EU Court of Justice confirms freezing of funds of five leading businesspersons operating in Russia

Brussels – The Court of Justice of the European Union has confirmed the freezing of funds belonging to five prominent businesspersons operating in Russia. This development comes against the backdrop of Moscow’s war of aggression against Ukraine, to which the EU Council has responded, since the start of the military invasion in February 2022, by adopting restrictive measures against companies and individuals close to the Kremlin. Among those affected by these sanctions, five – Dmitry Alexandrovich Pumpyanskiy, Tigran Khudaverdyan, Viktor Filippovich Rashnikov, Dmitry Arkadievich Mazepin, and German Khan – first lodged appeals before the General Court of the European Union and then, in 2023, when the General Court dismissed their appeals, lodged appeals before the Court of Justice. In the judgment Today (26 March), the judges in Luxembourg dismissed all the appeals. 

The Court “clarifies that it is the ‘economic sectors’, rather than the leading businesspersons involved in those sectors,
that must provide a substantial source of revenue to the Russian Government,” and that “the concept of the ‘influence’ of the businesspersons must be understood in the light of the economic
context in which they operate, irrespective of any link that they may have with the Russian Government.” In the Court’s view, “because they are of significant importance for the Russian economy that those persons are likely to further, indirectly, the
financing of destabilising actions against Ukraine, by contributing to maintaining the profitability, or the prosperity, of the
economic sectors in which they are involved.” Furthermore, the judges note that “the legality of a criterion serving as the basis for the imposition of restrictive measures can be
affected only if that criterion is manifestly inappropriate.” However, this criterion “cannot be regarded as unlawful provided that it
targets categories of persons that have, albeit indirectly and albeit independently of any personal conduct, an objective
link with the third country against which the European Union is seeking to impose sanctions.”

Finally, in this specific case, “the
Court finds that there is an objective link between, on the one hand, important businesspersons involved in sectors that
are lucrative for Russia and, on the other, the objective consisting in increasing the pressure exerted on that country and
the costs of its actions to destabilise Ukraine.” It therefore confirms that to determine whether the restrictive measures are proportionate, it is sufficient to verify whether they are not manifestly inappropriate for achieving the legitimate objective pursued and whether they do not manifestly exceed what is necessary to achieve that objective. As in the case of the five Russian businesspersons.