Tuesday, June 10, 2008

A little more on the forthcoming Kadi judgment...

**UPDATE - the judgment itself has now been handed down. For an account, see here.**

While we wait impatiently for the European Court of Justice to hand down final judgment in the Kadi case - a case that, to my mind at least, has the potential to be one of the most significant developments in the emerging field of global administrative law to date - I thought it would be interesting to have a little more analysis - from a different perspective - on the affair, and on the Opinion of Advocate General Maduro in particular (my own take can be found here). This post was written by Giacinto della Cananea, Professor of Administrative Law at the University of Naples "Federico II" and Fellow of the Institute for Research on Public Administration (IRPA), who has published widely on European and global administrative law. It is an extract from a longer comment on the Kadi judgment, to be published later this year. I am grateful to Professor della Cananea for his permission to publish this insightful extract here.

1. On September 21, 2005, the Court of First Instance decided Kadi v. Council and Commission (Case T-315/01), the anti-terrorism case that has posed unprecedented questions concerning the relationship between a variety of legal orders: those of the United Nations and the EU, but also the European Convention of Human Rights. Kadi has also been the subject of public debate, in academic seminars, legal journals and blogs. The Court left standing every provision of EU regulations, although such provisions were challenged on a number of grounds, including both the right to property and fundamental procedural safeguards such as the right to be heard and the right to effective judicial protection. The underlying reason, the Court said, was not simply a compelling public interest, such as collective security, which justifies the freezing of the funds held by individuals and legal entities suspect of supporting terrorism, but also the necessity to comply with UN law. For true, the Court’s decision did not go so far as in declaring that such rights simply do not apply when the measures provided by UN resolutions are challenged. Rather, it said that in such cases less stringent criteria apply, unless jus cogens is involved.

This decision was criticised on several grounds by international, administrative and constitutional lawyers. Some of them argued that, once the Court had exposed hierarchical conception of the relationship between legal order, it should not have reviewed the legality of EU regulations. Others refused such a hierarchical conception and held that the Court was deviating from both principles and precedents. Were this analysis correct, the Court would have followed the model of the Quadi’s justice outlined by Max Weber, that is to say rule by whim.

However, the decision left open the possibility that the Court would follow the ordinary criteria when anti-terrorism measures are not introduced by UN institutions. Indeed, the Court did so when asked to review the measures decided by EU institutions and, in the case concerning the Organisation de Modhahedins du people de l’Iran (Case T-228/02), annulled the contested measures. This decision, however, did not overrule Kadi. Indeed, it was based on a clear, but questionable distinction between the cases in which UN law applies, and the other cases in which the measures adopted are the result of the choices made by EU institutions alone. This allowed the Court to ensure the respect of some fundamental procedural due process requirements (examined in my comment in 32 European Law Review 895, 2007) which had been severely limited earlier. Interestingly, this judgment was not appealed by the Council of Ministers.

2. Precisely because Kadi and other cases raise the question whether the EU protects adequately fundamental human rights, in the conclusions delivered on January 16, 2008 (Case C-402/05, Kadi v. Council and Commission) Advocate General Miguel Poiares Maduro suggested that it is the duty of the Court of Justice to reverse the judgment of the Court of first instance. He argued that the judgment is vitiated by an error in law regarding the competences of the EU, too. However, he decided to focus on what he considered as an unsatisfactory understanding of the role and value of fundamental rights within the EU. He affirmed that since the 1970’s fundamental rights form part of the legal order of the EC. Moreover, since 1992 the Treaty establishing the EU included fundamental rights among the values upon which the EU is founded (Article 6, §1).

This is the constitutional background in the light of which the AG raises the question whether the legal order of the EU is hierarchically subordinated to the resolutions adopted by the UN Security Council. His answer is clear and bold. No immunity from judicial review may be accorded to the measures aiming at implementing UN Security Council resolutions, if such measures are incompatible with fundamental human rights. He added, with a reasoning that evocates the German Constitutional court’s so lange doctrine, that the role of the European Court of Justice is particularly important due to the absence of adequate judicial remedies in the UN system.

This line of reasoning is of the utmost importance and must be studied very carefully, also for its unusual and useful comparison with similar cases dealt with by courts in other jurisdictions, including the US. However, several question arise. A first one, which immediately comes to mind from an American point of view, is whether EU courts should refrain from judging on political questions, such as those concerning involved by this case. Once this option is excluded, as the AG argued, another question arises, that is to say whether the rejection of any hierarchy between the legal orders of the UN and the EU is limited to cases involving fundamental rights or has broader effects. Whether not reversing Kadi would create a gap within the legal order of the EU and would thus invite the European Court of Human Rights to fill it, is still another question.

3. I do not exclude that the Court of Justice should annul the contested measures for the plain reasons enounced by the AG. Rather, I would suggest that the Court may reverse Kadi not for such reasons, which would oblige her to confront strong arguments concerning fundamental rights as well as complex political issues regarding the relationship between the UN and the EU. Kadi may be reversed for another reason, which is based on the principles governing the competences of the EU and their exercise.

A standard, though static, way to look at the competences of the EU would be to begin by noting that the EU is based on the principle of attributed competences. It may not, consequently, act beyond such competences. Seen in this light, the fact there is not a specific provision of the Treaty which entrusts EU institutions with the task of imposing financial sanctions on individuals, as opposed to governments, entails precise legal consequences. Such sanctions are vitiated by incompetence. As a result, the Court of Justice ought to annul them.

The persuasiveness of such an approach is, however, questionable. First of all, the competences of the EC have been extended in a variety of ways (the best account, in my view, is still that of professor Weiler in his essay on the “Transformation of Europe”). As a consequence, the EC deals with a wider and more differentiated range of interests, which resembles that of the States. This is still more evident within the EU, which is constitutionally entrusted with the task of ensuring public order and public security. The dynamics of European integration, therefore, are based on interests, rather than on competences, as professors Haas and Stone Sweet have convincingly held in different periods, but using a similar neo-functional approach.

Second, it should not be forgotten that the Treaty of Rome itself provides, though Article 308, a technique for adding new competences. The Court of first instance was aware of the risks implied in the use of Article 308 alone, as far as anti-terrorism measures were concerned. Accordingly, the Court excluded it (§ 121). However, the Court said that there are “good grounds for accepting that recourse to the additional basis of Article 308 is justified for the sake of the Community institutions the power necessary, in the field of economic and financial sanctions, to act for the purpose of attaining the objective pursued by the Union and its Member States” under the Common Foreign and Security Policy (§ 128). In other words, the Court is well aware of the lack of any express attribution to impose financial sanctions on individuals and other legal entities. But it finds evidence for a more favourable interpretation in the need to achieve the common objectives.

4. In my view, the Court’s underlying argument is political, rather than legal. As a matter of fact, the argument is that “the Union and its Community pillar are not to be prevented from adapting to those new threats” deriving from individuals and groups (§ 133). However, the consequences are legally relevant. First of all, EU institutions have exercised their powers beyond the category of States engaged in international terrorist activities or offering a shelter to terrorist groups. They have thus moved beyond a fundamental boundary concerning the balance of powers. Secondly, and consequently, the power to impose economic and financial sanctions is now exercised towards individuals and other legal entities. Both of them belong to a category of subjects which differs from that of the States. The difference between such categories has not lost legal relevance, if only for procedural reasons regarding locus standi, which the Court correctly recognized in this case. It is possible that the Court hoped not to undermine the external role of the Union and for this reason it concluded that “the Council has not widened the scope of Community powers” (§ 134). However, it is not possible to ignore the contradiction. When adopting anti-terrorism measures towards individuals and groups, EU institutions at the same time bypass a fundamental boundary and impinge on fundamental rights. As a matter of fact, at least in the European legal space, both the right to property and basic procedural safeguards are included within fundamental rights (Article 6 ECHR and Article of the First additional protocol).

I add that it does not matter whether the sanctions imposed on Kadi are the result either of analogical interpretation or of the widened scope of the EU powers. What matters, rather, is that such powers are exercised by the EU institutions under EU law. If there is a proper legal basis, as the Court itself affirmed, there is no reason to distinguish between two tests, one for UN measures and another for the measures adopted by EU institutions alone. The test that the Court of Justice has used in cases when other important fundamental individual rights were at stake is based on its own procedural principles. One of such principles is proportionality, which permits individual liberties to be abridged only when necessary to protect some important collective interest and to the extent to which this is interest may not be protected in a less restrictive means. Another principle is the right to be heard. Providing individuals with a reasonable opportunity to be heard and to provide evidence and legal reasons looks particularly important when measures having unfavourable effects are taken, such as sanctions. If the sanctions provided by EU regulations comply with these procedural principles, they are lawful. Otherwise, they must be annulled. It cannot be excluded that such measures pass the proportionality test, though if not a less restrictive means, at least a really temporary effectiveness of such measures would be needed. Anyway, it is unlikely that EU measures may be judged lawful from the other point of view. Of course, as professor Dworkin has argued, we would all be safer if we ignored the rights of due process, but this would undermine intolerably the constitutional guarantees on which our polities are founded.

In conclusion, the argument based on the supremacy of UN law should be dismissed. One thing is that EU courts are aware of the political and international implications of their judgments, another is to change the standards of legality, of which the courts have to ensure the respect.

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