‘Between a rock and a hard place?’: The European Union’s financial sanctions against suspected terrorists,multilateralism and human rights

Abstract

This article focuses on the financial sanctions adopted by the European Union (EU) against individuals suspected of involvement in terrorist activities. This sanctions regime has been sharply criticised for its negative impact on human rights and has seen several judicial challenges before the European Courts. In contrast with most of the existing literature, which focuses on legal issues or examines the consequences of the EU financial sanctions, this article takes a step back to examine the reasons for which the EU decided to adopt these controversial financial sanctions in the first place. This article argues that it is mainly its commitment to ‘UN-centred effective multilateralism’ that has led the EU to adopt these financial sanctions measures in order to align itself with the UN financial sanctions regime. However, the Kadi landmark ruling of the European Court of Justice (ECJ) has challenged the pre-eminence of multilateralism over other considerations, such as the respect for human rights. As the Court of Justice prepares to hand down its second judgment in this case, the EU is left torn between its commitment to multilateralism and its commitment to human rights, which can be fully reconciled only if the UN sanctions regime meets the EU’s human rights standards.

Introduction

‘Does Europe believe in international law?’ This was the provocative question that legal scholars Goldsmith and Posner (2008) asked in a Wall Street Journal opinion piece in 2008. Their answer was emphatically negative, as they rested their case on a then recent ruling of the European Court of Justice (ECJ) concerning financial sanctions against suspected terrorists, namely the Kadi and Al-Barakaat cases. In Goldsmith and Posner’s opinion, the ECJ judgment, by stating that ‘[the] duty to comply with the [United Nations] Charter […] “cannot have the effect of prejudicing [regional] constitutional principles”’, aptly illustrated how the EU discards international law and disregards decisions of the United Nations (UN) when they do not advance its own interests. In the same year, in Germany, the ‘Big Brother Award’ in the ‘Europe/European Union’ category was given to the Council of the European Union (EU) for the development of its financial sanctions regime against suspected terrorists. The FoeBuD e.V. – the data protection non-governmental organisation (NGO) behind this negative award – criticised the EU measures for the lack of democratic control affecting their adoption process and the violations of human rights that they entail (Biersteker and Eckert, 2009: 10).

These are only two illustrations of the controversies that have surrounded the financial sanctions – or asset-freezing measures – that the EU has adopted against several suspected terrorists in recent years. Financial sanctions against individuals are measures that oblige states to both freeze the funds and other financial assets or economic resources of the targeted persons and ensure that these persons do not have any direct or indirect access to other funds, financial assets or economic resources. ¹ They are an important category of measures against ‘terrorist financing’, which can itself be defined, as it has been by the EU in the Third Anti-Money Laundering Directive, ² as ‘the provision or collection of funds, by any means, directly or indirectly, with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out any of the offences’ that are defined as terrorist acts. ³ Financial sanctions are also a category of the so-called ‘targeted’ or ‘smart’ sanctions that have been developed since the 1990s in response to the realisation that comprehensive sanctions placed upon states generally cause high levels of suffering amongst the population of the targeted country, often without achieving their main aims (Biersteker, 2009–2010; Van Thiel, 2008). These measures have been criticised on various grounds in a debate that echoes that on the EU counter-terrorism policy more generally (see notably Argomaniz, 2011; Bures, 2011; Kaunert, 2010; Mahncke and Monar, 2006; Spence, 2007). Some scholars have questioned the efficacy of EU financial sanctions – and of financial sanctions in general – or have called into question the added value of EU activities in this area (Bures, 2010, 2011; Eckert and Biersteker, 2010; Eckes, 2009: 72–77; Portela, 2009–2010). In a study written for the European Parliament, Cameron (2008: 34) has claimed that ‘the effectiveness of [sanctions against suspected terrorists] in the sense of stopping terrorist groups from obtaining financing […] is most likely zero’. Jacobson (2007: 2) has argued that ‘the EU has been able to effectively target and freeze the assets of entities associated with al-Qaeda or the Taliban – at least those already designated by the United Nations’ 1267 committee […] [but] has been far less successful and effective in designating groups not associated with al-Qaeda or the Taliban’. Bures (2011: 184–194) has identified a variety of obstacles – both internal and external – to the success of the EU’s efforts to combat terrorist financing. Nevertheless, he has also emphasised that the ‘lack of official, publicly available data concerning the actual amounts and types of terrorist assets frozen by relevant authorities makes the evaluation of the real impact of the EU’s CTF [combating terrorist financing] policies a rather difficult endeavour even at this most basic level’ (Bures, 2011: 181).

However, as is the case with UN financial sanctions, the most common criticism of the EU financial sanctions regime has been its negative impact on the human rights and fundamental liberties of the targeted persons, in particular their rights to property and to a fair hearing (Almqvist, 2008; Biersteker, 2009–2010; Draghici, 2009; Eeckhout, 2007; Guild, 2008; Heupel, 2009; Van den Herik and Schrijver, 2008; Vlcek, 2009). This reflects broader concerns about the move from collective sanctions (against states) to targeted sanctions (against individuals) that began in the 1990s (Biersteker, 2009–2010; Flynn, 2007; Foot, 2007; Hazelzet, 2001; Olivier, 2004; Reich, 2008; Van den Herik, 2007). Paradoxically, whilst it was prompted by the willingness to avoid harming the human rights of the population of targeted countries – as had been the case with the comprehensive sanctions imposed upon Iraq in the early 1990s – this move has actually led to serious violations of the human rights of the persons concerned (Biersteker, 2009–2010: 101). For example, as explained by Almqvist (2008: 307), ‘[t]he original design of the Al-Qaida/Taliban sanctions regime left targeted individuals without money to cover even their most basic needs of food, medical treatment and housing; neither did it entail any safeguards whatsoever against wrongful or mistaken inclusion of names’. Indeed, given the state-centric nature of the UN system, a specific problem inherent to individual sanctions has been the difficulty for the targeted private entities or individuals to express their disagreement with the imposition of sanctions (Van Thiel, 2008). This problem was emphatically denounced by the ECJ in a ruling that annulled the financial sanctions against Kadi and Al Barakaat in September 2008, which emphasised that ‘the rights of the defence, in particular the right to be heard, and the right to effective judicial review of those rights, were patently not respected’. ⁴

A large part of the literature on EU financial sanctions has been written by international law or Community law scholars. Unsurprisingly, they have largely focused on legal questions, in particular the extent to which the listing and de-listing procedures could be seen as compliant with legal principles, such as due process. As a result, far less attention has been devoted to the political processes underpinning the development of these asset-freezing measures. A notable exception is an article by Heupel (2009), which identifies court judgments and proceedings as a particularly influential factor accounting for the reforms to the listing and de-listing procedures that have gradually taken place at both the UN and EU levels. Another exception is De Goede’s (2008, 2012) analysis of asset-freezing measures as a manifestation of the growing role of pre-emption and precaution in European security culture.

Therefore, an important issue that has been strikingly neglected is the reasons for which the EU decided to adopt these controversial financial sanctions in the first place. Why has the EU, which presents respect for human rights as one of its core values and has adopted its own Charter of Fundamental Rights, developed policies that have led to serious violations of human rights? One could argue that this case might simply illustrate the view held by some observers that the EU’s commitment to human rights is mainly rhetorical. However, this possible explanation is evidently not convincing in this case. First of all, as the EU is not a member ⁵ of the UN and is therefore not itself subject to the United Nations Security Council Resolutions (UNSCRs), from the standpoint of international law, the EU was not required to adopt measures in order to develop its own financial sanctions regime (Eckes, 2009; Lavranos, 2006). In addition, although the European treaties contain some references to the UN, it is generally agreed that those are not sufficient to argue that UNSCRs have binding force on the EU from the standpoint of European law either (Eckes, 2009). Even more importantly, although the European Courts construed a Community competence in this area – arguably for political and pragmatic reasons (Eckes, 2009) – some legal experts have convincingly argued that it is highly questionable whether the Community actually had the legal competence to adopt sanctions against individuals prior to the entry into force of the Lisbon Treaty (Eckes, 2009; Tridimas, 2009; Tridimas and Gutierrez-Fons, 2008; see Poli and Tzanou, 2009). In other words, the EU was neither required nor unequivocally legally enabled to adopt asset-freezing measures. Why, then, did the EU develop its own financial sanctions regime? This article puts forward a two-step answer. First of all, the EU adopted its own financial sanctions in order to align itself closely with the UN financial sanctions regime. Second, this decision itself can be mainly explained by the EU’s commitment to what this article terms ‘UN-centred effective multilateralism’. This is not to suggest that the human rights violations inherent to the EU financial sanctions should be downplayed, for they are a cause for significant concern. Rather, this article argues that, in order to understand them fully, it is important to locate these measures in their broader context, which includes the EU’s pursuit of and preference for multilateralism when it comes to international security issues.

In order to develop this argument, this article is divided into four main sections. The first analyses the development of the EU’s financial sanctions regime. The second section demonstrates the close alignment of the financial sanctions regime of the EU with that of the UN. The third section sets to explain this alignment by a key factor, namely the EU’s commitment to multilateralism. The fourth section analyses the impact of the Kadi judgment on the EU’s financial sanctions regime and its relations to human rights and multilateralism. Kadi is not the only case concerning financial sanctions against suspected terrorists that has come before the European Courts (see notably Cuyvers, 2011; Eckes, 2009). However, the long-running (and, at the time of writing, still on-going) ‘Kadi saga’, as it has come to be widely known (e.g. Eeckhout, 2011: 523), best exemplifies the dilemmas faced by the EU in this policy area.

The evolution of the EU’s financial sanctions regime

Before examining the evolution of the EU’s financial sanctions regime, it is necessary to elaborate briefly on its legal complexity. The entry into force of the Lisbon Treaty on 1 December 2009 has brought about some changes in that respect, including the introduction of new legal bases (see Cremona, 2009: 590–592; Eckes, 2009: 121–124). However, their full impact still remains to be seen. As the measures discussed in this article were initially adopted prior to the entry into force of the Lisbon Treaty, it is necessary to focus on the institutional arrangements that were in place at that time. In the pre-Lisbon era, the EU’s financial sanctions regime involved various measures across the three pillars of the EU. ⁶ First of all, a Common Position was adopted under (pre-Lisbon) Articles 15 and 34 of the Treaty on European Union (TEU) to set the EU’s general approach on the matter. It contained measures relating to foreign policy – such as the ‘strategic decision’ to adopt individual sanctions (Eckes, 2009) – and police and judicial criminal matters – such as assistance in preventing and combating terrorist acts – that is, measures in the then second and third pillars. Subsequently, a Regulation instructing the European Community (EC) to implement the necessary operational measures was adopted in the then first (i.e. EC) pillar.

It is important to note that the question of whether, in the pre-Lisbon era, the Council had the competence to adopt these financial sanctions measures has been highly controversial. The Council based these regulations on a triple legal basis (Articles 60, 301 and 308 of the Treaty establishing the European Community (TEC)). There is no space in this article for an in-depth examination of this extremely complex legal debate. It suffices to say that several scholars, including Eckes (2009), Andersson et al. (2003) and Tridimas and Gutierrez-Fons (2008) (see also Poli and Tzanou, 2009), have argued that even a combined reading of these three articles did not give the EC the competence to adopt these asset-freezing regulations. In other words, in the opinion of several legal scholars, the Treaties had not granted the EC the competence to adopt these regulations organising asset freezing. This has been implicitly confirmed by the drafters of the Lisbon Treaty, which contains two articles that have, for the first time, explicitly granted the EU the competence to adopt asset-freezing measures against individuals (see Cremona, 2009: 590–592; Eckes, 2009: 121–124). Nevertheless, despite this uncertainty, both the Court of First Instance (CFI) and the ECJ ruled in the pre-Lisbon era that the EC did have the competence to adopt financial sanctions against suspected terrorists, although most authors have found the reasoning of both Courts on this point ‘highly problematic and controversial’ (Poli and Tzanou, 2009: 545). It is also noteworthy that both Courts ‘construed a Community competence for individual sanctions’ in ‘(very) different ways’ (Eckes, 2009: 125), which reinforces the argument that the EU competence in this area was indeed open to question. Whilst several observers have found the reasoning of both the CFI and the ECJ on this point rather legally unsound, it has also been acknowledged by some that this ‘pragmatism’ has had the advantage of ‘[avoiding] much tension’ by allowing ‘the [EU] political institutions […] to comply with the necessities of the international cooperation in the fight against terrorism’ (Eckes, 2009: 125. Thus, it appears that both the CFI and the ECJ implicitly recognised that it was necessary to enable the EU to cooperate with the UN and pursue a multilateralist approach to that aspect of counter-terrorism.

In any case, these legal controversies did not prevent the EU’s financial sanctions regime from growing over time with two main components. The first comprises the measures that have been adopted to freeze the assets of the Taliban, Osama bin Laden and his associates (e.g. Al-Qaeda) in particular. The second relates to broader measures that provide for the freezing of the assets of terrorist individuals and entities in general. The first asset-freezing measures adopted by the EU were of the first type; they targeted the Taliban (Council Common Position 1999/727/CFSP of 15 November 1999) and Osama bin Laden and the persons and entities associated with him (Council Common Position 2001/154/CFSP of 26 February 2001) (see Tappeiner, 2005). As explained earlier, these EU asset-freezing measures were two-tiered, as the common positions were supplemented by regulations.

After adopting measures targeting the Taliban, bin Laden and his associates in particular, the EU later adopted broader financial sanctions targeting suspected terrorists in general. In December 2001, the Council adopted a major package of four acts, comprising two common positions, a regulation and a decision. Council Common Position on combating terrorism (2001/930/CFSP) outlined a series of actions to be taken by the EU to combat terrorism, including the freezing of the funds and other financial assets and economic resources of individuals and groups facilitating, attempting to commit or committing terrorist acts on the territory of the EU. Council Common Position 2001/931/CFSP contained more specific measures to combat terrorism. More precisely, it provided that, pursuant to Community law, the EC should order the freezing of the funds and other financial assets or economic resources of ‘international’ (i.e. non-EU) terrorists and ensure that those would not have access to alternative funds, financial assets, economic resources or financial or related services. This instrument also contained a definition of ‘persons, groups and entities involved in terrorist acts’, which was identical to that outlined in the Council Framework Decision of 13 June 2002 on combating terrorism. In addition, Council Common Position 2001/931/CFSP required Member States to strengthen judicial and police cooperation with respect to both ‘international’ and ‘domestic’ (i.e. EU) terrorists. Finally, there was an annex to the Common Position, which listed the persons, groups and entities ‘involved in terrorist acts’ that were targeted by the instrument. In this first version, it contained 29 persons and 13 groups and entities. The Common Position indicated that the list would be reviewed regularly and at least once every six months. As for the connected Regulation (Council Regulation EC 2580/2001), it defined the ‘funds’ and assets to be frozen, and laid down a detailed freezing procedure, whilst the Decision connected to this Regulation (Council Decision 2001/927/EC of 27 December 2001) listed the persons, groups and entities to which the aforementioned Regulation applied. This first version of the list contained 10 entries, but it has been amended several times since then. Its most recent publicly available version at the time of writing contained 25 individuals and 29 groups and entities. ⁷

The alignment of the EU’s financial sanctions regime with the UN’s regime

Having presented the EU’s financial sanctions regime for counter-terrorism purposes, this article can now proceed to examine the important question of why it was established. This is indeed an intriguing question, as the EU was neither required to adopt these measures nor unequivocally competent to do so prior to the entry into force of the Lisbon Treaty. As previously announced, this article offers an answer to this question in two stages, the first of which is to argue that the EU adopted its own financial sanctions in order to align itself clearly with those of the UN. Indeed, following the terrorist attacks on 11 September 2001, ‘the Security Council became the focal point of discussions and the forum for the adoption of measures against terrorism’ (Bantekas, 2003: 315), including financial sanctions against persons suspected of involvement in terrorist activities.

Both components of the EU’s asset-freezing regime have been developed to enable the EU to align itself with the financial sanctions against suspected terrorists that have been adopted by the UN. With regard to the measures specifically targeting the Taliban, bin Laden and Al-Qaeda, Common Position 2001/154/CFSP, which provides for the freezing of the funds and financial assets of bin Laden and his associates, has been adopted by the EU mainly in order to ensure the implementation of UNSCR 1333, which notably decided that all UN Member States should freeze the funds of Osama bin Laden and individuals and entities associated with him and should ensure that no other funds or financial resources should be made available to them. ⁸ This Resolution was adopted under Chapter VII of the UN Charter, which means that, according to Article 25 of the UN Charter, its provisions are binding on all UN Member States. Council Common Position 2001/154/CFSP contains numerous references to UNSCR 1333, as well as to the ‘UN Sanctions Committee’. Article 4 states that ‘[funds] and other financial assets of Usama Bin Laden and individuals and entities associated with him as designated by the UN Sanctions Committee will be frozen, and funds or other financial resources will not be made available to Usama Bin Laden and individuals or entities associated with him as designated by the UN Sanctions Committee, under the conditions set out in UNSCR 1333 (2000)’ (emphasis added). Thus, it is remarkable that the EU asset-freezing measures concerning bin Laden and his associates have been directly and entirely based on a list drawn up by the UN Sanctions Committee, which has been accepted by the EU without any amendment. Any subsequent changes to the 1267 Committee list of terrorist suspects have been faithfully transcribed into Community law. This is particularly striking given the harsh criticisms that have been levelled at the work of this UN Sanctions Committee – also known as the ‘1267 Committee’, ⁹ – in particular the lack of transparency in its listing and de-listing of suspected terrorists, especially in the first years of its work (Draghici, 2009; Mendelsohn, 2009; Rosand, 2004). Thus, although the EU’s position can be criticised from a human rights standpoint, it demonstrates a strong commitment on its part to cooperating with the UN in the implementation of the financial sanctions targeting bin Laden and his associates.

The other component of the EU’s financial sanctions regime – namely the measures that provide for the freezing of the assets of terrorist individuals and entities in general – also finds its origins in the EU’s willingness to align itself with the UN’s financial sanctions regime. Council Common Position 2001/931/CFSP of 27 December 2001 was adopted by the EU with the specific aim of implementing UNSCR 1373, which had been passed on 28 September 2001. This Resolution, described by Rosand (2003: 333) as the ‘cornerstone of the United Nations’ counterterrorism effort’ (see also Talmon, 2005), requires all UN Member States to strengthen various aspects of their counter-terrorism policies, although it actually does not define ‘terrorism’ (Stromseth, 2003). As it has been adopted under Chapter VII of the UN Charter, the counter-terrorism measures that it contains, including measures against the financing of terrorism, are binding on all the UN Member States. This Resolution notably lays down that all states should prevent and suppress the financing of terrorist acts, criminalise activities aiming to fund terrorism, freeze the resources of terrorists and prevent funds being made available to them. It also decides that all Member States should assist each other in criminal investigations and criminal proceedings relating to the financing of terrorism. Thus, this Resolution comprises various measures that were hitherto only part of international conventions and protocols, such as the Terrorism Financing Convention, which thereby became binding on all UN members, rather than just on those that had chosen to become parties to these international instruments (Alvarez, 2003; Rosand, 2003).

The strong character of the obligations placed upon UN Member States was also reinforced by the fact that Resolution 1373 established a Committee tasked with the monitoring of the progress of UN Member States in implementing the Resolution. This Committee, which is known as the Counter-Terrorism Committee (CTC), comprises the 15 members of the Security Council and has three sub-committees, each of which monitors the progress accomplished by a specific group of states in the implementation of their counter-terrorism obligations. The main roles of the CTC are to monitor the implementation of Resolution 1373 and to increase the capabilities of states to fight terrorism. It is not a sanctions committee in the sense that it does not compile lists of suspected terrorists whose assets should be frozen (Cortright et al., 2007; Dhanapala, 2005). This has presented a significant challenge to the EU. Rather than taking over a list of terrorist suspects such as that established by the 1267 Committee, it has had to autonomously list those who were to become the target of financial sanctions. A new body, described as an ‘ad hoc forum’, was established for that purpose, the so-called ‘Clearing House’, which was later replaced by the ‘Working Party on the implementation of Common Position 2001/931/CFSP on the application of specific measures to combat terrorism’ (also known as ‘CP 931 WP’) (Heupel, 2009: 316). Thus, in the case of the EU’s general financial sanctions regime, one can also identify a high level of alignment with the UN’s measures, in particular UNSCR 1373.

Explaining the alignment of the EU’s financial sanctions regime on the UN’s regime: The EU’s commitment to multilateralism

After having demonstrated that the EU has developed its own financial sanctions against suspected terrorists in a bid to align itself with the UN in that policy area, it is necessary to proceed further in the analysis by asking why the EU sought to do so. This article argues that a key factor accounting for the EU’s decision to adopt its own financial sanctions in order to align itself with the UN regime has been the EU’s commitment to what can be termed ‘UN-centred effective multilateralism’.

In recent years, and especially since the adoption of the European Security Strategy (ESS) in 2003, the EU has promoted ‘effective multilateralism’ ¹⁰ as one of the key principles underpinning its foreign and security policy. It has also regularly proclaimed the central role of the UN in dealing with international security matters, which is not insignificant in the face of attempts, notably by the USA, at sidelining the global organisation. As a commitment to multilateralism does not necessarily entail the identification of an important role for the UN (Gowan, 2008: 42–43), for ‘multilateralism’ should be distinguished from ‘multilateral institutions’ (Wouters et al., 2010: 166), ¹¹ the specific brand of multilateralism that is endorsed by the EU is termed here ‘UN-centred effective multilateralism’. This section demonstrates its growing importance as a principle governing the development of EU policies in general and that of the EU counter-terrorism policy in particular, including the fight against the financing of terrorism.

As emphasised by Wouters et al. (2010: 165), the EU’s commitment to multilateralism can be viewed as ‘a cardinal principle of EU external relations ever since the Union’s inception’, which is notably linked to the fact that the EU itself embodies multilateralism. Since 2003, the EU has made this commitment increasingly explicit in a series of high-profile documents and has also qualified it as a commitment to ‘effective multilateralism’, although it has not precisely defined what this may entail (Kissack, 2010). All the main EU institutions have politically endorsed ‘effective multilateralism’ as a core principle of the EU’s foreign and security activities and have emphasised the pivotal role of the UN in international security matters, with the exception of the ECJ – which is not surprising given that ‘multilateralism’ was not inscribed in the EU Treaties before the Lisbon Treaty. In its 2003 Communication on ‘The European Union and the United Nations: The choice of multilateralism’, which was endorsed by the European Council in December of the same year (Council of the European Union, 2004a), the European Commission presented the EU’s commitment to multilateralism as a ‘defining principle of its external policy’ and emphasised the EU’s ambition to become ‘a central pillar of the UN system’ (Commission of the European Communities, 2003: 3). The Communication also underlined the importance for the EU to take a proactive role in various policy areas and to be a ‘front-runner’ in the development and the implementation of multilateral instruments. According to the Commission (2003: 9), this notably involves ‘taking decisive action at an early stage to implement key UN measures at the EU level – thus setting an example and demonstrating a “clean record’”. The European Parliament (2004) also expressed its support for multilateralism in a Resolution adopted in January 2004. It reaffirmed on this occasion that multilateralism is the best tool to achieve global peace and security. The Resolution also called for reinforced cooperation between the EU and the UN to tackle the major threats faced by the international community today, such as international terrorism.

In addition, the most politically significant endorsement of UN-centred ‘effective multilateralism’ as a core principle of the EU foreign and security policy came with the adoption of the ESS by the European Council in December 2003. This was drafted by the then High Representative for the Common Foreign and Security Policy, Javier Solana, following a request of the General Affairs and External Relations Council in May 2003 to draft a strategic concept for the EU in the wake of the divisions amongst NATO allies over Iraq and the adoption of the US National Security Strategy in 2002 (Biscop, 2008). The ESS identified the strengthening of ‘an international order based on effective multilateralism’ as one of its three strategic objectives (European Council, 2003: 9). It emphasised that EU security was increasingly dependent on an effective multilateral system and that it was of paramount importance to both uphold and develop international law. The importance given to the UN in the final version of the text was particularly striking, especially in comparison with the June draft of the ESS (Gowan, 2008: 45). The ESS notably emphasised that it is the United Nations Security Council that has primary responsibility for the maintenance of peace and security – a politically important statement in the context of the war in Iraq – and that the United Nations Charter is ‘the fundamental framework for international relations’ (European Council, 2003: 9). The ESS also stated that, for multilateralism to be effective, breaches of international rules should not be left without any reaction. Five years later, the Report on the Implementation of the ESS of December 2008 recalled again that ‘the United Nations stands at the apex of the international system’ and went as far as stating that ‘[everything] the EU has done in the field of security has been linked to UN objectives’ (European Council, 2008: 11). It also called for ‘Europe [to] lead a renewal of the multilateral order’ (European Council, 2008: 2).

Moreover, it is important to emphasise that the EU’s commitment to UN-centred ‘effective multilateralism’ is not only rhetorical. It is also evident when examining various statistical indicators. In particular, whilst the European Commission alone gives the UN over €1 billion every year, the EU and its Member States jointly constitute the largest contributor to the UN system. They fund half of all contributions to the UN family and almost 40% of the regular budget of the UN (European Commission, 2009). Finally, this EU commitment to multilateralism has been further reinforced by the entry into force of the Lisbon Treaty on 1 December 2009, which has introduced references to multilateralism for the first time in EU Treaties. In particular, Article 21(1) lays down that the EU shall ‘promote multilateral solutions to common problems, in particular in the framework of the United Nations’, whilst Article 21(2) defines ‘the promotion of an international system based on stronger multilateral cooperation and good global governance’ as one of the goals of the EU’s common activities and policies. Thus, the EU’s commitment to UN-centred effective multilateralism is now more than a political concept, as it has acquired legal value with the Lisbon Treaty, which has identified it as one of the goals of the EU’s activities.

The EU’s commitment to multilateral action and its support for the UN have also been particularly visible in its counter-terrorism policy. As emphasised the Commission (Commission of the European Communities, 2003: 7).

[in] the global fight against terrorism, the EU has an important lead role to play in implementing key UN instruments – […] because of its potential role as a model and catalyst for other regions of the world. The EU already has a solid record in this regard, having acted swiftly to implement Security Council Resolution 1373 within the Union, and co-operating fully with the work of relevant UN bodies.

This emphasis on a multilateral approach centred on the UN can be traced back to the time when the EU began its counter-terrorism efforts in earnest, following the terrorist attacks on 11 September 2001 (Argomaniz, 2009; Kaunert, 2010). Early EU counter-terrorism documents all called for the ratification and implementation of international conventions on terrorism and the UN Convention for the Suppression of the Financing of Terrorism, firmly establishing a multilateral approach to addressing terrorism in general and the financing of terrorism in particular (European Council, 2001a, 2001b). The EU’s preference for a multilateral approach in counter-terrorism was confirmed in the 2004 EU Plan of Action to Combat Terrorism (Council of the European Union, 2004b). It identified as its first objective ‘to deepen the international consensus and enhance international efforts to combat terrorism’, including ‘supporting the key role of the UN’ in counter-terrorism efforts and promoting the implementation of the UN Conventions on Terrorism. The measures outlined for the attainment of the second objective, namely ‘to reduce the access of terrorists to financial and other economic resources’, also highlighted the multilateral approach of the EU to counter-terrorism. They notably called again for the ratification and implementation of the 1999 UN Convention for the Suppression of the Financing of Terrorism, giving ‘increased effect’ to the provisions of UNSCR 1373 and ensuring the effectiveness of the EU’s asset-freezing procedures ‘in accordance with UN obligations’. The EU’s Counter-Terrorism Strategy of December 2005 (Council of the European Union, 2005: 7) also placed a particular emphasis on the importance of a multilateral approach to counter-terrorism and the crucial role of the UN in this policy area. It notably stated that:

[as] set out in the European Security Strategy, through its external action the European Union takes on a responsibility for contributing to global security and building a safer world. Acting through and in conjunction with the United Nations and other international or regional organisations, the EU will work to build the international consensus and promote international standards for countering terrorism. The EU will promote efforts in the UN to develop a global strategy for combating terrorism.

More recently, the revised strategy on combating the financing of terrorism, which was adopted in July 2008, again emphasised that ‘the Union should continue to promote universal compliance with the relevant UN Security Council Resolutions, the [Financial Action Task Force] Recommendations, UN Resolutions, full implementation of the UN Global [Counter-terrorism] Strategy and ratification and implementation of other relevant international and regional conventions’ (Council of the European Union, 2008: 13).

It can therefore be argued that it is this commitment to a UN-centred form of ‘effective multilateralism’ that has led the EU to adopt the financial sanctions measures discussed before. The EU’s willingness to appear overall as an ‘exemplary implementer’ of UNSCRs – which can set an example and demonstrate a ‘clean record’, to paraphrase the Commission’s 2003 Communication on multilateralism – can be identified as a key factor in the development of its financial sanctions regime against suspected terrorists. ¹² Indeed, the adoption of EU financial sanctions in application of the UNSCRs notably aimed to assist those Member States that did not have any asset-freezing arrangements in place to ensure that they would meet their obligations under the UNSCRs (Eling, 2007: 111–112). This was particularly important given that Resolution 1373 had also established the CTC in order to scrutinise the actions taken by UN Member States in order to implement the Resolution. As emphasised by Eling (2007: 112), ‘[in] the early days of the CTC […] the possibility of some form of enforcement action by the Security Council aiming at those states that did not implement crucial provisions of the resolution did not seem entirely far-fetched’, such were the political significance and the priority given to Resolution 1373 by the United States and its allies. The failure of some EU Member States to satisfactorily implement UNSCR 1373 would have harmed the EU’s image on the world stage, especially as a champion of multilateralism.

Thus, by adopting its own financial sanctions regime in order to align itself with the UN’s regime, the EU has sought to appear as a ‘good multilateralist’ and a ‘front-runner’ in the implementation of the UN financial sanctions against suspected terrorists. This is also confirmed by the EU’s voluntary decision to present common EU reports to the CTC on the implementation of UNSCR 1373, alongside the national reports of all the EU Member States, in 2001 and 2002 (Eling, 2007: 111–112). The EU had no obligation to do so, as it is not a member of the UN, but it aimed to demonstrate its commitment to multilateralism and the importance of the role of the UN in the ‘War on Terror’.

It can therefore be concluded that a key factor explaining the EU’s adoption of financial sanctions against suspected terrorists has been its commitment to a UN-centred brand of ‘effective multilateralism’, which has led it to voluntarily align itself with the UN’s regime through the adoption of its own sanctions regime. As there have been concerns that the UN sanctions have entailed human rights violations, this has also meant that, in this case, the EU has, overall, prioritised multilateralism over human rights. However, this process has not remained uncontested, as the European Courts have adopted rulings that have had an impact on the ordering of these priorities.

Challenging the pre-eminence of multilateralism in the EU’s foreign and security policy: The role of the European Courts

Whilst the Commission and the Council, which had successfully pushed for the implementation of the UNSCRs at the EU level (see Kaunert and Della Giovanna, 2010), were priding themselves on the swift development of the EU’s financial sanctions for counter-terrorism purposes, the ECJ adopted a more critical stance. Although their jurisdiction in foreign policy matters was overall limited (Vlcek, 2006: 491; Denza, 2002: 312), both the CFI and the ECJ had already been empowered to hear actions for the annulment of sanctions adopted under Articles 60 and 301 prior to the entry into force of the Lisbon Treaty (Eeckhout, 2011: 497–499). Now their successors – the General Court and the Court of Justice – have seen their jurisdiction in foreign policy further expanded by the Lisbon Treaty. This means that, although the European Courts are often not included in studies of EU foreign policy because of their traditionally limited competences (see, for example, Keukeleire and MacNaughtan, 2008: 66–97), it is necessary to consider their potentially important role in the case of the financial sanctions against suspected terrorists. Such a position chimes with the idea put forward by Slaughter (2004) in A New World Order that international relations take place between disaggregated, rather than unitary, units, in which one can identify the different roles of legislators, regulators and judges. In addition, it echoes Hill’s (2003: 82–85) observation that foreign ministries are being increasingly challenged by rivals who are playing a growing role in foreign policy matters (see also Hocking, 1999; Karvonen and Sundelius, 1987), ¹³ as also demonstrated by Randazzo (2010) in his analysis of the influence of Federal Courts on the US foreign policy.

The most important of the ECJ rulings in that respect is that in the appeal decision in Kadi (Case C-402/05) and Al-Barakaat International Foundation (Case C-415/05) in 2008, ¹⁴ which followed a controversial ruling by the CFI ¹⁵ in the cases of Yusuf and Al-Barakaat International Foundation (Case T-306/01) and Kadi (Case T-315/01) in 2005. Mr Kadi and Al-Barakaat International Foundation were amongst the persons and entities that had been placed on one of the EU lists of terrorist suspects whose assets should be frozen by the EU Member States, as a result of their inclusion in the 1267 Committee list of terrorist suspects. It is outside the scope of this article to consider all these rulings in detail, as they deal with various complex legal issues. They have also proved extremely controversial and have given rise to vigorous scholarly debates, in particular amongst law specialists (see Poli and Tzanou, 2009, for a survey of this literature). This section aims only to examine briefly what the European Courts ruled in relation to the matter at the heart of this article, namely the relations between the EU’s financial sanctions, multilateralism and human rights.

It is important to emphasise that the legal debates in court were not phrased in those terms. This is not surprising given that a concept such as multilateralism was not part of the European Treaties before the entry into force of the Lisbon Treaty on 1 December 2009. This explains why the European Commission, for example, justified the adoption of EU financial sanctions not on the basis of the EU’s commitment to multilateralism, but with reference to the necessity to ensure a consistent application of the targeted sanctions across the EU in order to preserve the free movement of capital within the Community and to avoid distortions of competition. ¹⁶ Nevertheless, the decisions of the CFI and the ECJ have had a significant impact on the relations between the EU’s financial sanctions, multilateralism and human rights, although the debates were actually phrased in terms of the relationship between the UN’s legal order and the Community’s legal order.

It can be inferred from the rulings of both Courts that they disagreed about the balance that should be struck by the EU between its commitment to multilateralism and respect for human rights. Whilst the various applicants were requesting the annulment of the EC regulations on the freezing of assets in so far as they concerned them on the grounds that those breached their fundamental rights, the CFI considered that such financial sanctions measures fall outside the scope of judicial review for the most part when they are required by UNSCRs. The CFI mainly justified its position by arguing that any examination of the internal lawfulness of the instruments adopted by the EU to give effect to UNSCRs would amount to an evaluation of the UN lists of terrorist suspects, which evidently falls outside the scope of the CFI’s jurisdiction. In other words, the CFI affirmed that obligations under the UN Charter prevail over European law and that, as a matter of principle, Community acts implementing obligations under the UN Charter fall outside the scope of the CFI’s jurisdiction. ¹⁷ Thus, this ruling of the CFI can be seen as a tacit agreement to the EU’s drive to align itself with the UN’s financial sanctions regime in order to promote multilateralism. According to the CFI, the EU does not have any latitude in the adoption of sanctions against those previously identified as suspected terrorists by the 1267 Committee. However, this ruling by the CFI was sharply criticised by legal experts on several grounds, including in particular the limitations that it put on the protection of human rights (Wessel, 2006; see also Poli and Tzanou, 2009).

It therefore came as no surprise that the ECJ set aside the CFI’s ruling on appeal in September 2008. It is not the place to consider in detail the various legal points examined in the ruling. The most important point with regard to the topic examined in this article is that the ECJ ruled that the European Courts have jurisdiction to review the measures adopted by the Community in order to give effect to UNSCRs, such as the Regulations concerning financial sanctions against suspected terrorists. The ECJ emphasised that the European Courts are competent to review whether any Community measure respects fundamental rights. In particular, the ECJ stated in paragraph 285 of its judgment that ‘the obligations imposed by an international agreement cannot have the effect of prejudicing the constitutional principles of the EC Treaty, which include the principle that all Community acts must respect fundamental rights’. At the heart of this ruling lay the ECJ’s willingness to highlight the autonomy of the Community’s legal order vis-à-vis the international order (Cremona, 2009) and to ‘[prioritise] its constitutional rights over the commands of the Security Council’ (Nollkaemper, 2008: 863). The ECJ emphasised that all the instruments adopted to implement UNSCRs can be subjected to full review under the human rights standards of Community law. This means that, if the European Courts find that some of the fundamental rights of a person included in the EU lists have been breached, this person should normally be removed from these lists. In the case of the financial sanctions regime against the Taliban, Osama bin Laden and Al-Qaeda, this would therefore lead to a divergence between the 1267 Committee list of suspected terrorists and that used by the EU, which might be interpreted by some as a sign of reduced commitment to multilateralism on the EU’s part. Thus, in any case, the ECJ ruling has introduced some possible limitations to the EU’s alignment with the UN’s financial sanctions regime by emphasising the importance of respecting the fundamental rights of those suspected of terrorism.

This ECJ judgment has been received with mixed reactions. Some observers have welcomed the argument made by the ECJ that a violation of fundamental rights cannot be justified by the fact that it is caused by measures adopted in a wider security context, such as UNSCRs (Halberstam and Stein, 2009; Kunoy and Dawes, 2009; Tridimas, 2009). Some have positively received the emphasis put by the ECJ on the autonomy and the constitutional character of the EC legal order (D’Aspremont and Dopagne, 2008). However, others have been more critical of the ruling. Some have criticised the ECJ for, in their view, disregarding international law and the UN Charter in particular (Goldsmith and Posner, 2008; Hinojosa Martínez, 2008), or at least ‘indulging in […] ad hoc, instrumentalist engagement with international law’ (De Búrca, 2009: 862). According to De Búrca (2009), the ECJ has, in recent years, increasingly emphasised the autonomy of the EC’s legal order in rulings relating to international relations. In her view, this emphasis on the constitutional nature of the Community’s legal order and its separation from the international legal order, including the UN, ‘has potentially significant implications for the image the EU has long cultivated of itself as an actor which is committed to “effective multilateralism”, professing a distinctive allegiance to international law and institutions and seeking to carve out a global role for itself as a normative power’ (De Búrca, 2010: 49).

Thus, the ECJ’s Kadi ruling can be interpreted as having sought to reorder priorities for the EU’s action. By affirming the importance of the Community’s distinct constitutional order – a constituent feature of which is the respect for human rights – the ECJ has implicitly downgraded the significance of the EU’s commitment to multilateralism in situations where there are tensions between this commitment and the protection of human rights, such as in this case.

However, the Court has not been entirely successful in its endeavour so far. Following the ECJ ruling in September 2008, which had annulled the regulation freezing Mr Kadi’s funds, the European Commission informed him of the reasons for which he had been listed by the UN 1267 Committee and subsequently adopted a new regulation maintaining the freezing of his funds. The summary of grounds sent by the Commission was only one page long (Cuyvers, 2011: 487). Mr Kadi then brought an action for annulment of this decision before the General Court (formerly known as the CFI). The Commission stated that it had complied with the judgment of the ECJ by communicating to Mr Kadi the reasons for his listing and granting him an opportunity to comment on these reasons. This did not convince the General Court, which, in September 2010, annulled the regulation freezing Mr Kadi’s funds. ¹⁸ It ruled that the regulation had been adopted in breach of Mr Kadi’s rights of defence, whilst also constituting an unjustified restriction of his right to property. The Commission, the Council and the United Kingdom swiftly brought appeals. As a result, the Court of Justice will now have to revisit these difficult questions in a second Kadi judgment in the future. In the meantime, Mr Kadi’s assets are still frozen, as he will have to remain on the EU list until at least the next ruling of the Court of Justice. Thus, this qualifies the influence that the ECJ (now the Court of Justice) has been able to exercise on the Kadi case to date. Nevertheless, more generally, the various rulings of the European Courts have led to significant changes to listing procedures at both the EU and UN levels (Cuyvers, 2011; Draghici, 2009; Heupel, 2009). It will be interesting to observe how the second Kadi ruling of the Court of Justice seeks to and, in practice, manages to alter the relations between the EU’s financial sanctions, multilateralism and human rights.

Conclusion

This article set out to explain why the EU has decided to develop its own financial sanctions regime against suspected terrorists. This was indeed an intriguing decision on various grounds. First of all, the EU was not required to do so, as it is not a member of the UN, although it has been noted that it has enjoyed an ‘enhanced’ observer status at the General Assembly since May 2011. Second, prior to the entry into force of the Lisbon Treaty in December 2009, it was questionable whether the EU was actually legally entitled to adopt such measures. Third, it became rapidly evident that these financial sanctions had a negative impact on human rights, as discussed in the introduction to this article. Despite these issues and the ensuing controversies, the EU decided to develop its own financial sanctions regime against suspected terrorists and has continued to do so, aligning it closely with that of the UN. This article has put forward the argument that a key factor behind this decision has been the commitment to a UN-centred form of ‘effective multilateralism’ that has been proclaimed by various EU institutions since 2003. The European Commission, the European Parliament, the Council of Ministers and the European Council have all endorsed ‘effective multilateralism’ as a core principle underpinning both the foreign and security policy of the EU and its counter-terrorism efforts. However, as the human rights standards applied at the UN level are not as high as those of the EU, the EU’s alignment with the UN’s sanctions regime has led to human rights violations, which have been criticised by scholars and the European Courts alike. In this context, the ECJ’s Kadi ruling of 2008 attempted to reorder the EU’s priorities, as the ECJ emphasised the importance of respecting European human rights standards, through its emphasis on the autonomy of the Community’s legal order from the UN’s legal order. As the ‘Kadi saga’ has since then continued, a second ruling of the newly renamed General Court, which will have to revisit these questions, is eagerly awaited at the time of writing.

This presents a conundrum for the EU. It appears to be torn between its commitment to ‘effective multilateralism’ and its commitment to human rights, which seem difficult to reconcile in the case of financial sanctions against suspected terrorists. ¹⁹ The EU is therefore in the uncomfortable position that, as shown at the beginning of this article, some criticise it for not being ‘multilateralist enough’, whilst others simultaneously condemn its lack of respect for human rights. This tension between multilateralism and human rights will exist as long as the gap between EU human rights standards and UN standards persists, as it has been only partially closed by the reforms to UN listing and de-listing procedures that have taken place. Moreover, time will show how the current uncertainties and controversies surrounding the EU’s financial sanctions regime will evolve as a result of future rulings by the European Courts. In that respect, it will be particularly interesting to observe how the Court of Justice of the EU will adjudicate between the various priorities for the EU, now that the Lisbon Treaty has also elevated the promotion of ‘stronger multilateral cooperation’ to the rank of objective of the EU’s activities. This will also allow scholars to examine the intriguing question of the growing role of the Court of Justice of the EU in foreign policy.