ECJ upholds and clarifies EU’s Russia sanctions in Rosneft judgment

The ECJ has today answered questions the UK High Court referred to it (on which see previous blog) in the EU’s preliminary reference procedure asking for the ECJ to interpret some of the EU’s sanctions on Russia imposed in July 2014. The ECJ’s judgment is here: Case C-72/15. The EU Russia sanctions at issue are those imposing restrictions on some financial transactions and on the access of some Russian entities to EU capital markets, and on the export of some goods and technology and services required for oil transactions. The questions were referred to the ECJ in the course of a judicial review brought by Rosneft (the Russian oil and gas company) against the UK Government and Financial Conduct Authority (see previous blog for the background to this case). See previous blog for the Advocate General’s opinion in this case.

The ECJ judgment holds (link to the Court’s summary of its judgment here) that:

  1. It has jurisdiction to answer most of the questions on the validity of these restrictive measures, even though they are EU Common Foreign & Security Policy (CFSP) measures, because the ECJ has jurisdiction to consider whether CFSP measures comply with Article 40 TEU (which concerns institutional competence) and CFSP decisions imposing restrictive measures on natural or legal persons. The Court commented that the exclusion of jurisdiction for certain CFSP decisions should be “interpreted strictly” given the need to ensure effective judicial protection as part of the rule of law.
  2. The ECJ rejected Rosneft’s argument that the EU Council had encroached on the powers of the Commission and EU High Representative for foreign & security policy in breach of Article 40 by enacting these measures.
  3. These measures were not incompatible with the EU-Russia Partnership agreement because the EU institutions could take the view that they were necessary to protect essential EU security interests and to maintain peace and international security.
  4. The measures gave sufficient reasons and did not breach the principle of equal treatment or misuse the EU’s powers, nor did they amount to a disproportionate interference with Rosneft’s fundamental rights.
  5. Rosneft would have to have challenged the Council’s refusal to give full access to its file in an action for annulment before the General Court, not in a preliminary reference in the ECJ.
  6. The ECJ said the vagueness of some of the measures did not make them invalid for lack of certainty or prevent member states from imposing criminal penalties for breach, and gave interpretations of a few provisions:
    • The power for authorities to grant an authorisation in Article 3(5) of Regulation 833/2014 must be understood as meaning that they had to ensure that the application of the first sub-para of Article 3(5) was without prejudice to the execution of contracts concluded before 1 August 2014.
    • The measures on “financial assistance” in Article 4(3)(b) do not include the processing of a payment by a bank or other financial institution.
    • Article 5(2) prohibits the issuance of Global Depositary Receipts pursuant to a depositary agreement concluded with one of the entities listed in Annex VI where those GDRs represent shares issued by one of those entities before 12 September 2014.

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About Maya Lester QC

Maya Lester QC

Maya Lester QC is a senior barrister (Queen’s Counsel) at Brick Court Chambers with a wide-ranging practice in public law, European law, competition law, international law, human rights & civil liberties. She has a particular expertise in sanctions. The legal directories say she is the...

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