On September 17, 2020 the EU Court of Justice (“the Court”) rendered a judgement, by which it upheld the General Court’s decision dismissing an action brought by members of the Rosneft group. The judgement concerned the validity of some of the EU’s sanctions imposed on Russian oil companies in the context of the Ukraine crisis. The Court ruled on the sanctions’ justification, requirements to state reasons for their adoption as well as their compatibility with international agreements.
- Restrictive measures of general application: The Court explained that the adoption of restrictive measures of general application targeting a specific sector of the economy may lead to a situation in which, because of the specific characteristics of that sector, the number of actors in that sector may be very limited. The fact that only the Rosneft group and the Gazprom group were affected by the export restrictions provided for in Articles 3, 3a, 4(3) and 4(4) of, and in Annex II to Regulation 833/2014, and that the Council of the EU (“Council”) was aware of that, cannot call into question that the export restrictions were of general application. Therefore, the Council could justifiably maintain that the statement of reasons could be limited to indicating the overall situation which led to their adoption, on the one hand, and the general objectives which they were intended to achieve, on the other.
- Statement of reasons for sanctions of individual application: The Court recalls that the statement of reasons for an act of the Council which imposes a restrictive measure of individual application, such as the restrictions to access the capital markets under the EU sanctions against Russia, does not have to identify the actual and specific reasons why such a measure must be adopted in respect of the person concerned. The statement of reasons must be appropriate to the act at issue and the context in which it was adopted but it is not necessary for the reasoning to go into all the relevant facts and points of law. In particular, the reasons given for a decision adversely affecting a person are sufficient if it was adopted in circumstances known to the party concerned which enable them to understand the scope of the measure concerning them. In that context, the Court recalls that the Rosneft group is a major player in the Russian oil sector, predominantly owned by the Russian State, and that those companies do not dispute that they meet the criteria set by the Council for the application of such targeted measures. Thus, the Court of Justice confirmed that the companies in question could not reasonably have been unaware of the reasons why the targeted restrictions at issue were imposed on them.
- Connection between export restrictions and objective of the sanctions: The appellants argued that there was no rational connection between the export restrictions and the objective of the restrictive measures, because the non-conventional projects targeted by some of the EU measures at issue would not generate immediate revenue for the Russian State. The Court held that the Council could reasonably expect that undermining investment and future revenues of entities active in the oil sector targeted by those measures would help to put pressure on the Russian Government and to increase the costs of Russia’s actions to undermine Ukraine’s territorial integrity, sovereignty and independence. According to the Court, the legality of restrictive measures is not dependent on their being found to have immediate effects; all that is required is that they are not manifestly inappropriate in regard to the objective that the competent institution seeks to pursue.
- Compatibility with EU-Russia Partnership Agreement and GATT: The Court recalled that the restrictive measures at issue are compatible with the EU-Russia Partnership Agreement and confirmed that they are also compatible with GATT. Like the EU-Russia Partnership Agreement, GATT also contains a provision relating to ‘security exceptions’, which, in circumstances such as those that led to the adoption of the measures at issue, enables the contracting parties to take any measures necessary for the protection of their essential security interests.
The EU restrictive measures targeting Russia is the EU’s sanctions framework with the most important practical relevance for many EU businesses. The Court’s judgement on the validity of some of these restrictions is of great importance insofar as it confirms their lawfulness. That being said, the ruling is of a very principal nature. It does not provide detailed guidance on the interpretation of individual sanctions provisions, which may be disappointing for many market operators interested in increased legal certainty.