CJEU confirms the freezing of funds for five active businessmen in Russia

The Court of Justice of the European Union has rejected the appeals made by five sanctioned businessmen and confirmed that the freezing of their funds can be justified by the role played in economic sectors that generate substantial revenue for the Russian state, even without proving a personal connection to the government in Moscow.

The Court of Justice of the European Union confirmed on Thursday the freezing of funds for five important businessmen operating in Russia, rejecting all appeals made by Dmitry Pumpyanskiy, Tigran Khudaverdyan, Viktor Rashnikov, Dmitry Mazepin, and German Khan against the sanctions imposed by the Council of the European Union following the outbreak of Russia's war against Ukraine.

In short

The Court of Justice of the EU has rejected all appeals made by five businessmen sanctioned by the Union.

The court clarified that it is the economic sectors, not the individuals themselves, that provide substantial revenue to the Russian state.

The Court indicated that the influence of these businessmen must be assessed in the context of the economic environment in which they operate, regardless of the existence of a personal connection to the Russian government.

The judges confirmed that there is an objective link between the important businessmen in profitable sectors for Russia and the EU's objective of increasing pressure on Moscow.

The Court also decided that the restrictive measures are not manifestly disproportionate and do not exceed what is necessary to achieve the intended objective.

The decision concerns the appeals made after the General Court of the European Union had rejected in 2023 the actions brought by the five claimants against the restrictive measures adopted by the Council. The cases were joined, and the ruling issued on Thursday by the CJEU concludes this stage of the litigation at the level of the EU's supreme court in matters of EU law.

In its ruling, the Court first clarifies a central element of the sanctions regime. According to the court, "economic sectors," and not "important businessmen" involved in them, are those that must provide a substantial source of income for the Russian government. In other words, the legal criterion does not require that each sanctioned person be a direct source of funding for the Russian state, but that they have a relevant role in economic sectors that fuel the Russian economy.

The Court also explains how the concept of "influence" of these businessmen should be understood. The judges indicate that influence must be analyzed "in light of the economic context in which they operate, regardless of any connection they may have with the Russian government." The court considers that, precisely because they have significant importance for the Russian economy, these individuals are likely to indirectly favor the financing of destabilizing actions against Ukraine, contributing to the maintenance of the profitability or prosperity of the economic sectors in which they are active.

Another important part of the ruling concerns the legality of the criterion used by the Council to include these individuals on the sanctions list. The Court reminds that the legality of such a criterion can only be affected if it is manifestly inadequate. In this case, the court considers that this is not the case, as the criterion targets categories of individuals who have, even indirectly and independently of their personal conduct, an objective link with the country against which the Union seeks to exert pressure through sanctions. In these cases, the Court found an objective link between, on the one hand, important businessmen involved in profitable sectors for Russia and, on the other hand, the objective of increasing pressure on this country and the costs of its destabilizing actions against Ukraine.

The court also confirms that the restrictive measures are proportional. According to the ruling, to verify proportionality, it is sufficient to establish that the measures are not manifestly inadequate for achieving the legitimate objective pursued and that they do not exceed in a manifest way what is necessary to achieve it. The Court concludes that both conditions are met in these cases.

From a journalistic perspective, the ruling is important not only for the five claimants but also for the entire legal architecture of EU sanctions against Russian economic elites. It confirms that the Union can maintain the freezing of funds of individuals active in strategic and profitable sectors for the Russian economy without necessarily demonstrating a direct personal connection to the Kremlin, as long as there is an objective link between their economic position and the purpose of the restrictive measures. This interpretation strengthens the legal margin of the Council in defending the sanctions regime established after February 2022.

According to the Court's statement, the Council of the European Union adopted restrictive measures against important businessmen active in economic sectors that provide a substantial source of income to the Russian government after the start of Russia's war against Ukraine in February 2022. The legal basis mentioned in the document is Council Decision 2014/145/CFSP, as amended by Decision 2022/329 of February 25, 2022.

The five claimants had previously challenged the sanctions before the General Court of the European Union, but their actions were rejected in 2023. The ruling now issued by the CJEU confirms those decisions of the General Court and reinforces the interpretation that the economic criterion used by the EU in listing certain Russian businessmen can withstand judicial review, including regarding the adequacy and proportionality of the measures.

https://2eu.brussels/ro/stiri/cjue-confirma-inghetarea-fondurilor-pentru-cinci-oameni-de-afaceri-activi-in-rusia