Professor Dr. Peter Van Elsuwege and Joyce De Coninck (PhD
Researcher), Ghent European Law Institute
The Grand
Chamber judgment
in Bank Refah Kargaran v Council,
delivered on 6 October 2020, unveiled yet another piece of the puzzle of
the jurisdiction of the Court of Justice
of the European Union (CJEU) in relation to the EU’s Common Foreign and
Security Policy (CFSP). Building upon the logic which was developed in previous
judgments such as Elitaliana,
H
v. Council (discussed here
and here), Rosneft
(discussed here)
and SatCen
vs. KF, the Court of Justice has now concluded that the EU courts have jurisdiction to hear and determine an
action for damages for the harm allegedly caused by the adoption of CFSP decisions
under Article 29 TEU. Accordingly, it revokes the approach of the General Court
which had so far rejected this option in view of the CJEU’s limited
jurisdiction in matters concerning CFSP. Whether the judgment in Bank Refah Kargaran has further
implications beyond the specific situation of restrictive measures remains to
be seen. In any event, it confirms once again that the role of the CJEU in the
field of CFSP is not as limited as a cursory reading of the Treaties might suggest
(see also G. Butler).
Background to the Grand Chamber Ruling
Restrictive
measures are effectuated by the adoption of Council Decisions on the basis of Article
29 TEU. To ensure that such CFSP Council Decisions are applied in a uniform
manner, the Council typically adopts additional regulations in parallel with
said decisions upon the basis of Article
215 TFEU, which generally replicate the content of the underlying Council
Decision. The CJEU has repeatedly held that as concerns the content of
regulations founded upon Article 215 TFEU, it retains jurisdiction, including
in actions for damages. Whether such actions for damages are possible against
the underlying CFSP Council Decision concerning the restrictive measures,
remained up in the air until now.
In this case
Bank Refah Kargaran had already successfully obtained the annulment of
restrictive measures against it, taken on the basis of Council Decisions
2010/664 and 2011/783, as well as the subsequent Council Regulations 961/2010
and 1245/2011, for failure to state reasons (judgment
in Case T-24/11; note that the Bank was then subjected to sanctions on the
basis of a new decision, and its legal
challenge to that later decision was unsuccessful). Having obtained the
annulment of said decisions and regulations, Bank Refah Kargaran initiated an
action for damages before the General Court, for the damages incurred by both
the underlying Council Decisions, as well as Council Regulations 961/2010 and
1245/2011, without distinction between the measures or the legal basis upon
which they are founded.
In its judgment,
the General Court noted that this distinction between the Council Decisions
adopted on the basis of a CFSP legal basis, and the Council
Regulations 961/2010 and 1245/2011, adopted upon the basis of Article 215
TFEU , had not been raised. With this distinction in mind, the General Court
held that it did not have jurisdiction to rule on an action for damages
concerning the aforementioned Council Decisions. In so doing, it recalled that
it enjoys only limited jurisdiction in the realm of CFSP measures, namely where
the Court is called upon to monitor compliance with Article
40 TEU (on the ‘boundary’ between the CFSP and other areas of EU law) and
secondly, concerning the legality of
measures which provide for restrictive measures in accordance with Article
275(2) TFEU. As this latter provision does not (explicitly) provide
jurisdiction for an action for damages against restrictive measures, the
General Court concluded that the action brought for damages against the Council
Decisions escapes its jurisdiction. However, concerning Council Regulations
961/2010 and 1245/2011, the General Court held that it retained jurisdiction,
as these measures were adopted upon the basis of Article 215 TFEU. The General
Court subsequently embarked on an assessment of the conditions for a successful
claim for damages, underlining the cumulative nature thereof, to ultimately
conclude that these conditions had not been met.
The CJEU’s Grand
Chamber ruling concerns the appeal against the aforementioned case before the
General Court, and sparked much interest as it presented the CJEU with the
opportunity to elaborate on the contours and limitations of its jurisdiction in
CFSP measures and more specifically, whether Article 275(2) TFEU is to be read
teleologically – in line with its Rosneft
ruling – or rather, textually and in line with the opinions presented by AG
Wahl in H v Council, and AG
Kokott in Opinion 2/13.
Opinion of AG Hogan: advocating a ‘holistic and
harmonious’ interpretation of the Treaties
AG Hogan’s opinion
unpacks the CJEU’s case law on the jurisdiction on CFSP related matters, with
as a departing point, the general jurisdiction of the CJEU in Article 19 TEU
and the exceptional and limited nature of jurisdiction in CFSP on account of Article
24 TEU and Article
275(1) TFEU. AG Hogan proffers that the raison
d’être for this limited jurisdiction is that the drafters of the Treaties
acknowledged that decisions of a purely political nature should be exempted
from judicial scrutiny (§47). He underlines however, that this is not the case
for all matters of foreign policy – solely for questions of “high-level politics and diplomacy, which by
their very nature are inapt for judicial resolution”.
In line with
this finding, A.G Hogan identifies three factors to be taken into account when
assessing whether the CJEU retains jurisdiction in matters of foreign policy.
Firstly, AG Hogan notes that only acts adopted on the basis of Articles 23 – 46
TEU are shielded from judicial scrutiny. Secondly, certain acts on account of
their nature will not be shielded from judicial scrutiny (such as staff
management for example – see H v. Council).
Thirdly, the exclusion from jurisdiction in Article 24 TEU and Article 275(1)
TFEU constitute an exception to the more general rule of jurisdiction in Article
19 TEU, and accordingly must be interpreted narrowly.
Against this
background, AG Hogan arrives at the most contentious point of the case, the
treaty-based “claw-back” exceptions to the limited jurisdiction of the CJEU
embedded in Article 40 TEU and Article 275(2) TFEU. Article 275(2) TFEU grants
the CJEU jurisdiction to assess the legality of restrictive measures adopted
under the CFSP-framework “…in accordance
with the conditions laid down in the fourth paragraph of Article 263 [TFEU]”,
thus linking the limited CFSP jurisdiction to the legality review inherent to
the annulment proceedings. Two different approaches can be distinguished in
this respect: while it may be argued that the reference to annulment
proceedings must be read strictly and implies that the CJEU is granted
jurisdiction to assess only the
legality of restrictive measures in the context of the annulment procedure,
this provision may also be read teleologically.
Following this
latter perspective, the reference to Article 263(4) TFEU in Article 275 TFEU is
nothing more than a reference to the “…types
of decisions which may be subject to judicial review by the EU judicature and
not to a particular procedure of judicial review” (§ 69). The infamous Rosneft judgment drawing from Article 19
TEU along with Article
47 of the EU Charter of Fundamental Rights, follows this second strand of
opinion, holding that Article 275(2) TFEU cannot be read in such a restrictive
manner that the reference to Article 263 TFEU would rule out interpretative
indirect jurisdiction of the CJEU via the means of a preliminary reference
procedure.
AG Hogan
concludes that excluding an action for damages against successfully annulled
CFSP-decisions on restrictive measures, is nonsensical, as decisions taken on
the basis of Article 215 TFEU are - for all intents and purpose no more than a
reproduction of the original CFSP-based restrictive measures. Any other reading
of Article 275(2) TFEU – according to AG Hogan – would result in indefensible
anomalies, as well as impair the effectiveness and coherence of the judicial
remedies established in the Treaties. On jurisdiction, the AG concludes that
the Treaties must be read in a “holistic and harmonious manner” and that it was never the intention
of the drafters of the Treaties to exclude an action for damages (closely
related to an action for annulment) against CFSP-adopted restrictive measures.
The Court judgment: confirming the unity of the EU
legal order based on respect for the rule of law
The CJEU tackles
the issue headfirst, and while acknowledging that Article 275(2) TFEU does not
explicitly endow the Court with jurisdiction to rule on an action for damages
against CFSP-based restrictive measures, lays out the groundwork as to why this
jurisdiction is nevertheless implied. True to its approach in Rosneft, the CJEU first recalls that the
limited jurisdiction in CFSP matters constitutes an exception to its general
jurisdiction under Article 19 TEU and must, therefore, be interpreted narrowly.
Second, the CJEU recalls that while an action for damages is conceptually
distinct from legality review, it remains an integral component of the EU
system of legal remedies, as well as the right to an effective remedy. Finally,
the CJEU recalls the rule of law upon which the Union is founded, as well as
the right to an effective remedy enshrined in Article 47 CFR, which require
that affected parties have access to effective judicial protection. Applying
these observations, the Court agrees explicitly with AG Hogan, in concluding
that the coherence and effectiveness of the Union system of remedies, as well
as the need to avoid legal lacuna in this system of remedies, requires that
Article 275(2) TFEU is to be read as providing jurisdiction to rule on an action
for damages against an annulled CFSP-adopted restrictive measure.
Significantly,
the Court also expressly rejects the arguments put forward by the Council on
the basis of the pre-Lisbon judgments of Segi
and Gestorias
Pro Amnestia. The introduction of a single legal personality for the
EU, laid down in Article 47 TEU,
implies that the CFSP is no longer to be regarded as a separate pillar but as
an integral part of the EU legal order. The logical consequence is that the EU
Treaty provisions relating to the CFSP – including the part on the limits to
the Court’s jurisdiction – cannot be
interpreted in isolation from the general structure and logic of the Treaties.
The Grand Chamber judgment in Bank Refah Kargaran
confirms this approach, which was already present in previous judgments, most
notably in Rosneft, to conclude that
the General Court erred in law when it excluded its jurisdiction to hear and
determine an action for damages in relation to CFSP decisions imposing
restrictive measures.
Finally, with respect
to the substance of the action, the Court of Justice dismissed the appeal of Bank Refah Kargaran. As correctly
observed by the General Court, the inadequacy of the statement of reasons for
the annulled legal acts imposing restrictive measures does not in itself
provide a ground for triggering the non-contractual liability of the EU. The
obligation to state reasons is merely an essential procedural requirement,
which must be distinguished from the question whether the reasons are well
founded. Hence, the EU may only be found liable when the substantive legality
of the measure is at stake.
Understanding the intention of the drafters of the
Treaty
Taking into
account the fundamental importance of the rule of law as a cornerstone of the
EU legal order, the Court’s deliberate choice for a broad interpretation of its
general jurisdiction does not come as a surprise. It builds upon the tradition
of Les
Verts to ensure, in so far as possible, an effective system of judicial
protection in a Union which is based on respect for the rule of law. In its
post-Lisbon case law, the CJEU consistently applied the same logic with respect
to questions concerning the scope of its jurisdiction in the area of CFSP. Of
course, the question remains how far this approach can be stretched, taking
into account the limitations imposed under Article 24 TEU. As observed by AG
Wahl in H v. Council, the system of
judicial review in relation to the CFSP is “the
result of a conscious choice made by the drafters of the Treaties”,
implying that the Court may not broaden its jurisdiction beyond the limits laid
down in the Treaties.
In other words,
the entire discussion about the precise limitations to the jurisdiction of the
CJEU relates to the intention of the drafters of the Treaties. Did they intend
to retain an separate constitutional status for the CFSP, which is shielded
from judicial review by the EU courts with certain exceptions as defined in
Article 24 (1) TEU and 275 (2) TFEU, or did they essentially aim to exclude
CJEU jurisdiction in view of the highly political nature of CFSP decisions? The
latter approach largely corresponds with the established practice at the
national level of EU Member States where foreign policy decisions traditionally
escape judicial review. This is the view defended by AG Hogan in his opinion to
the Bank Refah Kargaran judgment when
he points at the intention to exclude CJEU jurisdiction for CFSP decisions that
are in essence of a purely political nature without excluding particular types
of foreign policy decisions that can be the subject of judicial review. A
largely similar approach was previously developed by AG
Bobek in SatCen v. KF when he
observed that “the fact that an act is
formally based on CFSP provisions or adopted in that context simply is not
enough to trigger the CFSP derogation. The act must also have genuine CFSP
content.”(§79).
The Court
judgment in Bank Refah Kargaran again
confirms that not the form of a measure is decisive to determine its
jurisdiction. As observed by AG Hogan and expressly upheld by the Court (§39),
such a formalistic approach would lead to indefensible anomalies in a Union
based on the rule of law. The case at stake concerned the specific situation of
CFSP decisions pertaining to restrictive measures. For such acts, an action for
damages is possible with respect to measures adopted under Article 215 TFEU and
it would be rather artificial if this option would then be precluded with
respect to the underlying CFSP decision based on Article 29 TEU.
Unresolved Issues
Although the
current case constitutes a significant clarification in an increasingly
momentous strand of case law on CJEU jurisdiction in CFSP, a number of
questions remain unresolved in this jurisdictional enigma, and not in the least
the larger implications of the current judgment. While on the one hand, it
could be argued that by building upon the reasoning adopted in Rosneft and the underlying principles of
the rule of law and the right to an effective remedy, the Court has opened the
door to significantly more jurisdiction in the realm of CFSP, it could also be
argued on the other hand, that the implications of the current judgment are in
fact, relatively limited.
The case at hand
concerned restrictive measures that had already been the subject of a
successful annulment proceeding as concerns both the Article 215 TFEU-based
regulations, as well as the underlying Council Decisions to include Bank Refah
Kargaran on the EU’s list of restrictive measures. However, for the right to an
effective remedy under Article 47 CFR to be discharged, the mere declaratory
nature of an annulment proceeding will not suffice, and additional remedial
action is needed. Within this line of reasoning, it is not surprising that the
CJEU found that an action for damages for an already annulled CFSP-based
restrictive measure is inherent to the system of remedies encapsulated in
Article 275(2) TFEU. In other words, as Article 275(2) TFEU already embodies
one aspect of the right to an effective remedy, it is not surprising that the
CJEU confirmed in casu that this legality review for CFSP-based restrictive
measures includes also the complementary right to damages as a result of the
unlawfulness of the measures. Following this reasoning, the impact of the
ruling on CJEU jurisdiction in CFSP can be construed as limited exclusively to
matters concerning restrictive measures that in any event, were already subject
to legality review by the Court.
However, by
increasingly building its reasoning in the present case and in its predecessors
such as Rosneft, on the overarching
and foundational value of the rule of law, as well as the coherence and
effectiveness of the system of remedies in the Union, the question remains
whether the Court’s judgment may have broader implications, going beyond the
specific situation of CFSP decisions concerning restrictive measures. In
particular, if the intention of the drafters of the Treaty was to solely
exclude CFSP decisions of a political nature, it implies that such decisions
that are not of a political nature,
would thus fall within the purview of CJEU jurisdiction.
The reference to
the overarching right to an effective remedy in the EU legal order, including
the right to damages where the conditionality has been met, could arguably be
invoked within the context of EU Common Security and Defence Policy (CSDP)
military missions for purported human rights violations occurring in the
context thereof. In fact, the increased reference to such overarching
principles inherent to the rule of law, make it increasingly difficult to
contend that the CSDP nature of the mission in itself prevents any judicial
scrutiny by the CJEU. Given the increased appropriation of jurisdiction in
CFSP-matters of a cross-policy nature (the Mauritius
case concerning criminal cooperation, discussed here;
the Elitaliana case concerning the
Financial Regulation, H. v. Council and
SatCen v. KF concerning staff
management), as well as the increasingly established jurisdiction in differing
procedures on restrictive measures (the Rosneft
case and now Bank Refah Kargaran) it
appears that the CJEU is taking definitive steps in determining the contours of
its jurisdiction in CFSP. In turn, this evolution in the case law of the Court
could prove to be instrumental in the currently recommenced
negotiations on the accession of the EU to the European Convention on Human
Rights (ECHR), in which (the absence of CJEU) jurisdiction in CFSP had proven
to be a significant obstacle. Whereas the Court held in Opinion
2/13 (discussed here)
that it did not yet had the opportunity to define the exact scope to which its
jurisdiction is limited in CFSP matters (§251), the increasingly long list of
recent judgments reveals that its role is less limited than what a literal
interpretation of Article 24 TEU may suggest.
Concluding remarks
The Court
judgment in Bank Refah Kargaran v Council
is another important contribution to the ongoing discussion about the precise
scope of CJEU jurisdiction in relation to the area of CFSP. It makes an end to
the existing practice of the General Court to reject the option of an action
for damages in relation to restrictive measures adopted on the basis of Article
29 TEU. In combination with previous judgments, most notably Rosneft, it implies that the entire
system of EU legal remedies is now available with respect to the adoption of
restrictive measures against natural or legal persons, meaning that, for this
issue, there is no difference in comparison to other areas of EU law.
Whereas the case
at stake is confined to the specific situation of restrictive measures, the
Court’s reasoning on the basis of the integration of the CFSP in the
post-Lisbon EU legal order – and its concomitant application of the general
principles of EU law – has to be put in the broader perspective of EU
constitutional law. Once again, the Court stressed the fundamental importance
of respect for the rule of law and its concomitant right to an effective
judicial remedy in order to allow for a broad interpretation of its own jurisdiction.
Whereas the precise limitations with respect to matters adopted in the field of
CFSP are still not entirely defined, the judgment in Bank Refah Kargaran thus forms part of a broader tendency in the
Court’s post-Lisbon case law to ensure as much as possible that non-political
questions adopted in the field of CFSP are subject to judicial review.
Barnard &
Peers: chapter 24
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