CASE OF BOSPHORUS HAVA YOLLARI TURİZM VE TİCARET ANONİM ŞİRKETİ v. IRELAND

(Application no. 45036/98)

JUDGMENT

STRASBOURG

30 June 2005

In the case of Bosphorus Hava Yolları Turizm ve Ticaret Anonim Şirketi v. Ireland,

The European Court of Human Rights, sitting as a Grand Chamber composed of:

     Mr C.L. Rozakis, President,
     Mr J.-P. Costa,
     Mr G. Ress,
     Sir Nicolas Bratza,
     Mr I. Cabral Barreto,
     Mrs F. Tulkens,

     Mrs V. Strážnická,
     Mr K. Jungwiert,
     Mr V. Butkevych,
     Mrs N. Vajić,
     Mr J. Hedigan,
     Mr M. Pellonpää,
     Mr K. Traja,
     Mrs S. Botoucharova,
     Mr V. Zagrebelsky,
     Mr L. Garlicki,
     Mrs A. Gyulumyan, judges,
and Mr P.J. Mahoney, Registrar,

Having deliberated in private on 29 September 2004 and 11 May 2005,

Delivers the following judgment, which was adopted on the last-mentioned date:

PROCEDURE

1. The case originated in an application (no. 45036/98) against Ireland lodged with the European Commission of Human Rights (“the Commission”) under former Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a company incorporated in Turkey, Bosphorus Hava Yolları Turizm (“the applicant company”), on 25 March 1997.

2. The applicant company was represented by Mr J. Doyle, a lawyer practising in Dublin, instructed by Mr M.I. Özbay, the company's managing director and majority shareholder. The Irish Government (“the Government”) were represented by two successive Agents, Ms P. O'Brien and Mr J. Kingston, and by a co-Agent, Ms D. McQuade, all of the Department of Foreign Affairs.

3. The applicant company alleged that the impounding of its leased aircraft by the respondent State had breached its rights under Article 1 of Protocol No. 1.

4. The application was transmitted to the Court on 1 November 1998, when Protocol No. 11 to the Convention came into force (Article 5 § 2 of Protocol No. 11).

5. Following the communication of the case to the respondent Government, the Turkish Government confirmed that it did not intend to make submissions in the case (Rule 44 of the Rules of Court).

6. On 13 September 2001, following a hearing on the admissibility and merits, the application was declared admissible by a Chamber composed of Mr G. Ress, President, Mr I. Cabral Barreto, Mr V. Butkevych, Mrs N. Vajić, Mr J. Hedigan, Mr M. Pellonpää, Mrs S. Botoucharova, judges, and Mr V. Berger, Section Registrar.

7. On 30 January 2004 that Chamber relinquished jurisdiction in favour of the Grand Chamber, none of the parties having objected (Article 30 of the Convention and Rule 72).

8. The composition of the Grand Chamber was determined according to the provisions of Article 27 §§ 2 and 3 of the Convention and Rule 24.

9. The applicant company and the Government each filed observations on the merits, to which each replied at the oral hearing (Rule 44 § 5). Written comments were also received from the Italian and United Kingdom Governments, and from the European Commission and the Institut de formation en droits de l'homme du barreau de Paris, which were given leave by the President to intervene (Article 36 § 2 of the Convention and Rule 44 § 2). The European Commission also obtained leave to participate in the oral hearing.

10. The hearing took place in public in the Human Rights Building, Strasbourg, on 29 September 2004 (Rule 59 § 3).

There appeared before the Court:

(a) for the Government
Mr J. Kingston,                                                                       Agent,
Ms D. McQuade,                                                               Co-Agent,
Mr G. Hogan, Senior Counsel,
Mr R. O'Hanlon, Senior Counsel,                                        Counsel,
Mr P. Mooney,                                                                      Adviser;

(b) for the applicant company
Mr J. O'Reilly, Senior Counsel,
Mr T. Eicke, Barrister-at-Law, Counsel,
Mr J. Doyle, Solicitor.

Mr M.I. Özbay, managing director of the applicant company, also attended.

(c) for the European Commission
Mr G. Marenco,
Ms S. Fries,
Mr C. Ladenburger,                                                             Agents.

The Court heard addresses by Mr O'Reilly, Mr Hogan and Mr Marenco.

THE FACTS

I. THE CIRCUMSTANCES OF THE CASE

A. The lease agreement between JAT and the applicant company

11. The applicant company is an airline charter company incorporated in Turkey in March 1992.

12. By an agreement dated 17 April 1992, the applicant company leased two Boeing 737-300 aircraft from Yugoslav Airlines (JAT), the national airline of the former Yugoslavia. These were, at all material times, the only two aircraft operated by the applicant company. The lease agreement was a “dry lease without crew” for a period of forty-eight months from the dates of delivery of the two aircraft (22 April and 6 May 1992). According to the terms of the lease, the crew were to be the applicant company's employees and the applicant company was to control the destination of the aircraft. While ownership of the aircraft remained with JAT, the applicant company could enter the aircraft on the Turkish Civil Aviation Register provided it noted JAT's ownership.

13. The applicant company paid a lump sum of 1,000,000 United States dollars (USD) per aircraft on delivery. The monthly rental was 150,000 USD per aircraft. On 11 and 29 May 1992 the two aircraft were registered in Turkey as provided for in the lease. On 14 May 1992 the applicant company obtained its airline licence.

B. Prior to the aircraft's arrival in Ireland

14. From 1991 onwards the United Nations adopted, and the European Community implemented, a series of sanctions against the Federal Republic of Yugoslavia (Serbia and Montenegro) – “the FRY” – designed to address the armed conflict and human rights violations taking place there.

15. In January 1993 the applicant company began discussions with TEAM Aer Lingus (“TEAM”) with a view to having maintenance work (“C-Check”) done on one of its leased aircraft. TEAM was a limited liability company whose principal business was aircraft maintenance. It was a subsidiary of two Irish airline companies wholly owned by the Irish State. Memoranda dated 8 and 18 January 1993 showed that TEAM considered, on the basis of information obtained, that the applicant company was not in breach of the sanctions regime, noting that it was doing business with many companies, including Boeing, Sabena and SNECMA (a French aero-engine company). By a letter of 2 March 1993, TEAM requested the opinion of the Department of Transport, Energy and Communications (“the Department of Transport”) and included copies of its memoranda of January 1993. On 3 March 1993 the Department of Transport forwarded the request to the Department of Foreign Affairs.

16. On 17 April 1993 the United Nations Security Council adopted Resolution 820 (1993), which provided that States should impound, inter alia, all aircraft in their territories “in which a majority or controlling interest is held by a person or undertaking in or operating from the [FRY]”. That resolution was implemented by Regulation (EEC) no. 990/93, which came into force on 28 April 1993 (see paragraph 65 below).

17. On 5 May 1993 the Department of Foreign Affairs decided to refer the matter to the United Nations Sanctions Committee.

18. By a letter of 6 May 1993, the Turkish Foreign Ministry indicated to the Turkish Ministry of Transport that it considered that the leased aircraft were not in breach of the sanctions regime and requested flight clearance pending the Sanctions Committee's decision. On 12 May 1993 Turkey sought the opinion of the Sanctions Committee.

C. The impounding of the aircraft

19. On 17 May 1993 one of the applicant company's leased aircraft arrived in Dublin. A contract with TEAM was signed for the completion of C-Check.

20. On 18 May 1993 the Irish Permanent Mission to the United Nations indicated by facsimile to the Department of Transport that informal advice from the Secretary to the Sanctions Committee was to the effect that there was no problem with TEAM carrying out the work, but that an “informal opinion” from the “legal people in the Secretariat” had been requested. On 19 May 1993 the Department of Transport explained this to TEAM by telephone.

21. On 21 May 1993 the Irish Permanent Mission confirmed to the Department of Foreign Affairs that the “informal legal advice” obtained from the “United Nations legal office” was to the effect that TEAM should seek the “guidance and approval” of the Sanctions Committee before signing any contract with the applicant company. It was recommended that TEAM submit an application to the Committee with relevant transaction details; if the applicant company was to pay for the maintenance, it was unlikely that the Committee would have a problem with the transaction. On 24May 1993 the Department of Transport received a copy of that facsimile and sent a copy to TEAM, who were also informed by telephone. By a letter dated 26 May 1993, the Irish Permanent Mission provided the Sanctions Committee with the required details and requested the latter's “guidance and approval”.

22. On 21 May 1993 the Sanctions Committee disagreed with the Turkish government's view that the aircraft could continue to operate, referring to Resolution 820 (1993) of the United Nations Security Council. The Turkish Permanent Mission to the United Nations was informed of that opinion by a letter dated 28 May 1993.

23. At noon on 28 May 1993 the applicant company was informed by TEAM that C-Check had been completed and that, on payment of USD 250,000, the aircraft would be released. Later that day payment was received and the aircraft was released. While awaiting air traffic control clearance to take off, the aircraft was stopped. In his report, the duty manager of Dublin Airport noted that TEAM had informed him that it had been advised by the Department of Transport that it would be “in breach of sanctions” for the aircraft to leave. He also stated that the aircraft had been scheduled to depart during that shift and that the airport police had been advised. TEAM informed the applicant company accordingly. The Department of Transport later confirmed by a letter (of 16 June 1993) its instructions of 28 May 1993:

“... [TEAM] were advised by this Department that, in the circumstances, TEAM should not release the [aircraft] ... Furthermore, it was pointed out that if TEAM were to release the aircraft TEAM itself might be in serious breach of the UN resolutions (as implemented by Council Regulation (EEC) no. 990/93) ... and the matter was under investigation. At the same time directions were given to Air Traffic Control, whose clearance is necessary for departure of aircraft, not to clear this aircraft for take-off.”

24. By letters dated 29 May 1993 to the applicant company, TEAM noted that it was waiting for the opinion of the Sanctions Committee and that it had been advised by the authorities that release of the aircraft before receipt of that opinion would be in violation of the United Nations sanctions regime.

D. Prior to judicial review proceedings

25. By a memorandum dated 29 May 1993, the Turkish embassy in Dublin requested the release of the detained aircraft to Turkey, given the latter's commitment to the sanctions regime

26. By a letter dated 2 June 1993, the Irish Permanent Mission informed the Sanctions Committee that the maintenance work had in fact already been carried out, that the government regretted the failure to abide by the procedure it had initiated and that the matter had been taken up with TEAM. The aircraft was being detained pending the Committee's decision.

27. On 3 June 1993 the Irish government learned of the Sanctions Committee's reply to the Turkish government and that the chairman of the Committee had indicated that it would be likely to favour impounding. The Committee would not meet until 8 June 1993.

28. On 4 June 1993 the European Communities (Prohibition of Trade with the Federal Republic of Yugoslavia (Serbia and Montenegro)) Regulations 1993 (Statutory Instrument no. 144 of 1993) were adopted. By a letter dated 8 June 1993, the Minister for Transport (Energy and Communications) informed the Dublin Airport managers that he had authorised the impounding, until further notice, of the aircraft pursuant to that statutory instrument.

29. Shortly afterwards the applicant company's second aircraft was grounded in Istanbul, although the parties disagreed as to precisely why.

30. By a letter of 14 June 1993, the Sanctions Committee informed the Irish Permanent Mission of the findings of its meeting of 8 June 1993:

“... the provision of any services to an aircraft owned by an undertaking in the [FRY], except those specifically authorised in advance by the Committee ..., would not be in conformity with the requirements of the relevant Security Council resolutions. The members of the Committee also recalled the provisions of paragraph 24 of [Resolution 820 (1993) of the United Nations Security Council] regarding such aircraft, under which the aircraft in question should have already been impounded by the Irish authorities. The Committee, therefore, would be extremely grateful for being apprised of any action on behalf of Your Excellency's Government to that effect.”

By a letter dated 18 June 1993, the Irish Permanent Mission informed the Sanctions Committee that the aircraft had been detained on 28 May 1993 and formally impounded on 8 June 1993.

31. In a letter of 16 June 1993 to the Department of Transport, the applicant company challenged the impoundment, arguing that the purpose of Regulation (EEC) no. 990/93 was not to deal simply with legal ownership, but rather with operational control. On 24 June 1993 the Department replied:

“The Minister is advised that the intention and effect of the UN resolution as implemented through [Regulation (EEC) no. 990/93] is to impose sanctions by impounding the types of commercial asset mentioned in Article 8, including aircraft, in any case where a person or undertaking in or operating from the [FRY] has any ownership interest of the kind mentioned. As this view of the scope and effect of the original resolution has been confirmed by the [Sanctions Committee], the Minister does not feel entitled to apply [Regulation (EEC) no. 990/93] in a manner which would depart from that approach. ... the aircraft must remain impounded. ... the Minister appreciates the difficulty that [the applicant company] finds itself in and would be anxious to find any solution that was available to him under [Regulation (EEC) no. 990/93] which would permit the release of the aircraft.”

32. By a letter dated 5 July 1993, the Turkish embassy in Dublin repeated its request for the release of the aircraft, stating that the Turkish government would ensure impoundment in accordance with the sanctions. The Irish government indicated to the Sanctions Committee, by a letter of 6 July 1993, that it would be favourably disposed to grant that request. On 4 August 1993 the Sanctions Committee ruled that the aircraft had to remain in Ireland, since the relevant resolutions required the Irish State to withhold all services from the aircraft, including services that would enable it to fly.

E. The first judicial review proceedings: the High Court

33. In November 1993 the applicant company applied for leave to seek judicial review of the Minister's decision to impound the aircraft. Amended grounds were later lodged taking issue with TEAM's role in the impoundment. On 15 April 1994 the High Court struck out TEAM as a respondent in the proceedings, the applicant company's dispute with TEAM being a private-law matter.

34. On 15 June 1994 the applicant company's managing director explained in evidence that rental payments due to JAT had been set off against the deposits initially paid to JAT and that future rental payments were to be paid into a blocked bank account supervised by the Turkish Central Bank.

35. On 21 June 1994 Mr Justice Murphy delivered the judgment of the High Court. The issue before him could,he believed, be simply defined as the question of whether the Minister for Transport was bound by Article 8 of Regulation (EEC) no. 990/93 to impound the applicant company's aircraft. He considered the Department of Transport's letter of 24 June 1993 to the applicant company to be the most helpful explanation of the Minister's reasoning. He found that:

“... it is common case that the transaction between JAT and [the applicant company] was entirely bona fide. There is no question of JAT having any interest direct or indirect in [the applicant company] or in the management, supervision or direction of the business of that company. ...

It is, however, common case that [resolutions of the United Nations Security Council] do not form part of Irish domestic law and, accordingly, would not of themselves justify the Minister in impounding the aircraft. The real significance of the [resolutions of the United Nations Security Council], in so far as they relate to the present proceedings, is that [Resolution 820 (1993) of the United Nations Security Council] ... provided the genesis for Article 8 of [Regulation (EEC) no. 990/93]. ...”

36. In interpreting Regulation (EEC) no. 990/93, Mr Justice Murphy had regard to its purpose. He found the aircraft not to be one to which Article 8 applied, as it was not an aircraft in which a majority or controlling interest was held by a person or undertaking in or operating from the former FRY, and that the decision of the Minister to impound was therefore ultra vires. However, the aircraft was, at that stage, the subject of an injunction obtained (in March 1994) by a creditor of JAT (SNECMA) preventing it from leaving the country. That injunction was later discharged on 11 April 1995.

F. The second judicial review proceedings: the High Court

37. Having indicated to the applicant company that the Minister for Transport was investigating a further impoundment based on Article 1.1(e) of Regulation (EEC) no. 990/93, the Department of Transport informed the applicant company by a letter of 5 August 1994 of the following:

“The Minister has now considered the continuing position of the aircraft in the light of the recent ruling of the High Court and the provisions of the Council regulations referred to.

Arising out of the Minister's consideration, I am now directed to inform you that the Minister has ... directed that the aircraft ... be detained pursuant to Article 9 of [Regulation (EEC) no. 990/93] as an aircraft which is suspected of having violated the provisions of that regulation and particularly Article 1.1(e) and [Regulation (EEC) no.] 1432/92. The aircraft will remain detained pending completion of the Minister's investigation of the suspected violation as required under Article 9 and Article 10 of Regulation [(EEC) no.] 990/93.”

Although not noted in that letter, the Minister's concern related to the applicant company's setting off of JAT's financial obligations (certain insurance, maintenance and other liabilities) under the lease against the rental monies already paid by it into the blocked bank account.

38. On 23 September 1994 the United Nations Security Council adopted Resolution 943 (1994). Although it temporarily suspended the sanctions as peace negotiations had begun, it did not apply to aircraft already impounded. It was implemented by Regulation (EC) no. 2472/94 on 10 October 1994.

39. In March 1995 the applicant company was given leave to apply for judicial review of the Minister's decision to re-impound the aircraft. By a judgment of 22 January 1996, the High Court quashed the Minister's decision to redetain the aircraft. It noted that almost all of the monies which had been paid into the blocked account by the applicant company had by then been used up (with the consent of the holding bank in Turkey) in order to discharge JAT's liabilities under the lease. The crucial question before the High Court was the Minister's delay in raising Article 9 of Regulation (EEC) no. 990/93 given that the applicant company was an “innocent” party suffering heavy daily losses. The High Court found that the Minister had failed in his duty to investigate and decide such matters within a reasonable period of time, to conduct the investigations in accordance with fair procedures and to have proper regard for the rights of the applicant company.

40. On 7 February 1996 the Irish government appealed to the Supreme Court and applied for a stay on the High Court's order. On 9 February 1996 the Supreme Court refused the Minister's application for a stay. The overriding consideration in deciding to grant the stay or not was to find a balance which did not deny justice to either party. Noting the significant delay of the Minister in raising Article 1.1(e) and the potentially minor damage to the State (monies owed for the maintenance and parking in Dublin Airport) compared to the applicant company's huge losses, the justice of the case was overwhelmingly in the latter's favour.

41. The aircraft was therefore free to leave. By letters dated 12 and 14 March 1996, the applicant company, JAT and TEAM were informed that the Minister considered that he no longer had any legal responsibility for the aircraft.

G. The first judicial review proceedings: the European Court of Justice (ECJ)

42. On 8 August 1994 the Minister for Transport lodged an appeal in the Supreme Court against the High Court judgment of 21 June 1994. He took issue with the High Court's interpretation of Regulation (EEC) no. 990/93 and requested a preliminary reference to the ECJ (Article 177, now Article 234, of the Treaty establishing the European Community – “the EC Treaty”).

43. By an order dated 12 February 1995, the Supreme Court referred the following question to the ECJ and adjourned the proceedings before it:

“Is Article 8 of [Regulation (EEC) no. 990/93] to be construed as applying to an aircraft which is owned by an undertaking the majority or controlling interest in which is held by [the FRY] where such aircraft has been leased by the owner for a term of four years from 22 April 1992 to an undertaking the majority or controlling interest in which is not held by a person or undertaking in or operating from the said [FRY]?”

44. The parties made submissions to the ECJ. The applicant company noted that it was ironic that, following Resolution 943 (1994) of the United Nations Security Council, JAT aircraft could fly whereas its own remained grounded.

45. On 30 April 1996 Advocate General Jacobs delivered his opinion. Given the majority interest of JAT in the aircraft, Article 8 of Regulation (EEC) no. 990/93 applied to it. The Advocate General disagreed with the Irish High Court, considering that neither the aims nor the texts of the relevant resolutions of the United Nations Security Council provided any reason to depart from what he considered to be the clear wording of Article 8 of Regulation (EEC) no. 990/93.

46. As to the question of the respect shown in that regulation for fundamental rights and proportionality, the Advocate General pointed out:

“It is well established that respect for fundamental rights forms part of the general principles of Community law, and that in ensuring respect for such rights, the [ECJ] takes account of the constitutional traditions of the Member States and of international agreements, notably [the Convention], which has a special significance in that respect.

Article F(2) of the Treaty on European Union ... gives Treaty expression to the [ECJ's] case-law. ... In relation to the EC Treaty, it confirms and consolidates the [ECJ's] case-law underlining the paramount importance of respect for fundamental rights.

Respect for fundamental rights is thus a condition of the lawfulness of Community acts – in this case, the Regulation. Fundamental rights must also, of course, be respected by Member States when they implement Community measures. All Member States are in any event parties to the [Convention], even though it does not have the status of domestic law in all of them. Although the Community itself is not a party to the Convention, and cannot become a party without amendment both of the Convention and of the Treaty, and although the Convention may not be formally binding upon the Community, nevertheless for practical purposes the Convention can be regarded as part of Community law and can be invoked as such both in the [ECJ] and in national courts where Community law is in issue. That is so particularly where, as in this case, it is the implementation of Community law by Member States which is in issue. Community law cannot release Member States from their obligations under the Convention.”

47. The Advocate General noted that the applicant company had relied on the right to peaceful enjoyment of property, protected by the Convention, and the right to pursue a commercial activity, recognised as a fundamental right by the ECJ. Having considered Sporrong and Lönnroth v. Sweden (judgment of 23 September 1982, Series A no. 52), he defined the essential question as being whether the interference with the applicant company's possession of the aircraft was a proportionate measure in the light of the aims of general interest Regulation (EEC) no. 990/93 sought to achieve. He had regard to the application of this test in AGOSI v. the United Kingdom (judgment of 24 October 1986, Series A no. 108) and Air Canada v. the United Kingdom (judgment of 5 May 1995, Series A no. 316-A) and to a “similar approach” adopted by the ECJ in cases concerning the right to property or the right to pursue a commercial activity (including Hauer v. Land Rheinland-Pfalz, Case 44/79 [1979] European Court Reports (ECR) 3727, §§ 17-30).

48. While there had been a severe interference with the applicant company's interest in the lease, it was difficult to identify a stronger type of public interest than that of stopping a devastating civil war. While some property loss was inevitable for any sanctions to be effective, if it were demonstrated that the interference in question was wholly unreasonable in the light of the aims sought to be achieved, then the ECJ would intervene. However, the Advocate General felt that neither the initial decision to impound nor the continued retention of the aircraft could be regarded as unreasonable.

49. Whether or not the financial impact of the sanctions were as outlined by the applicant company, a general measure of the kind in question could not be set aside simply because of the financial consequences the measure might have in a particular case. Given the strength of the public interest involved, the proportionality principle would not be infringed by any such losses.

50. The Advocate General concluded that the contested decision did not

“... strike an unfair balance between the demands of the general interest and the requirements of the protection of the individual's fundamental rights. That conclusion seems consistent with the case-law of [this Court] in general. Nor has [the applicant company] suggested that there is any case-law under [the Convention] supporting its own conclusion.

The position seems to be no different if one refers to the fundamental rights as they result from 'the constitutional traditions common to the Member States' referred to in the case-law of [the ECJ] and in Article F(2) of the Treaty on European Union. In the [above-cited Hauer case, the ECJ] pointed out ..., referring specifically to the German Grundgesetz, the Irish Constitution and the Italian Constitution, that the constitutional rules and practices of the Member States permit the legislature to control the use of private property in accordance with the general interest. Again it has not been suggested that there is any case-law supporting the view that the contested decision infringed fundamental rights. The decision of the Irish High Court was based, as we have seen, on different grounds.”

51. By a letter of 19 July 1996, TEAM informed JAT that the aircraft was free to leave provided that debts owed to TEAM were discharged.

52. On 30 July 1996 the ECJ ruled that Regulation (EEC) no. 990/93 applied to the type of aircraft referred to in the Supreme Court's question to it. The ECJ noted that the domestic proceedings showed that the aircraft lease had been entered into “in complete good faith” and was not intended to circumvent the sanctions against the FRY.

53. It did not accept the applicant company's first argument that Regulation (EEC) no. 990/93 did not apply because of the control on a daily basis of the aircraft by an innocent non-FRY party. Having considered the wording of Regulation (EEC) no. 990/93, its context and aims (including the text and aims of the United Nations Security Council resolutions it implemented), it found nothing to support the distinction made by the applicant company. Indeed, the use of day-to-day operation and control as opposed to ownership as a criterion for applying the regulation would jeopardise the effectiveness of the sanctions.

54. The applicant company's second argument was that the application of Regulation (EEC) no. 990/93 would infringe its right to peaceful enjoyment of its possessions and its freedom to pursue a commercial activity because it would destroy and obliterate the business of a wholly innocent party when the FRY owners had already been punished by having their bank accounts blocked. The ECJ did not find this persuasive:

“It is settled case-law that the fundamental rights invoked by [the applicant company] are not absolute and their exercise may be subject to restrictions justified by objectives of general interest pursued by the Community (see [the above-cited Hauer case]; Case 5/88, Wachauf v. Bundesamt fuer Ernaehrung und Forstwirtschaft [1989] ECR 2609; and Case C-280/93, Germany v. Council [1994] ECR I-4973).

Any measure imposing sanctions has, by definition, consequences which affect the right to property and the freedom to pursue a trade or business, thereby causing harm to persons who are in no way responsible for the situation which led to the adoption of the sanctions.

Moreover, the importance of the aims pursued by the regulation at issue is such as to justify negative consequences, even of a substantial nature, for some operators.

The provisions of [Regulation (EEC) no. 990/93] contribute in particular to the implementation at Community level of the sanctions against the [FRY] adopted, and later strengthened, by several resolutions of the Security Council of the United Nations. ...

It is in the light of those circumstances that the aim pursued by the sanctions assumes a special importance, which is, in particular, in terms of [Regulation (EEC) no. 990/93] and more especially the eighth recital in the preamble thereto, to dissuade the [FRY] from 'further violating the integrity and security of the Republic of Bosnia-Herzegovina and to induce the Bosnian Serb party to cooperate in the restoration of peace in this Republic'.

As compared with an objective of general interest so fundamental for the international community, which consists in putting an end to the state of war in the region and to the massive violations of human rights and humanitarian international law in the Republic of Bosnia-Herzegovina, the impounding of the aircraft in question, which is owned by an undertaking based in or operating from the [FRY], cannot be regarded as inappropriate or disproportionate.”

55. The answer to the Supreme Court's question was therefore:

“Article 8 of Council Regulation (EEC) no. 990/93 of 26 April 1993 concerning trade between the European Economic Community and the [FRY] applies to an aircraft which is owned by an undertaking based in or operating from the [FRY], even though the owner has leased it for four years to another undertaking, neither based in nor operating from [the FRY] and in which no person or undertaking based in or operating from [the FRY] has a majority or controlling interest.”

56. On 6 August 1996 the Minister reinstated the impounding of the aircraft under Article 8 of Regulation (EEC) no. 990/93.

H. The first and second judicial review proceedings: judgments of the Supreme Court

57. By a notice of motion dated 29 October 1996, the applicant company applied to the Supreme Court for, inter alia, an order determining the action “in the light of the decision of the [ECJ]” and for an order providing for the costs of the Supreme Court and ECJ proceedings. The grounding affidavit of the applicant company of the same date stressed its bona fides, the benefit of having had the ECJ examine the regulation for the first time, the fact that ultimate responsibility for its predicament lay with the FRY authorities and that its operations had been destroyed by the impoundment. It referred to Regulation (EC) no. 2815/95, noting that it did not allow aircraft already impounded to fly whereas those not previously impounded could do so. Since its aircraft was the only one impounded under the sanctions regime, no other lessee could have initiated the action it had in order to clarify the meaning of the relevant regulation.

58. On 29 November 1996 the Supreme Court delivered its judgment allowing the appeal of the Minister for Transport from the order of the High Court of 21 June 1994. It noted that the sole issue in the case was whether the Minister had been bound by Article 8 of Regulation (EEC) no. 990/93 to impound the aircraft. Having noted the answer of the ECJ, the Supreme Court simply stated that it was bound by that decision and the Minister's appeal was allowed.

59. In May 1998 the Supreme Court allowed the appeal from the order of the High Court of 22 January 1996. Given the intervening rulings of the ECJ and of the Supreme Court (of July and November 1996, respectively), the appeal was moot since, from the date of the initial order of impoundment, the aircraft had been lawfully detained under Article 8 of Regulation (EEC) no. 990/93. There was no order as to costs.

I. The return of the aircraft to JAT

60. The applicant company's leases on both aircraft had expired by May 1996 (see paragraph 12 above). Further to the judgment of the Supreme Court of November 1996 (see paragraph 58 above) and given the relaxation of the sanctions regime (see paragraphs 67-71 below), JAT and the Minister for Transport reached an agreement in July 1997 concerning the latter's costs. JAT deposited 389,609.95 Irish pounds into a blocked account in the joint names of the Chief State Solicitor and its solicitors to cover all parking, maintenance, insurance and legal costs of the Minister for Transport associated with the impoundment. On 30 July 1997 the aircraft was returned to JAT.

II. THE SANCTIONS REGIME: THE RELEVANT PROVISIONS

A. Setting up the sanctions regime

61. In September 1991 the United Nations Security Council (UNSC) adopted a Resolution (Resolution 713 (1991)) under Chapter VII of its Charter by which it expressed concern about the conflict in the former Yugoslavia and implemented a weapons and military embargo. UNSC Resolution 724 (1991), adopted in December 1991, established a Sanctions Committee to administer the relevant resolutions of the United Nations Security Council.

62. The relevant parts of UNSC Resolution 757 (1992), adopted on 30 May 1992, provided as follows:

“5. Decides further that no State shall make available to the authorities in the [FRY] or to any commercial, industrial or public utility undertaking in the [FRY], any funds, or any other financial or economic resources and shall prevent their nationals and any persons within their territories from removing from their territories or otherwise making available to those authorities or to any such undertaking any such funds or resources and from remitting any other funds to persons or bodies within the [FRY], except payments exclusively for strictly medical or humanitarian purposes and foodstuffs;

...

7. Decides that all States shall:

(a) Deny permission to any aircraft to take off from, land in or overfly their territory if it is destined to land in or has taken off from the territory of the [FRY], unless the particular flight has been approved, for humanitarian or other purposes consistent with the relevant resolutions of the Council, by the [Sanctions Committee];

(b) Prohibit, by their nationals or from their territory, the provision of engineering or maintenance servicing of aircraft registered in the [FRY] or operated by or on behalf of entities in the [FRY] or components for such aircraft, the certification of airworthiness for such aircraft, and the payment of new claims against existing insurance contracts and the provision of new direct insurance for such aircraft;

...

9. Decides further that all States, and the authorities in the [FRY], shall take the necessary measures to ensure that no claim shall lie at the instance of the authorities in the [FRY], or of any person or body in the [FRY], or of any person claiming through or for the benefit of any such person or body, in connection with any contract or other transaction where its performance was affected by reason of the measures imposed by the present resolution and related resolutions;”

The resolution was implemented in the European Community by a Council regulation of June 1992 (Regulation (EEC) no. 1432/92), which was in turn implemented in Ireland by statutory instrument: the European Communities (Prohibition of Trade with the Republics of Serbia and Montenegro) Regulations 1992 (Statutory Instrument no. 157 of 1992) made it an offence under Irish law from 25 June 1992 to act in breach of Regulation (EEC) no. 1432/92.

63. UNSC Resolution 787 (1992), adopted in November 1992, further tightened the economic sanctions against the FRY. This resolution was implemented by Regulation (EEC) no. 3534/92, adopted in December 1992.

64.UNSC Resolution 820 (1993), adopted on 17 April 1993, provided, inter alia, as follows:

“24. Decides that all States shall impound all vessels, freight vehicles, rolling stock and aircraft in their territories in which a majority or controlling interest is held by a person or undertaking in or operating from the [FRY] and that these vessels, freight vehicles, rolling stock and aircraft may be forfeit to the seizing State upon a determination that they have been in violation of resolutions 713 (1991), 757 (1992), 787 (1992) or the present resolution;”

65. This resolution was implemented by Regulation (EEC) no. 990/93, which came into force on 28 April 1993, once published in the Official Journal (L 102/14 (1993)) of that date (as specified in Article 13 of the regulation) pursuant to Article 191(2) (now Article 254(2)) of the Treaty establishing the European Community (“the EC Treaty”).

Articles 1.1(e) and 8 to 10 of that regulation provided as follows:

Article 1

“1. As from 26 April 1993, the following shall be prohibited:

...

(e) the provision of non-financial services to any person or body for purposes of any business carried out in the Republics of Serbia and Montenegro.”

Article 8

“All vessels, freight vehicles, rolling stock and aircraft in which a majority or controlling interest is held by a person or undertaking in or operating from the [FRY] shall be impounded by the competent authorities of the Member States.

Expenses of impounding vessels, freight vehicles, rolling stock and aircraft may be charged to their owners.”

Article 9

“All vessels, freight vehicles, rolling stock, aircraft and cargoes suspected of having violated, or being in violation of Regulation (EEC) no. 1432/92 or this Regulation shall be detained by the competent authorities of the Member States pending investigations.”

Article 10

“Each Member State shall determine the sanctions to be imposed where the provisions of this [Regulation] are infringed.

Where it has been ascertained that vessels, freight vehicles, rolling stock, aircraft and cargoes have violated this Regulation, they may be forfeited to the Member State whose competent authorities have impounded or detained them.”

66. On 4 June 1993 the Irish Minister for Tourism and Tradeadopted the European Communities (Prohibition of Trade with the Federal Republic of Yugoslavia (Serbia and Montenegro)) Regulations 1993 (Statutory Instrument no. 144 of 1993), the relevant part of which provided as follows:

“3. A person shall not contravene a provision of [Regulation (EEC) no. 990/93].

4. A person who, on or after the 4th day of June, 1993, contravenes Regulation 3 of these Regulations shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,000 or to imprisonment for a term not exceeding 12 months or to both.

5. The Minister for Transport, Energy and Communications shall be the competent authority for the purpose of Articles 8 and 9 of [Regulation (EEC) no. 990/93] except in so far as the said Article 8 relates to vessels and the said Article 9 relates to cargoes.

6. (1) The powers conferred on the Minister for Transport, Energy and Communications by Articles 8 and 9 of [Regulation (EEC) no. 990/93] as the competent authority for the purposes of those Articles may be exercised by –

(a) members of the Garda Síochána,

(b) officers of customs and excise,

(d) Officers of the Minister for Transport ... duly authorised in writing by the Minister for Transport, Energy and Communications in that behalf.

...

(3) A person shall not obstruct or interfere with a person specified in sub-paragraph (a), (b) or (c) of paragraph (1) of this Regulation, or a person authorised as aforesaid, in the exercise by him of any power aforesaid.

(4) A person who, on or after the 4th day of June, 1993, contravenes sub-paragraph (3) of this Regulation shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £500 or to imprisonment for a term not exceeding 3 months or to both.

7. Where an offence under Regulation 4 or 6 of these Regulations is committed by a body corporate and is proved to have been so committed with the consent, connivance or approval of or to have been attributable to any neglect on the part of any person, being a director, manager, secretary or other officer of the body corporate or a person who was purporting to act in any such capacity, that person as well as the body corporate, shall be guilty of an offence and shall be liable to be proceeded against and punished as if he were guilty of the first-mentioned offence.”

B. Lifting the sanctions regime

67. UNSC Resolution 943 (1994), adopted on 23 September 1994, provided, inter alia, as follows:

“(i) the restrictions imposed by paragraph 7 of Resolution 757 (1992), paragraph 24 of Resolution 820 (1993) with regard to aircraft which are not impounded at the date of adoption of this Resolution, ...

shall be suspended for an initial period of 100 days from the day following the receipt ... of a report from the Secretary-General ...”

This resolution was implemented by Regulation (EC) no. 2472/94 of 10 October 1994, Article 5 of which suspended the operation of Article 8 of Regulation (EEC) no. 990/93 “with regard to aircraft ... which had not been impounded at 23 September 1994”.

68. The suspension of UNSC Resolution 820 (1993) was extended further by periods of 100 days on numerous occasions in 1995, and these resolutions were each implemented by Community regulations.

69. UNSC Resolution 820 (1993) was suspended indefinitely in 1995 by Resolution 1022 (1995). It was implemented in the Community by Regulation (EC) no. 2815/95 of 4 December 1995 which provided, inter alia, as follows:

“1. [Regulation (EEC) no. 990/93] is hereby suspended with regard to the [FRY].

2. As long as [Regulation (EEC) no. 990/93] remains suspended, all assets previously impounded pursuant to that Regulation may be released by Member States in accordance with the law, provided that any such assets that are subject to any claims, liens, judgments, or encumbrances, or which are the assets of any person, partnership, corporation or other entity found or deemed to be insolvent under the law or the accounting principles prevailing in the relevant Member State, shall remain impounded until released in accordance with the applicable law.”

70. UNSC Resolution 820 (1993) was later definitively suspended. That suspension was implemented by Regulation (EC) no. 462/96 of 27 February 1996, the relevant part of which provided as follows:

“As long as the Regulations [inter alia, Regulation (EEC) no. 990/93] remain suspended, all funds and assets previously frozen or impounded pursuant to those Regulations may be released by Member States in accordance with law, provided that any such funds or assets that are subject to any claims, liens, judgments or encumbrances, ... shall remain frozen or impounded until released in accordance with the applicable law.”

71. On 9 December 1996 Regulation (EC) no. 2382/96 repealed, inter alia, Regulation (EEC) no. 990/93. On 2 March 2000 the European Communities (Revocation of Trade Sanctions concerning the Federal Republic of Yugoslavia (Serbia and Montenegro) and Certain Areas of the Republics of Croatia and Bosnia-Herzegovina) Regulations 2000 (Statutory Instrument no. 60 of 2000) repealed Statutory Instrument no. 144 of 1993.

III. RELEVANT COMMUNITY LAW AND PRACTICE

72. This judgment is concerned with the provisions of Community law of the “first pillar” of the European Union.

A. Fundamental rights: case-law of the ECJ[1]

73. While the founding treaties of the European Communities did not contain express provisions for the protection of human rights, the ECJ held as early as 1969 that fundamental rights were enshrined in the general principles of Community law protected by the ECJ[2]. By the early 1970s the ECJ had confirmed that, in protecting such rights, it was inspired by the constitutional traditions of the member States[3] and by the guidelines supplied by international human rights treaties on which the member States had collaborated or to which they were signatories[4]. The Convention's provisions were first explicitly referred to in 1975[5], and by 1979 its special significance amongst international treaties on the protection of human rights had been recognised by the ECJ[6]. Thereafter the ECJ began to refer extensively to Convention provisions (sometimes where the Community legislation under its consideration had referred to the Convention)[7] and latterly to this Court's jurisprudence[8], the more recent ECJ judgments not prefacing such Convention references with an explanation of their relevance to Community law.

74. In a judgment of 1991, the ECJ was able to describe the role of the Convention in Community law in the following terms[9]:

“41. ... as the Court has consistently held, fundamental rights form an integral part of the general principles of law, the observance of which it ensures. For that purpose the Court draws inspiration from the constitutional traditions common to the Member States and from the guidelines supplied by international treaties for the protection of human rights on which the Member States have collaborated or of which they are signatories ... The [Convention] has special significance in that respect ... It follows that ... the Community cannot accept measures which are incompatible with observance of the human rights thus recognised and guaranteed.

42. As the Court has held ... it has no power to examine the compatibility with the [Convention] of national rules which do not fall within the scope of Community law. On the other hand, where such rules do fall within the scope of Community law, and reference is made to the Court for a preliminary ruling, it must provide all the criteria of interpretation needed by the national court to determine whether those rules are compatible with the fundamental rights the observance of which the Court ensures and which derive in particular from the [Convention].”

75. This statement has often been repeated by the ECJ, as, notably, in its opinion on accession by the Community to the Convention[10], in which it opined, in particular, that respect for human rights was “a condition of the lawfulness of Community acts”.

76. In Kondova[11], relied on by the applicant company, the ECJ ruled on the refusal by the United Kingdom of an establishment request of a Bulgarian national on the basis of a provision in an association agreement between the European Community and Bulgaria:

“... Moreover, such measures [of the British immigration authorities] must be adopted without prejudice to the obligation to respect that national's fundamental rights, such as the right to respect for his family life and the right to respect for his property, which follow, for the Member State concerned, from the European Convention for the Protection of Human Rights and Fundamental Freedoms of 4 November 1950 or from other international instruments to which that State may have acceded.”

B. Relevant treaty provisions[12]

1. Concerning fundamental rights

77. The case-law developments noted above were reflected in certain treaty amendments. In the preamble to the Single European Act of 1986, the Contracting Parties expressed their determination

“to work together to promote democracy on the basis of the fundamental rights recognised in the constitutions and laws of the Member States, in the Convention for the Protection of Human Rights and Fundamental Freedoms ...”.

78. Article 6 (formerly Article F) of the Treaty on European Union of 1992 reads as follows:

“1. The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States.

2. The Union shall respect fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms signed in Rome on 4 November 1950 and as they result from the constitutional traditions common to the Member States, as general principles of Community law.

3. The Union shall respect the national identities of its Member States.

4. The Union shall provide itself with the means necessary to attain its objectives and carry through its policies.”

79. The Treaty of Amsterdam of 1997 required the ECJ, in so far as it had jurisdiction, to apply human rights standards to acts of Community institutions and gave the European Union the power to act against a member State that had seriously and persistently violated the principles of Article 6(1) of the Treaty on European Union, cited above.

80. The Charter of Fundamental Rights of the European Union, proclaimed in Nice on 7 December 2000 (not fully binding),states in its preamble that it

“reaffirms, with due regard for the powers and tasks of the Community and the Union and the principle of subsidiarity, the rights as they result, in particular, from the constitutional traditions and international obligations common to the Member States, the Treaty on European Union, the Community Treaties, the European Convention for the Protection of Human Rights and Fundamental Freedoms, the Social Charters adopted by the Community and by the Council of Europe and the case-law of the Court of Justice of the European Communities and of the European Court of Human Rights”.

Article 52 § 3 of the Charter provides:

“In so far as this Charter contains rights which correspond to rights guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms, the meaning and scope of those rights shall be the same as those laid down by the said Convention. This provision shall not prevent Union law providing more extensive protection.”

81. The Treaty establishing a Constitution for Europe, signed on 29 October 2004 (not in force),provides in its Article I-9 entitled “Fundamental Rights”:

“1. The Union shall recognise the rights, freedoms and principles set out in the Charter of Fundamental Rights which constitutes Part II.

2. The Union shall accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms. Such accession shall not affect the Union's competences as defined in the Constitution.

3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union's law.”

The Charter of Fundamental Rights cited above has been incorporated as Part II of this constitutional treaty.

2. Other relevant provisions of the EC Treaty

82. Article 5 (now Article 10) provides:

“Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community's tasks.

They shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.”

83. The relevant part of Article 189 (now Article 249) reads as follows:

“A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States. ...”

The description of a regulation as being “binding in its entirety” and “directly applicable” in all member States means that it takeseffect[13] in the internal legal orders of member States without the need for domestic implementation.

84. Article 234 (now Article 307) reads as follows:

“The rights and obligations arising from agreements concluded before 1 January 1958 or, for acceding States, before the date of their accession, between one or more Member States on the one hand, and one or more third countries on the other, shall not be affected by the provisions of this Treaty.

To the extent that such agreements are not compatible with this Treaty, the Member State or States concerned shall take all appropriate steps to eliminate the incompatibilities established. Member States shall, where necessary, assist each other to this end and shall, where appropriate, adopt a common attitude.

In applying the agreements referred to in the first paragraph, Member States shall take into account the fact that the advantages accorded under this Treaty by each Member State form an integral part of the establishment of the Community and are thereby inseparably linked with the creation of common institutions, the conferring of powers upon them and the granting of the same advantages by all the other Member States.”

C. The European Community control mechanisms

85. As regards the control exercised by the ECJ and national courts, the ECJ has stated as follows:

“39. Individuals are ... entitled to effective judicial protection of the rights they derive from the Community legal order, and the right to such protection is one of the general principles of law stemming from the constitutional traditions common to the Member States. That right has also been enshrined in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms ...

40. By Article 173 and Article 184 (now Article 241 EC), on the one hand, and by Article 177, on the other, the Treaty has established a complete system of legal remedies and procedures designed to ensure judicial review of the legality of acts of the institutions, and has entrusted such review to the Community Courts ... Under that system, where natural or legal persons cannot, by reason of the conditions for admissibility laid down in the fourth paragraph of Article 173 of the Treaty, directly challenge Community measures of general application, they are able, depending on the case, either indirectly to plead the invalidity of such acts before the Community Courts under Article 184 of the Treaty or to do so before the national courts and ask them, since they have no jurisdiction themselves to declare those measures invalid ..., to make a reference to the Court of Justice for a preliminary ruling on validity.

41. Thus it is for the Member States to establish a system of legal remedies and procedures which ensure respect for the right to effective judicial protection.

42. In that context, in accordance with the principle of sincere cooperation laid down in Article 5 of the Treaty, national courts are required, so far as possible, to interpret and apply national procedural rules governing the exercise of rights of action in a way that enables natural and legal persons to challenge before the courts the legality of any decision or other national measure relative to the application to them of a Community act of general application, by pleading the invalidity of such an act.”[14]

1. Direct actions before the ECJ

(a) Actions against Community institutions

86. Article 173 (now Article 230) provides member States, the European Parliament, the Council and the Commission with a right to apply to the ECJ for judicial review of a Community act (“annulment action”). Applications from the Court of Auditors and the European Central Bank are more restricted and, while subject to even greater restrictions, an individual (a natural or legal person) can also challenge “a decision addressed to that person or ... a decision which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former” (Article 173(4), now Article 230(4)).

87. According to Article 175 (now Article 232) member States and the Community institutions can also call, among others, the Council, the Commission and the European Parliament to account before the ECJ for a failure to perform their Treaty obligations. Article 184 (now Article 241) allows a plea of illegality of a regulation (adopted jointly by the European Parliament and the Council, by the Council, by the Commission or by the European Central Bank) to be made during proceedings already pending before the ECJ on the basis of another Article: a successful challenge will result in the ECJ declaring its inapplicability inter partes, but not the annulment of the relevant provision.

88. Having legal personality of its own, the European Community can be sued for damages in tort, described as its non-contractual liability. Its institutions will be considered liable for wrongful (illegal or invalid) acts or omissions by the institution (fautes de service) or its servants (fautes personnelles) which have caused damage to the claimant (Articles 178 and 215, now Articles 235 and 288). Unlike actions under Articles 173, 175 and 184 (now Articles 230, 232 and 241), and subject to the various inherent limitations imposed by the elements of the action to be established, there are no personal or locus standi limitations on the right to bring such an action. It can therefore provide an independent cause of action[15] before the ECJ to review the legality of an act or failure to act to those (including individuals) who do not have locus standi under Articles 173 or 175 but who have suffered damage.

(b) Actions against member States

89. Under Article 169 (now Article 226) and Article 170 (now Article 227), both the Commission (in fulfilment of its role as “guardian of the Treaties”) and a member State are accorded, notably, the right to take proceedings against a member State considered to have failed to fulfil its Treaty obligations. If the ECJ finds that a member State has so failed, the State shall be required to take the necessary measures to comply with the judgment of the ECJ (Article 171, now Article 228).The Commission can also take proceedings against a member State in other specific areas of Community regulation (such as State aids – Article 93, now Article 88).

90. There is no provision in the EC Treaty for a direct action before the ECJ against individuals. Individuals may, however, be fined under certain provisions of Community law; such fines may, in turn, be challenged before the ECJ.

2. Indirect actions before the national courts

91. Where individuals seek to assert their Community rights before national courts or tribunals, they may do so in the context of any proceedings of national law, public or private, in which Community rights are relevant, in pursuit of any remedy, final or interim, under national law.

(a) Direct effects

92. The “direct effect” of a provision of Community law means that it confers upon individuals rights and obligations they can rely on before the national courts. A provision with direct effect must not only be applied by the domestic courts, but it will take precedence over conflicting domestic law pursuant to the principle of supremacy of Community law[16]. The conditions for acquiring direct effect are that the provision

“contains a clear and unconditional prohibition which is not a positive but a negative obligation. This obligation, moreover, is not qualified by any reservation on the part of the States which would make its implementation conditional upon a positive legislative measure enacted under national law. The very nature of this prohibition makes it ideally adapted to produce direct effects in the legal relationship between States and their subjects” [17].

93. Certain EC Treaty provis

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