Case T-85/09, Kadi II

Guest post by Tim Stahlberg, Lawyer at CMS Hasche Sigle in Hamburg

The General Court of the EU quashes the regulation freezing terror suspect Yassin Abdullah Kadi's funds. The judgment of 30 September 2010 – it is the sequel to the seminal Kadi decision of the Court of Justice – deals with fundamental rights and EU anti-terror sanctions based on UN Security Council resolutions.

On 20 October 2001, following a European regulation giving effect to UN Security Council resolutions, Mr Kadi's funds and other economic resources were frozen. The Sanctions Committee, a sub-organ of the Security Council, had designated Mr Kadi as being associated with Usama Bin Laden.

The General Court found clear words to describe this situation. 'Such measures are particularly draconian ... All the applicant's funds and other assets have been indefinitely frozen for nearly 10 years now and he cannot gain access to them without first obtaining an exemption from the Sanctions Committee … the UK Supreme Court took the view that it was no exaggeration to say that persons designated in this way are effectively “prisoners” of the State: their freedom of movement is severely restricted without access to their funds and the effect of the freeze on both them and their families can be devastating.' (para. 149)

Mr Kadi denies having ever supported terrorist organisations. He maintains that he has never been tried for or convicted of any criminal offence relating to terrorism anywhere in the world.

The Kadi judgment of the Court of First Instance (2005)

The legal odyssey of Mr Kadi in Europe began with the proceedings he initiated in December 2001 before the Court of First Instance (now the General Court). The applicant's case was dismissed in September 2005. Community courts must not review the lawfulness of the EU regulation at issue, the Court said, because resolutions of the UN Security Council have primacy over Community law. Except with regard to certain mandatory fundamental rights, recognised under international law as jus cogens, the regulation therefore enjoys immunity from jurisdiction.

The Kadi judgment of the Court of Justice (2008)

Mr Kadi appealed and the Court of Justice set aside the judgment of the Court of First Instance in September 2008 (see this comment on ECJBlog regarding Joined Cases C-402/05 P and C-415/05 P, C-402 Kadi and Al Barakaat). The Court of Justice asserted that 'an international agreement cannot affect the allocation of powers fixed by the Treaties or, consequently, the autonomy of the Community legal system'; 'the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty'; the European Community is an 'internal' and 'autonomous legal system'.

Thus, the Court of Justice examined the regulation and found a breach of fundamental rights. Since the Council had not communicated any evidence to the applicant, the rights of defence and the right to effective judicial review had been infringed.

With regard to the right to property the Court of Justice held that the restrictive measures might, in principle, be justified. However, without any meaningful opportunity to make his position heard, the applicant's right to property was disproportionately restricted.

In the aftermath of the judgment, the Commission sent a summary of reasons provided by the Sanctions Committee to Mr Kadi and informed the applicant that it intended to keep his assets frozen. Mr Kadi asked for evidence. The Commission did not reply and adopted a new regulation maintaining the freeze. Mr Kadi again took legal action.

The Kadi II judgment of the General Court (2010)

In the judgment of 30 September 2010, the General Court seized the occasion to criticise the Court of Justice's understanding of the relationship between the EU and the UN order (although the criticism was wrapped up as 'certain doubts voiced in legal circles'):

Even though the Court of Justice stated that it was not for the Community judicature to review the legality of a UN resolution, the fact remains that examining the legality of a Community act which merely implements a resolution necessarily amounts to a review of such a resolution, the General Court said.

The Court of Justice in fact scrutinised the UN system; and 'such judicial review is liable to encroach on the Security Council’s prerogatives.' (para. 114)

Nevertheless, the General Court grudgingly followed the path of the higher court and considered that it must, in principle, ensure a full and rigorous review of the European regulation; it may only decline to do so if sufficient judicial guarantees are already in place at UN level.

The General Court therefore read into the Court of Justice's Kadi decision an element of potential deference, reminiscent of the first 'Solange' ('so long as') jurisprudence of the German Federal Constitutional Court: So long as the UN system does not offer effective judicial protection, the EU has to do so.

And judicial protection in the UN system is still not good enough: 'In essence, the Security Council has still not deemed it appropriate to establish an independent and impartial body responsible for hearing and determining, as regards matters of law and fact, actions against individual decisions taken by the Sanctions Committee ... Moreover, the evidence which may be disclosed to the person concerned continues to be a matter entirely at the discretion of the State which proposed that he be included on the Sanctions Committee’s list and there is no mechanism to ensure that sufficient information be made available to the person concerned in order to allow him to defend himself effectively (he need not even be informed of the identity of the State which has requested his inclusion on the Sanctions Committee’s list).' (para. 128)

Having found so, it was clear that sending the applicant a summary of reasons, containing 'general, unsubstantiated, vague and unparticularised allegations,' would hardly remedy these deficiencies. (paras. 177, 157) 'The applicant's rights of defence have been “observed” only in the most formal and superficial sense,' the General Court lambasted. (para. 171) The Commission 'failed to take due account of the applicant's comments' and 'did not grant him even the most minimal access to the evidence against him.' (paras. 172 – 173) As a consequence, the right to effective judicial review and the right to property were also infringed.

The Kadi saga, however, does not end with this judgment. An appeal by the Commission is most likely. This means that it might take even more than ten years until Mr Kadi will ever know the evidence against him.

'In the scale of a human life,' the General Court said, '10 years in fact represent a substantial period of time and the question of the classification of the measures in question as preventative or punitive, protective or confiscatory, civil or criminal seems now to be an open one.' (para. 150)

The Court also cited the UN High Commissioner for Human Rights:

‘Because individual listings are currently open-ended in duration, they may result in a temporary freeze of assets becoming permanent which, in turn, may amount to criminal punishment due to the severity of the sanction. This threatens to go well beyond the purpose of the United Nations to combat the terrorist threat posed by an individual case. In addition, there is no uniformity in relation to evidentiary standards and procedures. This poses serious human rights issues, as all punitive decisions should be either judicial or subject to judicial review.’ (para. 150)

Indeed, 'smart sanctions', as the listings are called in comparison to traditional sanctions like embargoes, is a strange formula of newspeak: A decision not to trade with a particular state is one thing, freezing all financial means of an individual is quite another.

Moreover, the substantive criteria for listing a person are still unclear. The Kadi judgments of the Court of Justice and the General Court vindicate procedural rights (until today unsuccessfully), but do not elucidate what 'associated' with Usama Bin Laden or a terrorist organisation actually means.

In some respects, this parallels legal developments in the US, where judicial rights have been defended by the US Supreme Court without however clarifying the definition of an 'enemy combatant' in the war on terror (see, for instance, the Hamdi and Boumediene judgments).

Text of Judgment

C-208/09, Sayn-Wittgenstein (Opinion)

Of Princesses and Castles

Guest post by Tim Stahlberg, Lawyer at CMS Hasche Sigle in Hamburg


Last Thursday, Advocate General Sharpston issued a thoughtful opinion in the preliminary ruling procedure C-208/09 Sayn-Wittgenstein, a case which raises interesting questions of private international law and European citizenship (not to be confused with case 5/88 in which Prinzessin zu Sayn-Wittgenstein seemed to profit unfairly from European milk quotas, to the detriment of a small farmer who made her land suitable for milk production, a result which the Court of Justice corrected by holding for the first time that Member States must respect fundamental rights when they implement European rules).


This case also concerns a princess – or maybe not? In fact, that is the question. Sayn-Wittgenstein is about Ms Ilonka Havel, an Austrian estate agent for castles and stately homes in Bavaria and Austria. Following her adoption (as a grown up) in Germany by Lothar Fürst von Sayn-Wittgenstein, she obtained a judgment in 1992 by a German court confirming that her name has changed to 'Ilonka Fürstin von Sayn-Wittgenstein'. She was registered under that name in Austria for fifteen years until Austrian authorities objected to the 'Fürstin von' (Princess of) element. They relied on the constitutional principle of equality between citizens and the abolition of the nobility in Austria. Ms Ilonka (Fürstin von) Sayn-Wittgenstein, however, complained that her European rights to freedom of movement had been violated.


What makes this case so peculiar is that it raises a host of puzzling issues. Was the adoption as an adult a genuine one or was it only arranged to gain an advantage in the real estate market with a name suggestive of princely ancestry? Why did the Austrian authorities accept the 'Fürstin von' element for fifteen years before deciding otherwise? And does the Austrian ban on names of nobility constitute a consistent practice or is it marred by implausible exceptions?


It is also startling that German private international law concerning a person's name in fact refers to the law of the state of the person's nationality, which in this case is Austrian law. This implies that the German court was wrong in 1992 to rubber-stamp the name 'Fürstin von Sayn-Wittgenstein' since, in principle, names of nobility are prohibited in Austria. The gears of German and Austrian law in fact mesh – only because of the incorrect, albeit valid decision of the German court does this case arise.


Advocate General Sharpston found her way through this maze. Building on the case-law of Konstantinidis, García Avello, and Grunkin and Paul, she took the view that there is an interference with the citizen's freedom of movement (now Article 21 TFEU). During the fifteen years in which the appellant in the main proceedings was registered as 'Fürstin von Sayn-Wittgenstein', she was issued a driving licence and registered a company in Germany under that name. She will have opened bank accounts and entered into ongoing contracts. 'In short, she has lived for a considerable time in a Member State under a particular name, which will have left many traces of a formal nature in both the public and the private sphere. It can hardly be described as other than a serious inconvenience to be obliged to modify all those traces because her official identity papers now give her a different name.' (para. 44)


Turning to the question of justification, the Advocate General held: 'It seems clear that the abolition of the nobility, and of all privileges and designations pertaining thereto, is a legitimate aim for a newly founded republic – such as Austria in 1919 – based on the equality of all citizens and struggling out of the ruins of an empire which had been dominated by privileged classes.' (para. 59)


She continued: 'It further seems to me to be legitimate for such a republic to wish to maintain a firm safeguard against any resurrection of the privileged castes whose abolition was the original aim, which may legitimately be enshrined as a constitutional principle.' (para. 61)


Given the complexity and ambiguity in fact and national law, the remarks on proportionality were nuanced: 'If, for example, it were established that the legal position in 1992 was such that the appellant, the German court and the Austrian authorities could justifiably believe that the appellant’s surname was to be determined by German law alone, then a rectification 15 years later might well seem disproportionate. If, on the other hand, it transpired that the appellant had acted in bad faith in seeking to be registered under a surname to which she knew she was not entitled, or had in any way misled any of the authorities in question, then rectification might seem a just and proportionate measure. In any event, the length of the period concerned and the official and professional use the appellant has made of the name ‘Fürstin von Sayn-Wittgenstein’ are necessarily factors to be weighed in the balance.' (para. 68)


One may wonder whether the proportionality assessment may be different if the case is analysed solely under the umbrella of European citizen's rights. National authorities might enjoy greater leeway than in the framework of the free movement of services and the freedom of establishment. Strangely, the Austrian court only asked for an interpretation on the rules of European citizenship, although the appellant's economic activity was clearly at stake, too. In her analysis, Advocate General Sharpston took account of the obstacles to the appellant's professional endeavours.


It remains to be seen whether the Court will follow the Advocate General and touch upon the thorny issues of justification. A strategy of avoidance would be to avert the gaze from the economic dimension of the case and submit to the Austrian court that there is no restriction to the citizen's free movement. But this would be unconvincing. Sayn-Wittgenstein concerns the freedom to provide services and the freedom of establishment which are restricted. It is a curious case, arisen out of errors and omissions, apparently.

Text of Opinion