October 6, 2020

ECJ affirms jurisdiction but rejects Iranian bank’s claim for damages arising from sanctions

On October 6, 2020, the Court of Justice of the European Union upheld the May 2020 judgment dismissing a claim for damages by Bank Refah Kargaran, an Iranian bank that was sanctioned in 2010 and 2011 pursuant to the EU’s Common Foreign and Security Policy.  The bank challenged the imposition of restrictive measures on the grounds that the reasons for the sanctions had not been articulated with sufficient clarity.  Refah Kargaran’s bid to annul the sanctions was successful, although a new resolution subsequently re-imposed sanctions on the bank.  Based on the annulment it initially secured, the bank sued for economic damages caused by the invalidated resolution.  The General Court dismissed the action on two grounds:  (1) it lacked jurisdiction over the portion of the claim that challenged Council Decisions adopted on the basis of the Common Foreign and Security Policy, and (2) Refah Kargaran had not met the conditions for bringing a claim for damages caused by measures adopted pursuant to Article 215 of the Treaty on the Functioning of the European Union.

On appeal, the ECJ raised the jurisdictional issue on its own motion, ruling that EU courts do have jurisdiction to hear actions for damages allegedly caused by decisions adopted under Article 29  of the Treaty of the European Union (which authorizes the European Council to adopt sanctions against non-EU countries). Then, reviewing the merits of Refah Kargaran’s appeal, the ECJ concluded that the General Court did not err in holding that the inadequacy of the statement of reasons for imposing the sanctions did not render the EU liable for damages.

ECJ press release | Judgment (6 October 2020) | Opinion (28 May 2020)