Legal challenges to the UN and EU sanctions against Iran

Legal Challenges to the UN &
EU Sanctions against Iran
AUTHOR: Makan Sharifi
August 2015
SUPERVISOR: Elspeth Guild
FINAL WORDCOUNT: 14535

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Contents
I Introduction..............................................................................................................................2
II Background ............................................................................................................................3
III The Security Council Resolutions against Iran.....................................................................5
1. The EU restrictive measures against Iran following Security Council Resolutions ..........7
2. The relationship between the UN Charter and the EU law................................................9
2.1 Bosphorus .....................................................................................................................9
2.2 Kadi.............................................................................................................................11
3. Legal issues with the Security Council Resolutions against Iran.....................................16
3.1. The UNSC Resolution 1969 (2006) ..........................................................................17
3.2. Iran’s nuclear programme – a threat to the international peace and security? ..........18
IV Fundamental rights and Iranian Cases before the EU Courts .............................................20
1. Bank Mellat......................................................................................................................21
1.1 Obligation to State Reasons, Right of Defence and Right to Effective Judicia l
Protection..........................................................................................................................22
1.2 Manifest Error of Assessment ....................................................................................24
2. Other Iranian cases...........................................................................................................25
3. Negative Impact on Reputation and Legal Actions Available .........................................27
3.1 Interim relief...............................................................................................................29
3.2 Damages .....................................................................................................................29
V EU autonomous sanctions against Iran: countermeasures and legal issues .........................33
1. An internationally wrongful act attributed to Iran ...........................................................36
2. The ‘Injured State’/international organisation .................................................................37
3. Proportionality..................................................................................................................39
VI Conclusions.........................................................................................................................40
VII Bibliography......................................................................................................................40

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I Introduction
Iran has been under crippling economic sanctions ever since it revealed its uranium enrichment
activities in 2002, due to the suspicion that Iran is seeking nuclear weapons contrary to its
obligations under the Non-Proliferation Treaty.1 Hence, Iran’s nuclear case has been referred2
to the Security Council of the United Nations where several targeted sanctions resolutions have
been adopted against the country in order to induce it to halt its nuclear activities.3 Accordingly,
the EU has imposed a rigorous set of restrictive measures against Iran in response to its nuclear
development. These measures have been adopted either on the basis of the United Nations
Security Council resolutions or on an autonomous basis, under the Common Foreign and
Security Policy (CFSP).
The purpose of this paper is to examine the potential legal challenges to the EU restrictive
measures against Iran through the case-law of the EU Courts, the EU treaties as well as the
international law. It will look at the legal basis of the EU sanctions imposed on Iran and will
assess whether the Council of Europe (The Council) complies with the rule of law and
fundamental rights in subjecting Iranian entities and individuals to travel ban and asset freezing
measures. It will explore the limits to the binding nature of the Security Council resolutions in
the light of the UN Charter and the EU law. It will also evaluate the legality of the unilateral
restrictive measures taken by the EU against Iran with reference to the law of state
responsibility. The severity of the EU’s comprehensive restrictive measures against Iran and
its repercussion on socio economic and political stability at both the regional and international
level, raises a number of questions as regards their legality under the EU and international law.
1 Treaty on the Non-Proliferation of Nuclear Weapons [1968] 21 U.S.T. 483, 729 U.N.T.S. 161. art.II.
2 IAEA Resolution, Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran ,
GOV/2006/13 (4 February 2006), para 2.
3 S.C. Res. 1737, S/RES/1737 (27 December 2006); S.C. Res. 1747, S/RES/1747 (24 March
2007); S.C. Res. 1803, S/RES/1803 (3 March 2008); S.C. Res. 1835, S/RES/1835 (27 September 2008);
S/RES/1929 (9 June 2010).

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This paper consists of five sections after the introduction. Section II will give a brief overview
of the background to the sanctions against Iran and its nuclear issues. Section III will outline
the EU restrictive measures enacted following the binding Security Council resolutions against
Iran, examining the relationship between the EU law and the UN Charter, the decisions of the
Security Council in particular, through the EU treaty provisions and the EU Court’s rulings in
cases such as the Bosphorus4 and Kadi.5 This will be followed by an evaluation of the
lawfulness of the Security Council resolutions against Iran and their consistency with the UN
Charter and the EU law. Section IV will look at the travel ban and asset freezing measures
adopted by the Council of Europe against Iranian entities or individuals through case studies,
and will assess whether the Council complies with the rule of law and the fundamental rights
in designating them. This section will also briefly evaluate the possibility of obtaining interim
measures or compensations before the EU Courts, under Article 340 TFEU for instance, for
those individuals who have been unlawfully listed by the Council. Section V will analyse the
lawfulness of the EU restrictive measures, taken independently from the Security Council
sanctions resolutions against Iran, with reference to the law of state (international organization)
responsibility. Finally, section VI will provide some concluding remarks.
II Background
Despite the recent rigorous UN, US and EU sanctions against Iran for its engagement in nuclear
activities, Iran has been subject to sanctions by the west, the US in particular, since the Iranian
revolution 1979. The decision of the then US President Jimmy Carter to admit the Shah (the
former Iranian king who had fled the country following the revolution), into the United State
led to the hostage crisis whereby the Iranian students stormed the US embassy in Tehran and
took 52 US diplomats and staff as hostages.6 This laid the ground for the US embargo on
Iranian oil and freezing billions of Iran’s dollar assets.7 The US also urged its European allies,
4 Case C–84/95 Bosphorusv. Ministerfor Transport, Energy and Communications,Ireland and the Attorney
General [1996] ECR I–3953.
5 Case T–306/01 Yusuf v. Council and Commission [2005] ECR II–3353 and Case T–315/01 Kadi v. Council and
Commission [2005] ECR II–3649.
6 William J. Daugherty, ‘Jimmy Carter and the 1979 decision to admit the Shah into the United States’American
Diplomacy (2003) <http://www.unc.edu/depts/diplomat/archives_roll/2003_0103/dauherty_shah/
dauherty_shah.html>(accessed 23 June 2015).
7 Christian Emery, ‘The transatlantic and Cold War dynamics of Iran sanctions,1979-1980’ (2010) 10 Cold War
History 371, 372.

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who were Iran’s main trading partners at the time, to follow suit. The European Economic
Community (EEC), although reluctant in the beginning, eventually joined the US and enacted
sanctions against Iran in May 1980 soon after the US applied a total trade embargo against
Iran.8 However, the most extended sanctions against Iran are based on the various Security
Council resolutions which have paid the way for the UN as well as the EU to impose extensive
sanctions against the country.
Article IV of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) guarantees all
State Parties the “inalienable right” to develop, research and produce nuclear energy for
peaceful purposes.9 Yet, Article III(1) of the Treaty, also requires each non-nuclear-weapon
State Party to accept safeguards as set forth in safeguard agreements with the International
Atomic Energy Agency (IAEA).10 Under safeguards agreements, the IAEA monitors the
nuclear activities of non-nuclear-weapon state parties to ensure that the material and equipment
used for peaceful purposes are not diverted to use in nuclear weapons programme. Therefore,
under the Safeguards Agreement between Iran and the IAEA11 Iran is to ensure transparency
and non-diversion of its nuclear activities from peaceful to military purposes.12
Since 2002, when Iran declared its nuclear programme in Natanz and Arak that had been
previously concealed, Iran has been under suspicion of being engaged in nuclear activities for
military purposes.13 While Iran’s nuclear programme in those facilities were legal and did not
violate Iran’s obligation not to manufacture or acquire nuclear weapons, Iran’s failure to
declare them earlier to the IAEA is said to have violated its Safeguards Agreement. In this
regard, Iran has acknowledged having some clandestine but not illegal activities, and has
continuously asserted that its nuclear program is for peaceful purposes only “[…] and merely
8 ibid.
9 NPT (n 1).
10 Calamita N Jansen,’Sanctions, Countermeasures, and the Iranian Nuclear Issue’(2009) 42 V and J
Transnatl L 1393, 1399.
11 Agreement between Iran and the International Atomic Energy Agency for the application of safeguards in
connection with the Treaty on the Non-proliferation of Nuclear Weapons’ Doc. INFCIRC/214 (13 December
1974).
12 Ibid. art. 7(b).
13 Sahib Singh, ‘Iran, The Nuclear Issue & Countermeasures’ (2012) EJIL <http://www.ejiltalk.org/iran-the-
nuclear-issue-countermeasures/>(accessed 20 July 2015).

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in order to prevent further illegal and illegitimate restrictions on the exercise of its rights, it
was forced to be discrete in its legal activities.”14 Anyhow, in October 2003, Iran entered into
an agreement with France, Germany and the United Kingdom15 whereby, as a confidence-
building measure, Iran voluntarily suspended all its uranium enrichment activities and signed
an Additional Protocol to its Safeguards Agreement with the IAEA. While this was ensued by
more than three years of IAEA’s enhanced monitoring of Iran’s nuclear activities16 the IAEA’s
Director General, though verifying the peaceful nature of Iran’s declared nuclear activities,
reported that it is “not yet in a position to conclude that there are no undeclared nuclear
materials or activities in Iran.”17 Subsequently, blaming the IAEA for producing equivocal
reports, Iran announced that it would resume its uranium conversion activities, which it had
voluntarily suspended for over two years, and cease its voluntary implementation of the terms
of the Additional Protocol.18 As a result, in 2006, the IAEA Board of Governors (BOG)
adopted a resolution19 which referred Iran’s nuclear dossier to the Security Council, while
demanding Iran to fully re-suspend all its enrichment-related activities and ratify promptly the
Additional Protocol. The lawfulness of the IAEA’s referral of Iran’s nuclear dossier to the
Security Council has been widely questioned.20 However, this is not in the scope of this paper.
III The Security Council Resolutions against Iran
Following the IAEA’s referral of Iran’s nuclear file to the Security Council, the Council acting
under Article 40 of the Chapter VII of the UN Charter, adopted the Resolution 1696 in July
2006 calling upon Iran to meet the IAEA’s requirements in re-suspending all enrichment
related activities and implementing and ratifying the Additional Protocol, or face possible
sanctions. 21 Iran stressed that the resumption of enrichment was the exercise of its
14 ‘Communication dated 1 August 2005 received from the Permanent Mission of the Islamic Republic of Iran to
the Agency’ IAEA Doc. INFCIRC/648 (1 August 2005), 1.
15 IAEA Doc. INFCIRC/637 (26 November 2004) 3, 4.
16 ‘Implementation of the NPT SafeguardsAgreement in the Islamic Republic of Iran’ IAEA Doc. GOV/2004/83
(15 November 2004), 6, 96-99.
17 IAEA Doc. GOV/2004/83 (15 November 2004), 112.
18 IAEA Doc. INFCIRC/648 (1 August 2005), 5.
19 IAEA (n 2).
20 see eg DH Joyner, 'The Security Council as a Legal Hegemon' (2012) 43 Georgetown J Intl L 225.
21 S.C. Res. 1696, S/RES/1696 (31 July 2006).

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‘unalienable’ right to nuclear technology for peaceful purposes, and that it posed no threat to
international peace and security.22 Thus, it refused to comply with the requirements of the 1696
Resolution.
This was met with a strong response from the Security Council, which adopted sanctions
resolutions 1737 (2006), 1747 (2007), 1803 (2008), 1835(2008), and 1929 (2009), under
Article 41 of Chapter VII of the UN Charter. The resolutions are designed “to constrain Iran’s
development of sensitive technologies in support of its nuclear and missile programmes”23
They designate entities and individuals “engaged in or providing support for Iran’s
proliferation-sensitive nuclear activities or for the development of nuclear-weapon delivery
systems.”24 In general, resolutions 1737 and 1747 prohibit states from trading with Iran in listed
materials, equipment and technology that could be used for uranium enrichment.25 They
require states to freeze the assets of entities and individuals related to Iran’s nuclear
development. The Security Council Resolution 1803 imposes a travel ban on certain
individuals and prohibits sales of dual-use to Iran.26 Finally, Resolution 1929 expands an arms
embargo and tightens restrictions on financial and shipping enterprises related to the Iran’s
nuclear activities.27
Pursuant to the Resolution 1737 a Sanctions Committee was established on 23 December 2006
to apply and oversee States’ implementation of the measures imposed and undertake its tasks
set out in paragraph 18. The mandate of the Committee was subsequently expanded by the
Security Council resolutions, 1747, 1805 and 1929.28
These sanctions are form of so called targeted sanctions, often referred to as ‘Smart’ sanctions,
which attempt to target specific individuals, associations and companies. Essentially, they aim
to put an effective pressure on individual national policy-makers through travel bans and asset
22 ibid.
23 S.C. Res. 1929 (9 June 2010) 3.
24 ibid para 10.
25 S.C. Res. 1737 (27 December 2006) para 3(d); S.C. Res. 1747(24 March 2007) Annex I.
26 S.C. Res. 1803 (3 March 2008) para 5.
27 SC/9948 ‘Security Council Imposes Additional Sanctions on Iran, Voting 12 in Favour to 2 Against, with 1
Abstention’(9 June 2010); S.C. Res. 1929 (9 June 2010) para 19.
28 S.C. Res. 1929 (9 June 2010) para 8.

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freezing measures, as oppose to comprehensive sanctions which impose broad economic and
trade sanctions, adversely affecting everyone in the target country. A shift towards the adoption
of smart sanctions was largely a response to the criticisms of the UNSC sanctions imposed on
Iraq in 1990 and 1991, which caused widespread malnutrition, diseases and other negative
consequences in the country.29 As a result, in order to reduce such unwanted and unforeseen
humanitarian consequences for innocent civilians, smart sanctions were designed.
The targeted sanctions resolutions against Iran clarify that unless Iran co-operates with the
IAEA and meets the latter’s requirements, the sanctions will remain in force.30 The Security
Council resolutions are perceived as the Council’s ‘decisions’ within the definition of Article
25 of the UN Charter and thus legally binding on all Member States. Although the obligatory
character of the Security Council resolutions could be limited when they conflict with
international peremptory norms and fundamental rights which will be discussed further below.
1. The EU restrictive measures against Iran following Security Council Resolutions
The measures contained in the sanctions resolutions against Iran have been enacted by virtue
of decisions taken by the Council of the Europe in the framework of the Common Foreign and
Security Policy (CFSP). These decisions are implemented through the Council regulations
adopted under Articles 215 TFEU (ex 301 TEC). The first Common Position 2007/140/CFSP31
regarding the restrictive measures against Iran was adopted by the Council in 2007
implementing the Security Council Resolution 173. Next, the Council adopted the Common
Positions 2007/246/CFSP 32 and 2008/652/CFSP 33 implementing respectively the Security
Council Resolutions 1747(2007) and 1803(2008). The adoption of the Security Council
Resolution 1929(2010), which extended the sanctions imposed by the previous resolutions, was
welcomed by the European Council who requested the Council to take accompanying measures
29 Joy Gordon, 'Smart Sanctions Revisited Ethics & International Affairs' 25 (2011) 315, 315.
30 S.C. Res. 1803 (3 March 2008) para 19(b).
31 Council Common Position 2007/140/CFSP of 27 February 2007 concerning restrictive measures against Iran
[2007] OJ L61/49.
32 Council Common Position 2007/246/CFSP of 23 April 2007 amending Common Position 2007/140/CFSP
concerning restrictive measures against Iran [2007] OJ L106/67.
33 Corrigendum to Council Common Position 2008/652/CFSP of 7 August 2008 amending Common Position
2007/140/CFSP concerning restrictive measures against Iran [2008] OJ L285/22.

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in implementing the Resolution. 34 This was followed by the Council Decision
2010/413/CFSP35 (amended by Council Decision 2012/35/CFSP) which confirmed all the
previous restrictive measures taken since 2007 and comprised accompanying measures.
The Decision was implemented by the Council Regulation 961/201036 which was amended by
Council Regulation 267/2012 of 23 March 2012 introducing even further restrictions on Iran.
The Regulation imposed restrictions on trade, the financial sector, the Iranian transport sector,
key sectors in the oil and gas industry and as well as additional designations contained in the
annexes of the Regulation. The Council’s regulations are directly applicable and binding on all
Member States and are to be applied in their entirety.37
The Council Regulation 267/2012 provides that it respects the fundamental rights and that it
should be applied in accordance with rights and “principles recognised by the Charter of
Fundamental Rights of the European Union and in particular the right to an effective remedy
and to a fair trial, [as well as] the right to property [...]”.38 Also, paragraph 27 of the Regulation
specifies that it respects the obligations of Member States under the UN Charter and the legally
binding nature of the Security Council resolutions. However, the EU case law suggests that
respecting the legally binding nature of the Security Council sanctions resolutions, and
upholding the fundamental rights of those who are subject to those resolutions, could
potentially lead to a disagreement between the EU Law and the UN Charter. Thus, it is
appropriate to consider the relationship between the EU Law and the UN Charter, the Security
Council resolutions in particular, in the light of the EU treaties and case law before proceeding
with Iran’s case.
34 Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing
Common Position 2007/140/CFSP [2010] OJ L195/39, para 5.
35 Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran and repealing
Common Position 2007/140/CFSP [2010] OJ L195/39.
36 Council Regulation (EU) 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing
Regulation (EC) No 423/2007 [2010] OJ L281/1.
37Article 288 TFEU; Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures
against Iran and repealing Regulation (EU) No 961/2010 (2012) L88/1, para 26.
38 ibid.

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2. The relationship between the UN Charter and the EU law
It is clear that the UN Charter plays an important role in the international legal order and its
supremacy in dealing with international affairs is evident from Article 103 of the Charter which
provides that in the event of conflicting obligations of the UN Members under the Charter and
any other international agreements, their obligations under the former will prevail. Also,
according to Article 39 of the Charter, the Security Council has a wide discretion in determining
what constitutes a threat to the international peace and security, and what measures to take in
order to restore peace. All the EU Member States are parties to the Charter and have accepted
obligations contained thereof, which extends to legally binding effect of the Security Council
resolutions. The membership in the UN is open to states only (Articles 3 and 4 of the Charter)
and thus the EU, as an organisation, is not and cannot, for now, become a party to it. However,
Article 48(2) of the Charter allows the UN members to comply with the binding Security
Council decisions through international agencies. Thus, in accordance with Article 48, the EU
Member States have chosen to carry out their obligations under the Charter within the EU legal
framework. The importance of the Charter has also been recognised and given expression in
the EU Treaties. For instance, Article 220 TFEU stipulates that “the Union shall establish all
appropriate forms of cooperation with the organs of the United Nations and its specified
agencies”. Also, Article 347 TFEU allows Member States to evade their obligations under the
internal market in order to carry out obligations accepted for the maintenance of the
International peace and security. Furthermore, through Article 351 TFEU, the rights and
obligations of Member States arising from other International agreements, such as the UN
charter, which were concluded prior to their accession to the EU are not to be affected by the
EU Treaties.39 On the hand however, the EU has a unique personality and legal “capacity of
representation on the international plane […]”40 with its own constitutional principles which
have been developed through the case law of the European Court of Justice (ECJ).
2.1 Bosphorus41
39 see Piet Eeckhout, EU External Relations Law (2nd edn, Oxford Shcolarship Online 2011).
40 Case 6/64 Costa vs. ENEL [1964] ECR 1141, Para 3.
41 Case C–84/95 Bosphorusv. Ministerfor Transport, Energy and Communications,Ireland and the Attorney
General [1996] ECR I–3953.

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This case concerned the Council Regulation 990/9342 which had given effect to UN sanctions
against the Federal Republic of Yugoslavia (FRY). A Turkish airline, Bosphorus, had leased
two aircraft from a Yugoslav national (JAT). Bosphorus was in a complete day to day control
and maintenance of the aircraft and the lessor, JAT, had no involvement with the use of them.43
In 1993, one of the aircraft was flown to Ireland for maintenance purposes, where it was seized
by the Irish authorities under the sanction regulation. Bosphorus brought actions before the
Irish courts for breaches of its fundamental rights. The Irish Supreme Court, acting under
Article 267 TFEU (Current), referred a question to the European Court of Justice (ECJ) asking
whether the aircraft in question fell under the regulation.44 Article 8 of the regulation, which
had been taken straight from Paragraph 24 of Resolution 820 (1993)45 provided that: “All
vessels…and aircraft in which a majority or controlling interest was held by a person or
undertaking in, or operating from the Federal Republic of Yugoslavia (FRY) had to be
impounded by the competent authorities of the Member States”.46
Bosphorus argued that Article 8 did not apply to an aircraft whose day to day control and
operation were transferred to an undertaking which was neither based in nor operated from
FRY. 47 A different interpretation of Article 8, according to Bosphorus, would be
disproportionate for an entirely innocent party, since the owner had already been penalised by
not having access to the rent due to the sanction. More importantly, it claimed that it would
infringe “its right to peaceful enjoyment of its property and its freedom to pursue a commercial
activity.”48 Taking the text and the aim of the Resolution into account, the Court rejected
Bosphorus’ interpretation of Article 8, holding that the word “interest” in Paragraph 24 of the
Resolution 820 did not exclude ownership.49
42 Council Regulation (EEC) 990/93 of 26 April 1993 concerning trade between the European Economic
Community and the Federal Republic of Yugoslavia (Serbia and Montenegro)[1993] OJ L102/14.
43 Bosphorus (n 41) para 2.
44 ibid para 6.
45 S.C. Res. 820, S/RES/820 (17 April 1993).
46 Bosphorus (n 41) para 1.
47 ibid para 8.
48 Bosphorus (n 41) para 19-20.
49 ibid para 15 of the judgment.

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Although both the Advocate General and the Court of Justice recognised Bosphorus Airways’
fundamental rights, it was held that those fundamental rights are not absolute and that their
restrictions could be justified in the light of the aim pursued by the sanctions.50 Putting an end
to the state of war and the massive violations of human rights in the Republic of Bosnia-
Herzegovina was so fundamental that impounding of the aircraft could not be regarded
inappropriate or disproportionate.51
While some maintain that the Court was correct in interpreting the Regulation in the light of
the Security Council Resolution that formed its basis,52 others see the interpretation of the
wording of paragraph 24 of the Security Council Resolution by the Court as a development in
its power to review the operation of the UN sanctions.53 The latter’s view seems to have been
approved by the Kadi judgment.
2.2 Kadi54
Mr Kadi was an individual who was designated by the Sanctions Committee of the UN Security
Council for being associated with Al-Qaeda or the Taliban. The Security Council had adopted
a number of resolutions under Chapter VII of the UN Charter, including Resolution 1390
(2002).55 Accordingly, all UN Member States were required to freeze the funds and other
financial assets of individuals and entities who were suspected of supporting terrorism. Giving
effect to those resolutions, the Council adopted Regulation 881/200256 under which Mr Kadi’s
assets were frozen. He brought actions before the Court of First Instance (CFI) seeking
annulment of the Regulation as far as it concerned him, arguing, inter alia, that it infringed a
52 Hans-Joachim Priess, ‘Embargo against the Federal Republic of Yugoslavia – EU Regulation implementing
UN sanctions’(1997) 3 Int. T.L.R. 11.
53 Noreen Burrows, ‘Caught in the cross-fire’ (1997) 22 E.L. Rev. 170.172.
54 Case T-315/01 Yassin Abdullah Kadi v Council of the European Union and Commission of the European
Communities [2005] ECR II-3649.
55 S.C. Res. 1390, S/RES/1390 (28 January 2002).
56 Council Regulation (EC) No 881/2002 of 27 May 2002 imposing certain specific restrictive measures directed
against certain persons and entities associated with Usama bin Laden, the Al-Qaida network and the Taliban, and
repealing Council Regulation (EC) No 467/2001 prohibiting the export of certain goods and services to
Afghanistan,strengthening the flight ban and extending the freeze offunds and otherfinancial resources in respect
of the Taliban of Afghanistan (2002) L139/9.

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number of his fundamental rights, in particular, the right to property and the rights of the
defence.57 He asserted that the European Union has its own legal order that is independent of
the United Nations, and thus the Union must justify its actions by reliance on its own rules of
law.58
The CFI held that, from the international point of view, the Member States’ obligations under
the UN Charter clearly prevails over their obligations under the EC Treaty. It recalled the
primacy of the UN Charter over other international agreements, by referring to customary
international law as well as Article 103 of the Charter. Such a primacy, the Court held, extends
to the decisions of the Security Council by virtue of Article 25 of the Charter.59 Turning to The
EC Treaty provisions, the CFI based its reasoning on Article 351 TFEU (Current), under which
the EU Member States’ rights and obligations arising from their pre-accession international
agreements are not to be affected by the EC Treaty. Moreover, it held that, Article 347 TFEU
(Current), was introduced into the Treaty in order to observe the primacy of the Charter.60 The
CFI concluded that, based on both the rules of general international law and specific treaty
provisions, Member States must refrain from applying provisions of Community law, whether
primary or secondary, which impedes their obligations under the UN Charter.61 It noted that
the Community is not a member of the UN or an addressee of the Security Council resolutions
and thus it is not under an obligation, under public international law, to accept and carry out
the decisions of the Security Council. Nevertheless, by establishment of the EEC Treaty, the
Member States’ obligations have been transferred to the Community. Since Member States
could not, by concluding a treaty between them, “transfer to the Community more powers than
they possessed or withdraw from their obligations to third Countries under Charter”,62 the
Community must respect their obligations under the Charter. Having established the primacy
of the UN Charter it refused to review the validly of the Regulation in question, on the grounds
that such a review would indirectly amount to a review of the lawfulness of the UNSC
57 Kadi (n 54) para 139.
58 ibid, para 140.
59 ibid, paras 181, 183-184.
60 ibid, para 188.
61 ibid, para 190.
62 ibid, paras 195, 192.

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resolutions and, according to the CFI, that would be contrary both to the provisions of the
Charter as well as the EC Treaty.63
Yet, the CFI acknowledged that all subjects of international law including organs of the UN
are bound by a body of higher rules of public international law and felt empowered to examine
the lawfulness of the UNSC resolutions in the light of jus cognes.64 It noted that Article 53 of
the Vienna Convention on the Law of Treaties provides for a treaty to be void and inapplicable
if it conflicts with a peremptory norm of general international law. Referring to the Charter
itself, the CFI observed that the Charter “presupposes the existence of mandatory principles of
international law […]”65 and that one of the ‘purposes and Principles’ of the United Nations is
to respect human rights and fundamental freedoms.66 Furthermore, under Article 24(2) of the
Charter, the Security Council must act in accordance with the purposes and principles of the
United Nations, in carrying out its duties for the maintenance of international peace and
security. Thus there exists, the Court held, one limit to the principle that the UNSC resolutions
have binding effect. So, if they fail to observe the fundamental provisions of peremptory norms
of jus cognes, they would bind neither the Member States of the UN, nor the Community in
consequence.67 Therefore, it examined the alleged breaches of the applicants’ fundamental
rights in the light of jus cognes. However, having found no breaches, the Court dismissed the
action.
The CFI could review the contested Regulation by virtue of Article 263 TFEU, if it had not
made the UN Charter as supreme and unattainable as it did in comparison with the Community
legal order. On the one hand, the Court made the European Community legal order subordinate
to the UN Charter in a hierarchical relationship, and on the other hand sought to subject the
UNSC resolution to jus cognes. 68 With this approach, it attempted to reach a “golden
balance.”69
63 ibid, para 222-225.
64 ibid, para 226.
65 Ibid, para 228.
66 Ibid, para 228.
67 ibid, paras 230-31.
68 Tridimas Takis and Jose A. Guiterrex-Fons, ‘EU law, international law, and economic sanctions against
terrorism: the judiciary in distress.’(2008) 32 Fordham Int'l LJ 660, 681.
69 ibid.

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On Appeal70 the European Court of Justice (ECJ) rejected the CFI’s reasoning that the
Community measures intended to give effect to the UNSC resolutions are immune from
jurisdiction. It held that the Community is based on the rule of law and that its institutions’ acts
are subject to review in the light of the basic constitutional charter, the EC Treaty, “which
established a complete system of legal remedies and procedures”.71 It further emphasised that
the fundamental rights form an integral part of the general principles of law which the Court
must observe.72
While the Court Acknowledged that Articles 351 TFEU (Current) and 347 TFEU (Current)
allow, in some circumstances, derogations from even primary law, neither of those Articles,
authorise any derogation from the principles of “liberty, democracy and respect for human
rights and fundamental freedoms” enshrined in Article 6 (1) TEU as a foundation of the
Union.73 It referred in particular to Article 351 TFEU, asserting that that provision may under
no condition allow any challenge to the principles forming the very foundations of the
Community legal order.74
In the hierarchy of norms within the Community legal order, the UN Charter and UNSC
resolutions would prevail over acts of secondary Community law and not primary law.75 Unlike
the CFI, the ECJ saw no real chance for individuals and entities to assert their rights before the
UN Sanctions Committee. The re-examination procedure before the Committee, the Court
held, is still intergovernmental and that the Committee’s decisions can be affected by a right
of veto.76 The Sanctions Committee is not obliged to justify its listing nor is it under any
obligation to give reasons for rejecting a request for removal from the list.77 Thus the ECJ drew
70 Joined cases C-402/05P and C-415/05P, Yassin Abdullah Kadi and Al Barakaat International Foundation v
Council and Commission [2008] ECR I-6351
71 ibid, para 281.
72 ibid, para, 284.
73 ibid, para 303.
74 ibid, paras, 304.
76 ibid, para, 323.
77 ibid, para, 325.

15
a conclusion that the EU courts must “ensure the review, in principle the full review”78 of the
Community measures, including measures which are designed to give effect to the Security
Council resolutions adopted under Chapter VII, in their conformity with the fundamental
rights.
Having established its jurisdiction, the Court examined the alleged infringements of the
fundamental rights of the applicants and found that the contested regulation was in breach of
the applicants’ rights of defence, in particular the right to be heard, and the right to effective
judicial review.79 While some restrictions imposed by the Community measures on the
fundamental rights might be justified by the aim and objectives of international community in
fighting terrorism, they cannot escape all review by the EU courts.80 As a result, the ECJ
annulled the contested regulation to the extent that it concerned the applicants.
The Judgment of the ECJ and its explicit support for the protection of fundamental rights
through its judicial scrutiny of the contested regulation even when it “reflected the wishes of
the Security Council”81 has been applauded.82 The ECJ accorded with the AG Maduro’s
opinion that “it would be wrong to conclude that, once the Community is bound by a rule of
international law, the Community Courts must bow to that rule with complete acquiescence
[…].”83 However, the ECJ was also clear in emphasising that its judicial review is limited to
the Community acts only and does not “entail any challenge to the primacy of the Security
Council Resolution”.84 But this would only be true if the member states would be free to
implement these resolutions under the Community law and at the same time remain bound by
them.85 Although, as the AG pointed out, Member States would still be able to adopt their own
78 ibid, para 326.
79 ibid, para 353.
80 ibid, paras, 342-343.
81 ibid Advocate General, para 43.
82 see e.g Katja S. Ziegler, 'Strengthening the Rule of Law, But Fragmenting International Law: The Kadi Decision
of the ECJ from the Perspective of Human Rights' (2009) 9 HRLR.
83 Kadi, ICJ, Advocate General (n 70) para 24.
84 ibid, ICJ judgement, para 288.
85 see e.g Stefan Griller, ‘International Law, Human Rights and the European Community's Autonomous Legal
Order: Notes on the European Court of Justice Decision in Kadi’ (2008) 4 European Constitutional Law Review
528, 539.

16
measures for the maintenance of the international peace and security,86 neither them nor the
Community can perform the measures required by the Security Council resolutions if they are
in violation of fundamental rights. Consequently, unlike the ECJ’s assertion, the annulment of
the regulation in question indicates a clear challenge to the binding effect of the Security
Council resolutions.87 However, the Court’s refusal to review the Security Council decisions
have left some fundamental issues regarding the EU law and international obligations unclear.88
3. Legal issues with the Security Council Resolutions against Iran
It has been submitted that in its Kadi judgement, the ECJ should have reviewed the contested
regulation on the basis of customary and general international version of rule of law instead of
limiting itself to the EC fundamental rights.89 Although, unlike the CFI, the ECJ did not review
the regulation in the light of international law, it did quote relevant provisions of the UN
Charter including Articles 103 and 25. The Court also attached special importance to Article
24 of the Charter,90 paragraph 2 of which clarifies that in carrying out its duties
“[t]he Security Council shall act in accordance with the purposes and principles of the United
Nations”.
This is similar to the CFI’s statement that, “the Security Council’s powers of sanction in the
exercise of that responsibility must be wielded in compliance with international law,
particularly with the purposes and principles of the United Nations.”91 Besides, Articles 103
and 25, which constitute the legal basis for the primacy of the UN Charter and the Security
Council decisions, refer to overriding obligations of the UN Members under the ‘present
Charter’. Clearly, the words ‘present Charter’ refer to the powers conferred upon the Council
within the ambit of the Charter only and, such powers cannot go beyond the limitations
stipulated in the Charter. This view has been shared by the International Criminal Tribunal for
86 Kadi, ICJ, Advocate General Maduro (n 70) para 30.
87 Griller (n 85) 539.
88 ibid 552.
89 Eeckhout (n 39) 416.
90 Kadi (n 70) para 294.
91 Kadi CFI (n 54) para 229.

17
former Yugoslavia (ICTY) in the Tadic case 92 where it was sated that, “In any case neither the
text nor the spirit of the Charter conceives the Security Council as legibus solutus (unbound by
law).”93 Therefore, the primacy of the Security Council sanctions resolutions would affect the
EU member states and the Union only if they are in accordance with the UN Charter, as well
as the general international law, including jus cognes.
3.1. The UNSC Resolution 1969 (2006)94
As mentioned earlier, the Resolution 1969 was the first resolution against Iran which was
adopted under Article 40 of Chapter VII of the UN Charter in 31 July 2006. It did not impose
any sanctions against Iran but provided for a mandatory suspension of Iran’s ‘all enrichment-
related and reprocessing activities, including research and development to be verified by the
IAEA.’95 Some have doubted whether imposing such a mandatory requirement on Iran, to
suspend its main nuclear activities, is reconcilable with the wording of the Article 40 of the UN
Charter. 96 The controversy is whether Article 40 constitutes a basis for measures of a
mandatory as appose to recommendatory nature.97 The ICTY in the Tadic case stated that.98
These measures, as their denomination indicates, are intended to act as a “holding operation”,
producing a “stand-still” or a “cooling-off” effect, “without prejudice to the rights, claims or
position of the parties concerned.” […]
They are akin to emergency police action rather than to the activity of a judicial organ
dispensing justice according to law. Moreover, not being enforcement action, according to the
language of Article 40 itself (“before making the recommendations or deciding upon the
measures provided for in Article 39”), such provisional measures are subject to the Charter
limitation of Article 2, paragraph 7, and the question of their mandatory or recommendatory
character is subject to great controversy; […]
92 Case IT-94-1 Prosecutor v. Tadic [1995] ICTY AR72.
93 ibid para 28.
94 S.C. Res. 1696, S/RES/1969 (31 July 2006) para 2.
95
ibid.
96 Pierre-Emmanuel Dupont, ‘Countermeasures and Collective Security: The Case of the EU Sanctions Against
Iran’ (2012) 17 J Conflict Security Law 301, 304-305.
97 ibid.
98 Tadic (n 92) para 33.

18
The language of Article 40 and the analysis of the ICTY cast doubt on whether the Security
Council is authorised to make the suspension of Iran’s all nuclear activities a mandatory
requirement under Article 40.99
3.2. Iran’s nuclear programme – a threat to the international peace and security?
The Security Council is entrusted, under Article 39 of the UN Charter, to maintain international
peace and security. The interest of the international community in the maintenance of peace is
such that the EU courts have allowed, (in the Bosphorus case for instance), some adverse
consequences of UN sanctions on innocent individuals. However, the question is, what if there
is no threat to the peace or the Security Council has not determined a threat to the peace in
imposing sanctions on a State. It has been noted that, the binding effect of the Article 39 has to
be limited to the existence of a threat to the peace.100
With regard to the sanctions resolutions against Iran, the Council has never determined Iran’s
nuclear programme as a ‘threat to the peace, breach of the peace, or act of aggression’.101 In
order to invoke Chapter VII, it seems necessary for the Council to first make such a
determination under Article 39.102 Such a prerequisite is quite apparent from the wording of
the Article which provides:
The Security Council shall determine the existence of any threat to the peace, breach of the
peace, or act of aggression and shall make recommendations, or decide what measures shall
be taken in accordance with Articles 41 and 42, to maintain or restore international peace and
security.
This was also emphasised by the ECJ in its Kadi judgment where it stated that Articles 39, 41
and 48 of the Charter of the United Nations form part of Ch.VII, headed “Action with respect
99 Dupont (n 96).
100 Karel Wellens, ‘The UN Security Council and New Threats to the Peace: Back to the Future’ (2003) 8 J.
Conflict & Security L. 15, 49.
101 IAEA Doc. INFCIRC/833 (12 December 2011) 8 (h).
102 Muhammad Sahimi, ‘Iran's Nuclear Energy Program. Part VII: Are Referral of Iran's Nuclear Dossier to the
Security Council and Resolutions 1696, 1737, and 1747 Legal?’.<http://www.payvand.com/news/07/dec/
1044.html> (accessed 3 July 2015)

19
to threats to the peace, breaches of the peace, […].”103 The Security Council however, has
adopted various sanctions resolutions against Iran under Article 41 of Ch.VII without
determining that Iran's nuclear program poses a threat to the peace and international security.
Accordingly, the adoption of the resolutions against Iran is not in conformity with Article 39
of the UN Charter.104 Besides, the resolutions order Iran to take the steps required by the IAEA
Board of Governors, and comply fully with its IAEA Safeguards Agreement.105 According to
Antonios Tzanakopoulos, “[the] Security Council does not impose sanctions in order to enforce
the law against a recalcitrant State. It imposes sanctions in order to maintain or restore
international peace and security”.106 In Iran’s case however, this might be the opposite. The
Security Council seems to be acting as a treaty enforcement tool by way of enforcing and
interpreting the provisions of the NPT and the Safeguards Agreement between Iran and the
IAEA, rather than determining and maintaining international peace and security. Also,
requiring Iran to suspend its peaceful (in the absence of any evidence to the contrary) nuclear
programme, including research and development, may contradict the “right to development”107
and “right to natural resources”108 both of which are amongst the fundamental rights of nations.
In addition, according to Article 1(1) of the UN Charter, (the purposes and principles) for the
purpose of ‘adjustment or settlement of international disputes or situations which might lead to
a breach of the peace’, the Security Council is to act ‘in conformity with the principles of justice
and international law’.109
If the above submission is accepted, then those Security Council sanctions resolutions against
Iran would bind neither the EU nor its Member States, as they are not in conformity with the
provisions of the UN Charter or its purposes and principles. Making a mandatory requirement,
under Article 40 of the UN Charter, which provides for provisional measures only, combined
103 Kadi ICJ Judgement (n 70) 6.
104 Sahimi (n 102).
105 S. C. Res. 1929 (9 June 2010) arts. 2-5.
106 Antonios Tzanakopoulos, ‘The Right to Be Free From Economic Coercion’ (2015) 4 Cambridge Journal of
International and Comparative Law 12.
107 General Assembly resolution 41/128 Declaration on the Right to Development A/RES/41/128 (4
December 1986).
108 General Assembly Resolution 1803 (XVII) Permanent Sovereignty over Natural Resources A/RES/1803
(XVII) (14 December 1962).
109 IAEA Doc. INFCIRC/833 (12 December 2011) art.25 (g).

20
with the invocation of Chapter VII in adopting non-military measures against Iran without
satisfying the pre-existing condition set out in Article 39 of the Chapter, make those resolutions
ultra vires. Finally, Article 21(1) TEU refers to ‘respect for the principles of the United Nations
Charter and international law’ as a guiding principle for the Union's action on the international
scene.110 Then, the EU regulations giving effect to those resolutions may not be in accordance
with the Union’s respect for the principles of the UN Charter and international law.
IV Fundamental rights and Iranian Cases before the EU Courts
As mentioned earlier, within the framework of the CFSP, the Council has adopted numerous
decisions and regulations, either implementing the Security Council resolutions or on an
autonomous basis, against Iran. Consequently, several hundreds of Iranian entities and
individuals have been added to the lists annexed to those decisions and regulations.111 As a
result, the designees have been subjected to either travel bans or their asset have been frozen
across the EU countries. Since 2008, the Council has frequently amended its measures,
strengthening the restrictions on Iran and its nationals each time. Through its various measures,
not only has the Council imposed further restrictions on the Iranian oil and gas industry, upon
which a big portion of the country’s economy is based, but also has added to its sanctions lists
entities, banks and individuals who “provide support to the Government of Iran or controlled
by them or persons and entities associated with them.”112 Such additional measures, according
to the Council, are necessary in order to address the concerns about the military dimension of
Iran’s nuclear activities and its ballistic missile programme.113
The Iranian banks have been key targets for EU sanctions in order to put pressure on Iran to
change its nuclear proliferation policy. In January 2012 the Central Bank of Iran was added to
the sanctions lists which already included 14 other Iranian banks and their subsidiaries having
their assets frozen across the EU.114 In general providing support to the Iranian Government
110 Eeckhout (n 39) 417.
111 see e.g. Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran
and repealing Regulation (EU) No 961/2010 (2012) L88/1, annex VIII of Regulation 267/2012
112 Council Decision 2012/635/CFSP of 15 October 2012 amending Decision 2010/413/CFSP concerning
restrictive measures against Iran (2012) L282/58, art.18(3)(b)
113 ibid
114 Maya Lester, ‘Targeted sanctions and sanctions targeted:Iranian Court’ (2013) 5 JIBFL 278.

21
may simply trigger a proposal for designation. The EU has also imposed financial restrictions
which are more analogous to comprehensive rather than targeted sanctions. Since the adoption
of Regulation 961/2010, all transfer of funds above €10, 000 to and from an Iranian person or
entity are subject to notifications and authorisation procedures.115 Many of the designated
Iranian banks and entities have brought actions for annulment before the EU Courts,
challenging the legality of inclusion of their names in the Council’s sanctions lists.
1. Bank Mellat116
It is well established that the EU institutions’ acts imposing sanctions against individuals or
entities, whether implementing UN sanctions or on an autonomous basis, are lawful only if
they are in accordance with the ‘fundamental principles’ of the European law. This was once
again confirmed by the ECJ in its Kadi II judgment.117 In the last few years, the Fourth
Chamber of the General Court has annulled the designation of a number of Iranian commercial
banks on the EU’s sanctions list. This has been largely due to the Council’s failure to respect
those entities’ fundamental rights in subjecting them to its restrictive measures.
Bank Mellat is an Iranian commercial bank which was listed in the annex II of Council Decision
2010/413/CFSP in July 2010. As a result, its funds and economic resources were frozen. The
Council had adopted in its Decision that “Bank Mellat is a state-owned Iranian bank, [and]
engages in a pattern of conduct which supports and facilitates Iran’s nuclear and ballistic
missile programmes.”118 The Decision was given effect by Regulation 668/2010.119 The bank
requested the Council to remove its name from the lists but was rejected by the Council on the
grounds that there was no guarantee that the applicant will not provide financial services to
those involved in nuclear proliferation in the future.120
115 ibid.
116 Case T-496/10 Bank Mellat v Council [2013]ECR 0.
117 Joined Cases C-584/10 P, C-593/10 P and C-595/10 P European Commission and Others v Yassin Abdullah
Kadi [2013] ECR 0.
118 Bank Mellat (n 116) para 5.
119 Council implementing Regulation (EU) No 668/2010 of 26 July 2010 implementing Article 7(2) of Regulation
(EC) No 423/2007 concerning restrictive measures against Iran (2010) L195/25.
120 Mark Clough, ’Potential legal challenges to EU sanctions’(2013) 19 Int. T.L.R. 27, 30.

22
Bank Mellat bought an action before the General Court arguing that its fundamental rights of
defence and its right to effective judicial protection were infringed and that the Council was in
violation of its obligation to state reasons. Secondly, the Bank argued that the Council had
committed a manifest error of assessment in adopting restrictive measure against it. Thirdly, it
claimed that the measure concerned had infringed its right to property and the principle of
proportionality.121
The Council contended that the Bank is an emanation of the Iranian State and cannot rely on
fundamental rights protection under EU law. Rejecting this argument, the General Court
observed that there is no provision neither in the EU treaties, nor in the Charter of the
Fundamental Rights of the European Union, preventing legal persons, who are emanation of
States, from relying on fundamental rights protection.122 On the contrary, Article 17, 41 and 47
of the Charter guarantee the rights of ‘everyone’ and that includes the applicant too.123 Article
34 of the ECHR, which deems submission of applications by governmental organisations to
the ECtHR inadmissible, and on which the Council had relied, did not apply to this case. The
Court held, inter alia, that that Article is a procedural provision which does not apply to
procedures before the EU Courts.124 The Council’s argument that “a State is the guarantor of
respect for fundamental rights in its territory but cannot qualify for such rights”,125 was not
relevant to the “extent of the rights to which legal persons which are emanations of that same
State may be entitled in the territory of other States”. The Council also had not put forward any
evidence indicating that the applicant was an emanation of the Iranian State.126
1.1 Obligation to State Reasons, Right of Defence and Right to Effective Judicial Protection
In order to examine the applicant’s first plea in law, the General Court Recalled the second
paragraph of Article 296 TFEU and clarified that the purpose of the obligation to state reasons
for an act adversely affecting a person is to provide him/her with sufficient information, so that
they could decide on whether the measure is well founded or vitiated by an error. This is to
121 Bank Mellat (n 116) para 28.
122 ibid, para 35-6.
123 ibid.
124 ibid, para 38.
125 ibid, para 39.
126 ibid, para 39.

23
allow the person concerned, to challenge the validity of the measure in question before the EU
Courts as well as enabling the latter, in the event of challenge, to review the lawfulness of that
measure.127 The Court held that the “obligation to state reasons constitutes an essential
principle of EU law which may be derogated from only for compelling reasons.”128 Thus,
unless there are compelling reasons touching upon the security of the EU or its Members, the
Council is required to provide the person concerned with detailed and clear reasons based on
which the restrictive measures were adopted.129
The effectiveness of the judicial review which has been enshrined in Articles 6 and 13 of the
ECHR and in Article 47 of the Charter of the Fundamental Rights of the European Union,
means that the EU authority in question has an obligation to disclose the evidence, based on
which it has adopted a restrictive measure, to the entity or person concerned. This must take
place either when the measure is adopted or as soon as possible after that decision, so the
designee would have an opportunity to comment on the evidence and also be able to exercise
its right to bring an action if it deems appropriate.130 However, the right of defence does not
oblige the institution in question to grant the applicant a full access to the formers file. The
applicant can only have access to non-confidential official documents related to the contested
measure upon the request.131
The General Court upheld the applicant’s argument that the assessment carried out by the
Council in respect of Decision 2010/413 and implementing regulation 668/2010 was defective.
The applicant’s rights of defence and its right to effective judicial protection was infringed by
the Council for its failure to notify the applicant in good time of the proposal on which it had
relied in adopting the contested measure.132 The applicant was notified of the proposal only
after the date for the submission of its observation had expired, so it was not able to effectively
make his point of view known regarding the reasons and the proposal. The Court did not accept
the Council’s contention that it notified the applicant as soon as it received the consent of the
127 ibid, para 49.
128 ibid.
129 ibid, para 50.
131 ibid, para 53.
132 ibid, para 105.

24
Member State which had submitted the proposal.133 It held that, if the Council is to rely on
information submitted by a Member State, it must first ensure that the applicant can be notified
of such information in good time. Therefore, the Council had infringed the applicant’s rights
of defence.134 Further, the Council was in breach of its obligation to assess the validity of the
information and evidence which was submitted to it against the applicant.135 The Council’s
incorrect statement that the applicant was a state-owned bank, where in fact the Iranian State
was only a minority shareholder, indicated that no such assessment had taken place.136 Thus,
the Council had infringed its obligation to state reasons. While most of the reasons relied on
were excessively vague and gave no detail of the nature of the alleged violations, there were
some sufficiently detailed and clear reasons that the applicant could comprehend the allegations
against it. Since reasons given were independent of each other, the insufficiency and vagueness
of some of them did not justify the annulment of the contested measures. Therefore, the General
Court went on to assess the applicant’s second plea.137
1.2 Manifest Error of Assessment
The Court largely agreed with the applicant that the reasons against it, were not substantiated
by evidence, and that the Council had manifestly erred in its assessment by relying on them in
adopting the measures. Next, the General Court recalled the Bank Melli138 judgement clarifying
that the judicial review of the lawfulness of a restrictive measure extends to the assessment of
the fact and circumstances relied on as justification, and to the evidence and information on
which such assessment was based.139 The allegation that the applicant was a state-owned bank,
was factually mistaken and could not justify the measures imposed.140 Also, the allegation that
a subsidiary entity, wholly owned by the applicant, had been involved in nuclear proliferation
was only a mere presumption and did not constitute an autonomous reason from the other
reasons.141 Furthermore, the Council had presented no evidence or information to support its
133 ibid, paras 83, 105.
135 ibid, para 106.
136 ibid, para 101.
137 ibid, para 107.
138 Case T-390/08 Bank Melli Iran v Council [2009] ECR II-3967.
139 ibid, para 111.
140 ibid, para 113.
141 ibid, para 117.

25
allegation that the bank had provided banking services to an entity under UN sanctions. Since
none of the reasons relied on by the Council justified the adoption of restrictive measures
against the bank, the General Court annulled the measures in question to the extent that they
concerned Bank Mellat.142
2. Other Iranian cases
Thus, Bank Mellat was not the only Iranian entity who brought an action for annulment of the
Council’s restrictive measures. Bank Saderat Iran,143 one of the largest Iranian commercial
banks, was amongst those entities whose funds and assets were frozen mainly for providing
financial services to designated entities. Pursuant to Article 263 and 275 TFEU, the bank
brought an action for the annulment of those measures on the same grounds as in the Bank
Mellat case. The Council had adopted in its Decision that “Bank Saderat is an Iranian state-
owned bank (94 %- owned by IRN government) [and] has provided financial services for
entities procuring on behalf of Iran’s nuclear and ballistic missile programmes, including […]
Iran Electronics […] Mesbah Energy Company.144
In an almost identical ruling to its judgment in the Bank Mellat case, the General Court
established that the Council had infringed the applicant’s fundamental rights and manifestly
erred in its assessments in listing Bank Saderat. The Council’s reasons were excessively vague
and not supported by evidence. Also, the Council was in breach of its obligation to assess the
validity and relevance of the evidence submitted to it by a Member State.145 It produced no
evidence or information regarding the allegation that the bank provided financial services to
listed entities. The bank was not 94% owned by the Iranian government and the latter was a
minority shareholder.146 Finally, contrary to the Council’s submission, the Court firmly
reaffirmed that the burden of proof was on the Council to justify the designations by sufficient
evidence. This seems to mirror the approach taken by the ECJ in its Kadi II judgement, where
it held that "to establish, in the event of challenge, that the reasons relied on against the person
142 ibid, paras 139-140.
143 Case T-494/10 Bank Saderat Iran v. Council [2013] ECR 0.
144 ibid, para 5.
145 ibid, para 116.
146 ibid, para 103.

26
concerned are well founded, not the task of that person to adduce evidence of the negative, that
those reasons are not well founded."147
In the Islamic Republic of Iran Shipping Lines (IRISL)148 case, the Council’s restrictive
measures against 18 shipping companies based in Iran, Europe and Singapore were annulled
on the grounds that the Council had submitted no sufficient evidence to prove that there was a
link between the companies and the development of nuclear weapons in Iran. The statement of
reasons adopted by the Council was not accurate and defendable. The allegation that IRISL
had repeatedly facilitated the violation of UN sanctions, according to the Court, was overly
ambiguous as it neither specified the nature or date of the alleged violations nor did it identify
the entity or goods concerned.149
The Council argued that IRISL is a large shipping company owned by the Iranian State and that
the latter is dependent on the applicant’s transporting services for its nuclear development.
Therefore, according to the Council, there was a serious risk of the applicant transporting
nuclear related materials.150 The Court took account of the wording of the listing which referred
to “persons and entities […] engaged in, directly associated with, or providing support for
[…]”151 Iran’s nuclear activities. This implied an actual involvement rather than a mere risk
and therefore the Council’s argument was rejected. The mere risk that the entity may in future
provide support for nuclear proliferation was not sufficient and that the Council was required
to establish that IRISL had actually provided support for nuclear proliferation. The adoption
and maintenance of restrictive measures could not be based on a presumption which is
inconsistent with the objective of the legislation in question.152 Also, the evidence presented
by the Council did not justify the adoption of the restrictive measures against IRISL. In respect
of the other applicants in this case, even if they were in fact IRISL’s subsidiaries, they could
not be subject to those restrictive measures, since IRISL itself had not been identified as
providing support for nuclear proliferation. Consequently, the contested measures were
annulled to the extent that they concerned IRISL and the other 17 applicants. The Court
147 Kadi (n 117) 121
148 Case T-489/10 Islamic Republic of Iran Shipping Lines and Others v Council [2013] ECR 0.
149 ibid para 38.
150 ibid para 45.
151 ibid para 47.
152 ibid paras 48-9, 61.

27
maintained the effect of the sanctions for two months, allowing the Council to remedy the
defects, and adopt new restrictive measures with respect to the applicants if it deems
appropriate.153
This judgment led to further actions of annulment brought by other entities and individuals,
who had been listed by the Council for being owned or controlled by IRISL. In GmbH & Ors
v Council154 the General Court annulled the listing of 35 other entities which had been
designated on the basis of an allegation that they acted on behalf of IRISL. It was held that
sanctions against the entities owned or controlled by another entity (IRISL) are only justified if
the parent entity was validly identified as providing support for nuclear proliferation.155 The
fact that the Council had already failed to establish that IRISL was involved in nuclear
proliferation, vitiated all of the contested measures against the applicants and therefore had to
be annulled to the extent that they concerned them.156
As is apparent from the above cases, the legal challenges to EU sanctions measures have been
consistently successful, as the Council has continuously failed to improve the way its procedure
complies with the fundamental rights of the applicants as contained in the Charter of
Fundamental rights of the European Union.157 Contrary to Article 296 TFEU, the Council has
breached its obligation to state sufficient reasons for targeting the Iranian entities and
individuals. It has failed to respect the designees’ rights of defence and a right to effective
judicial protection. Thus, the EU Courts have not been able to judicially review the Council’s
restrictive measures based on the reasons and evidence relied upon. The Council has also
manifestly erred in its assessments by relying on reasons supported either by no evidence or by
flawed ones.
3. Negative Impact on Reputation and Legal Actions Available
The effects of the annulled sanctions are often maintained for two months and ten days from
the notification of the judgment, during which the Council can either appeal against the
153 ibid paras 67,77, 79, 82.
154 Cases T-420/11 and T-56/12 Ocean Capital Administration GmbH & Ors v Council [2015] ECR 0
155 ibid para 60.
156 ibid paras 60, 68.
157 Clough (n 120) 29.

28
judgment or correct the irregularities identified and adopt new sanctions. 158 Thus,
notwithstanding the successful challenges against their designations the Iranian entities and
individuals, including almost all of the above-mentioned applicants, are kept in the Council’s
sanctions lists and their assets remain frozen. This is because the Council has either lodged
appeals against the General Court’s judgments, like in the Bank Mellat159 and Bank Saderat160
cases, or it has relisted them on different grounds. The latter is exemplified by the Council
Decision 2015/556/CFSP and Regulation 267/2012 which relisted Bank Tejarat and 32 other
companies which had had their listings annulled by the EU Courts. This has been a common
practice by the Council and there are numerous examples of relisting Iranian entities after they
have won their annulment actions. These re-listings are based on new statements of reasons.
However, whether such reasons are well-founded and justified by evidence will be determined
by the EU Courts, should the concerned entities and individuals bring new actions against them.
This means that they will have to await the EU Courts’ judgments while their assets remain
frozen across the EU territory. This seems contrary to the applicants’ right to a fair hearing
under art.6 of the ECHR, since the adjudication process before the EU Courts, the GC in
particular, takes an unacceptably long time. There is also no guarantee that the Council would
not relist them yet for another time on new allegations. In any case, the severe and devastating
consequences of the listing on their business and reputation, combined with the fact that those
applicants’ funds and assets are frozen for an undefined period of time, gives the listing a
criminal rather than an administrative character, only with no due process, since the designees
are denied an opportunity to be heard before the sanctions are imposed.161
In short, the listing and delisting procedure through which the Council adopts and maintains an
EU-wide asset freeze in the form of CFSP decisions and regulations, appears to be an endless
process, where the designees can hardly find a way out, even though the Council has
continuously failed to demonstrate any legal justification for imposing such measures on them.
While the Council seems to enjoy a considerable discretion in imposing sanctions, there must
158 The Council guideline 7383/1/15 REV 1 of 24 March 2015 EU Best Practices for the effective implementation
of restrictive measures, art 22.
159 Case C-176/13 P Council v Bank Mellat [2015] ECR 0.
160 Case C-200/13 P Council v Bank Saderat Iran [2015] ECR 0.
161 Christina Eckes, EU Counter-Terrorist Policies and Fundamental Rights: The Case of Individual Sanctions
(Oxford Scholarship Online 2010) 151.

29
be some legal remedies available to those who have been unlawfully affected by such
discretion.
3.1 Interim relief
The addressees of restrictive measures are entitled to have sanctions removed at the earliest
opportunity that a court may do so.162 Once the contested measures have been annulled, there
is a possibility for the applicant to obtain interim relief whereby the application of the measures
would be suspended pending a judgment on their validity.163 However, under the case law, the
chances of winning interim suspension are very slim. Article 278 TFEU specifies that actions
do not have suspensory effect, unless in exceptional circumstances. The applicant is required
to demonstrate that the application of the contested measure would cause a ‘risk of serious and
irreparable damage’ to its interests, beyond a pecuniary loss.164 In principle, the suspension
sought would be justified only if “in the absence of such relief, the applicant would be placed
in a situation which could endanger its very existence or irremediably affect its market
share.”165 Such conditions have not been satisfied in the EU sanction cases so far, and
consequently, the EU courts have declined to grant interim relief to listed persons or entities.
This approach becomes surprising when the gravity of the infringements, that such applications
concern, is taken into consideration.166
3.2 Damages
Another remedy available for an unlawfully targeted individual is to bring an action for
damages which is an action independent of annulment. It is governed by Article 340 TFEU
paragraph two, which provides that "In the case of non-contractual liability, the Union shall
[…] make good any damage caused by its institutions […] in the performance of their duties."
This provides a basis for bringing a compensation claim for losses suffered as a result of an
unlawful EU measure. However, the ECJ has ruled that the annulment of a legislative measure
is inadequate by itself for the Union to incur non-contractual liability, unless a ‘sufficiently
162 Clough (n 120) 27.
163 ibid.
164 Case T-395/94 R Atlantic ContainerLine AB and Others v Commission of the European Communities [2002]
ECR II-875, para 50.
165 Case T-13/99 R Pfizer Animal Health SA v Council of the European Union [2002] ECR II-3305, para 138.
166 Clough (n 120) 30.

30
serious breach’ of rule of law has occurred.167 For damages to be owed, the EU institution
“must have manifestly and gravely disregarded the limits on the exercise of its powers.”168 Two
more criteria were added to this approach following the Bergaderm169 judgment, where it was
considered that: the infringed law must be intended to confer rights on individuals and there
must be a direct causal link between the breach and the damage suffered.170 Although this is a
well-established rule under EU law, the ECJ has interpreted it very narrowly in order not to
affect the legislative discretion of the EU institutions.171
Nevertheless, in an unprecedented judgement, the General Court has recently awarded damages
for first time in a sanction case.172 Safa Nicu v Council173 concerned an Iranian company that
was included in the Council’s sanctions list in 2011, on the grounds that it is a “communica tion
firm that supplied equipment” to a uranium enrichment facility which was not declared to the
IAEA.174 The entity was not a communication firm nor was it involved in supplying equipment
to that facility. The Council adduced no evidence to prove its allegations and had merely relied
on a listing proposal from a Member State. Thus, it had made a manifest error in its
assessment.175 As a result, the listing was annulled and, in examining the applicant’s claim for
damages, the Court applied the abovementioned criteria in order to decide whether the
applicant was entitled more reparation than annulment.
3.2.1 The institution’s conduct must be unlawful
As it was demonstrated in the earlier cases, the Council’s designations have been considered
to be unlawful where the Council has failed to substantiate the allegations based on which it
167 Jugement Case 83/76 KG and others v Council and Commission of the European Communities [1978] ECR
1209, para 3.
168 Ibid, para 5.
169Case C-352/98 Laboratoires pharmaceutiques Bergaderm SA and Jean-Jacques Goupil v Commission of the
European Communities [2000] ECR I-5291.
170 Clough (n 120) 33.
171 Clough (n 120) 34.
172 Maya Lester, ‘EU court awards damages for 1st time in a sanctions case’ (2015)
<http://europeansanctions.com/2014/11/25/eu-court-awards-damages-for-1st-time-in-a-sanctions-case/>
(accessed 10.07.2015)
173 Case T-384/11 Safa Nicu Sepahan Co. v Council [2014] ECR 0.
174 ibid, para 5
175 ibid, paras 37-38

31
has adopted them or has adopted measures inconsistent with the objectives of the legislations
in question. However, for the purposes of Article 340 TFEU, such an unlawfulness is not
adequate by itself to hold the EU liable for damages caused. There must be a sufficiently serious
breach of a rule of law which confers rights on individuals.176 This requirement is satisfied if
the institution concerned, the Council in this case, has “manifestly and gravely disregarded the
limits of its discretion”.177 This leads to another question as regards the limits of the Council’s
discretion in adopting restrictive measures. If the Council has a very limited discretion or has
no discretion at all, then any breach of EU law may constitute a ‘sufficiently serious breach’.178
However, whether the application or interpretation of the legislation in question require a
complex legal assessment will also need to be taken into consideration. In any case, a breach
of EU law is ‘sufficiently serious’ if the alleged conduct has already been established, by settled
case-law, to constitute an infringement.179
The restrictive measures allow the Council to impose certain restrictions on individuals’ rights
in order, for instance, to prevent nuclear proliferation. However, there are also provisions in
those measures which set out conditions under which the restrictions are permitted.180 Those
provisions protect the interests of the targeted individuals by limiting the extent or degree of
the sanctions that could be lawfully imposed on them. Such provisions are therefore considered
to be rules of law intended to protect rights of individuals concerned as the restrictions can be
imposed only if the conditions of those provisions are met.181 As regards the degree of the
Council’s discretion, the General Court held that the Council had an obligation to observe the
fundamental rights of the persons and entities concerned, particularly their right to effective
judicial protection, and therefore, had no discretion in this respect. Thus, the Council was in
breach of its obligations, with regard to the applicant, where it did not enjoy any discretion.182
176 Safa (n 173) para 52.
177 Case T-341/07 Jose Maria Sison v Council of the European Union [2011] ECR 0, para 35.
178 ibid para 35.
179 Safa (n 173) para55.
180 ibid para 57.
181 ibid para 58.
182 ibid paras 60,61.

32
Finally, the Council’s obligation to substantiate the restrictive measures adopted was clear and
precise and did not amount to a complex situation in terms of its application or interpretation.183
As a result, it was held that the Council must have realised that it had an obligation to adduce
sufficient evidence for its allegations, and produce them before the EU Courts in a case of
conflict. The Council had not done so and therefore incurred liability for a serious breach of a
rule law intended to confer rights on individuals.184
3.2.2 Actual damage and a causal link
An applicant must have actually suffered ‘real and certain’ loss, in order to hold the Union
liable for damages, and it is for the applicant to establish the fact and the extent of such loss.
Also, the alleged damage must be a sufficiently direct consequence of the disputed conduct.
Thus, there must be a causal link between the actual damage suffered and the conduct
complained of.185
The General Court held that listing an entity on the grounds that it has provided support for
nuclear proliferation implies that the entity has been involved in activities perceived as
reprehensible by the international community.186 This affects the entity beyond its commercial
interests, and seriously harms its reputation. Also, the entity’s reputational injury is aggravated
by the fact that it is “caused by an official statement of an EU institution, which is published in
the Official Journal of the European Union which entails legal binding consequences.”187 The
Council’s contention that the reputational injury was caused not by the restrictive measures
themselves but by their publication in the Official Journal was rejected. The publication was
an essential part of the process for adopting sanctions, entry of force of which depended on it,
and was linked to the maintenance of the sanctions.188 Therefore, the unlawful listing of the
applicant caused it non-material (reputational) damage, and that a mere annulment of the listing
was not enough to compensate it.189 The applicant also claimed that it had suffered ‘material
damage’ for the closure of its bank accounts, the blockage of its all payments in euros by
183 ibid paras 62,68.
184 ibid paras 69.
185 ibid paras 70-71.
186 ibid paras 82.
187 ibid paras 83.
189 ibid para 87.

33
European banks and by the fact that it was not able to perform its contracts.190 All of these were
rejected as the applicant either failed to establish a causal link or to produce sufficient evidence
proving the loss.
The infringements committed by the Council in this case are hardly different from those
committed in the aforementioned Iranian cases. In those cases too, the Council had failed to
assess the relevance and accuracy of the information relied on, and has adduced no evidence
to prove reasons for the listings. Therefore, it is not clear how the General Court was satisfied
to classify the breaches in this case as ‘sufficiently serious’ but not those in the previous cases.
Also, the applicant had claimed over €7.5 million as damage to its reputation and business and
was awarded a very modest amount of €50,000. It was not clear how the Court came up with
that figure other than stating that it was a just and fair compensation.191
V EU autonomous sanctions against Iran: countermeasures and legal issues
The EU sanctions against Iran were significantly broaden on January 2012 where the Council
imposed, inter alia, an import ban on Iranian oil and froze the assets of the Central Bank of
Iran. 192 Since such comprehensive measures go far beyond the mandate of the UNSC
resolutions against Iran,193 their legal justification must be found on a source other than those
resolutions.194 In this context, it has been submitted that Iran’s noncompliance with its NPT
and Safeguards Agreement obligations195 is an internationally wrongful act, which permits
other states to use measures, beyond the scope of the Security Council resolutions, available in
international law to invoke Iran’s international responsibility.196 This arguably resembles the
Council’s conclusion of 23 January 2012 which clarified that its additional measures were
taken as a response to Iran’s noncompliance with its international obligations, namely its failure
191 ibid para 92.
192 see Annex 1 Council Decision 2012/35/CFSP of 23 January 2012 amending Decision 2010/413/CFSP
concerning restrictive measures against Iran [2012] OJ 2012 L31/7;
Council Regulation (EU) 267/2012 of 23 March 2012 concerning restrictive measures against Iran and repealing
Regulation (EU) No 961/2010 [2012] OJ 2012 L88/1.
193 see e.g. Joyner (n 20); Jansen (n 10).
194 Jansen (n 10) 1418.
195 IAEA Doc. INFCIRC/214 (n 11).
196 Jansen (n 10) 1418.

34
to address the concerns on its nuclear programme, and to fully co-operate with the IAEA.197
As it was stated by Professor Arangio-Ruiz in his third report to ILC, there exist various
measures in international practice “to which States resort in order to secure fulfilment of the
obligations deriving from, or otherwise react to, the commission of an internationally wrongful
act.”198 Amongst those measures the most relevant ones, in this case, are retorsion, sanctions
and countermeasures. Retorsion has been defined by ILC as an “unfriendly conduct which is
not inconsistent with any international obligation”. 199 However, the majority of the EU
measures against Iran, adopted independently from the Security Council resolutions, cannot be
classified as acts of retorsion, as they are not consistent with the EU and its Member States’
international obligations. For example, freezing assets of the Iranian Central Bank would be in
breach of the doctrine of state immunity.200 Also, such measures undermine the performance
of some of the EU Member States’ treaty commitments arising from their BITs with Iran.201 In
general, such measures “go beyond mere expressions of disapproval and involve the suspension
of the performance of international legal obligations otherwise owed to Iran.”202
Those measures cannot be considered as sanctions, adopted on the basis of The Security
Council resolutions, either, as the resolutions do not impose such a comprehensive economic
embargo on Iran, otherwise any state who is having business with Iran and its state-owned
entities would have been in breach of those resolutions.203 Also, as presented by Antonios
Tzanakopoulos, sanctions are a collective and thus centralised response to illegality which are
taken by international organisations, the UN in particular, against their members rather than
197 EU Council Conclusions on Iran (3142th Foreign Affairs Council meeting, Brussels,23 January 2012) para 2.
198 G Arangio-Ruiz, ‘Third Report on State Responsibility’ A/CN.4/440/Add 1 (1991) ILC Yearbook II (1) para
8.
199 Commentaries on the Draft articles on Responsibility of States for Internationally Wrongful Acts (2001) ILC
Yearbook II (2) 128.
200 See e.g. United Nations Convention on Jurisdictional Immunities of States and Their Property 2004, art.21(C)
201 Pierre-Emmanuel Dupont, ‘Countermeasures vs. Collective Security? The EU Sanctions Against Iran’ (2012)
<http://www.ejiltalk.org/countermeasures-vs-collective-security-the-eu-sanctions-against-iran/> (accessed 27
July 2015).
202 Jansen (n 10) 1397.
203 ibid 1417.

35
against third states. By contrast, imposing of ‘sanctions’ against third states by the EU, is in
reality a decentralised reaction to illegality through a countermeasure.204
Moreover, it has been submitted that, although the Security Council sanctions resolutions
against Iran leave some room for discretion by states, the scope of that discretion for the
interpretation and implementation of the resolutions is limited, and does not provide a legal
basis for the adoption of a comprehensive sanction against Iran.205 Then, the EU’s unilateral
measures against Iran would fall within the scope of countermeasures governed by the law of
state responsibility under the provisions of the 2001 Draft ARSIWA.206 However, the EU is
not a sovereign state but an international organization, and the lawfulness of its
countermeasures is conditioned by the provisions of the 2011 Draft articles on
the Responsibility of International Organizations (DARIO). The problem is that DARIO deals
with countermeasures taken by an international organization against another international
organization only, and not against a State.207 Yet, according to the ILC commentary, the
conditions for lawful countermeasures in DARIO, are almost identical to those of ARSIWA
and thus “one may apply by analogy the conditions that are set out for countermeasures taken
by a State against another State […].”208 Therefore, in order to examine the lawfulness of the
countermeasures taken by the EU against Iran, the relevant provisions of ARSIWA will be
applied by analogy to those of DARIO. Article 17(1) of DARIO states that “[a]n international
organization incurs international responsibility if it circumvents one of its international
obligations by adopting a decision binding member States or international organizations to
commit an act that would be internationally wrongful if committed by the former organization.”
Countermeasures are unilateral non-forcible reactions to an internationally wrongful act which
has been committed by a State.209 They are designed to persuade the responsible State to fulfil
204 Antonios Tzanakopoulos, ‘International Responsibility of the European Union’ (2013)
<http://ilcc.eu/Editor/UploadFiles/PDF/Abstracts%20of%20Presentations%20at%20the.pdf> (accessed 25 July
2015)
205 Jansen (n 10); Dupont (n 96).
206 Dupont (n 96) 323.
207 ILC, ‘Commentaries on the Draft Articles on the Responsibility of International Organizations’ (2011) ILC
Yearbook II(2) art.22, cmt.2
208 ibid.
209 Jansen (n 10) 1419.

36
its international obligations.210 Normally, countermeasures are unlawful as they violate the
rules of international law, and since they are susceptible to abuse certain conditions and
limitations have been developed under international law in order to keep them within ‘generally
acceptable bounds’.211
Pierre-Emmanuel Dupont has examined these limitations with regard the unilateral measures
taken by the EU against Iran through, inter alia, an internationally wrongful act, an injured
party, proportionately, and the collective security system under the UN Charter.212 Since a
thorough analysis of all conditions that govern the use of countermeasures would not be
possible within the constraints of this paper, only some of them will be briefly assessed below.
1. An internationally wrongful act attributed to Iran
The existence of an internationally wrongful act is a central precondition for the lawfulness of
any countermeasure taken by the injured State.213 Article 49 ARSIWA provides that:
An injured State may only take countermeasures against a State which is responsible for an
internationally wrongful act in order to induce that State to comply with its obligations […].
Thus, the lawfulness of the EU’s oil embargo and the freezing of assets of the Iranian Central
Bank, taken independently from the Security Council resolutions, depends on an actual
previous violation of international law by Iran, and the determination of such a violation “may
be made exclusively by an international tribunal.” 214 In this context, Iran’s alleged
noncompliance with its Safeguards Agreement and NPTobligations have been relied on by the
EU in taking measures against the country. 215 More specifically, Iran is alleged to have
breached two collective obligations found in the NPT, namely, the violation of Article II of
the NPT “not to manufacture or otherwise acquire nuclear weapons or other nuclear explosive
devices” and the breach of its obligations to apply IAEA safeguards under Artcile III (1) of the
210 ARSIWA 31.
211 ibid 128.
212 Dupont (n 96) 325.
213 ARSIWA 130.
214 Dupont (n 96) 326.
215 Council Conclusions on Iran (n 197) para 2.

37
NPT.216 Examination of the validity of such claims is beyond the scope of this study, but it
suffices to mention that the soundness of them have been questioned comprehensively by
various analysts.217 However, there are two relevant points to be made. First, despite the
argument that the IAEA’s determination of Iran’s noncompliance with its NPT obligations
gives rise to countermeasures against Iran,218 neither the IAEA inspectors nor the Agency’s
Director General (who are specifically designated under Article XII(C) of the IAEA Statute to
monitor the application of safeguards agreements, and report any noncompliance) have
reported a noncompliance from Iran’s part. In fact, the Agency has continuously verified non-
diversion of Iran’s declared nuclear activities from peaceful to military purposes.219 However,
this is not to say that Iran has not breached any of its procedural safeguards obligations, but
those breaches must be differentiated from substantive ones.220 Second, even if we undertake
that Iran is in noncompliance with its safeguards agreement, there are still provisions available
under the NPT and the IAEA Statute to deal with such a situation.221 Article XII(C) of the
Statute, enables the Agency to report the noncompliance to all members and to the Security
Council and the General Assembly. The provision also permits the Agency to suspend assisting
the noncompliant country, and call for the return of materials and equipment made available to
it, and also suspend the country’s rights of membership. These provisions as well as provisions
of dispute settlement mechanisms provided for in both the Iran-IAEA Safeguards
Agreement,222 and Article XVII(A) of the IAEA Statute, may characterise the non-proliferation
regime as a ‘self-contained’ regime,223 thereby precluding the use of ‘extra-treaty enforcement
mechanisms such as countermeasures’.”224
2. The ‘Injured State’/international organisation
Article 49 ARSIWA refers to the ‘injured State’ and provides that “Countermeasures shall, as
far as possible, be taken in such a way as to permit the resumption of performance of the
216 Singh (n 13).
217 see e.g. DH Joyner, ‘Interpreting the Nuclear Non-Proliferation Treaty’ 126 (2011) OUP; Sahimi (n 102).
218 Jansen (n 10) 1433.
219 IAEA Doc. GOV/2008/4 (n 109), para 52.
220 Singh (n 13).
221 Dupont (n 96) 328.
222 IAEA Doc. INFCIRC/214 (n 11).
223 Dupont (n 96) 328.
224 Jansen (n 10) 1435. see also for counterargument.

38
obligations in question.” This arguably resembles the position taken by the EU in claiming that
its measures against Iran intend to persuade the country to comply with its international nuclear
non-proliferation obligations.225 But the question is whether the EU can be considered as an
injured organisation. The EU’s unilateral measures taken independently from the Security
Council’s binding resolutions can only be justified as legal countermeasures if all EU Member
States consider themselves as injured states.226 This is the case, for instance, where the violated
obligation is owed “to the international community as a whole” (known as erga omnes
obligations)227 However, there is a possibility for invoking responsibility of a state by any State
other than an injured State under Article 48(1) (a) and Article 54 ARSIWA, where ‘the
obligation breached is owed to a group of States […] and is established for the protection of a
collective interest of the group’. The question then would be whether Iran’s alleged breaches
of its NPT obligations are of such a nature to violate a collective interest of all the NPT
Members, including all EU Member States who are also party to that Treaty.228 The reference
to collective obligations under Article 48(1) (a), although very controversial and unsettled to
date, includes obligations arising from “regional nuclear free zone treaties.229 Yet, the specific
NPT obligations that Iran is allegedly in breach of, are considered by a number of analysts to
be of purely ‘technical’ rather than ‘substantive’ nature, and thus not within the category of
erga omnes obligations.230 Also, it has been doubted whether Articles 48(1)(a) Article 54
ARSIWA provide a basis for the EU to invoke the responsibility of Iran.231
In addition, in respect of invocation of responsibility by an injured State under Article 42
ARSIWA, it has been submitted that Iran’s breaches of its NPT and Safeguards Agreement
obligations are not, ‘of such a character as radically to change the position of all the other
States to which the obligation is owed with respect to the further performance of the
obligation’, and therefore the conditions of the Article 42(b)(ii) ARSIWA are not met.232 The
225 Ali Z. Marossiand Marisa R. Bassett (eds.)Economic Sanctions underInternationalLaw (1st edition, Springer,
T.M.C. AsserPress, 2015)
226 Dupont (n 96) 329.
227 ARSIWA, art.48, cmt. 8.
228 Jansen (n 10) 142.
229 ibid 1424.
230 Dupont (n 96) 329.
231 ibid.
232 Singh (n 13).

39
main reason given is that not all other States (parties to NPT) are under the same obligation
not to manufacture nuclear weapons, but only the non-nuclear weapon states, and thus such an
obligation cannot modify the position of nuclear weapon states such as the US, Britain and
France.233
3. Proportionality
The power of adopting countermeasures in response to internationally wrongful acts is limited
by a prominent role of proportionality.234 This notion finds it place in Article 51 ARSIWA
which provides that [c]ountermeasures must be commensurate with the injury suffered […]
and, as it was noted by the ILC, the issue of proportionality is central to the legality of any
countermeasure. 235 This is a well-established requirement in terms of resorting to
countermeasures, and ‘is widely recognized in State practice, doctrine and jurisprudence.’236
The balance between the breach and the injury suffered was examined in the Air Service
Agreement case,237 where USA suspended Air France flights to Los Angeles in response to
France refusing a gauge change in London for American flights. The tribunal held that the
countermeasures taken by the USA “do not appear to be clearly disproportionate when
compared to those taken by France.” 238 In this case, the injury suffered and the
countermeasures taken had an appropriate degree of equivalence as they were in the same field,
air transport, and concerned the same routes.239
While states and international organisations, such as the EU, are conferred upon the power to
take countermeasures against other states or international organisations, neither of them enjoy
an unconditional power of enforcement as their measures are subject to the principle of
proportionality. In respect of the EU’s unilateral measures against Iran, there seems to be a
significant disproportionate between the alleged wrongful act and the countermeasures taken.
If Iran’s alleged breaches of some of its NPT and safeguards obligations is compared to the
233 ibid.
234 Enzo Cannizzaro, ‘The role of proportionality in the law of international countermeasures’ 12 (2001) EJIL
889, 890.
235 ARSIWA, art.51, cmt. 4
236 ibid cmt. 2
237 Case Concerning the Air Service Agreement of 27 March 1946 (1978) 54 ILR 304.
238 ARSIWA, art.51, cmt. 3.
239 ibid.

40
EU’s comprehensive oil embargo and freezing of assets of Iran’s Central Bank in the light of
the Air Service Agreement judgment, it would not be too difficult to find a significant imbalance
between the breach and the response.240
VI Conclusions
Remember today’s political expediency (AG)
VII Bibliography
240 Dupont (n 96) 331.

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