Like the United States and other like-minded countries, the EU regularly uses targeted financial sanctions against foreign organizations, legal entities, and individuals as a proportionate response in situations where an international disagreement or a crisis cannot effectively be resolved by conventional instruments of diplomacy, or to give weight to its demands against foreign powers. The procedure for the adoption of financial sanctions by the EU is in principle governed by strict standards as concerns due process and the respect of the rule of the law. However, when the parties targeted by sanctions seek legal redress, they are often frustrated by the outcome. This is illustrated by two judgments of the EU General Court in a matter involving Viktor Yanukovych, the former President of Ukraine, and his son, Oleksandr Yanukovych (see cases T-303/19 and T-302/19).
Before discussing the two rulings, it may be worthwhile recalling the principal procedural options available to persons that are targeted by EU sanctions. The EU Member States meeting in the Council of the EU decide on the imposition of sanctions. Once sanctions have been adopted, the persons who have been sanctioned may challenge them directly by introducing an action for annulment before the General Court of the EU. Although this occurs less often in practice, they may also challenge their designation indirectly by bringing a legal action against a national measure giving effect to the sanctions. The national court may then submit a reference for a preliminary ruling to the Court of Justice of the EU.
In the case under consideration, the two applicants had introduced actions for annulment before the General Court thereby challenging the lawfulness of EU financial sanctions and travel bans adopted against them. This was not the first time that the applicants had done so. In fact, the sanctions dated back to February 2014 when the Council of the EU had adopted restrictive measures against certain persons, entities, and bodies in view of the situation in Ukraine following the suppression of the demonstrations in Independence Square in Kiev. Thereafter, the Council had renewed the sanctions against Yanukovych and his son repeatedly and had also modified the underlying statement of reasons for their listings. The two applicants had lodged several actions for annulment, some of them successfully. However, this never resulted in a permanent lifting of the sanctions, given that the Council continuously adopted new acts to extend the sanctions.
Due Process Standards
In their most recent actions, Viktor and Oleksandr Yanukovych challenged the Council of the EU’s acts whereby it had designated them pursuant to the listings criteria set out in Article 1(1) of Council Decision 2014/119/CFSP and Article 3(1a) of Council Regulation (EU) No 208/2014. According to these criteria, the Council could sanction “persons subject to investigation by the Ukrainian authorities” for (i) the misappropriation of Ukrainian public funds or assets, or being an accomplice thereto or (ii) the abuse of office as a public office-holder in order to procure an unjustified advantage for him- or herself or for a third party, and thereby causing a loss to Ukrainian public funds or assets, or being an accomplice thereto.
When reviewing these criteria, the Court held that the Council may in principle base a designation on the decision of an authority of a competent third state to initiate and conduct criminal proceedings relating to an offence of misappropriation of public funds of that state. Nevertheless, in the opinion of the Court, the Council must also satisfy itself that the rights of the defense and the right to effective judicial protection were respected by that authority. This is necessary, according to the Court, in order to ensure that the adoption or the maintenance of measures for the freezing of funds is supported by a sufficiently solid factual basis and, accordingly, to protect the rights of the individuals that are targeted by the sanctions. Thus, the Council may not conclude that the adoption or the maintenance of such measures has a sufficiently solid factual basis before having itself verified that the third state on whose decision the Council intends to rely has respected the rights of defense and the right to effective judicial protection of the individuals concerned.
In the contested acts, the Council referred to various factual circumstances, which according to the Council supported the view that the Ukrainian authorities had respected the applicants’ procedural rights when taking the decision to initiate and conduct criminal proceedings against them. In particular, the Council referred to a series of decisions by the Ukrainian judiciary relating to criminal proceedings which, in the Council’s view, justified the maintenance of the restrictive measures at issue. However, according to the Court, the Council did not demonstrate that it had actually examined those decisions and that it was able to conclude from them that the essence of the procedural rights of the individuals concerned had been respected. Nor did the Council explain to what extent those decisions could be considered to prove that the procedural rights had been respected. Additionally, the Court held that, in any event, those decision were not capable, on their own, to demonstrate that the criminal proceedings in question had been initiated and conducted in conformity with the two individuals’ procedural rights.
Sidestepping the Court’s Annulments
In summary, the Court faulted the Council for having failed to satisfy itself that the Ukrainian judicial authorities had respected the rights of defense and the right to effective judicial protection in the context of the criminal proceedings at issue. For these reasons, the General Court annulled the contested acts in so far as they related to Viktor Yanukovych and his son.
That being said, it is doubtful that the General Court’s rulings will have actual practical consequences for these individuals. The annulled acts were adopted in 2019 and, since then, the Council has again designated the two applicants under other acts. In fact, and as indicated above, the Court had already reviewed the sanctions against Viktor Yanukovych and his son on various occasions in the past and annulled some of the acts adopted by the Council against them. The Court adopted rulings to this effect in 2015, 2016, 2017, and 2018, respectively. This did not stop the Council from re-designating the former President and his son after each annulment, by modulating the statement of reasons from time to time. It is an open question whether this is compatible with the notion of effective judicial relief.