European Court holds that the Islamic Republic of Iran Shipping Line should not have been included on the EU sanctions list

17/09/13

The Islamic Republic of Iran Shipping Lines (IRISL) was included on the European Union's list of individuals and companies targeted by the EU's sanctions against Iran in 2010, along with a number of companies said to be "owned or controlled" by IRISL. The General Court of the European Union has just held that the European Council should not have included IRISL on its sanctions list ("restrictive measures") because its reasons for doing so were too vague and because it had no evidence to support its allegations.

The allegations against IRISL were that it supported nuclear proliferation in Iran by shipping "proscribed cargo", and that it assisted other companies to breach United Nations sanctions against Iran. The Court held that the latter reason was too vague to comply with the Council's obligation to give reasons, and therefore the Council could in principle only rely on the former reason (involvement in nuclear proliferation). But since IRISL denied any involvement in nuclear proliferation, and submitted evidence showing that the goods to which the Council referred were military goods, unrelated to nuclear proliferation, and since the Council had produced no evidence to substantiate its assertions to the contrary, its designation could not be sustained.

The Court emphasised that inference and speculation about future risks is insufficient, and that if the EU wishes to sanction a company on the grounds of involvement in proliferation, it has to present evidence of actual involvement. It also said that if the EU wishes to include different criteria for listing companies it will have to legislate to do so. Since IRISL's designation is unjustified, so too is the inclusion of companies on the grounds that IRISL "owns or controls" them; a number of challenges by those companies are currently pending before the European court. The annulment of IRISL's listing will take effect if the Council does not appeal against the General Court judgment within two months.

The judgment is here.