–

Bank Sepah, by L. Vidal and J.-M. Thouvenin, avocats,

–

Overseas Financial Limited and Oaktree Finance Limited, by P. Spinosi, avocat,

–

the French Government, by J.-L. Carré, E. de Moustier and A. Daniel, acting as Agents,

–

the European Commission, by A. Bouquet and J. Roberti di Sarsina, acting as Agents,

1

This request for a preliminary ruling concerns the interpretation of Article 1(h) and (j) and Article 7(1) of Council Regulation (EC) No 423/2007 of 19 April 2007 concerning restrictive measures against Iran (OJ 2007 L 103, p. 1), of Article 1(h) and (i) and Article 16(1) of Council Regulation (EU) No 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation No 423/2007 (OJ 2010 L 281, p. 1), and of Article 1(j) and (k) and Article 23(1) of Council Regulation (EU) No 267/2012 of 23 March 2012 concerning restrictive measures against Iran and repealing Regulation No 961/2010 (OJ 2012 L 88, p. 1).

2

The request has been made in proceedings between Bank Sepah, a company established in Tehran (Iran), and Overseas Financial Limited and Oaktree Finance Limited, established in the State of Delaware (United States), concerning the possibility of applying, without prior authorisation from the competent national authority, protective measures in respect of funds and economic resources that have been frozen in connection with restrictive measures against the Islamic Republic of Iran.

3

In order to apply pressure on the Islamic Republic of Iran to end its proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems, the United Nations Security Council (‘the Security Council’) adopted, on 23 December 2006, on the basis of Article 41 of Chapter VII of the Charter of the United Nations, Resolution 1737 (2006), which institutes a certain number of restrictive measures against that State.

4

Under paragraphs 2 and 12 of that resolution, the Security Council:

‘2. Decides, in this context, that Iran shall without further delay suspend the following proliferation sensitive nuclear activities …

…

12. Decides that all States shall freeze the funds, other financial assets and economic resources which are on their territories at the date of adoption of this resolution or at any time thereafter, that are owned or controlled by the persons or entities designated in the Annex, as well as those of additional persons or entities designated by the Security Council or by the [Sanctions] Committee as being engaged in, directly associated with or providing support for Iran’s proliferation sensitive nuclear activities or the development of nuclear weapon delivery systems, or by persons or entities acting on their behalf or at their direction, or by entities owned or controlled by them, including through illicit means …, and decides further that all States shall ensure that any funds, financial assets or economic resources are prevented from being made available by their nationals or by any persons or entities within their territories, to or for the benefit of these persons and entities.’

5

By Resolution 1747 (2007) of 24 March 2007, the Security Council included Bank Sepah on the list of entities involved in Iran’s nuclear or ballistic missile programme, whose assets were to be frozen.

6

In order to give effect to Resolution 1737 (2006), the Council of the European Union adopted Common Position 2007/140/CFSP of 27 February 2007 concerning restrictive measures against Iran (OJ 2007 L 61, p. 49).

7

Recitals 1 and 9 of that common position stated:

…

8

Article 5(1) of that common position stated:

‘All funds and economic resources which belong to, are owned, held or controlled, directly or indirectly, by:

…

shall be frozen.’

9

On the basis of Common Position 2007/140, the Council adopted Regulation No 423/2007, which entered into force on 20 April 2007.

10

According to recital 3 of that regulation:

‘[The restrictive] measures [provided for by Common Position 2007/140] fall within the scope of the Treaty establishing the European Community and, therefore, notably with a view to ensuring their uniform application by economic operators in all Member States, Community legislation is necessary in order to implement them as far as the Community is concerned.’

11

Article 1(h) and (j) of that regulation provided:

‘For the purposes of this Regulation only, the following definitions shall apply:

…

…

12

Article 7 of the same regulation provided:

‘1.   All funds and economic resources belonging to, owned, held or controlled by the persons, entities and bodies listed in Annex IV shall be frozen. Annex IV shall include the persons, entities and bodies designated by the Security Council … or by the Sanctions Committee in accordance with paragraph 12 of … Resolution 1737 (2006) …

…

3.   No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of the natural or legal persons, entities or bodies listed in Annexes IV and V.

4.   The participation, knowingly and intentionally, in activities the object or effect of which is, directly or indirectly, to circumvent the measures referred to in paragraphs 1, 2 and 3 shall be prohibited.’

13

According to Article 8 of Regulation No 423/2007:

‘By way of derogation from Article 7, the competent authorities of the Member States, as indicated in the websites listed in Annex III, may authorise the release of certain frozen funds or economic resources, if the following conditions are met:

…’

14

Article 9 of that regulation provided:

‘By way of derogation from Article 7 and provided payment by a person, entity or body listed in Annex IV or V is due under a contract, agreement or obligation that was concluded by, or arose for the person, entity or body concerned, before the date on which that person, entity or body has been designated by the Sanctions Committee, the Security Council or by the Council, the competent authorities of the Member States, as indicated in the websites listed in Annex III, may authorise, under such conditions as they deem appropriate, the release of certain frozen funds or economic resources, if the following conditions are met:

15

Article 10 of that regulation provided:

‘1.   By way of derogation from Article 7, the competent authorities of the Member States, as indicated in the websites listed in Annex III, may authorise, under such conditions as they deem appropriate, the release of certain frozen funds or economic resources, or the making available of certain funds or economic resources, if the following conditions are met:

2.   By way of derogation from Article 7, the competent authorities of the Member States, as indicated in the websites listed in Annex III, may authorise the release of certain frozen funds or economic resources or the making available of certain funds or economic resources, after having determined that the funds or economic resources are necessary for extraordinary expenses, provided that

…’

16

Following the adoption of Resolution 1747 (2007), the Council adopted Common Position 2007/246/CFSP of 23 April 2007 amending Common Position 2007/140 (OJ 2007 L 106, p. 67).

17

The Commission adopted Regulation (EC) No 441/2007 of 20 April 2007 amending Regulation No 423/2007 (OJ 2007 L 104, p. 28). By Regulation No 441/2007, Bank Sepah was included in the list in Annex IV to Regulation No 423/2007.

18

On 25 October 2010, the Council adopted Regulation No 961/2010, by which Regulation No 423/2007 was repealed. Regulation No 961/2011 was replaced in turn by Regulation No 267/2012.

19

Article 1(h) and (i) and Article 16 of Regulation No 961/2010 and Article 1(j) and (k) and Article 23 of Regulation No 267/2012 are, in essence, identical to Article 1(h) and (j) and Article 7 of Regulation No 423/2007. Bank Sepah’s name was included in the lists in Annex VII to Regulation No 961/2010 and Annex VIII to Regulation No 267/2012.

20

Article L. 521‑1 of the code des procédures civiles d’exécution (Code of Civil Enforcement Proceedings) states:

‘A preventive attachment may relate to all the movable, tangible or intangible property belonging to the debtor. It renders those assets unavailable. …’

21

Article L. 522‑1 of that code provides:

‘A creditor who has obtained or holds an enforceable instrument establishing a fixed and enforceable claim may arrange for the sale of the assets that have been rendered unavailable up to the amount of his or her claim.’

22

Article L. 523‑1 of that code provides:

‘Where the attachment concerns a claim relating to a sum of money, the attachment order shall make that sum unavailable up to the amount authorised by the court or, where such authorisation is not necessary, up to the amount for which the attachment is made. The attachment shall produce the effects of a consignment provided for in Article 2350 of the Civil Code.’

23

Article L. 531‑1 of the Code of Civil Enforcement Proceedings provides:

‘A judicial lien may be issued as a preventive measure in respect of immovable property, business assets, shares, and transferable securities.’

24

Article L. 531‑2 of that code is worded as follows:

‘Property subject to a judicial lien may still be disposed of. The price thereof shall be paid and distributed in accordance with the conditions laid down by a decree of the Conseil d’État [(Council of State)].

However, where there is a sale of transferable securities recorded in an account which is held and managed by an authorised intermediary, the price may be used to acquire other securities which are then subrogated to the securities that have been sold.’

25

Article 2333 of the code civil (Civil Code) provides:

‘A pledge is an agreement under which the pledgor grants a creditor the right to be paid in preference to his or her other creditors out of a tangible movable asset or a set of tangible movable assets, whether present or future.

…’

26

Article 2350 of that code provides:

‘The deposit or consignment of sums, effects or securities, ordered by a court as a guarantee or as a preventive measure, entails a special appropriation and a right of preference within the meaning of Article 2333.’

27

By judgment of 26 April 2007, the cour d’appel de Paris (Court of Appeal, Paris, France) ordered Bank Sepah to pay Overseas Financial and Oaktree Finance the sums of 2500000 United States dollars (USD) (approximately EUR 1800000) and USD 1500000 (approximately EUR 1100000) respectively, together with interest at the statutory rate from that date.

28

After obtaining partial payments made between 2007 and 2011, Overseas Financial and Oaktree Finance on 2 December 2011 requested that the ministre chargé de l’Économie (Minister for the Economy, France) authorise the release of the outstanding amount pursuant to Article 8 of Regulation No 423/2007. Overseas Financial and Oaktree Finance brought an action for annulment against the implicit rejection of their request before the tribunal administratif de Paris (Administrative Court, Paris, France). The latter court dismissed that action by judgment of 21 October 2013.

29

On 17 May 2016, Overseas Financial and Oaktree Finance issued formal notices of attachment and sale against Bank Sepah before attaching, on 5 July 2016, receivables, shareholder rights and transferable securities held by a French bank. By judgment of 9 January 2017, the enforcement court of the tribunal de grande instance de Paris (Regional Court, Paris, France) confirmed those attachments and their amount, including the interest provided for by the judgment of the cour d’appel de Paris (Court of Appeal, Paris) of 26 April 2007. While Bank Sepah considered that it was required to pay the principal amounts ordered against it, it was of the view, however, that it was not liable for the interest and it therefore contested the enforcement measures before that enforcement court. It inter alia argued that it could not be held liable for interest, taking the view that it had been prevented from paying its debt by a case of force majeure arising from the freezing of its assets by Regulation No 423/2007, which had the effect of suspending the running of that interest.

30

That line of argument having been rejected by the enforcement court, Bank Sepah lodged an appeal. By judgment of 8 March 2018, the cour d’appel de Paris (Court of Appeal, Paris) dismissed that appeal on the ground that the temporary unavailability of Bank Sepah’s funds and economic resources had not affected the running of interest.

31

In addition, that court noted, first, that a five-year limitation period applied to the circumstances of the case and, second, that nothing precluded Overseas Financial and Oaktree Finance from initiating enforcement steps as a precautionary measure, which could have interrupted that limitation. Such measures not having been taken before the notices for payment of 17 May 2016, the interest which Overseas Financial and Oaktree Finance could claim therefore had to be limited to the interest that ran from 17 May 2011, namely five years before those notices.

32

Both Bank Sepah and Overseas Financial and Oaktree Finance lodged an appeal in cassation with the Cour de cassation (Court of Cassation, France). Overseas Financial and Oaktree Finance contest, in particular, the part of that appeal judgment which concerns the five-year limitation period in respect of the interest.

33

In that regard, the referring court considers that the resolution of the dispute in the main proceedings turns on whether Overseas Financial and Oaktree Finance could have interrupted the limitation period by applying a protective or enforcement measure in respect of Bank Sepah’s frozen assets.

34

That court notes that neither Regulation No 423/2007 nor Regulations No 961/2010 and No 267/2012 expressly prohibit a creditor from implementing a protective or enforcement measure. Having regard to the definitions of the terms ‘freezing of funds’ and ‘freezing of economic resources’ in those acts, it cannot be ruled out that measures not coming within any of the prohibitions covered by those definitions may be implemented in respect of frozen assets.

35

More specifically, the court raises the question of the possibility of taking measures, without prior authorisation, which do not have an earmarking effect, such as judicial liens and preventive attachments. First, a judicial lien, whether imposed in respect of immovable property, namely a mortgage, business assets or shares and transferable securities, namely collateral security, does not entail any obligation for the owner of the property or rights concerned to transfer them nor does it affect his or her right to choose the person to whom he or she transfers them. Its only effect is that, in the event of transfer of the assets or rights on which the lien was imposed, the claim held by the party which established the lien must be settled on a priority basis out of the transfer price. Second, with regard to preventive attachments, those likewise have no earmarking effect in so far as the attached assets, claims and rights remain in the debtor’s estate, producing the effects of a consignment resulting in a special appropriation and a right of preference under the Civil Code.

36

However, the referring court asks whether such measures do not entail a change in the ‘destination’ of the funds to which they apply, within the meaning of the definition of the term ‘freezing of funds’ or, more generally, whether they are not capable of enabling ‘the use of’ frozen funds and economic resources, within the meaning of Regulations Nos 423/2007, 961/2010 and 267/2012. Furthermore, it raises the question of whether it is relevant to the answer to that question that the grounds for the claim are unrelated to Iran’s nuclear and ballistic programme and pre-date the freezing of Bank Sepah’s assets.

37

In those circumstances, the Cour de Cassation (Court of Cassation, France) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

38

By its first question, the referring court asks, in essence, whether Article 7(1) of Regulation No 423/2007, read in conjunction with Article 1(h) and (j) of that regulation, Article 16(1) of Regulation No 961/2010, read in conjunction with Article 1(h) and (i) of that latter regulation, and Article 23(1) of Regulation No 267/2012, read in conjunction with Article 1(j) and (k) of that latter regulation, must be interpreted as precluding the implementation of protective measures, without prior authorisation from the competent national authority, in respect of funds or economic resources that have been frozen in the context of the common foreign and security policy, which establish a right to be paid on a priority basis in favour of the creditor concerned in relation to other creditors, even if such measures do not have the effect of removing assets from the debtor’s estate.

39

As a preliminary point, it should be noted that, since the provisions of Regulations Nos 961/2010 and 267/2012 cited in the preceding paragraph are, in essence, identical to Article 1(h) and (j) and Article 7(1) of Regulation No 423/2007, the considerations relating to the provisions of that latter regulation apply also to the provisions of the first two regulations.

40

It must be noted that Article 7(1) of Regulation No 423/2007 provides that all funds and economic resources belonging to, owned, held or controlled by the persons, entities and bodies listed in Annex IV to that regulation are to be frozen.

41

The concepts of ‘freezing of funds’ and ‘freezing of economic resources’ are defined in Article 1(h) and Article 1(j) of that regulation, respectively.

42

Article 1(h) of Regulation No 423/2007 defines the concept of ‘freezing of funds’ as ‘preventing any moving, transfer, alteration, use of, access to, or dealing with funds in any way that would result in any change in their volume, amount, location, ownership, possession, character, destination or other change that would enable the funds to be used, including portfolio management’.

43

It is apparent from that definition that the purpose of freezing funds is to limit as much as possible the transactions that may be carried out with frozen funds, as demonstrated by the large number of situations referred to and the use of the word ‘any’. As for the means of attaining the limitation of those transactions, those are also defined in broad terms by the EU legislature.

44

The foregoing considerations are also valid as regards the concept of ‘freezing of economic resources’. That concept is defined in Article 1(j) of Regulation No 423/2007 as ‘preventing the use of economic resources to obtain funds, goods or services in any way, including, but not limited to, by selling, hiring or mortgaging them’.

45

It follows that the concepts of ‘freezing of funds’ and ‘freezing of economic resources’ referred to in Regulation No 423/2007 are defined very broadly.

46

In terms of measures such as those at issue in the main proceedings, which establish a right to be paid on a priority basis over other creditors in favour of the creditor concerned, it must be stated, as the Advocate General observed in points 55 to 61 of his Opinion, that such measures have the effect of changing the destination of frozen funds and are liable to permit the use of frozen economic resources to obtain funds, goods or services.

47

It follows that such measures fall within the concepts of ‘freezing of funds’ and ‘freezing of economic resources’ within the meaning of Article 1(h) and (j) and Article 7(1) of Regulation No 423/2007.

48

The fact that such measures do not have the effect of removing assets from the debtor’s estate cannot call that conclusion into question.

49

First, the concept of ‘freezing of funds’ encompasses any use of funds which results, inter alia, in a change in the destination of those funds, even if such use of the funds does not have the effect of removing assets from the debtor’s estate.

50

Second, as regards the definition of the concept of ‘freezing of economic resources’, it refers, by way of example, to the use of economic resources by mortgaging them. Such a measure does not have the effect of removing assets from the debtor’s estate.

51

Consequently, it must be held that the very definitions of the concepts of ‘freezing of funds’ and ‘freezing of economic resources’ pertain, inter alia, to measures which do not have the effect of removing assets from the debtor’s estate.

52

That interpretation is supported by the objectives of Regulation No 423/2007, implementing restrictive measures against the Islamic Republic of Iran.

53

In that regard, it should be noted that, according to recital 3 thereof, Regulation No 423/2007 ensures the implementation of Common Position 2007/140, adopted to implement in the European Union the objectives of Resolution 1737 (2006), and thus seeks to implement that resolution. Accordingly, the wording and object of that resolution must be taken into account in order to interpret that regulation (judgment of 21 December 2011, Afrasiabi and Others, C‑72/11, EU:C:2011:874, paragraph 43).

54

It is apparent from the terms both of Resolution 1737 (2006), in particular paragraphs 2 and 12 thereof, and of Common Position 2007/140, in particular recitals 1 and 9 thereof, that the restrictive measures adopted against the Islamic Republic of Iran are intended to be preventive in that they seek to prevent a risk of proliferation sensitive nuclear activities in that State (see, to that effect, judgment of 21 December 2011, Afrasiabi and Others, C‑72/11, EU:C:2011:874, paragraph 44).

55

The measures of freezing funds and economic resources therefore aim to prevent the asset concerned by a freezing measure from being used to obtain funds, goods or services capable of contributing to nuclear proliferation in Iran, which Resolution 1737 (2006), Common Position 2007/140 and Regulation No 423/2007 seek to combat (see, to that effect, judgment of 21 December 2011, Afrasiabi and Others, C‑72/11, EU:C:2011:874, paragraph 46).

56

As the Advocate General observed in point 50 of his Opinion, in order to achieve those aims, it is not only legitimate, but also indispensable that the definitions of the concepts of ‘freezing of funds’ and ‘freezing of economic resources’ should be interpreted broadly because what is at stake is preventing any use of frozen assets that would enable the regulations at issue to be circumvented and the weaknesses in the system to be exploited.

57

In the light of the foregoing considerations, it must be held that the freezing of funds and economic resources provided for in Article 7(1) of Regulation No 423/2007, read in conjunction with Article 1(h) and (j) of that regulation, precludes the implementation of protective measures in respect of frozen assets which establish a right to be paid on a priority basis in favour of the creditor concerned in relation to other creditors, even if such measures do not have the effect of removing assets from the debtor’s estate.

58

It is still necessary to point out that, although Article 7 of Regulation No 423/2007 establishes the principle of the freezing of funds and economic resources of designated persons and entities also as regards those measures, a prior authorisation may nevertheless be issued by the competent national authority in accordance with the derogations provided for by Articles 8 to 10 of that regulation, provided that the conditions required by those provisions are satisfied.

59

In the light of the foregoing considerations, the answer to the first question is that Article 7(1) of Regulation No 423/2007, read in conjunction with Article 1(h) and (j) of that regulation, Article 16(1) of Regulation No 961/2010, read in conjunction with Article 1(h) and (i) of that latter regulation, and Article 23(1) of Regulation No 267/2012, read in conjunction with Article 1(j) and (k) of that latter regulation, must be interpreted as precluding the implementation of protective measures, without prior authorisation from the competent national authority, in respect of funds or economic resources that have been frozen in the context of the common foreign and security policy, which establish a right to be paid on a priority basis in favour of the creditor concerned in relation to other creditors, even if such measures do not have the effect of removing assets from the debtor’s estate.

60

By its second question, the referring court asks, in essence, whether it is relevant to the answer to the first question that the grounds for the claim for recovery from the person or entity whose funds or economic resources are frozen are unrelated to Iran’s nuclear and ballistic programme and pre-date Resolution 1737 (2006).

61

In that regard, it should be noted that the definitions of the concepts of ‘freezing of funds’ and ‘freezing of economic resources’ in Article 1(h) and (j) of Regulation No 423/2007 and the corresponding provisions of Regulations Nos 961/2010 and 267/2012 do not make any distinction as to the grounds for the claim for recovery from the person or entity subject to restrictive measures.

62

Nor, moreover, do Article 7(1) of Regulation No 423/2007 and the corresponding provisions of Regulations Nos 961/2010 and 267/2012 make any distinction as to the grounds for that claim in the case of the freezing of funds or economic resources.

63

As the Advocate General observed in point 68 of his Opinion, it is necessary in those circumstances to assess whether it is possible to implement a measure in respect of frozen assets solely in terms of the legal effects it brings about and not in terms of the grounds for the claim relating to that measure.

64

It must be added that Articles 8 to 10 of Regulation No 423/2007, which lay down and detail the restrictive conditions under which certain measures whose effect is contrary to the freezing of funds and economic resources may be authorised by the competent national authorities, do not refer to situations where the grounds for the claim for recovery are unrelated to Iran’s nuclear and ballistic programme and pre-date Resolution 1737 (2006).

65

Moreover, if the fact that the grounds for the claim are unrelated to that programme and pre-date Resolution 1737 (2006) had to be taken into account, it would be necessary to establish, on the facts of each case, the existence of such a circumstance, entailing the attendant risk that the freezing of funds and economic resources might be circumvented and presenting the Member States with difficult problems of implementation (see, by analogy, judgment of 11 October 2007, Möllendorf and Möllendorf-Niehuus, C‑117/06, EU:C:2007:596, paragraph 58).

66

Moreover, the Court has already held that the importance of the objectives pursued by an EU act establishing a system of restrictive measures is such as to justify negative consequences, even of a substantial nature, for some operators, including those who are in no way responsible for the situation which led to the adoption of the measures in question, but who find themselves affected, particularly as regards their property rights (see, by analogy, judgment of 3 September 2008, Kadi and Al Barakaat International Foundation v Council and Commission, C‑402/05 P and C‑415/05 P, EU:C:2008:461, paragraph 361 and the case-law cited).

67

In the light of the foregoing, the answer to the second question is that the fact that the grounds for the claim for recovery from the person or entity whose funds or economic resources are frozen are unrelated to Iran’s nuclear and ballistic programme and pre-date Resolution 1737 (2006) is not relevant to the answer to the first question.

68

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules: