EU court rejects free speech challenge by Kiselev to Russia designation

The General Court of the EU has rejected an application to annul the inclusion of Dmitrii Kiselev on the EU’s restrictive measures. Judgment here; Case T-262/15 Kiselev v Council.  Mr Kiselev was included in March 2014 on the EU’s asset freezing & travel ban measures for being a State-appointed propagandist supporting the deployment of Russian forces in Ukraine. The Court has held (in summary) that:

  1. The EU’s Russia sanctions do not breach the EU / Russia Partnership Agreement because Russia’s actions in Ukraine fall within the exceptions for “war or serious international tension constituting threat of war”.
  2. The phrase “active support” for the Russian Government’s actions in Ukraine should be interpreted as referring to “persons who – without being themselves responsible for the actions and policies of the Russian Government destabilising Ukraine and without themselves implementing those actions or policies – provide support for those policies or actions” and covers only forms of support which are significant enough to “contribute to the continuance of” Russia’s “actions and policies destabilising Ukraine”.
  3. Including Mr Kiselev was a justified and proportionate restriction on his freedom of expression. He had given active support by portraying events in Ukraine in a light favourable to the Russian Government. Less restrictive measures such as a system of prior authorisation would not  have been as effective in pursuing the aim of “bringing pressure to bear on Russia’s decision-makers responsible for the situation in Ukraine”.

Arab states not seeking to include their latest sanctions listings on UN list

It is reported that Bahrain, Egypt, Saudi Arabia, and the UAE, who imposed sanctions on Qatar and several Qatar-linked people and entities last week (see previous blog), are not also seeking to have them included on the UN’s sanctions list. The new listings, which affect 59 people and 12 entities said to be linked to terrorism, came days after the 4 states cut off their relations with Qatar, having accused it of supporting terrorism and Iran.  However, while it would be difficult to gain the required support for the listings at UN level, Egypt’s Foreign Minister Sameh Shoukry suggested on Wednesday that there may be more Qatar-linked sanctions to come.

Russia’s Supreme Court says sanctions not grounds for rescinding lease

We previously reported that Russia’s Supreme Court was to give judgment on an appeal (VTB v Luisa Bikmaeva) brought by the proprietor of office premises in Russia leased to VTB Bank before VTB was subject to US, Canadian, and EU sectoral sanctions. VTB brought the claim for a declaration that it had validly rescinded this lease when sanctions were imposed. The first instance court held that the lease had been validly rescinded because the imposition of sanctions on VTB constituted “an exceptional and unforeseen circumstance…which the parties did not expect while entering into the contract”, and its findings were upheld on appeal to the Court of Cassation.

The Supreme Court has now overturned the findings of Russia’s lower courts, holding that VTB should have anticipated a possible change in circumstances when entering into the contract, and that the imposition of sanctions did not meet the test for a vital chance in circumstances and was not included in the terms of the contract as a factor which would allow a party to rescind it. The judgment (in Russian) is here.

US Senate votes in favour of new Russia sanctions

The US Senate has passed an amendment to an Iran sanctions bill that would, if approved by the House and signed by President Trump, introduce a range of new sanctions on Russia and restrict the US President’s ability to ease sanctions on Russia without Congressional approval.

The amendment, which enjoys bipartisan support, would expand existing sanctions on Russian people involved in human rights abuses, impose new sanctions on people conducting cyberattacks on behalf of the Russian government, supplying weapons to Syria’s government or deemed to have interfered in the 2016 US elections, and consolidate sanctions on Russia’s energy and financial sectors currently imposed by executive order.  The amendment would also allow for new sanctions on certain areas of Russia’s commodities and transport sectors and includes new measures targeting Russian and overseas entities supporting Russian “gas export pipelines” including the Nord Stream 2 pipeline to the EU.

Qatar-linked AQ sanctions imposed by Bahrain, Egypt, Saudi Arabia, and UAE

Bahrain, Egypt, Saudi Arabia, and the UAE have jointly designated 59 people and 12 entities as supporters of al-Qaida and associated organisations.  Many of the new listings are Qatar-linked people and entities, and follow a decision by those 4 countries last week to bar all traffic with Qatar, eject its diplomats, and require all Qatari citizens to leave within 14 days, in response to what they say is Qatar’s support for the Muslim Brotherhood and other groups they deem to be terrorist organisations. A list of the newly designated people and entities is here.

UN imposes new DPRK sanctions

Last Friday the UN Security Council imposed new sanctions on 18 DPRK officials and entities in response to North Korea’s most recent ballistic missile tests. The UN press release is here, and a link to the new resolution (2356 (2017)) is here.

The EU’s implementing measures (published today) are Commission Regulation 2017/970 amending Council Regulation 329/2007 and Council Decision 2017/975 implementing Council Decision 2016/849.

The sanctions subject listed people and entities to an asset freeze and travel ban in all UN countries.  Among those newly listed are Cho Il-U, said to be in charge of DPRK’s foreign espionage activities, the Vice Director of its Propaganda and Agitation department, and the Strategic Rocket Force of the Korean People’s Army, which is responsible for the country’s ballistic missile programmes.  The US representative to the UN Security Council, which sponsored the resolution, warned that the pressure on DPRK would not cease until it ended its illegal activities, and China’s representative expressed support for the “double strengthening” of the non-proliferation regime.

Separately, OFAC also designated 3 people and 6 entities said to be responsible for financing and supporting North Korea’s nuclear weapons and ballistic missile programs. The details are here.

Safa Nicu – EU appeal court judgment on damages for sanctions listings

The European Court of Justice has given its judgment on an appeal brought by Safa Nicu, an Iranian company that successfully applied in 2014 to have its listing on the EU’s sanctions against Iran annulled, and on a cross-appeal brought by the EU Council. Case C-45/15 P Safa Nicu v Council [2017].

Safa Nicu appealed against the General Court’s decision to dismiss most of its €7.7m claim for damages resulting from the imposition of EU sanctions, awarding it €50,000 for reputational damage. The Council’s cross-appeal called for the Court to set-aside the decision to award Safa Nicu non-pecuniary damages.  The General Court judgment was the first awarding damages in a sanctions case (see previous blog), and the Court of Justice has upheld the judgment below on all points.  The main points are as follows:

  1. The ECJ upheld the General Court’s reasoning that the Council’s failure to substantiate the reasons for Safa Nicu’s listing with evidence for 3 years was a “sufficiently serious breach” of EU law (the pre-condition for an award of damages from an EU institution). The Court rejected the Council’s argument that the obligations on the Council had not been clear at the relevant time – the principles had been clear from the court’s case law since at least Kadi I.
  2. The ECJ also said the General Court had been correct to have considered all circumstances of the case in deciding whether to award damages, including whether annulment provided sufficient reparation, the gravity of the breach, its duration, the Council’s conduct, and the effect of listing Safa Nicu on third parties.
  3. The Court held that the General Court had also been justified in dismissing Safa Nicu’s claims for material damage, because the company had not provided sufficient evidence on the damage caused by the sanctions or the causal link between the imposition of sanctions and its losses.

EU to amend reasons for some Russia sanctions targets

The EU has published a notice for the attention of several people and entities listed on its sanctions targeted at (inter alia) people said to be undermining the territorial integrity of Ukraine, informing them that it is considering maintaining their listings with new statements of reasons.  The people concerned (named on the notice) may request a copy of the new reasons from the EU Council before 16 June 2017.