Written by Victor Comras
There is an interesting new twist to the Security Council proscription against providing financial assets to or for the benefit of designated Al Qaeda and Taliban members. The European Court of Justice has just overturned a long held UK government practice of withholding payment of social security and other entitlements to the spouses of individuals designated by the UN Al Qaeda and Taliban Sanctions Committee. Such payments were withheld on the basis that Security Council resolutions required all countries to:
"Freeze without delay the funds and other financial assets or economic resources of these individuals, groups, undertakings and entities, including funds derived from property owned or controlled directly or indirectly, by them or by persons acting on their behalf or at their direction, and ensure that neither these nor any other funds, financial assets or economic resources are made available, directly or indirectly for such persons' benefit, or by their nationals or by persons within their territory"
The ruling came down April 29th in the case of M and Others v Her Majesty's Treasury (Case number C 340/08). The case had been referred to the European Court from the UK House of Lords which was troubled by this UK government rule.
The European Union had adopted a common position in 2002 giving force to the UN freeze measures. It left it to member countries to work out the details and to regulate implementation in accordance with domestic laws. The UK authorities decided that, in order to ensure that such social payments payments would not accrue to the benefit of designated entities, special measures should be in place to regulate such social payments. The regulations issued required that such benefit payments could be paid to terrorist spouses only upon their application for a license granting such payments, and then only to a bank account in the spouses name. Payments would be made in limited amounts calculated to cover each member of the household except the designated individual. "M" who apparently is the spouse of a designated individual challenged the application of these measures before the House of Lords and the Lords referred the case to the European Court.
Attorneys for the UK Treasury argued that the prohibition laid down by the Security Council resolution and the EU directive should apply whenever a designated individual might well also benefit from the funds, as was most likely the case with payments made to persons in the same household. Such a situation, they maintained, required extraordinary precautions. However, the court took a much narrower view. The court indicated that the essential purpose and object of the asset freeze was to combat international terrorism, and to cut off terrorists from financial resources that would be used for terrorist activities. Yet, it should be presumed, the court reasoned, that the social payments involved here would be used only for household expenses. If and when such payments were turned over to the designated spouse for terrorist purposes, the court reasoned, the UK authorities could then hold the spouse accountable other UK laws and penalties.
While this decision seems quite mundane, its effect is to narrow the scope of the all important "for and on behalf" restrictions contained in the Security Council resolutions. It may also presages a further liberal tilting of the court in what will soon be another round of the Kadi case which is still weaving its way back up to the European Union's highest court.