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EU Sanctions on Russia Face Legal Challenges

  • The EU's sanctions regime against Russia has faced legal challenges, with three individuals removed from the list due to insufficient evidence.
  • The EU is using a legal quirk to keep sanctioned individuals blacklisted until they file new cases.
  • Hungary is likely to request the removal of more individuals from the sanctions list, backed by recent court rulings.

It is fair to say that the European Union's sanctions regime against Russia has had a bit of a wobble in recent weeks, particularly with regard to the list of entities and people that the bloc has imposed asset freezes and visa bans on since the full-scale invasion of Ukraine in 2022.

As the European Union considers expanding the sanctions list, which currently includes 2,177 individuals and entities, three people were removed from the list in March during its routine biannual review, which requires the unanimous agreement of all 27 EU member states.

While that is a relatively small number, the delisted individuals were notable -- Arkady Volozh, the co-founder of the Russian Internet giant Yandex; businessman Sergei Mndoiants; and Jozef Hambalek, a Slovak national and head of the Russian nationalist Night Wolves motorcycle club in Europe.

Hambalek was the first EU national to be blacklisted in 2022. (Some of the other blacklisted individuals had EU passports in addition to their Russian citizenship.) When the entire list is up for renewal again in September, it's likely that more names will be removed, largely due to three recent rulings in the EU's Luxembourg-based General Court, a constituent part of the Court of Justice of the European Union.

Deep Background: On March 20, the General Court ruled that Nikita Mazepin, a former Formula One driver and son of the Russian oligarch Dmitry Mazepin, should be removed from the list. The EU has maintained that Mazepin senior is a member of Russian President Vladimir Putin's inner circle and has supported actions undermining the territorial integrity of Ukraine. Last fall, an EU court backed Brussels' reasoning on this in a landmark verdict.

When it comes to Mazepin junior, however, the General Court noted that the EU had failed to prove any link between father and son -- beyond the obvious family ties, that is -- and had insufficient evidence to apply restrictive measures on him.

And then, on April 10, the Luxembourg court delivered another legal blow for Brussels when it ruled that Petr Aven and Mikhail Fridman, both major shareholders in one of Russia's biggest financial institutions, Alfa Bank, should also be delisted.

The judges noted that there may very well be "a degree of proximity" between Aven and Fridman on one side and Putin or his entourage on the other, but that the EU had failed to demonstrate that the pair either supported actions and policies undermining Ukraine's independence or provided material or financial support to destabilize the country.

Drilling Down

  • It's important to remember that Mazepin junior, Aven, and Fridman do still remain under EU sanctions. How come? First of all, the EU can appeal the verdict within a period of two months and 10 days. Second, Brussels is also using something of a legal quirk in the sanctions regime to keep them blacklisted.
  • The EU has argued that the three men's judgments only cover the period from their initial listings in February 2022 to March 2023. Since then, the EU has renewed the sanctions list, with the three men's names included, both in September 2023 and, most recently, last month. According to EU officials, these renewals are more than just a technicality; in fact, they produce new lists every six months as some names are added and some are removed.
  • In this way, the EU is forcing the still-sanctioned individuals to file a new case at the European Court of Justice (ECJ) to challenge the most recent sanctions update. Legal proceedings are time-consuming, and when the time for renewal comes around every March and September, the wheels of justice are still turning, enabling the EU to stay ahead.
  • This was how the EU managed to keep former Ukrainian President Viktor Yanukovych on a sanctions list until 2022, even though he won his first case in an EU court back in 2019 and then, over the next two years, won another two legal battles.
  • The extra time that Brussels is buying itself could allow it to present additional evidence for the court to consider. This is what happened to Violetta Prigozhina, the mother of the now-deceased Russian oligarch and mercenary leader Yevgeny Prigozhin. In March 2023, she became the first person challenging the EU's Russia sanctions to win at the ECJ. But according to sources familiar with the file who don't have the authority to speak on the record, the EU then managed to present additional details. Prigozhina has remained sanctioned ever since.
  • To date, 115 cases have been filed at the EU court requesting the delisting of people or companies. Many are filed by rich, sanctioned Russian businessmen who are able to spend vast sums on European lawyers to fight their cases. So far, the EU has won 33 cases and only lost eight -- a pretty decent scorecard for Brussels. The recent trio of losses could set a precedent, though, and mean more legal blows for the EU in the months ahead.
  • Ultimately, it remains a political decision whether those three Russians and others remain listed come September. For pretty much every renewal so far, Hungary has attempted to leverage its veto by asking for some names to be dropped. Previously, the EU managed to secure another six-month rollover by offering to remove people that the EU's own legal service marked as "weak" due to insufficient evidence.
  • For example, last fall, two lesser-known Russian businessmen, Aleksandr Shulgin and Farkhad Akhmedov, were removed from the list. But considering that Budapest had previously asked for Aven, Fridman, and Mazepin junior to be removed, they are likely to make a similar request soon enough, especially since they are now backed by the EU's own court on the matter.

Looking Ahead

EU leaders are gathering in Brussels for another summit on April 17-18. The meeting will mainly focus on economic issues and relations with Turkey, but attendees will also talk about Ukraine and how the EU can boost its defense industry in order to send more arms to Kyiv.

A few days before the EU leaders meet, on April 16-17, the National Conservatism Conference (often referred to as "NatCon") will take place in the EU capital. The annual event, bringing together right-wing politicians and think tankers, will be headlined by Hungarian Prime Minister Viktor Orban and the pro-Brexit British politician Nigel Farage. Expect a lot of Brussels-bashing and talk of how Euroskeptic parties must win the upcoming European Parliament elections.



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