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Court upholds EU sanctions against Russian banks

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Court upholds EU sanctions against Russian banks

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(LUXEMBOURG) - The General Court of the EU upheld Thursday restrictive measures taken by the EU Council against a number of Russian banks and oil and gas companies in connection with the crisis in Ukraine.

In response to Russia's actions to destabilise the situation in Ukraine, the EU has since 2014 adopted sanctions against a number of Russian banks and undertakings which specialise in the oil and gas sector.

These measures impose restrictions on certain financial transactions and on the export of certain sensitive goods and technologies, restrict the access of certain Russian entities to the capital market and prohibit the provision of services required for certain oil transactions.

Their objective is to increase the cost of actions taken by Russia to undermine the sovereignty of Ukraine. A number of undertakings and banks affected by those measures brought actions for their annulment before the General Court of the European Union.

In its judgments, the General Court of the European Court of Justice finds, first of all, that it has jurisdiction to review the legality of the contested acts and that the actions are admissible, as the entities which brought these actions are directly and individually concerned by the measures in question or, in the case of the export restrictions, are directly concerned by acts that do not entail implementing measures.

As to the substance, the Court rules in particular that the reasons given by the Council for the contested acts are sufficient and that the statements of reasons enabled the entities concerned to ascertain the reasons for the restrictive measures affecting them and to challenge them. The Court also points out that the stated objective of the contested acts is to increase the costs of Russia's actions to undermine Ukraine's territorial integrity, sovereignty and independence, and to promote a peaceful settlement of the crisis. According to the Court, such an objective is consistent with the objective of maintaining peace and international security, in accordance with the objectives of the European Union's external action set out in Article 21 TEU. The Court also states that the Council can impose, if it deems it appropriate, restrictions which target undertakings active in specific sectors of the Russian economy in which products, technologies or services imported from the European Union are particularly significant.

The Court goes on to note that the question whether the restrictive measures at issue are compatible with the EU-Russia Partnership Agreement has already been settled by the Court of Justice in its Rosneft judgment of 28 March 2017. The Court of Justice considered that the adoption of the restrictive measures was necessary for the protection of the essential security interests of the European Union and for maintaining peace and international security, and that an examination of the acts at issue in the light of the EU-Russia Partnership Agreement had disclosed nothing that might affect the validity of those measures. As to the argument alleging breach of the principle of equal treatment and non-arbitrariness, the Court of Justice found that the choice of targeting undertakings or sectors that are reliant on cutting-edge technology or expertise mainly available in the European Union is consistent with the objective of ensuring the effectiveness of the restrictive measures and ensuring that the effect of those measures is not offset by the importation, into Russia, of substitute products, technologies or services from third countries.

The General Court further points out that, in the context of the principle of proportionality, the Court of Justice held that the EU legislature had to be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. In accordance with the ruling of the Court of Justice, there is a reasonable relationship between the content of the contested acts and their objective. The General Court notes that the importance of the objectives pursued is such as to justify the possibility that, for certain operators, which are in no way responsible for the situation which led to the adoption of the sanctions, the consequences may be negative, even significantly so. Therefore, interference with the freedom to conduct a business and the right to property of the entities concerned cannot be considered to be disproportionate.

Judgments in Cases T-715/14 Rosneft and Others v Council, T-732/14 Sberbank of Russia v Council, T-734/14 VTB Bank v Council, T-735/14 Gazprom Neft v Council, T-737/14 Vnesheconombank v Council, T-739/14 PSC Prominvestbank v Council, T-798/14 DenizBank v Council, and T-799/14 Gazprom Neft v Council


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