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||Neutral Citation Number:  EWHC 282 (Admin)
||Claimant in Case No. CO/564/2015
Claimant in Case No.CO/569/2015
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION ADMINISTRATIVE COURT
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE GREEN
|| NATIONAL IRANIAN TANKER COMPANY
GHOLAM HOSSEIN GOLPARVAR
|Claimant in Case No. CO/564/2015
Claimant in Case No.CO/569/2015
||- and –
||SECRETARY OF STATE FOR FOREIGN AND COMMONWEALTH AFFAIRS
Thomas de la Mare QC and Jason Pobjoy (instructed by Stephenson Harwood LLP for National Iranian Tanker Company) and Thomas de la Mare QC and Richard Blakeley (instructed by M Taher & Co for Gholam Hossein Golparvar) for the Claimants
Jonathan Hall QC and Rosemary Davidson (instructed by The Treasury Solicitor) for the Defendant
HTML VERSION OF JUDGMENT
Crown Copyright ©
MR JUSTICE GREEN:
- There are, before the court, two applications by Mr Gholam Golparvar (Mr Golparvar), and by National Iranian Tanker Company (NITC), both of whom seek interim relief against the Secretary of State for Foreign and Commonwealth Affairs (the "Secretary of State" or the "Defendant").
- The applications arise out of the fact that the representatives of the 28 Member States of the EU are due to meet today, Monday, 9 February 2015, and that they are likely to consider the re-inclusion of a series of natural and legal persons onto the list of persons subject to sanctions arising out of the concerns of the EU relating to nuclear proliferation in Iran, either at the meeting itself or by way of written procedure during the course of the week. The applicants are amongst those threatened with re-listing.
- The applications for relief in substance seek to compel the Secretary of State to veto the re-listing of Mr Golparvar and NITC. They seek interim declarations and a prohibition order. Specifically the applicants seek interim orders that:
"1. The Defendant's decision to propose, support or participate in (whether by positive vote or abstention) the redesignation ("the Decision") of the claimant is declared to be unlawful on an interim basis.
2. The Secretary of State be prohibited from taking any action giving effect to the Decision."
- The applications came before me upon an urgent basis on the afternoon of Friday, 6 February 2015, when I heard full argument and decided at the end of argument to refuse the applications.
- I gave very brief and provisional reasons then but indicated I would give full reasons on the morning of Monday, 9 February 2015. These are those reasons.
B. THE FACTS
- I start by setting out the facts. The facts are complex, and in order to place the legal submissions and my conclusions into context, it is necessary to set out those facts in some detail.
(a) Legislative framework
- On 26 July 2010 at the Council of the EU, adopted a decision ("the Council Decision") concerning restrictive measures against Iran reflecting its deepening concern (and as recorded in a series of prior declarations and common positions) about Iran's nuclear programme. The Council Decision buttressed measures already adopted by the UN Security Council in the form of UNSCR 1929 of 2010, which itself broadened the scope of existing UN sanctions against Iran. Recital 9 of the Council Decision stated as follows:
"9. In accordance with the European Council declaration, it is appropriate to prohibit the supply, sale or transfer to Iran of further items, materials, equipment, goods and technology in addition to those determined by the Security Council or the Committee that could contribute to Iran's enrichment-related reprocessing or heavy water-related activities to the development of nuclear weapon delivery systems or to the pursuit of activities related to other topics about which the International Atomic Energy Agency (IAEA) has expressed concerns or identified as outstanding or to other weapons of mass destruction programmes. This prohibition should include dual-use goods and technology."
- The Council Decision also emphasised the importance of protecting individual and fundamental rights in the context of decisions listing individuals, whether natural or legal, as subject to sanctions. Recitals 24 and 25 state as follows:
"24. The procedure for amending annexes I and II to this Decision should include providing to designated persons and entities the grounds for listing so as to give them an opportunity to present observations. Where observations are submitted or where substantial new evidence is presented, the Council should review its decision in the light of those observations and inform the person or entity concerned accordingly.
25. This decision respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union, and notably the right to an effective remedy and to a fair trial, the right to property and the right to the protection of personal data. This decision should be applied in accordance with those rights and principles."
- The Council Decision has since 2010 been periodically updated. Articles 19 and 20 thereof impose restrictions on travel and upon funds and other economic resources in the form of freezing provisions. Both provisions specifically target and identify natural and legal persons who are listed in annexes. The applications in the present case were, upon their initial designation, both specifically identified in the annexes.
- The rationale behind the listings is that the individuals or companies concerned are said to be directly associated with or provide support for Iran's proliferation-sensitive nuclear activities or for the development of nuclear weapon delivery systems, including such activities as procurement of prohibited items, goods, equipment, materials and technology. The provisions are broadened to catch also the agents of the main targets and those who assist them. It also extends to insurers or other providers of essential services, and it covers activities owned or controlled by them.
- In short, the Council Decision imposes travel bans and a wide-ranging series of freezing orders, and seeks to define and bring within the sanctions an extensive group of persons, companies and entities involved to varying degrees of proximity with Iran's nuclear programme. Illustrations of the breadth of the sanctions are found in Articles 20(1) and (2) of the Council Decision. Sub-paragraph (1) states:
"1. All funds and economic resources which belong to, are owned, held or controlled directly or indirectly by the following shall be frozen".
And sub-paragraph (2) states:
"No funds or economic resources shall be made available directly or indirectly to or for the benefit of persons and entities referred to in paragraph 1."
- The Council Decision also defines exemptions to the prohibitions.
- In order to give effect to the Council Decision, the Council has adopted Regulation 267/2012 which has been amended subsequently on 16 occasions. The Regulation is adopted pursuant to Article 215 TFEU which stipulates that when the Council adopts a decision which interrupts or reduces wholly or partially economic and financial relations with third countries, the Council is empowered by qualified majority to adopt the necessary measures.
- The European Parliament is excluded from this legislative process, no doubt because of its acutely sensitive political nature. But the Parliament does have the right to be informed of the measures adopted.
- The Article permits the Council to adopt sanctions as part of the necessary measures. In this judgment, the references that I make to the Regulation are to the version as amended and, hence, up to date.
- Article 23 of the Regulation is entitled "Freezing of funds and economic resources", and in subparagraphs 2(d) and (e) it identifies natural and legal persons listed in Annex IX to the Regulation upon whom sanctions are imposed.
(b) The listing of Mr Golparvar and NITC
- In relation to Mr Golparvar, he was identified in Part III, Annex IX, item 8. There, the following is stated: under the heading "Name" "Mr Gholam Hossein Golparvar" is identified. Under "Identifying information" it is stated: "Born on 23 January 1957, Iranian." Under "Reasons", the following is stated:
"Former commercial manager of IRISL, deputy Managing Director and shareholder of the Rahbaran Omid Darya Shipmanagement Company, Executive Director and shareholder of the Sapid Shipping Company, a subsidiary of EU-sanctioned IRISL, deputy Managing Director and shareholder of HDSL, member of the board of directors of EU-sanctioned Irano-Hind Shipping Company."
- In relation to NITC in Annex IX Part I, B, item 140 the company was identified, as is its address. Under the heading "Reasons" the following is stated:
"Effectively controlled by the Government of Iran. Provides financial support to the Government of Iran through its subsidiaries which maintain ties with the Government."
(c) The annulment decisions of the General Court
- Both applicants challenged their inclusion in the annexes before the General Court in applications for annulment brought under Article 263(4) TFEU.
- There is no dispute in this case but that there is a right to invoke Article 263(4) TFEU by these applicants. This is notwithstanding that in other respects the Court of Justice of the European Union is stripped of jurisdiction to review measures relating to common, foreign and security policy (see Article 275 TFEU). For the purpose of this judgment, it is not necessary to examine the scope and effect of this immunity from challenge. It is, however, a live issue in relation to other sanctions cases, and questions have been referred to the Court of Justice of the European Union by the Divisional Court in the case of OJSC Rosneft Oil Company v Her Majesty's Treasury & Ors  EWHC 248, 9 February 2015.
- In two judgments in December 2013 and July 2014, the General Court annulled the listing of the two applicants. First, in case T-58/12, Nabipour & Ors, (12 December 2013), the Court annulled the listing of Mr Golparvar (see paragraphs 180-194). The gist of the reasoning behind the Court's ruling was that a number of the facts relied upon by the Council to justify the initial listing were challenged as incorrect by Mr Golparvar, and the Council had not advanced any countervailing evidence to the Court to gainsay that challenge. In consequence, the Court stated, at paragraph 184, that since the Council did not challenge the assertions, the claims contained in the annex "must be considered to be vitiated by errors of fact".
- In certain other respects, where the Council did contest Mr Golparvar's assertions and in particular in relation to his role in SAPID Shipping, the Court was more circumspect and identified circumstances in which the listing could be justified (see paragraphs 181-194). The ultimate effect of the judgment, however, was to annul Annex IX insofar as it concerned, inter alia, Mr Golparvar.
- It is not disputed that the effect of a judgment of the General Court under Article 263(4) TFEU, and certainly in a case such as this, is not such as to preclude the Council from retaking the decision to re-list but this time in conformity with the ruling of the General Court.
- I turn, now, to the position of NITC. In case T-565/12 NITC, (3 July 2014), the General Court annulled the listing in relation to NITC. The initial listing had been based upon assertions that NITC gave what can broadly be described as (a) financial support, and (b) logistical support, to the Iranian regime. Either basis, if correct, was, in principle, sufficient to support the imposition of sanctions (see judgment paragraphs 40ff).
- It is, again, unnecessary to consider in detail the Court's reasons for annulling the listing of NITC. At paragraph 56 the Court pointed out that under Article 47 of the Charter of Fundamental Rights of the European Union it was incumbent upon the Court to ensure that Council decisions were taken "on a sufficiently solid factual basis". This involved the Court in verifying the Council's factual reasons for a listing. The Court also observed that in the event of challenge it was the Council's duty to establish "that the reasons relied on against the person concerned are well-founded". The Court added that it was not the task of the person listed to adduce evidence of the negative, i.e. that the reasons were not well-founded (see paragraph 57, citing Joined Cases, C-584/10 P, C-593/10 P and C-595/10 P, Kadi II  ECR, paragraphs 121 and 122).
- The nub of the Court's criticism of the listing of NITC was: (a) that the Council's evidence was factually confused; (b) that the Council relied upon indirect and not direct support; (c) that the Council's explanations to the Court were not found in the reasons in the annex to the Regulation and could not, therefore, be relied upon; and (d) that the Council's file did not contain the evidence now purported to be advanced in support of the listings (see paragraphs 58-65). In the light of these criticisms the Court annulled the Annex IX listing of NITC.
(d) The steps taken by the Council to re-list the applicants
- I have already observed that the judgment did not preclude the Council retaking the impugned listing decisions provided the new process was compliant with the law. Following the judgment, the Council's General Secretariat engaged in correspondence with both applicants, indicating an intent to re-list both upon the basis of amended statements of reasons. These were put to the applicants for their views and responses. In the case of Mr Golparvar, solicitors acting upon his behalf made various submissions which endeavoured to establish that he had severed all connections with any of the entities or bodies, including SAPID Shipping, with which it was hitherto said that he had been associated or connected. In order to support his contention, Mr Golparvar produced documents and certificates from the entities with whom it was said he was connected, which purported to prove his case that he was no longer connected. It seems plain that these did not satisfy the Council because, as I indicated at the outset of the judgment, the Council is likely to consider re-listing Mr Golparvar imminently.
- A letter from the Council dated 17 November 2014 described the new listing in the following terms:
"Mr Golparvar acts on behalf of IRISL and companies associated with it. He has been commercial director of IRISL as well as managing director and shareholder of the SAPID Shipping Company, non-executive director and shareholder of HDSL and shareholder of Rahbaran Omid Darya Ship Management Company, which are designated by the EU as acting on behalf of IRISL."
- The Council has taken a similar stance vis-à-vis NITC. On 23 October 2014 it sent a revised summary of reasons to NITC explaining why, in the light of the General Court ruling, it considered NITC to be an entity within the scope of Article 20(1)(c) of Decision 2010/413 and Article 23(2)(d) of Regulation 267/2012 as it provided financial and/or logistical support to the Government of Iran.
- The new proposed listing of NITC was to be accompanied by reasons which were set out in the Council's letter and which were in the following terms:
"The National Iranian Tanker Company provides financial support to the Government of Iran through its shareholders, the Iranian State Retirement Fund, the Iranian Social Security Organisation and the Oil Industry Employees Retirement and Savings Fund which are state-controlled entities. Moreover, NITC is one of the largest operators of crude oil carriers in the world and one of the main transporters of Iranian crude oil. Accordingly, NITC provides logistical support to the Government of Iran through the transport of Iranian oil."
(e) The role of the House of Lords European Union Committee
- I need now to explain that subsequent to the exchanges between the Council and the applicants, lawyers acting for the applicants and, in particular for Mr Golparvar, sought to exert pressure within the United Kingdom. This pressure prevailed to the extent that the House of Lords European Union Committee Sub-committee on External Affairs had placed before it, on 15 January 2015, letters from Mr Golparvar's solicitors and background documents which sought to undermine the Council's position.
- The decision to be taken by the Council today is one that must be taken by unanimity. It follows that if a single Member State votes against the re-listing, that serves as an effective veto to the decision. In the United Kingdom, under a procedure I will describe shortly, decisions taken by Ministers are subject to Parliamentary scrutiny, and in some circumstances very considerable pressure can be exerted upon Ministers to block EU measures. This is the context in which Mr Golparvar's solicitors sought to exert pressure on the Government.
- On 22 January 2015, Lord Tugendhat, the chairman of the sub-committee, wrote to Mr Golparvar's solicitors in the following terms:
"Thank you for your letters of 9 and 15 January 2015 regarding the case of Mr Gholam Golparvar, which I put before the Sub-committee on External Affairs at its meeting on 15 January. While the committee does have a role to play in scrutinising the Government's position on EU restrictive measures, it does not have the capacity to take up cases with the Government on behalf of individuals. However, we do have concerns about the process of re-listing following a general court annulment, of which your client's case is but one example. In this instance, we have written to the Government requesting, among other things, clarification of whether the Council has taken into account the evidence he has submitted to the Council that he is fully retired from acting on behalf of any of the companies mentioned in the new statement of reasons.
Pending a response from the Minister, we have decided to retain the document under scrutiny. When the Minister responds, the committee will take a decision on whether to release the document or not. We will show you a copy of our letter and the Government's reply in due course."
- The reference to the case being placed "under scrutiny" is a reference to a special procedure which is described in a Cabinet Office document of August 2013 entitled "Parliamentary scrutiny of European Union documents". The House of Lords scrutiny reserve procedure is set out in annex E. Paragraph 1 of the annex states as follows:
"1. Subject to paragraph 5 below, no Minister of the Crown shall give agreement in the Council or the European Council in relation to any document subject to the scrutiny of the European Union Committee in accordance with its terms of reference while the document remains subject to scrutiny."
Paragraph 5 sets out a list of exceptions. It is in the following terms:
"5. The Minister concerned may give agreement in relation to a document which remains subject to scrutiny:
(a) if he considers it is confidential, routine or trivial or is substantially the same as a proposal on which scrutiny has been completed.
(b) if the European Union Committee has indicated that agreement need not be withheld pending completion of scrutiny or
(c) if the Minister decides that for special reasons agreement should be given but he must explain his reasons:-
(i) in every such case to the European Union Committee at the first opportunity after reaching his decision, and
(ii) if that committee has made a report for debate in the House, to the House at the opening of the debate on the report."
- The special reasons referred to in paragraph 5(c) have been elaborated upon in the main body of the document at paragraph 6.2.10 in a non-exhaustive list of eight reasons. The first through to sixth reasons set out there are as follows:
"(i) The need to avoid a legal vacuum which might arise if an existing measure were to expire without agreement to an extension or adoption of a successful measure.
(ii) The wish that a measure of benefit to the UK should come into operation as soon as possible.
(iii) The difficulty, particularly if the negotiations in the Community have themselves been difficult or protracted of putting a late reserve on a measure which is beneficial or neutral from the UK viewpoint.
(iv) To achieve an advantageous package deal with other measures.
(v) To prevent the adoption of a measure disadvantageous to the UK, i.e. in the case of a measure subject to majority voting, the risk that voting against would result in a less advantageous measure. The vote of other Member States would have to be secured in place of the UK's, and this might require changes contrary to our interest.
(vi) To secure negotiated improvement in the measures."
- The present position of the Secretary of State has been set out in a witness statement of Mr Ajay Sharma, Head of the Iran Department at the Foreign and Commonwealth Office (the FCO). I can summarise his evidence in the following way. First, the use of targeted, complex sanctions is designed to coerce a change in the target's behaviour, to constrain their ability to continue with the behaviour and to signal to the target, to domestic constituencies, and to third parties that their behaviour should change. Secondly, the Government's purpose behind supporting UN and EU sanctions is to support the achievement of specific foreign policy objectives, to ensure that responses are proportionate and minimise humanitarian impacts, to be straightforward to implement and to reflect emerging case law and ensure that measures withstand legal scrutiny. Thirdly, with specific regard to Iran, the present approach is to maintain a strong sanctions regime while negotiating a comprehensive agreement.
- In paragraph 11 of his witness statement, Mr Sharma stated:
"In line with the broad sanctions approach outlined above, the purpose of the Iran sanctions regime is two-fold:
(a) To restrict or prevent Iran's nuclear proliferation-related activities by making it harder for the Government of Iran to access the materials, finance or logistical support needed for these activities; and
(b) Provide a deterrent and encourage the adoption of a different course to that of nuclear proliferation."
- It is in this context that Mr Sharma described the Secretary of State's position vis-à-vis the House of Lords Sub-committee scrutiny reserve. The following is to be found in paragraphs 22 through to 32 of the witness statement:
"22. Parliamentary scrutiny is the process by which the UK Parliament holds the Government to account for decisions taken in the EU, through examination of relevant EU documents presented to Parliament by the Government.
23. There are two scrutiny committees dealing with Brussels. The Commons European Scrutiny Committee and The Lords European Union Select Committee.
24. Most sanctions business does not go through the scrutiny committees before the measures are adopted. The measures are therefore scrutinised after they have been adopted at EU level. There are two main reasons for this. The first is because of the risk of asset flight (documents that go to the committees are published). This means new listings cannot be scrutinised before they are agreed. The second is because of timing. The scrutiny process takes a minimum of three weeks and sometimes longer (EU decisions usually need to be decided more quickly than this). As a result, at any point in the EU decision making process, Ministers are able to decide to override scrutiny and agree to an EU decision before parliamentary scrutiny has been cleared.
25. A Minister will not agree to an override unless there is a strong case to do so based on the urgency and importance of the item. Where an override is exercised, Ministers are answerable to Parliament.
26. There is no indication when the current parliamentary scrutiny process that applies to these two individuals will be concluded. The use of an override in these cases would be as a result of the real risk of damage to international relations and the nuclear negotiations set out below.
27. The UK continues to play a key role in the nuclear negotiations. In the event that an injunction was granted, which prevented the Minister from pursuing HMG's foreign policy objectives, namely the maintenance of pressure on Iran through sanctions, the UK's credibility on the nuclear issue will be damaged. More worryingly though, it would hinder efforts to reach a negotiated settlement. It would lend credence to the view that some in Iran hold that Iran does not need to negotiate seriously as the sanctions regime will eventually collapse.
28. Already, the delay in relisting both NITC and Mr Golparvar is cause for concern for the reasons set out above. Since the Council's pre-notification letters were sent out in October 2014, the UK has been under considerable pressure from EU partners, the Council legal service and the EEAS to progress these cases.
29. Maintaining economic pressure through sanctions has been critical to bring Iran to the negotiating table and to take the international community's concerns over its nuclear programme seriously.
30. NITC is regarded as a significant entity in sanctions pressure terms. While it only appears to have tenuous links with the UK (around £70,000 of frozen funds), it is an entity with international reach.
31. Like NITC, Mr Golparvar is a significant listing, given his association with IRISL and other companies associated with this key Iranian shipping company. I am not however aware of any direct links Mr Golparvar has with the UK, including any frozen funds.
32. In terms of impact, I am acutely aware of the effect this is having and will continue to have on the UK's relations with other Member States. If the UK is unable to support these listings, it could make it very difficult for the UK to pursue sanctions on the 30+ EU regimes. The reason for this is that other Member States may not be willing to support our proposals if we block these. The UK's foreign policy and a number of key priorities (e.g. IS, Syria, Russia, Al-Qaeda) is contingent upon our ability to drive sanctions policy, including through both supporting listings proposed by others and by proposing our own listings".
- Finally, in his witness statement, Mr Sharma confirms that the only evidence the Government has seen is that set out in the reasons put forward by the Council and that the UK has not advanced any evidence about these two cases to the Council. The UK is not the Member State proposing the re-listing.
(f) The Minister's letter of 4 February 2015
- The position adopted in the witness statement of Mr Sharma reflects that set out in a letter from the Minister for Europe, the Right Honourable David Lidington MP, on 4 February 2010, to Sir William Cash MP, chair of the European Scrutiny Committee. The letter concerns communications from that committee about the applicants. The letter is detailed and addresses a number of matters about the process of scrutiny, an acceptance of the need for transparency and the collection of proper evidence. The contents of this letter are relied upon by the applicants. Under the heading "Mr Golparvar's evidence to the Council" the letter states as follows:
"I understand from your letter that you have been made aware by Mr Golparvar's solicitor that he has provided documents to the Council explaining that the proposed reason for his re-listing is factually incorrect and that a link with the Islamic Republic of Iran Shipping Lines (IRISL) is out of date. The Council takes all material provided to them into consideration when determining the evidential basis supporting an individual's re-listing. When an individual is proposed for re-listing a pre-notification letter is sent to them. The Council usually provides some supporting documents to the individual at this time. If an individual asks for access to their file, all open-source evidence held by the Council will be provided to them upon their request in order that they may prepare their defence."
- The final fact that I would refer to is the letter from the Treasury Solicitor, also of 4 February 2015, to Mr Golparvar's solicitors in which it is confirmed that it is open to the Minister to approve re-listing without prior approval of Parliamentary scrutiny.
- I turn, now, from the facts to the submissions of the parties. I address these under four headings. First, "Jurisdiction and test for interim relief". Secondly, "Arguability and/or serious issue to be tried". Thirdly, "Adequacy of damages".
Fourthly, "Balance of convenience".
C. JURISDICTION AND TEST FOR INTERIM RELIEF
- I start with the jurisdiction of the Court to grant relief and the test to be applied. As to jurisdiction it is common ground that in principle the Court has the jurisdiction to issue interim orders of the sort asked for by the applicants (see, for example, Re M  1 AC, 377 per Lord Woolf at paragraph 21). I do not, therefore, need to spend time addressing the issue of jurisdiction to injunct the Crown, including in the field of foreign and security policy and/or EU law. Mr Hall QC for the Defendant acknowledged that for the purpose of voting qua member of the Council the Secretary of State acts on behalf of the United Kingdom by authority of the Royal prerogative (see per Laws LJ in Youssef v Secretary of State for Foreign and Commonwealth Affairs  EWCA Civ 130 at paragraph 23). The Secretary of State can accordingly propose a listing or support, abstain or block a proposal from another Member State. Mr Hall accepted that, given the requirement for unanimity, if the Secretary of State disagrees with a listing, he can therefore effectively block or veto it. I am not, in this case, being asked to injunct Parliament in its legislative capacity (the so-called "Factortame" type of case). Here I am being asked in substance to compel, by one means or another, the Secretary of State to veto the decision-making process entailed in re-listing the applicants. The target is, therefore, a future, indeed imminent, individual decision of the Secretary of State, reflected in the giving of approval in an appropriate way to a resolution upon the agenda of the Council. It is accepted that the exercise of Royal prerogative in this context is, in principle, susceptible to judicial review. Setting aside for one moment the novelty of the situation, the Court has the power to enjoin a future decision of a Minister of the Crown on ordinary principles.
- In relation to the test to be applied Mr Hall QC pointed out that there is some debate as to whether in judicial review proceedings the relevant test is Cyanamid or whether a prima facie case of invalidity must be shown (see, for example, Lewis: Judicial Remedies in Public Law, fifth edition at paragraph 8-027, page 285). It is unnecessary for me to consider this point in detail in this case because I have decided this case in large measure upon the balance of convenience and public interest grounds. Nevertheless, I have endeavoured to assess the merits and have considered both possible tests.
- This brings me to a more difficult issue which arises because under well-established EU law national courts do not have the power to strike down as invalid a measure of EU law. The issue is partly one of jurisdiction but might also be said to affect the test to be applied to the question whether the applicants have (to use a neutral expression) a properly justiciable issue. National courts do have the jurisdiction to uphold such a measure as valid, but in the event the Court doubts the validity of the measure, the most that it can do is make a reference to the Court of Justice of the European Union for that court to determine whether the measure is lawful (see Foto-Frost v Hauptzollant Lubeck Ost  ECR 4199 ("Foto-Frost"). The National Court cannot, itself, strike down the offending measure.
- In the present case, Mr Hall QC for the Defendant relies upon this. He says that there is a patent artificiality in the applicants' cases. The pith and substance of their grievances are the decisions which will be adopted by the Council, which, howsoever they seek to paint their challenge in domestic law colours, remain challenges to measures of EU law. As such, he submits the applications must necessarily fail because the Court has no power to intervene as the applicants seek it to do. Alternatively, their attempt to dress up EU causes of action as domestic causes of action or grounds are not arguable, on any relevant test. Indeed, the logic of the argument is that the High Court has no power at all to rule on the validity of a decision of the Secretary of State which is an integral part of the process mandated under EU law, leading to the promulgation of the, ex hypothesi, illegal decision.
- Mr de la Mare QC for the Claimants rejected this analysis and strove to articulate his challenge as a traditional domestic law case. He submitted that so far as Mr Golparvar was concerned, the proposed decision by the Minister was an unjustified, disproportionate and/or irrational decision to re-list which amounted to an abuse of process given that it was predicated upon evidence which the General Court had already dismissed and condemned as unlawful. Indeed, he submitted that the evidence was weaker now than it was when the Council last addressed the position in the initial listing, given the documentary evidence which had now been submitted by Mr Golparvar. It was submitted that it was not open in domestic law to the Secretary of State to ignore the applicants' new evidence and the "inconvenient fact" that there was no proper basis for a case against Mr Golparvar. Yet the Secretary of State had plainly closed his mind to the true facts, and his rejection in the letter of 4 February 2015, to which I have already referred, was "empty assertion".
- In the skeleton lodged on behalf of the applicants, it is objected that the Secretary of State's position, namely that he has formed his view only upon evidence provided by the Council, is legally "unfair" as:
"Such approach renders the written hearing afforded by the Council an empty and futile process in breach of due process rights. There is no point in providing evidence and making submissions if the actual decision-makers, the constituent members of the Council, will and do ignore the responses, even apparently considering themselves obliged so to do."
- The applicants also assert that this amounts to a violation of Articles 6 and 8 of the European Convention on Human Rights because previous precedent, namely the earlier General Court judgments, have been flouted.
- With specific regard to NITC, Mr de la Mare QC casts his arguments in a similar manner, namely that the process which was ongoing was abusive, that there was no new evidence upon which the Minister could act and which could distinguish the new proposed listing from the old unlawful listing. Mr de la Mare categorised the new case as "rebranding" and lacking any proper basis under Article 23(d) of the Regulation. The conclusion of the argument was that the Secretary of State cannot lawfully endorse the new proposed listing decision under domestic law.
- Finally, objection was made to the fact that at 11.41 am on 5 February, i.e. four days ago, the Council disclosed to NITC new material to support the listing which is said to be confidential but which Mr de la Mare described, without breaching confidentiality, as a "veneer". He explained that it was information provided to the Secretary of State in November 2014 but never properly disclosed to NITC and which NITC had never, therefore, had a proper opportunity to address. He used this to buttress his Article 6 arguments.
- I turn now to consider, from the perspective of both jurisdiction and the merits, what this means for the powers that this court has to declare the proposed decision of the Defendant to be invalid, even on an interim basis, and/or adopt prohibitory measures in support of that position.
- In my view, however cleverly they are crafted, the arguments advanced by the applicants are quintessentially the self-same arguments that they would advance before the General Court in a challenge to the re-listing once it has taken place. There is no doubt but that challenges to the procedures which lead up to the adoption of a measure can, in principle, constitute good grounds for annulment of the measure even though they necessarily pre-date its formal adoption. This is a wholly unsurprising conclusion. Classic challenges to EU decisions and other measures include allegations of inadequate consultation or inadequate adherence to the principle of audi alteram partem. As such the applicants' challenges are typical EU law grounds. They are inextricably bound up with the procedure which is ongoing and which will culminate in the re-listing decision which it is assumed the Council will take later today. This analysis lends support to Mr Hall's submission that this is not a true domestic law challenge but at base an early rehearsal of the grounds to be advanced in due course before the General Court following a re-listing.
- In the circumstances, I must consider whether the Court has power to declare invalid the Defendant's proposed decision or whether, applying Foto-Frost, no such jurisdiction exists because this is in truth a challenge to the validity of an EU measure. If no power exists, it is hard to see how I could grant interim relief in support of future substantive judicial review proceedings in the High Court where that court would have no power to grant the relief sought. It is true that such a court has, in theory, the power if it is tempted by the applicants' invalidity argument, to refer the matter to the Court of Justice of the European Union. However, the scope of even that course of action is largely curtailed by the principle laid down by the Court of First Instance (as it then was), in Joined Cases T-244/93 et seq TWD  ECR II-2665 at paragraph 103 to the effect that the preliminary reference procedure should not be used to undermine or circumvent the right available to applicants to seek annulment of measures under Article 263(4) TFEU.
- Guidance on this difficult issue has been given by the High Court in Bredenkamp v the Secretary of State for Foreign and Commonwealth Affairs  EWHC 3297. The facts of that case bear a similarity to those in the present case. An individual subject to the EU Zimbabwean sanctions regime sought orders from the High Court condemning the decisions of the Secretary of State proposing the inclusion of the applicant's name in the annex to the relevant sanctions regulation. As events unfolded and before the applicant's annulment application to the General Court could be completed, the applicant was delisted. Permission to apply for judicial review was, however, granted. The Secretary of State contended that to permit the claim to proceed would contravene the Foto-Frost principle. The High Court held, however, that upon the facts before it, the claim was not barred on Foto-Frost grounds. In paragraphs 45 and 46, Ouseley J held as follows:
"45. The limitation as expressed in Foto-Frost ... is on the power of a national court to declare a Community act invalid. It does not prevent a conclusion by a national court that a Community act is valid. The Foto-Frost principle is thus quite narrowly defined. It is not an assertion of some exclusive 'competence' in areas which may touch and concern the Community legal order. The more obviously does this apply where the CJEU, whatever its approach to the effect of arguably unlawful Community acts may be, did not suggest that any contributory domestic acts were subject to its exclusive power, nor did the UK Government seek to obtain such a protective ruling from it. It is not suggested that there is some wider principle to the effect that where the act impugned leads to or is undertaken as part of a Community act, it is immune from domestic legal remedy, and a remedy can only be sought in respect of the eventual Community act and only through the CJEU. The Foto-Frost principle does not prevent a national court ruling on domestic unlawfulness where that may also involve implied or express criticism of Community processes or acts.
46. Instead the asserted, limited approach to remedying wrongs articulated by the CJEU leaves the field open in the interests of justice to a challenge to what domestic authorities did en route to the enactment of Community decisions. The absence of judicial protection from the ECJ is not a shield behind which domestic courts are allowed by the European legal order to hide from domestic challenge. I accept that the European legal order ought to provide a remedy for its own unlawfulness, but that may not always be precisely coterminous with possible national unlawfulness, however closely related."
- This statement by Ouseley J does not mean that every argument advanced by an applicant or claimant directed against Ministerial decisions which are precursors to an impugned EU measure without more fall outside the Foto-Frost principle. Ouseley J cast the test in paragraph 47 in terms of whether the possible analyses leading to success for the claimant can be seen inevitably to require such a "forbidden result", i.e. the invalidity of the measure. In determining whether a claim could prevail under domestic law, the judge identified as potentially relevant whether the Minister's decision was based upon the same or different or supplementary evidence as that of the Council, and whether a finding that the Minister acted unlawfully necessarily implied invalidity of the EU measure (see paragraphs 55, 56, 57, 62 and 63).
- It is, in my view, apparent from Bredenkamp that the actual limits of the Foto-Frost principle are very far from clear and will require future consideration by the Courts. In the present case, on my analysis of the applicants' arguments, they are largely reflective of the arguments that would be advanced to the General Court in an application for judicial review. They are not, for instance, based upon some self-evidently discrete point about bias or that a Minister acted pursuant to an improper purpose or for some scandalous reason. On the basis of evidence before me, the Secretary of State is not proceeding upon secret intelligence that is not before the Council or other Member States. As such, I have doubts whether, as presently crafted, this case, in its pith and substance, can be said to be more than a disguised challenge to validity. Having said this, the facts are not wholly clear. The outer limits of the permitted challenge under Foto-Frost are, as I have observed, a matter for much more developed argument than it has been possible to make and assess in the case before me. On one reading of Bredenkamp, at least arguably (and giving the applicants the benefit of the doubt), the applicants' arguments fall on the right side of the line.
- My conclusion on jurisdiction is, therefore, that I do not preclude relief upon the basis that the applicants in substance are asking the court to render an EU act invalid. There are, as I shall come to shortly, more compelling grounds on which to refuse relief.
D. SERIOUS ISSUE/ARGUABILITY/PRIMA FACIE CASE
- I turn now to consider whether the applicants have a serious case to be tried. Given the public law context to this application, I also consider whether the merits are seriously arguable and whether a prima facie case of invalidity has been adduced. My conclusion is that the applicants meet such threshold tests but this is by no means a conclusion that the grounds are strong or more. In coming to this conclusion, I attach weight to the novelty, difficulty and, indeed, complexity of the points arising. They are not grounds I can summarily dismiss as unarguable or so trivial as to not justify a full assessment of their merits.
- I have already recorded that Mr de la Mare QC, with characteristic ingenuity, attempted to recast EU points in domestic garb. I entertain real doubts that these arguments would ever ultimately succeed in a domestic forum, not least because of my concerns that they collide with Foto-Frost. Nevertheless, I do not discard them as trivial or hopeless or not properly arguable.
- In significant part, my conclusion is based upon Mr de la Mare's submission that the new statements of reasons, purportedly justifying the re-listings, do not achieve any more than a re-jigging or re-organisation of the old evidence that the General Court found to be inadequate. He submitted by reference to the actual evidence that in the case of Mr Golparvar, significant new evidence of a documentary nature has been adduced and supplied to the Council and to the Defendant, which both had seemingly ignored, but which evidence had, he submitted, powerful, probative and exculpatory value. Having reviewed this evidence I can see that Mr Golparvar has a respectable case to advance certainly at the level of the General Court.
- Mr Hall QC for the Secretary of State takes issue with this categorisation. He took me to the logic of the General Court's judgment, which he said was essentially a technical objection to the manner in which the Council had presented its reasons in the initial listing and that the new reasons adequately addressed the General Court's concerns. In the case of Mr Golparvar, he submitted, albeit in more diplomatic language than I do now in recasting his submissions, that the "new" documentary evidence submitted was self-serving, thin, unparticularised and unsatisfactory. He also submitted that the Council was entitled to adopt a precautionary approach to the evidence, citing the observation of Lord Sumption in Bank Mellat v HM Treasury (Number 2)  UKSC 39, that in cases involving sanctions on persons involved in such matters as nuclear proliferation, a precautionary approach was required in judicial review (see paragraph 21 of Lord Sumption's judgment).
- In my view, the applicants' arguments remain arguable and raise serious issues, certainly in the context of the General Court. They are stronger, I suspect, in the case of Mr Golparvar than in the case of NITC. They are not by any means overwhelming, but they cannot be dismissed. I am also not entirely convinced that the General Court would necessarily follow Lord Sumption's "precautionary" approach which, on Mr Hall's argument, would lead the General Court to a judicial reticence in interfering with sanctions decisions. It is already apparent what approach the General Court adopts, and it seems to me it is more hands-on than the Supreme Court's approach contemplates.
- In conclusion on this point, I accept the applicants' submission that the points are serious enough not to warrant peremptory rejection of the applications at this interim stage of the analysis.
E. ADEQUACY OF DAMAGES
- I turn now to consider adequacy of damages. For reasons I will now shortly set out, I do not consider damages from the domestic courts to be an adequate remedy. However, as I explain shortly, in the context of applications to the General Court (as an adequate and more apt alternative remedy), the existence of compensatory relief is a consideration that I must pay attention to.
- The reasons that I do not decide these applications against Mr Golparvar and NITC upon the narrow ground of adequacy of damages is because in domestic public law damages are not routinely granted for unlawful or ultra vires acts. Exceptions to this exist where the illegality is under EU law, but even then the test is demanding and more than mere breach must be established: The so-called "Factortame (No 3)" damages test. Equally in cases for damages based upon breach of the Human Rights Act 1998 and the European Convention on Human Rights, the general principle is that the courts grant "just relief". In cases where the claim is easily quantifiable, the principle of resitutio in integrum applies. But where the loss is difficult to quantify or non-pecuniary, the damages awarded tend to be very modest and are not based upon any compensatory principle (see by way of analysis of relevant principles the judgment of the High Court in DSD & NBV v The Commissioner of Police for the Metropolis  EWHC 2493 at 16ff).
- Mr Hall QC for the defendant pointed out that in the applicants' skeleton it is, in effect, conceded that if the re-listing occurs, both applicants can and will continue life and business in Iran. Further, it is contended that neither applicant has adduced any real evidence to this court that they will suffer any damage. Both of these points have force. However, it seems to me that the very purpose of the sanctions regime is to cause real economic harm to these two applicants, and the reasons that will lead to their re-listing assume that this will, in fact, occur. One asks rhetorically: why would these two applicants be seeking relief if it was not because, on the very logic of the Council's reasoning, they are to have economic harm meted out to them?
- This case has arisen on the basis of extreme urgency. I am not in such circumstances inclined to draw adverse evidential inferences against the applicants.
- Finally, I accept Mr de la Mare's argument that there would be real practical problems in quantifying loss and, by way of illustration, in disentangling loss caused by the listing from more general harm caused by the generality of sanctions which may occur regardless of the listing.
F. BALANCE OF CONVENIENCE/PUBLIC INTEREST
- This brings me, finally, to address the balance of convenience. It is here that I consider that the applicants confront insuperable problems. In particular, there are two main obstacles which will make the grant of relief in cases of this particular nature an intrinsically improbable outcome. These are, first, that the existence of an application for annulment to the General Court is an ever-available alternative route and indeed the orthodox route which is explicitly created in EU law to cater for challenges by natural and legal persons to decisions of direct and individual concern to them, such as in substance is the position in the present cases. Secondly, but in any event, the acutely political nature of the decision sought to be challenged and the international consequences of the grant of relief in and of themselves are powerful reasons to refuse relief. I will deal with each point separately.
(a) The availability of the full gamut of remedies before the General Court
- In my view, the availability of a challenge under Article 263(4) TFEU is a perfectly adequate alternative remedy to relief in the context of domestic judicial review. I consider in this regard three facets of the jurisdiction of the General Court. First, review of substantive merits. Secondly, interim relief. Thirdly, damages.
- First, with regard to a challenge on the merits, it is clear that the applicants would have locus to challenge any re-listing. The General Court has already demonstrated that it is prepared to annul listings adverse to the applicants and has applied a test which is vigorous in demanding real and tangible proof from the Council of facts sufficient to support the listing. In the Case T-565/12 NITC, to which I have already made reference, the Court in paragraph 57, made clear that provided the applicant properly put the evidential foundation of the listing in issue, the burden of proof was upon the Council to substantiate the reasons for the listing with coherent evidence. The Court prayed in aid Article 47 of the Charter Of Fundamental Rights in this respect.
- Mr de la Mare QC submitted that the process would be protracted and complex, and he did not shrink from the submission that the procedure was, in substance, systemically inadequate. With respect, I do not agree. The evidence upon which a challenge such as this would be advanced is within a relatively small compass and in sanctions cases at least the General Court is now completing applications to judgment in between 12 to 15 months. In the context of General Court challenges, this is a relatively straightforward matter and one where the General Court has prior experience. Moreover, it has to be remembered that the annulment procedure under Article 263(4) TFEU is "the" designated procedure which is provided for in the treaties for individuals and entities such as the applicants. To conclude that it is not adequate remedy is an extreme conclusion to arrive at and one which smacks of a lack of comity or mutual respect between courts. Furthermore, I am not convinced that the standard of review would be more easier or applicant-friendly in the High Court than in Luxembourg, certainly if the tenor of the judgment of Lord Sumption in Bank Mellat (ibid) is an indication of the precautionary approach that the High Court might be required to take.
- Secondly, in relation to interim relief, it is relevant that the General Court has itself a power under Article 104(2) of the Rules of Procedure of the General Court to grant interim relief. The test is well known and laid down in such cases as Zuckerfabrik  ECR I-495; and Atlanta  ECR I-3671. The applicants would need to show that they have a prima facie case and that the need for relief was urgent. The Court examines whether interim relief is necessary to avoid serious and irreparable harm. The jurisdiction is ex post, not ex ante (quia timet) As part of the process, an applicant must adduce proper evidence of economic harm that is irreparable. In practice, it is right to observe that the General Court does not treat economic harm as irreparable unless it is exceptional. The Court frequently considers it is reparable since pursuant to Articles 268 and 340 TFEU an action for compensation of quantifiable loss can be pursued before the court.
- This brings me to the third point concerning damages. An illustration where compensation in respect of unlawfully imposed sanctions has been awarded is case T-384/11, Safa Nicu Sepahan v the Council (25 November 2014). In that case, which also concerned a wrongful listing in relation to Iranian sanctions, the Court reiterated that, "however regrettable", not every breach of EU law met the test for damages. To warrant damages, mere breach is insufficient. There must be established a "sufficiently serious breach of a rule of law intended to confer rights on individuals" (ibid paragraph 50). This will arise if the Council has "manifestly and gravely disregarded the limits of its discretion", (see paragraph 52).
- In this case, the General Court held that an unlawful listing could meet the demanding test for liability if it operated upon the basis of incorrect facts (see paragraphs 68 and 69). Claims were made in that case for losses due to: the closure of bank accounts; the suspension of the ability to make payments in Euros; the discontinuance of commercial relations by European trading partners; and, the inability to perform extant contracts.
- Following a detailed analysis of each head of damage, the Court rejected most claims and awarded 50,000 Euros for non-material damage arising from the adverse effects of the opprobrium and suspicion which flowed from being associated with Iran's nuclear proliferation programme.
- Where does this lead to? In my judgment, the full gamut of remedies are available from the General Court once the listing decision is adopted. I accept that an application to the High Court might be more rapid and flexible and contemplates quia timet relief. But I do not consider that a conclusion that the General Court is the apt route for challenge and that this should be pursued is conditional upon showing that in each and every respect the General Court's procedure is on an exact par with, or better than, that of the High Court. The issue is not who is better; the issue is whether the General Court is an adequate alternative. What this means is, so far as the ability to determine the merits and/or grant interim relief and/or award compensation is concerned, the General Court is a proper and apt alternative remedy. It is the route that should be pursued.
- Finally on this point, I am not persuaded that the judgment of the High Court in Bredenkamp is apposite; there, Ouseley J held that an appeal to the Court of Justice of the European Union was not an alternative remedy but upon the basis of the very different facts arising in that case (see in this regard the recitation of relevant facts and matters in Bredenkamp at paragraphs 65-68). If anything, the implicit reasoning in that case supports my conclusion.
(b) The political dimension
- I turn now to consider the second reason under the heading "balance of convenience", which is the political dimension to this case. Mr de la Mare QC submitted that if I were to grant relief it would only be for a few weeks whilst an expedited substantive application for judicial review would be heard and that this should not prove problematic for the Council. In fact, if I were to grant relief, I would, upon the basis of an application brought at exceedingly short notice, be compelling a Minister to veto important EU sanctions restrictions, thereby disregarding the considered views and preferences of the representatives of 27 other Member States of the EU. This, in and of itself, would be a wholly exceptional exercise of the court's jurisdiction to grant interim relief. In considering whether to take this step, I need also to take into account that there is evidence before me, which is in many respects self-evident, that for a single domestic court to compel the vetoing of a decision of the Council risks causing real tangible difficulties for the policy behind the sanctions regime. I have referred already to the witness statement evidence of Mr Sharma to this effect which I accept. He highlighted not only the political imperative of maintaining pressure upon the Iranian regime but also upon the need not to disrupt the delicate negotiations, to resolve the impasse between Iran and other world states, which are ongoing.
- I have also already referred to the fact that the proposed re-listing decisions have been scrutinised by the House of Lords select committee, which has lodged a scrutiny reserve but which has been met by the Secretary of State with an invocation of the override. This also serves only to emphasise just how acutely political is both the process of decision-making and the proposed decision itself.
- It is considerations such as these which led the Supreme Court in Bank Mellat (No 2) (ibid) to reinforce the need for judicial restraint in this area and to accord to the decision-maker a "large margin of judgment". Further, a precautionary approach should be adopted and the court should recognise that in an area as intensely sensitive as this, the court needs to avoid being sucked into quintessentially political matters. In paragraph 21 of his judgment in Bank Mellat, Lord Sumption stated as follows:
"21. None of this means that the court is to take over the function of the decision-maker, least of all in a case like this one. As Maurice Kay LJ observed in the Court of Appeal, this case lies in the area of foreign policy and national security, which would once have been regarded as unsuitable for judicial scrutiny. The measures have been opened up to judicial scrutiny by the express terms of the Act because they may engage the rights of designated persons or others under the European Convention on Human Rights. Even so, any assessment of the rationality and proportionality of a schedule 7 direction must recognise that the nature of the issue requires the Treasury to be allowed a large margin of judgment. It is difficult to think of a public interest as important as nuclear non-proliferation. The potential consequences of nuclear proliferation are quite serious enough to justify a precautionary approach. In addition, the question whether some measure is apt to limit the risk posed for the national interest by nuclear proliferation in a foreign country depends on an experienced judgment of the international implications of a wide range of information, some of which may be secret. This is pre-eminently a matter for the executive. For my part, I wholly endorse the view of Lord Reed JSC that "the making of government and legislative policy cannot be turned into a judicial process"."
- In my judgment, and giving due weight to the political context to this dispute, nothing in the facts of this case comes even remotely close to justifying me exercising a discretion to grant interim relief, which would have the consequences which I have identified.
- For all of these reasons, the applications for interim declarations and prohibitive orders are refused.
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