Category Archives: Restrictive measures

Some clarifications on the validity and the scope of restrictive measures towards Russia

Judgment
C-72/15
28.03.2017
PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Reference for preliminary rulingPJSC Rosneft Oil Company v. Her Majesty's Treasury and OthersCJEUGrand ChamberA. RosasM. WatheletRestrictive measures
KeywordsReference for a preliminary ruling – Common Foreign and Security Policy (CFSP) – Restrictive measures adopted in view of Russia’s actions destabilising the situation in Ukraine – Provisions of Decision 2014/512/CFSP and Regulation (EU) No 833/2014 – Validity – Jurisdiction of the Court – EU‑Russia Partnership Agreement – Obligation to state reasons – Principles of legal certainty and nulla poena sine lege certa – Access to capital markets – Financial assistance – Global Depositary Receipts – Oil sector – Request for interpretation of concepts of ‘shale’ and ‘waters deeper than 150 metres’ – Inadmissibility
Significant pointsWhile Decision 2014/512 and Regulation 833/2014 of the Council introduced targeted restrictive measures, the United Kingdom adopted implementing measures based on these Council acts, which provided for criminal penalties in the case of an infringement of the restrictive measures.

In this preliminary ruling on the legality and the interpretation of the Council acts, the CJ considered first that a Member State can impose criminal penalties in the case of an infringement of the restrictive measures provided for in the Regulation, in order to effectively implement the latter.

Second, the CJ ruled that the Decision and the Regulation at issue were valid. Indeed, the importance of the objectives pursued by the contested acts was such as to justify certain operators being adversely affected. Insisting on the broad discretion of the Council when it determines the aim of restrictive measures, the CJ explained that targeting specific high value undertakings or sectors aims at ensuring the effectiveness of the restrictive measures (paragraph 132). The CJ also insisted on the proportionality of the interference with Rosneft’s freedom to conduct a business and its right to property in view of the objective of increasing the costs to be borne by the Russian Federation for its actions to undermine Ukraine’s territorial integrity, sovereignty and independence. Finally, the CJ refused to rule that the acts at issue were incompatible with the EU-Russia Partnership Agreement.

Third, the CJ ruled that the principles of legal certainty and of precision of law, which it considered to be applicable in this matter too, were respected in this case. Even if some terms of the regulation at issue have not been interpreted and clarified by the CJ yet, a Member State can establish penalties in order to ensure the implementation of this regulation (paragraphs 167 and 168). Indeed, the CJ recalled that the legislation must clearly define offences and the penalties, before ruling that “the terms which are claimed by Rosneft to be lacking in precision, while they are not absolutely precise, are not such that it is impossible for an individual to know for which acts and omissions he may be criminally liable” (paragraph 166).

Fourth, regarding the processing of payments by banks, the CJ ruled that given the fact that the payment services are provided by financial institutions as intermediaries, without any commitment of their own resources, the processing of bank transfers are not to be considered “financial assistance” within the meaning of Article 4(3)(b) of Regulation 833/2014. This expression refers to measures comparable to grants, loans and export credit insurance, which require the financial institution concerned to use its own resources (paragraph 179). The CJ noted that the aim of the EU legislature was neither to submit every bank transfer to an additional authorisation request, nor to establish a freezing of assets or restrictions on the transfer of funds (paragraph 181). However, the CJ also ruled that this interpretation is without prejudice to the prohibition that applies to any processing of payments that is related to a commercial transaction that is itself prohibited under Article 3(5) of Regulation 833/2014 (paragraph 183).

Finally, the CJ considered that the Regulation prohibits the issuance of international certificates representative of share ownership (Global Depositary Receipts), even if they represent shares which were emitted before the adoption of the contested acts. Indeed, pursuant to Article 5(2) of Regulation 833/2014, the issuance of transferable securities in respect of the shares of the entities listed in Annex VI to that regulation (including Rosneft) are prohibited from 12 September 2014, irrespective of the date of issue of those shares. The CJ ruled that GDR are “transferable securities” within the meaning of Article 5(2) of Regulation 833/2014 (paragraphs 187 to 189). Therefore, the CJ ruled that restrictive measures prohibit the issuance of GDR when holders of shares in the entities targeted by the restrictive measures re-package their shares in these GDR.
NoteworthyThis judgement reflects the importance and variety of legal issues in the field of restrictive measures, such as the impact of general principles of EU law on restrictive measures and the interpretation of the scope of some prohibited operations. On this last point, it is worth highlighting that the CJEU has carefully construed the notions of ‘financial assistance’ and of ‘Global Depositary Receipts’.

The CJ confirmed also the possibility for Member States to impose criminal penalties in the case of an infringement of the restrictive measures provided for by EU law in order to effectively implement the latter. Such a ruling contributes to the enforcement of the restrictive measures.

Freezing of funds – Annulment by the General Court

Judgment

T-579/11

12.02.2015

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Application for annulment

Tarif Akhras

v.

Council of the European Union

General Court

7th Ch.

I. Ulloa Rubio

/

Common foreign and security policy

Key-words

Common foreign and security policy — Freezing of funds — Rights of the defence — Obligation to state reasons — Manifest error of assessment — Right to life — Right to property — Right to respect for private life — Proportionality               

Significant points

  1. With regard to the specific context of the inclusion of the applicant’s name in the lists annexed to the contested acts preceding 23 March 2012, the Council relied on the following two reasons: ‘Founder of the Akhras Group (commodities, trading, processing and logistics), Homs’ and ‘Provides economic support for the Syrian regime’.

With regard to the first reason, it must be stated that it merely describes the applicant’s status. The fact that he is the founder of an industrial group does not necessarily or automatically mean that the applicant satisfies the general criteria set out in paragraph 67 above. Therefore, the statement that the applicant is the founder of a Syrian industrial group cannot constitute a fact capable of being stated as an adequate and specific reason for the contested acts preceding 23 March 2012.

With regard to the second reason, it must be held that, in the present case, the Council merely reproduced one of the criteria that would justify including the applicant’s name in the lists at issue, that is to say, the criterion relating to support for the incumbent regime, as introduced by Decision 2011/522 (see paragraph 5 above). The mere reproduction of the criterion, without any other information to support it, cannot serve as a sufficient statement of reasons on the part of the Council.

  1. It is therefore necessary to uphold the third plea in law and to annul the contested acts preceding 23 March 2012 for a failure to state reasons in so far as those acts concern the applicant.

Noteworthy

Once again, the General Court has annulled in part a decision of freezing of funds for failure to state reasons.

Restrictive measures directed against persons and entities in view of the situation in Côte d’Ivoire

Judgment

T-406/13

14.01.2015

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Action for annulment

Gossio

v

Council

General Court

3rd Ch.

S. Papasavvas

/

Restrictive measures

Keywords

 Common foreign and security policy-Restrictive measures directed against certain persons and entities in view of the situation in Côte d’Ivoire-Freezing of funds-Misuse of powers-manifest error of assessment-Fundamental rights

Significant points

The Council must take into consideration the fact that the circumstances according to which it took restrictive measures has changed when adopting a decision (in casu, the Decision 2014/271 and the Regulation n°479/2014) to maintain the name of a person on the list of persons subject to restrictive measures in the Annex II of the Decision 2010/656 and in the Annex I A of the Council Regulation n° 560/2005.The Council, in these new circumstances, must bring forward new element such as to justify the maintenance of the restrictive measures against the person concerned.

In casu, the arguments developed by the Council (seriousness of the allegations, the fact that the Côte d’Ivoire is still a fragile society and a Country with which we must act with prudence) are not sufficient.

Therefore, the General Court annulled the Decision 2014/271 and the Regulation n°479/2014 in so far as they pertain to the applicant.

Noteworthy

Common foreign and security policy – Restrictive measures against persons and entities with a view to combating terrorism

Judgment

T-400/10

17.12.2014

Parties

Jurisdiction

Formation

Judge Rapporteur

Advocate General

Subject-matter

Reference for a preliminary ruling

Hamas v Council

General Court

2nd Ch.

F. Dehousse

/

Restrictive measures

Keywords

Common foreign and security policy — Restrictive measures against certain persons and entities with a view to combating terrorism — Freezing of funds — Factual basis of the decisions to freeze funds — Reference to terrorist acts — Need for a decision of a competent authority for the purpose of Common Position 2001/931 — Obligation to state reasons — Temporal adjustment of the effects of an annulment

Significant points

  1. In accordance with a consistent line of decisions relating to successive fund-freezing measures adopted under Regulation No 2580/2001, an applicant still has an interest in obtaining annulment of a decision imposing restrictive measures which has been repealed and replaced by a subsequent restrictive decision, in so far as the repeal of an act of an institution does not constitute recognition of the unlawfulness of that act and has only prospective effect, unlike a judgment annulling an act, by which the annulled act is eliminated retroactively from the legal order and is deemed never to have existed (judgment of 12 December 2006 in Organisation des Modjahedines du peuple d’Iran v Council, T‑228/02, ‘OMPI T‑228/02’, ECR, EU:T:2006:384, paragraph 35; see also judgments of 23 October 2008 in People’s Mojahedin Organization of Iran v Council, T‑256/07, ‘PMOI T‑256/07’, ECR, EU:T:2008:461, paragraphs 45 to 48 and the case-law cited, and 30 September 2009 in Sison v Council, T‑341/07 ‘Sison T‑341/07’, ECR, EU:T:2009:372, paragraphs 47 and 48).
  2. In the first place, it should be borne in mind that, after adopting, on the basis of decisions of competent national authorities, a decision to include a person or a group on the list relating to frozen funds, the Council must satisfy itself at regular intervals, at least once every six months, that there are still grounds for maintaining that person or group on the list.
  3. Although verification that there is a decision of a national authority meeting the definition in Article 1(4) of Common Position 2001/931 is an essential precondition for the adoption, by the Council, of an initial decision to freeze funds, the verification of the consequences of that decision at national level is imperative in the context of the adoption of a subsequent decision to freeze funds (OMPI T‑228/02, EU:T:2006:384, paragraph 117, and judgment of 11 July 2007 in Sison v Council, T‑47/03, EU:T:2007:207, paragraph 164). The essential question when reviewing whether to continue to include a person on the list is whether, since that person was included on the list or since the last review, the factual situation has changed in such a way that it is no longer possible to draw the same conclusion in relation to the involvement of that person in terrorist activities (judgment of 15 November 2012 in Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, ECR, EU:C:2012:711, paragraph 82).
  4. In that regard, the Court cannot accept that the statement of reasons may consist merely of a general, stereotypical formulation, modelled on the drafting of Article 2(3) of Regulation No 2580/2001 and Article 1(4) or (6) of Common Position 2001/931. In accordance with the principles referred to above, the Council is required to state the matters of fact and of law which constitute the legal basis of its decision and the considerations which led it to adopt that decision. The grounds for such a measure must therefore indicate the actual and specific reasons why the Council considers that the relevant rules are applicable to the party concerned (see OMPI T‑228/02, EU:T:2006:384, paragraph 143 and the case-law cited).
  5. Accordingly, both the statement of reasons for an initial decision to freeze funds and the statement of reasons for subsequent decisions must refer not only to the legal conditions of application of Regulation No 372/2001, in particular the existence of a national decision taken by a competent authority, but also to the actual and specific reasons why the Council considers, in the exercise of its discretion, that the person or entity concerned must be made the subject of a measure freezing funds (Sison T‑341/07, paragraph 59 above, EU:T:2009:372, paragraph 60).

 

Noteworthy

 The General Court has once again annulled the imposition of restrictive measures by the European Council on a legal person for a lack for factual reasoning in support of the decision to impose such measures. Consistent with its case-law in Case T‑58/12 Nabipour and Others v Council [2013], the General Court has suspended the effects of the annulment, in order to avoid the risk of serious and irreversible harm to the effectiveness of the restrictive measures, for a period of three months from the delivery of the judgment or, if an appeal is lodged, until the Court of Justice has given judgment on that appeal.