Case by Case, EU Judges Help Iran Go Nuclear

Iran’s pursuit of nuclear weapons is entering a critical stage. However, the sanctions regime put in place by the European Union — until recently Iran’s biggest trading partner — along with the United States and other key western countries is greatly hampering the country’s efforts.

With what is at stake one would wish that even tougher sanctions were on their way. Instead, a string of recent rulings at the European Court of Justice has begun to undermine Europe’s elaborate architecture of sanctions against Iran and its agents.

It all started when Yassin Abdullah Kadi, a wealthy Saudi businessman who has been accused of being an al-Qaeda financier, challenged his designation at the Luxembourg-based court. Kadi was on a United Nations sanctions list and the EU had targeted him under a UN security council resolution. But Kadi challenged the EU decision and won.

The court adjudicated in his favour because there was no “real guarantee being given as to the disclosure of the evidence used against [him]”. The court also cited “the lack of any proper access to the information and evidence used against him”, indicating that “the rights of the defence were not observed”.

Kadi has since been delisted by both the EU and the UN sanctions committee — but the US sanctions remain, as US courts concluded that submitted records, classified and unclassified, justified keeping Kadi as a “specially designated global terrorist”.

Part of the reason for this discrepancy may derive from different judicial approaches to evidence. In America it is acceptable that classified evidence be withheld from the defence. Governments, after all, wish to protect their intelligence sources — often human assets who gather such information at great personal risk. Revealing such evidence to the other side may cost them their lives.

Europe’s most senior jurists appear to have little memory of wars and enemies, however — which is probably why, for them, transparency trumps national security concerns.

Iran’s lawyers took note of the outcome of the Kadi case and saw an opportunity to fight back against Europe’s sanctions on Tehran’s nuclear programme. Almost every sanctioned Iranian company or individual is suing the EU — and some of them are winning.

Such was the case for Fulmen, the Iranian company, and Fereydoun Mahmoudian, its director. In 2010 the EU sanctioned Fulmen because it “was involved in the installation of electrical equipment on the Qom/Fordoo [uranium enrichment] site at a time when the existence of the site had not yet been revealed”. The British government had had Fulmen in its sights since 2008, when it blacklisted it as an entity of proliferation concern. It is still under sanctions in America. Not so in Europe — thanks to the European Court of Justice.

In March 2012 the court ordered the EU to delist Fulmen and Mahmoudian on the grounds that insufficient evidence had been provided to the court. “The Council [of the EU] cannot rely on a claim that the evidence concerned comes from confidential sources and cannot, consequently, be disclosed,” it said.

In April 2012 the court ordered that Kala Naft, the procurement arm of the National Iranian Oil Company (NIOC), be delisted as well. Since then the US administration has designated NIOC as an entity controlled by Iran’s Revolutionary Guards, the custodians of Iran’s nuclear programme. In the EU, however, the carefully gathered intelligence sources on which the case against Kala Naft was built had to be shown to the lawyers of Iran’s nuclear bomb makers to stand a chance.

Emboldened by these successes, Iran continues to challenge sanctions in Luxembourg. Last week came its greatest success. In a ruling on Tuesday the court ordered Iran’s Bank Mellat to be delisted on similar grounds. Bank Mellat now plans to sue the EU for damages.

One by one the court is dismantling all the pieces of Europe’s sanctions architecture against Iran’s nuclear programme in the name of judicial review, the rights of the defendant to know the reasons for restrictive measures and the evidentiary base of designations. It is putting transparency before security.

Learned jurists will no doubt defend the court on human rights grounds. Still, it is hard not to conclude that the court upheld transparency against the EU in favour of Iran’s alleged proliferators by raising the burden of proof even in the presence of understandable security constraints.

With Europe’s sanctions under judicial assault, toughening US secondary sanctions against those who engage in transactions with now delisted Iranian entities could soon be the only way to ensure that Iranian proliferators and their overseas business partners pay a price for their role as enablers of Iran’s nuclear progress.

Emanuele Ottolenghi is a senior fellow at the Foundation for Defence of Democracies