By Justyna Pawlak
BRUSSELS (Reuters) - Europe's highest court ruled on Thursday that EU sanctions on Saudi businessman Yassin Kadi were unjustified and that governments had failed to provide enough evidence that he was involved in terrorist activities.
Kadi was put on a European Union blacklist after being included on a U.N. list of people suspected of supporting Osama bin Laden directly after the September 11, 2001, attacks on the United States. He contested the EU decision that year.
The United Nations annulled its restrictions on Kadi in 2012, but his long-standing case is closely watched by critics who have challenged the fairness of international sanctions and their targets' ability to defend themselves.
The Luxembourg-based EU Court of Justice dismissed appeals by the council of EU governments, Britain and the executive European Commission against earlier judgments to repeal sanctions.
"The European Union may not impose restrictive measures on Mr. Kadi," the court said in a statement.
The judgment echoes a handful of recent decisions by Europe's second-highest court, the General Court, to dismiss EU sanctions against some Iranian companies, imposed as part of Western efforts to pressure Tehran over its nuclear program.
Here as well, the court has argued that EU governments have failed to produce sufficient proof of the targeted companies links to Iran's atom work.
These decisions have raised alarm in Washington and Brussels over the West's ability to maintain economic restrictions on Iran and force it to scale back the program, which they suspect has a military aim. Tehran denies it wants to make bombs and says its nuclear work has civilian goals only.
Critics of the European courts say such decisions endanger the international community's efforts to conduct foreign policy and combat terrorism.
"The courts are making policy and they have overstepped their boundaries," said Emanuele Ottolenghi of the Foundation for the Defense of Democracies, a think-tank that has advised the U.S. government on sanctions against Iran.?
EU governments argue Europe's legal system rules would force them to make public evidence and information they say should remain confidential to protect intelligence efforts.
In the case of Kadi, the court ruling also says European governments cannot rely on the United Nations to choose sanctions targets without checking whether such decisions are justified, complicating EU policy.
"The question was if a person is put on the U.N. list, is it enough for (EU governments) to put the person on the EU list even if they are not in possession of any concrete evidence?" said one court official.
"It is not enough to make a reference to a U.N. decision. In all circumstances the council should be in possession of concrete evidence."
(Writing by Justyna Pawlak; Editing by Michael Roddy)