Morison Menon Chartered Accountants and Others v Council (Interim relief) [2012] EUECJ T-656/11 (16 February 2012)

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(Interim relief - Common foreign and security policy - Restrictive measures against Iran with the aim of preventing nuclear proliferation - Freezing of funds and economic resources - Application for suspension of operation - No urgency)

1 The applicants, Morison Menon Chartered Accountants, Morison Menon Chartered Accountants - Dubai Office and Morison Menon Chartered Accountants - Sharjah Office, are three firms providing consulting services in the United Arab Emirates.

2 These proceedings arise from the inclusion of 'Morison Menon Chartered Accountant' among the entities subject to the freezing of funds and economic resources, in the context of the body of restrictive measures introduced in order to apply pressure on the Islamic Republic of Iran to end proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems.

3 In that regard, it must be recalled that on 23 December 2006 the United Nations Security Council ('the Security Council') adopted Resolution 1737 (2006), the annex to which lists the persons and entities which, according to the Security Council, were engaged in nuclear proliferation in Iran and whose funds and economic resources were to be frozen. The list has been regularly updated by the Security Council by means of various resolutions.

4 In order to implement Resolution 1737 (2006), on 27 February 2007 the Council of the European Union adopted Common Position 2007/140/CFSP concerning restrictive measures against Iran (OJ 2007 L 61, p. 49). That Common Position was repealed and replaced by Council Decision 2010/413/CFSP of 26 July 2010 concerning restrictive measures against Iran (OJ 2010 L 195, p. 39).

5 In addition to the freezing of funds and economic resources of persons and entities designated by the relevant resolutions of the Security Council, covered by Article 20(1)(a) of Decision 2010/413, Article 20(1)(b) of that decision provides for the freezing of funds and economic resources of persons and entities not designated by those resolutions, but involved in the nuclear or ballistic missile programmes of the Islamic Republic of Iran. Provision is made in particular for the freezing of funds and economic resources of entities which are owned by, are controlled by, or act on behalf of, the Islamic Republic of Iran Shipping Lines (IRISL).

6 Council Decision 2011/783/CFSP of 1 December 2011 amending Decision 2010/413 (OJ 2011 L 319, p. 71) entered the name of the entity 'Morison Menon Chartered Accountant' in the list of persons and entities covered by Article 20(1)(b) of Decision 2010/413, the list in Annex II to Decision 2010/413.

7 In order to implement Common Position 2007/140, the Council had adopted Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1). Regulation No 423/2007 was repealed by Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran (OJ 2010 L 281, p. 1). Article 16(2)(d) of Regulation No 961/2010 provides for the freezing of funds and economic resources belonging to persons and entities not covered by the relevant resolutions of the Security Council who have been identified 'in accordance with Article 20(1)(b) of Decision 2010/413 ... [as] being a legal person, entity or body owned or controlled by [IRISL]'.

8 By its Implementing Regulation (EU) No 1245/2011 of 1 December 2011 implementing Regulation (EU) No 961/2010 on restrictive measures against Iran (OJ 2011 L 319, p. 11), the Council entered the name of the entity 'Morison Menon Chartered Accountant' in the list of persons and entities to which Article 16(2) of Regulation No 961/2010 applies, the list in Annex VIII to that regulation.

9 The reason for entering the name of the entity 'Morison Menon Chartered Accountant' in the list in Annex II to Decision 2010/413 and Annex VIII to Regulation No 961/2010 is as follows: 'IRISL front company, owned or controlled by IRISL or an IRISL affiliate'.

10 By application lodged at the Registry of the General Court on 29 December 2011, the applicants brought an action for the annulment of Decision 2011/783 and Regulation No 1245/2011 ('the contested measures') in so far as those measures concern them.

11 By separate document lodged at the Court Registry on the same day, the applicants brought this application for interim measures, whereby they claim, in essence, that the judge hearing the application for interim measures should:

12 In its written observations on the application for interim measures, lodged at the Court Registry on 13 January 2012, the Council contends that the judge hearing the application for interim measures should:

13 It is clear from reading the combined provisions of Articles 278 TFEU and 279 TFEU, on the one hand, and Article 256(1) TFEU, on the other, that the judge hearing an application for interim measures may, if he considers that the circumstances so require, order that the operation of a measure contested before the General Court be suspended or prescribe any necessary interim measures.

14 Article 104(2) of the Rules of Procedure provides that an application for interim measures is to state the subject matter of the proceedings, the circumstances giving rise to urgency and the pleas of fact and law establishing a prima facie case for the interim measures applied for. Accordingly, the judge hearing an application for interim measures may order suspension of operation and other interim measures, if it is established that such an order is justified, prima facie, in fact and in law (fumus boni juris) and that it is urgent in so far as, in order to avoid serious and irreparable harm to the applicant's interests, it must be made and produce its effects before a decision is reached in the main action. Those conditions are cumulative, so that an application for interim measures must be dismissed if either of them is absent (order of the President in Case C-268/96 P(R) SCK and FNK v Commission [1996] ECR I-4971, paragraph 30) Also, where appropriate, the judge hearing the application for interim measures must also balance the interests involved (order of the President of 23 February 2001 in Case C-445/00 R Austria v Council [2001] ECR I-1461, paragraph 73).

15 Moreover, in the context of that overall examination, the judge hearing the application for interim measures enjoys a broad discretion and is free to determine, having regard to the particular circumstances of the case, the manner and order in which those various conditions are to be examined, there being no rule of law imposing a pre-established scheme of analysis within which the need to order interim measures must be assessed (orders of the President in Case C-149/95 P(R) Commission v Atlantic Container Line and Others [1995] ECR I-2165, paragraph 23, and of 3 April 2007 in Case C-459/06 P(R) Vischim v Commission, not published in the ECR, paragraph 25).

16 Further, Article 278 TFUE establishes the principle that actions for annulment do not have suspensory effect, since measures adopted by the institutions of the European Union enjoy a presumption of legality. It is therefore only exceptionally that the judge hearing an application for interim measures can order the suspension of operation of such a measure or prescribe interim measures (see, to that effect, order of the President of 17 December 2009 in Case T-396/09 R Vereniging Milieudefensie and Stichting Stop Luchtverontreiniging Utrecht v Commission, not published in the ECR, paragraph 31 and case law cited).

17 Having regard to the material in the file, the judge hearing the application for interim measures considers that he has all the information needed to rule on the present application for interim measures, without it being necessary first to hear oral argument from the parties.

18 It is appropriate first to examine whether the condition of urgency is satisfied.

19 In accordance with settled case-law, urgency must be assessed in relation to the need for an interim order in order to avoid serious and irreparable damage being caused to the party seeking the interim measure. It does not have to be established with absolute certainty that the damage is imminent; it is sufficient that the damage, particularly when it depends on the occurrence of a number of factors, should be foreseeable with a sufficient degree of probability. However, the party invoking such damage is required to prove the facts forming the basis of its claim that serious and irreparable damage is likely (see order of the President of 8 June 2009 in Case T-149/09 R Dover v Parliament, not published in the ECR, paragraph 25 and case-law cited).

20 According to settled case-law, damage of a purely financial nature cannot, save in exceptional circumstances, be regarded as irreparable or even as reparable only with difficulty, since it may normally be the subject of subsequent financial compensation (order of the President of in Case C-471/00 P(R) Commission v Cambridge Healthcare Supplies [2001] ECR I-2865, paragraph 113, and order of the President in Case T-339/00 R Bactria v Commission [2001] ECR II-1721, paragraph 94), exceptional circumstances being established if it appears that, without such a measure, the party seeking the interim measure would be in a position that could imperil its existence before final judgment is given in the main action. Since imminent disappearance from the market does constitute damage that is both irremediable and serious, adoption of the interim measure sought appears justified in such a situation (see order of the President of 9 June 2011 in Case T-533/10 R DTS Distribuidora de Televisión Digital v Commission, not published in the ECR, paragraph 30 and case-law cited).

21 The applicants claim that, if the suspension of operation sought is not granted, they will be faced with a risk of imminent disappearance from the market. In support of that claim, they claim that three forms of damage will be caused by the contested measures: first, a serious and irremediable loss of clients, second, the closure of their bank accounts and, third, the likelihood of that they will be obliged to make early repayment of sums due under a loan agreement entered into for the acquisition of one of their offices.

22 At the outset, some of the alleged damage must be dismissed as being of no relevance to the assessment of urgency.

23 That is true, first, of the closure of the applicants' bank accounts with the Abu Dhabi Commercial Bank and the National Bank of Dubai. As the applicants themselves acknowledge in the application for interim measures, those banks are not legally bound by the measures for the freezing of funds and economic resources imposed under Article 20(1)(b) of Decision 2010/413 and Article 16(2) of Regulation No 961/2010, since they cannot be regarded as being under the jurisdiction of any Member State of the European Union. Accordingly, even on the assumption that the applicants are unable to open a bank account with another institution, it has not been demonstrated that a suspension of operation of the contested measures would be apt to prevent the occurrence of the damage which they present as the direct consequence of closure of their bank accounts (the impossibility of paying employees, their departure, the impossibility of obtaining work permits to replace them, loss of clients). In any event, it must be stated that the decisive cause of such damage is the independent choice of economic operators, not the contested measures (see, to that effect and by analogy, order of the President of 26 March 2010 in Case T-1/10 R PPG and SNF v ECHA, not published in the ECR, paragraphs 64 to 66; see also orders of the President of 4 December 2007 in Case T-326/07 R Cheminova and Others v Commission, not published in the ECR, paragraph 110; of 17 December 2007 in Case T-367/07 R Dow AgroSciences and Others v Commission, not published in the ECR, paragraphs 103 and 104, and of 28 April 2009 in Case T-95/09 R United Phosphorus v Commission, not published in the ECR, paragraph 56).

24 The same is true, secondly, of the possibility that another bank, the Bank of Baroda, may request the early repayment of a loan granted to the applicants for the acquisition of one of their offices. First, it must be stated that such damage is not sufficiently probable to merit being taken into account. Article 12 of the loan contract, to which the applicants refer, provides for the possibility of unilateral termination of the contract in the event that, in essence, the continuation of that loan becomes unlawful. However, since the Bank of Baroda does not appear to be bound by the measures for the freezing of funds and economic resources imposed under Article 20(1)(b) of Decision 2010/413 and Article 16(2) of Regulation No 961/2010, it may be doubted that the condition for the application of Article 12 of the contract can be regarded as satisfied. Secondly, and consequently, even if such an event were to take place, it would again have to be concluded, for the same reasons as stated in paragraph 23 above, that the contested measures cannot be regarded as the decisive cause of that damage.

25 As regards, thirdly, the damage claimed to consist of a complete and irremediable loss of their clients, the applicants argue as follows:

26 As regards the last two claims of loss of clients, for the same reasons as stated in paragraph 23 above, those claims cannot be taken into account in the assessment of condition of urgency, since their decisive cause is the conduct of economic operators who are not bound to comply with the contested measures. Accordingly, only the first claim will be considered.

27 It is certainly clear from the documents annexed to the application for interim measures that the applicants' European clients generated almost 26% of their income. While that proportion is not insignificant, it cannot however lead to the conclusion that, if the suspension of operation of the contested measures is not granted, the applicants would be in a position that could imperil their existence before final judgment is given in the main action.

28 It must also be borne in mind that while it is clear from the case-law that account can be taken of the fact that, if the interim measure sought were not granted, the market share of the party seeking that measure would be irremediably affected, that is only if that irremediable effect on market share is also of a serious nature, which implies that the market share which may be irremediably lost must be sufficiently large. A party seeking an interim measure who invokes the loss of such a market share must demonstrate, furthermore, that regaining a significant proportion of it, in particular by appropriate publicity measures, is impossible by reason of obstacles of a structural or legal nature (order of the President of 27 August 2008 in Case T-246/08 R Melli Bank v Council, not published in the ECR, paragraph 35).

29 Accordingly, before the financial damage consisting of the loss of its European clients could be considered to fall within exceptional circumstances mentioned in paragraph 20 above, the applicants would have needed to demonstrate that, in the particular circumstances of this case, that loss was not only serious but also irremediable. However, while there is no doubt that the damage consisting of the loss of the applicants' European clients is serious, it has not been demonstrated that it is irremediable, in the sense that, were they to be successful in the main action, they would be incapable of renewing their commercial relationships with a significant proportion of their European clients. In that respect, this case can be distinguished from that which gave rise to the order, referred to by the applicants, in United Phosphorus v Commission, paragraph 23 above.

30 In the light of all the foregoing, it must be concluded that the condition of urgency has not been established and that the application for interim measures must be dismissed, and there is no need to examine whether the other conditions governing suspension are satisfied.

31 Consequently, the claims that the General Court should suspend the operation of the contested measures must be dismissed.

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