Tuesday, 29 April 2008

EU TFEU: Freezing terrorists’ funds

The Treaty of Lisbon makes it easier for the EU to freeze terrorists’ funds. Even the UK government seems enthusiastic.

***

Article 75 of the Treaty on the Functioning of the European Union (TFEU) is presented as it stands after the intergovernmental conference (IGC 2007) in the Treaty of Lisbon (ToL), then renumbered and provisionally consolidated by the Council of the European Union (document 6655/08; page 98), with the location of the provision added from the table of equivalences (page 460 to 462):

Part Three ‘Policies and internal actions of the Union’

Title V TFEU ‘Area of freedom, security and justice’

Chapter 1 ‘General provisions’

Article 75 TFEU
(ex Article 60 TEC)

Where necessary to achieve the objectives set out in Article 67, as regards preventing and combating terrorism and related activities, the European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall define a framework for administrative measures with regard to capital movements and payments, such as the freezing of funds, financial assets or economic gains belonging to, or owned or held by, natural or legal persons, groups or non-State entities.

The Council, on a proposal from the Commission, shall adopt measures to implement the framework referred to in the first paragraph.

The acts referred to in this Article shall include necessary provisions on legal safeguards.

***

In Article 2, points 62 and 64, of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) agreed on the wording (as above) of the new Article 61h TFEU (ToL), which became Article 75 TFEU after renumbering in the consolidated version (OJ 17.12.2007 C 306/58).

The referral to the objectives of the area of freedom, security and justice in the original Lisbon Treaty was to Article 61 TFEU (ToL), which became Article 67 TFEU in the consolidated treaty (OJ 17.12.2007 C 306/209).

***

Article 60 of the Treaty establishing the European Community (TEC), to be moved and amended, is found in the latest consolidated version of the current treaties, under TEC Title III ‘Free movement of persons, services and capital’ and its Chapter 4 ‘Capital and payments’ (OJ 29.12.2006 C 321 E/65):

Article 60 TEC

1. If, in the cases envisaged in Article 301, action by the Community is deemed necessary, the Council may, in accordance with the procedure provided for in Article 301, take the necessary urgent measures on the movement of capital and on payments as regards the third countries concerned.

2. Without prejudice to Article 297 and as long as the Council has not taken measures pursuant to paragraph 1, a Member State may, for serious political reasons and on grounds of urgency, take unilateral measures against a third country with regard to capital movements and payments. The Commission and the other Member States shall be informed of such measures by the date of their entry into force at the latest.

The Council may, acting by a qualified majority on a proposal from the Commission, decide that the Member State concerned shall amend or abolish such measures. The President of the Council shall inform the European Parliament of any such decision taken by the Council.

***

The European Convention proposed Article III-49 of the draft Treaty establishing a Constitution for Europe, still under Section 4 ‘Capital and payments’ (OJ 18.7.2003 C 169/35):

Article III-49 Draft Constitution

Where necessary to achieve the objectives set out in Article III-158, in particular as regards prevention of and fight against organised crime, terrorism and trafficking in human beings, European laws may define a framework for measures with regard to capital movements and payments, such as the freezing of funds, financial assets or economic gains belonging to, or owned or held by, natural or legal persons, groups or non-state entities.

The Council of Ministers, on a proposal from the Commission, shall adopt European regulations or European decisions in order to implement the laws referred to in the first paragraph.

***

Article III-160 of the Treaty establishing a Constitution for Europe, still under Section 4 on capital and payments, drew upon but amended the draft provision (OJ 16.12.2004 C 310/68):

Article III-160 Constitution

Where necessary to achieve the objectives set out in Article III-257, as regards preventing and combating terrorism and related activities, European laws shall define a framework for administrative measures with regard to capital movements and payments, such as the freezing of funds, financial assets or economic gains belonging to, or owned or held by, natural or legal persons, groups or non-State entities.

The Council, on a proposal from the Commission, shall adopt European regulations or European decisions in order to implement the European laws referred to in the first paragraph.

The acts referred to in this Article shall include necessary provisions on legal safeguards.

***

The current Article 60 TEC refers to cases envisaged in Article 301 TEC, namely economic sanctions targeting one or more third countries and based on a prior common position or joint action adopted according to the TEU (common foreign and security policy). The urgent unilateral measures by a member state are targeted at countries, too.

The existing provision is ill adapted to measures concerning non-state actors, such as terrorists.

The European Convention drew the first provision, which referred to the aims of the area of freedom, security and justice (FSJ). The proposed scope of Article III-49 of the draft Constitution was rather wide, including the prevention of and fight against organised crime, terrorism and trafficking in human beings.

Article III-160 of the Constitutional Treaty retained the referral to the objectives of the area of freedom, security and justice, but the IGC 2004 limited the scope of the provision to terrorism and related activities and to a framework for ‘administrative’ measures. The third paragraph on legal safeguards was added. Additionally, the IGC 2004 agreed on a Declaration (number 15) on Articles III-160 and III-322, recalling the respect for fundamental rights and the need for clear and distinct criteria.

Article 75 TFEU (61h ToL) of the Treaty of Lisbon contains technical adjustments and minor stylistic changes, but in essence it takes over the text of the Constitution.

***

There are two declarations to take into account. First, we have Declaration (number 25) on Articles 75 and 215 of the Treaty on the Functioning of the European Union, almost identical to the corresponding declaration of the IGC 2004 (in the Council’s consolidated version of the Lisbon Treaty, document 6655/08, page 439):

25. Declaration on Articles 75 and 215 of the Treaty on the Functioning of the European Union

The Conference recalls that the respect for fundamental rights and freedoms implies, in particular, that proper attention is given to the protection and observance of the due process rights of the individuals or entities concerned. For this purpose and in order to guarantee a thorough judicial review of decisions subjecting an individual or entity to restrictive measures, such decisions must be based on clear and distinct criteria. These criteria should be tailored to the specifics of each restrictive measure.

***

Second, there is a unilateral declaration of intent by the UK, namely (on page 453):

65. Declaration by the United Kingdom of Great Britain and Northern Ireland on Article 75 of the Treaty on the Functioning of the European Union

The United Kingdom fully supports robust action with regard to adopting financial sanctions designed to prevent and combat terrorism and related activities. Therefore, the United Kingdom declares that it intends to exercise its right under Article 3 of the Protocol on the position of the United Kingdom and Ireland in respect of the area of freedom, security and justice to take part in the adoption of all proposals made under Article 75 of the Treaty on the Functioning of the European Union.


Ralf Grahn


Consolidated EU Treaties:

If you want to read or download the Council’s consolidated Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) as amended by the Lisbon Treaty, the original Treaty of Lisbon, the current TEU and TEC, the Draft Constitution, the Constitutional Treaty, or other consolidated language versions of the Lisbon Treaty TEU and TFEU, you find the needed information and links in the blawg post ‘Consolidated Treaty of Lisbon and other EU materials’ of 21 April 2008:

http://grahnlaw.blogspot.com/2008/04/consolidated-treaty-of-lisbon-and-other.html