the EC Treaty.[12] As regards the second ground of appeal, the ECJ found no violation of Article 294 of the EC Treaty.[13]

Judicial review by the EC courts

In terms of the third ground of appeal, the ECJ considered the limits of the review by EC courts, in light of the fundamental rights and of the internal lawfulness of the contested regulation. In this analysis, the ECJ took into consideration the principles governing the relationship between the international legal order under the UN and the EC legal order. The ECJ disagreed with the CFI’s finding on lack of jurisdiction to review the internal lawfulness of the contested regulation and confirmed, for the first time, its full competence to review EC acts implementing UNSC resolutions:

[T]he Community judicature must … ensure the review, in principle the full review, of the lawfulness of all Community acts in the light of the fundamental rights forming an integral part of the general principles of Community law, including review of Community measures which, like the contested regulation, are designed to give effect to resolutions adopted by the Security Council under Chapter VII of the Charter of the United Nations.[14]

Taking account of the settled case law, the ECJ justified its decision by emphasizing that

the review by the Court of the validity of any Community measure in the light of fundamental rights must be considered to be the expression, in a community based on the rule of law, of a constitutional guarantee stemming from the EC Treaty as an autonomous legal system which is not to be prejudiced by an international agreement.[15]

The ECJ added that the review of lawfulness applies only to the EC act purporting to give effect to the international agreement, but not to the international agreement as such.[16] Thus, EC courts do not have competence to review the lawfulness of a resolution adopted by an international body, even if the courts limited their review to examination of the compatibility of that resolution with jus cogens norms.[17] The ECJ held that

any judgment by the Community judicature deciding that a Community measure intended to give effect to … a [UNSC] resolution is contrary to a higher rule of law in the Community legal order would not entail any challenge to the primacy of that resolution in international law.[18]

Infringement of fundamental rights

On the question of fundamental rights, the ECJ held, contrary to the CFI’s ruling, that the rights to be heard and to effective judicial review were patently not respected.[19] The ECJ held that the regulation provided no procedure for communicating the evidence justifying the inclusion of Appellants on the list. In addition, the Council of the EU never informed the Appellants of the evidence against them that justified including them on the list.[20] Thus, the Appellants were not able to defend their rights before EC courts, so the ECJ found that the regulation also infringed the Appellants’ right to an effective legal remedy.[21]

With regard to the right to property, the ECJ acknowledged that the “restrictive measures imposed by the contested regulation constitute restrictions of the right to property which might, in principle, be justified.”[22] The ECJ considered, however, that “the contested regulation, in so far as it concerns Mr. Kadi, was adopted without furnishing any guarantee enabling him to put his case to the competent authorities, in a situation in which the restriction of his property right must be regarded as significant, having regard to the general application and actual continuation of the freezing measures affecting him.”[23] Thus, the ECJ found that the freezing of funds “constitutes an unjustified restriction of Mr. Kadi’s right to property.”[24]

Impending consequences and effects of the judgement

The ECJ allowed the EC to maintain the regulation for a period of three months in order to allow the Council of the EU time to remedy the infringements found. By doing so, the ECJ sought to prevent the Appellants from avoiding the application of the measures against them, given that the measures may prove justified.[25] Although the judgment, in the words of the ECJ, does not defy the primacy of the relevant UNSC resolutions in international law,[26] it does indirectly affect the implementation of the resolutions in question.

If the Council of the EU modifies the sanctions regime giving effect to UNSC resolutions, these modifications could, in principle, clash with the conditions set forth by the UNSC in the existing UN sanctions regime. The EU Member States might find themselves in a situation where, by following the EC measures, they would end up violating their international obligations vis-à-vis the UNSC. However, rather than allowing noncompliance of the resolutions, the UNSC might consider introducing necessary improvements, thereby avoiding undermining the authority and effectiveness of the anti-terrorist sanctions regime.[27]

Conclusion

This case is important for five reasons. First, this case marks the first time that the ECJ confirmed its jurisdiction to review the lawfulness of a measure giving effect to the UNSC resolutions. Second, the case constitutes the first time the ECJ quashed an EC measure giving effect to a UNSC resolution for being unlawful. Third, no other international or regional court has held that sanctions imposed by the UNSC resolutions in the fight against terrorism infringe certain fundamental rights. Fourth, the decision confirms that the powers of the UNSC are not unlimited. Fifth, the judgment illustrates the important role played by the EU Courts in delineating the limits of the UNSC’s powers.

About the Author

Dr. Miša Zgonec-Rozej, an ASIL member (misazgonec@gmail.com), is currently on leave from the International Criminal Tribunal for the former Yugoslavia, in The Hague, where she served as an Associate Legal Officer in Chambers. She was formerly law clerk to Vice President Judge Awn Shawkat Al-Khasawneh and Judge Shi Jiuyong at the International Court of Justice. She has a PhD from the University of Ljubljana, Slovenia. The views expressed herein are solely those of the author.

Endnotes