Thank you, Professor Hill, for that introduction. Thanks as well to Professor Armstrong and the Centre for European Legal Studies, and to Shearman & Sterling, for giving me the opportunity to deliver this year’s Mackenzie-Stuart lecture. I am proud to be the first U.S. government official so honored.
I arrived in Brussels nearly one year ago to take up my duties as United States Ambassador to the European Union. It was a homecoming to the city where years ago I had begun my career, first in the European Commission and subsequently as a competition and trade lawyer. The familiar topics of competition and trade law remain central to U.S.-EU relations, of course.
But today some of the most important bilateral issues between Washington and Brussels arise in areas that scarcely existed then. One subject of increasing importance in our trans-Atlantic dialogue is the coordination of sanctions. European sanctions policy today is made collaboratively in Brussels, rather than in individual European capitals. This evolution has given rise to intensive diplomatic and legal engagement between Washington and EU institutions. The second new topic is digital law and policy, reflecting the information revolution and concerns about personal privacy and sovereignty. I would like to offer a few observations on both.
The U.S. Government coordinates sanctions with the European Union in many areas – including counter-terrorism, Iran and Russia. The EU’s ability to coordinate and implement sanctions policy quickly and effectively, despite widely disparate national interests, is one of its signal foreign policy achievements of recent years. And the ability of the U.S. and the EU to coordinate sanctions has also been a notable example of trans-Atlantic partnership. We are stronger and more effective when we send uniform messages to offending governments, companies and individuals; by acting in parallel we reduce possibilities for sanctioned entities to evade the bite of restrictive measures.
But at the same time the U.S. Government is increasingly concerned about weaknesses in the European sanctions mechanism, particularly when sanctioned individuals or companies challenge the correctness of their designations before the European Court of Justice. There is nothing inappropriate about such challenges. Indeed, due process – the right to a defense– is ingrained in legal systems on both sides of the Atlantic. The U.S. government has faced legal challenges like these in our own federal courts. Now it is the turn of the European Union to face similar searching inquiry from the judges of the European Court of Justice in Luxembourg.
A recent case involved an alleged terrorist financier who challenged the EU’s implementation of counter-terrorism sanctions that had been agreed by the United Nations Security Council. In the Kadi case the Court of Justice surprised the international law community by holding that the EU’s implementation of a UN Security Council resolution was subject to European fundamental rights law. In other words, EU fundamental rights norms effectively were to be considered legally superior to primary international law.
Since that judgment, further lawsuits have uncovered a variety of structural and procedural weaknesses in the way the EU develops and administers sanctions measures. The EU’s Iran sanctions, for instance, concentrate on penalizing entities involved in nuclear proliferation in that country. Ferreting out the facts to justify such conduct-based listings is difficult: it requires teams of analysts working together across national borders, often in very time-sensitive circumstances. The U.S. has learned this lesson the hard way: in the 1990’s, when our government first started using economic sanctions as a primary foreign policy tool, we lost some cases before U.S. federal courts because we hadn’t done our factual homework properly. Today we have a sizeable staff in our State and Treasury Departments devoted to assembling detailed evidence that will stand up in court. As a result, very few sanctions listings are successfully challenged in the United States.
The European Union has been slower to devote the additional resources needed to develop factual records that will withstand rigorous judicial scrutiny. It has paid the price, most recently in the extraordinary decision by the Court in December of last year to annul the EU’s inclusion of Hamas in a list of terrorist groups. According to the Court, the EU had based its periodic relisting on “factual imputations derived from the press and the internet” rather than on its own analysis of the group’s actions. Some key member states, such as the UK, fully appreciate the problem; they have begun lending more experts to the European External Action Service and are providing it with better unclassified documentation. The United States is also lending a hand by providing information and research support to the EEAS.
But satisfying the need for evidentiary support can sometimes be challenging, especially when countries act in a clandestine manner to pursue terrorism and illicit proliferation, for example. In these instances relevant evidence can only come from intelligence sources. The General Court of the European Union, which hears sanctions challenges in the first instance, currently has no authority to receive or handle classified information. In the United States, on the other hand, federal judges with security vetting are able to review both unclassified and classified portions of an administrative record.
Following several recent annulments by the Court of EU designations of Iranian entities, the EU has recognized the need for a change in the court’s rules to enable examination of classified information. Although the divergence in member state legal traditions on the use of classified information in judicial proceedings has complicated the development of new common rules, approval appears to be within reach. The United States is encouraged to see that the EU is strengthening its capability, administratively and judicially, to promulgate and sustain sanctions designations. This is not only of critical importance in our common efforts to combat terrorism and apply pressure on Iran, but also in our common efforts to apply pressure on Russia to change its aggressive policies toward Ukraine.