EU Law: Restrictive measures (sanctions)

The Treaty of Lisbon would upgrade the European Union’s treaty provisions against oppressive third countries, dictators and their henchmen as well as their foreign assets.

Legal safeguards have been solemnly promised, but in the combat against terrorism we saw how persistent the EU Council was in ignoring its own principles.




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Current treaty

Article 301 of the existing Treaty establishing the European Community (TEC) provides for decisions on economic sanctions in two stages.

First there has to be a CFSP (common foreign and security policy) common position or joint action providing for economic measures against a third country.

Then the concrete measures are taken by the Council by a qualified majority on a proposal by the Commission.

The text of Article 301 TEC is from the latest consolidated version of the treaties, OJEU 29.12.2006 C 321 E/177:


Article 301 TEC

Where it is provided, in a common position or in a joint action adopted according to the provisions of the Treaty on European Union relating to the common foreign and security policy, for an action by the Community to interrupt or to reduce, in part or completely, economic relations with one or more third countries, the Council shall take the necessary urgent measures. The Council shall act by a qualified majority on a proposal from the Commission.


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In addition, restrictive financial measures (on the movement of capital and payments) with regard to third countries are provided for in Article 60(1) TEC (page 65):


Article 60(1) 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.


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Original Lisbon Treaty

Article 2, point 169 of the original Treaty of Lisbon (ToL) inserted a new Title IV on restrictive measures and a new Article 188k (OJEU 17.12.2007 C 306/96):



RESTRICTIVE MEASURES

169) The following Title IV and Article 188 K shall be inserted, replacing Article 301:

‘TITLE IV
RESTRICTIVE MEASURES

Article 188 K

1. Where a decision, adopted in accordance with Chapter 2 of Title V of the Treaty on European Union, provides for the interruption or reduction, in part or completely, of economic and financial relations with one or more third countries, the Council, acting by a qualified majority on a joint proposal from the High Representative of the Union for Foreign Affairs and Security Policy and the Commission, shall adopt the necessary measures. It shall inform the European Parliament thereof.

2. Where a decision adopted in accordance with Chapter 2 of Title V of the Treaty on European Union so provides, the Council may adopt restrictive measures under the procedure referred to in paragraph 1 against natural or legal persons and groups or non-State entities.

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


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Take note of Article 2, point 64 of the original Treaty of Lisbon, with Article 61h concerning the freezing of funds of natural or legal persons, groups or non-State entities in the context of preventing and combating terrorism.


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Consolidated Lisbon Treaty


With the Lisbon Treaty in force, the renumbered Article 215 of the Treaty on the Functioning of the European Union (TFEU) would look like this, as presented in the consolidated version of the treaties, OJEU 9.5.2008 C 115/144:

TITLE IV
RESTRICTIVE MEASURES

Article 215 TFEU
(ex Article 301 TEC)

1. Where a decision, adopted in accordance with Chapter 2 of Title V of the Treaty on European Union, provides for the interruption or reduction, in part or completely, of economic and financial relations with one or more third countries, the Council, acting by a qualified majority on a joint proposal from the High Representative of the Union for Foreign Affairs and Security Policy and the Commission, shall adopt the necessary measures. It shall inform the European Parliament thereof.

2. Where a decision adopted in accordance with Chapter 2 of Title V of the Treaty on European Union so provides, the Council may adopt restrictive measures under the procedure referred to in paragraph 1 against natural or legal persons and groups or non-State entities.

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


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Comments

Article 215 TFEU brings economic and financial sanctions against third countries under one roof, combining Articles 301 and 60(1) TEC.

The common foreign and security policy (CFSP) and the ‘Community pillar’ are brought together by the joint proposal from the High Representative and the Commission. (Since the High Representative would be a member of the Commission, as one of its Vice Presidents, the proposal would take CFSP aspects into account anyway, without the TFEU provision stating the obvious.)

The concrete implementing decision is based on a preceding political CFSP decision, much like today. According to Article 31(1) of the amended Treaty on European Union (TEU) unanimous decisions remain the main rule (whereas most implementing decisions can be taken by qualified majority voting; cf. paragraphs 2 to 5). Article 215 TFEU follows the same logic.

The European Parliament gets a formal right to be informed about the decisions.

We took note of the current Article 60 TEC, amended to counter terrorism and renumbered Article 61h ToL and moved to the Title on the area of freedom, security and justice. The provision concerns non-state actors in the context of combating terrorism and it has become Article 75 TFEU in the consolidated treaty.

Article 215(2) TFEU offers a legal base for sanctions against other natural or legal persons and groups or non-State entities, such as repressive dictators, their regimes and their economic and financial interests. These decisions as such are not new, but they have been based more precariously on the existing provisions in combination with the flexibility clause (Article 308 TEC).

The legal safeguard promised are most welcome. They are underlined by both the third paragraph and by Declaration 25 (below).

The substance of Article 215 TFEU is the same as Article III-322 of the Constitutional Treaty, which was based on Article III-224 of the draft Constitution, but with paragraph 3 on legal safeguards added.


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Declaration 25

Among the declarations annexed to the final act of the intergovernmental conference which adopted the Treaty of Lisbon underlines the importance of legal safeguards (OJEU 9.5.2008 c 115/346):

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.


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Sanctions

Untied Nations

The United Nations and the Security Council play a central role with regard to international sanctions. Therefore, an overview of sanctions could start from the home page UN Security Council Sanctions Committees:

http://www.un.org/sc/committees/index.shtml


European Union


The Commission offers web pages on CFSP sanctions:

http://ec.europa.eu/external_relations/cfsp/sanctions/index.htm

There are pages on Sanctions or restrictive measures in force (measures adopted in the framework of the CFSP):

http://ec.europa.eu/external_relations/cfsp/sanctions/measures.htm

There is also a page with links to Consolidated list of persons, groups and entities subject to EU financial sanctions:

http://ec.europa.eu/external_relations/cfsp/sanctions/list/consol-list.htm



Ralf Grahn

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.

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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.

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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).

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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.

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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.

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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.

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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.

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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.

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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