September 20-2013
The EU’s second highest court ruled against the EU’s sanctions on Iran’s main shipping company Monday, saying the EU had failed to prove any link between the Islamic Republic of Iran Shipping Lines (IRISL) and Iran’s nuclear program, a link required to justify sanctions.
This is the fourth time the EU General Court has issued such a ruling overturning sanctions and thus threatens to unravel the entire chain of sanctions.
The court is not saying that sanctions are wrong. It is just saying that since the EU is pinning sanctions on an institution for its aid to Iran’s nuclear program, it must provide evidence of such a link. The EU is understood to be looking at the option of linking sanctions to something else that would be easier to prove to the court without the need to use classified evidence.
This is the fourth time the General Court, based in Luxembourg, has upended a group of EU sanctions this year and the second time it has done so this month. But the court has also upheld sanctions on Bank Melli, Iran’s largest bank, and on a major Iranian bank based in Hamburg, Germany. (See last week’s Iran Times, page one.)
The IRISL sanctions are not ended by the General Court’s decision. All its decisions may be appealed to the EU Court of Justice, the highest court in the EU. The General Court allowed the IRISL sanctions to remain in place for 70 days to give the EU time to appeal. If the EU does appeal, the sanctions will remain in place until the appeal is decided.
In the IRISL decision Monday, the court said the evidence of the firm’s involvement in nuclear proliferation offered by European governments “does not justify the adoption and maintenance of restrictive measures.”
Monday’s ruling also covered 17 other Iranian shipping firms connected to IRISL. Most had been created as front companies to try to evade sanctions.
A spokesperson for the EU’s diplomatic service said the 28-member bloc would review the ruling to determine its response. “We are fully aware … of the consequences deriving from this and previous judgments. Reflection on all possible remedial action is already ongoing,” Maja Kocijancic said.
Such court cases are a challenge to EU governments who argue they cannot provide detailed proof of a company’s activities because doing so can expose confidential intelligence and undermine their efforts to combat Iran’s nuclear work.
Lawyers for the Iranian firms celebrated their victory. “This is not just victory for our clients but also for the rule of law. It’s a celebration of the independence and integrity of our courts,” Maryam Taher, one of the lawyers representing IRISL and its affiliates, told Reuters.
Sanctions experts say mounting litigation in Europe means western governments have to cast a wider net in their policies against Iran and target entire sectors of its economy to ensure they are effective. The United States already does that.
But such measures may not find support in the European Union, because some governments have expressed reluctance about punishing companies not involved in nuclear work.
Mark Dubowitz, executive director of the Foundation for Defense of Democracies think tank, which has pushed for tougher sanctions, said IRISL’s activities in Europe might remain constrained even if sanctions are upheld by the highest court.
“In theory, if the appeal is rejected, IRISL could have their cargo fleet now trade in Europe,” he said. “In practice, the fear of US sanctions should keep all European businesses that are not completely isolated from the US market from interacting with the Iranian fleet.”
IRISL was hit with financial sanctions by the US Treasury in 2008 for what it said was its role in aiding Iran’s ballistic missile development program, and any foreign companies doing businesses with it may face punitive measures under US law.
One irony in the General Court’s decision Monday is that it cited its earlier decision lifting sanctions on the Mojahedin-e Khalq. The EU had classified that group as a terrorist organization for committing terrorist acts. But the EU had failed to show the Mojahedin-e Khalq the evidence used against it and thus the group could not contest that evidence.
The General Court Monday cited the 2011 case and said the EU had treated IRISL wrongly in just the same way it had treated the Mojahedin-e Khalq wrongly. The media in Iran did not report that part of the ruling.