According to the facts of the case, Yassin Abdullah Kadi, a resident of Saudi Arabia, and Al Barakaat International Foundation, established in Sweden, (Claimants) were both designated by the Sanctions Committee of the United Nations (Committee) as being associated with Osama bin Laden, Al-Qaeda or the Taliban. As a result of being placed on the list of suspects developed by the Committee, their accounts had been ordered frozen in 2001.
In response to a number of SC resolutions, the Council of the European Union (Council) had adopted a regulation that ordered the freezing of the funds and other economic resources of the persons and entities whose names appear in a list annexed to the regulation. The claimants brought an action before the Court of First Instance demanding that the regulation be annulled, claiming that the Council lacked competence to adopt such a measure, and that the measure in question infringed several of their fundamental rights, including the right to property and the right to have a hearing. The Court of First Instance (CFI) rejected the claimants’ arguments and found the regulation in question valid. In its holding, the CFI held that Community courts lacked jurisdiction to review the validity of the regulation because all Member States are bound to comply with the resolutions of the Security Council according to the terms of the Charter of the United Nations, which as an international treaty prevails over Community law. The CFI also added that one exception to this general rule exists with respect to jus cogens rights.
The claimants appealed the judgment. The ECJ agreed with the CFI with respect to the competency of the Council to adopt a regulation on the basis of the EC Treaty. But the ECJ disagreed with the finding of the lower court that Community courts lacked jurisdiction to review such regulations. The ECJ reasoned that “the review by the Court of the validity of any Community measure in the light of fundamental rights must be considered to be the expression, in a community based on the rule of law, of a constitutional guarantee stemming from the EC Treaty as an autonomous legal system which may not be prejudiced by an international agreement.” This authority to review extended to the measures by the Community, even if the “Community act intended to give effect to the international agreement at issue.” The Court added that “a judgment given by the Community courts deciding that a Community measure intended to give effect to a resolution of the Security Council is contrary to a higher rule of law in the Community legal order would not entail any challenge to the primacy of that resolution in international law.”
In conclusion, the ECJ held that Community courts’ are obligated to review the “lawfulness” of all measures by the Community, even if such measures give effect to UN SC resolutions. The ECJ found in favor of the claimants, in particular, the court held that the regulation violated their 1) “rights of the defence” and 2) the “right to property.”
What is exceptional about this judgment are the potential consequences that go beyond the rights of the claimants. What the ECJ does, some will argue, is to subordinate the international obligations under the UN Charter, especially SC resolutions, to Community law. It will be interesting to see how other countries and the UN will react to this judgment.