The European Court of Justice: EU sanctions against Russia over Ukrainian crisis are lawful

 

 

The ECJ ruled that the restrictive measures adopted by the Council against several Russian banks as well as oil and gas companies in the wake of the Ukrainian crisis were legally correct.

 

Since 31 July 2014, the Council has adopted restrictive measures against several Russian companies in response to Russia's actions to destabilise the situation in Ukraine. These measures restrict various monetary transactions, the export of certain sensitive goods and technology and the access of certain Russian organisations to the capital markets, and prohibit the provision of services necessary for certain oil transactions. The measures adopted by the Council are aimed at increasing the cost of acts undermining the sovereignty of Ukraine by Russia. Several companies and banks concerned turned to the ACJ for annulment of these measures.

 

The ECJ first stated that it had jurisdiction to review the legality of the contested acts and that the actions were admissible because the plaintiffs were directly and individually concerned by the measures in question or, as regards export restrictions, directly concerned by the acts which did not entail implementing measures.

 

On the merits, the ECJ held that the Council had duly reasoned the contested acts and that reasoning enabled the persons concerned to infer from it the grounds on which the restrictive measures directed against it were adopted and to challenge them.

 

In addition, the stated aim of the contested acts is to increase the cost of Russia's actions undermining Ukraine's territorial integrity, sovereignty and independence and to support a peaceful settlement of the crisis. This was in line with the objective of maintaining peace and international security in accordance with the Union's external action objectives set out in Article 21 of the TEU. The Council could also, if it considered it appropriate, impose restrictions on companies operating in certain sectors of the Russian economy where Union products, technologies or services are particularly important.

 

The question whether the restrictive measures in question were compatible with the EU-Russia Partnership Agreement had already been decided by the ECJ in its Rosneft judgment of 28 March 2017 (C-72/15). The ECJ had in fact established that the adoption of the restrictive measures was necessary to protect the essential security interests of the Union and to maintain peace and international security and that the examination of the disputed legal acts on the basis of the EU-Russia Partnership Agreement had revealed nothing that could affect the validity of these measures. As regards the plea alleging infringement of the principle of equal treatment and of the prohibition of arbitrariness, the ECJ stated that the targeting of undertakings or sectors dependent on cutting-edge technologies or know-how mainly available in the Union takes into account the objective of ensuring the effectiveness of the restrictive measures and of preventing the effect of the measures from being neutralised by the importation into Russia of substitutable products, technologies or services from third countries.

 

In addition, the ECJ had ruled, in the context of the principle of proportionality that the Union legislature should be given a wide margin of appreciation in areas where it has to make political, economic and social decisions and complex assessments. As the ECJ has held, the content of the contested acts is proportionate to the objective pursued by them. The importance of the objectives pursued also justifies significant negative consequences for certain economic operators who are not responsible for the situation which led to the imposition of the sanctions. Accordingly, the interference with the entrepreneurial freedom and property rights of the banks and undertakings concerned cannot be regarded as disproportionate.

 

Note: In another judgment of 13.09.2018 in case T-515/15, the Court confirmed the maintenance of the freeze of funds of the Russian company Almaz-Antay for the period 2016-2017, as well as the validity of the freeze of funds of this company for the period 2015-2016.

17.09.2018