Francesca Finelli, PhD student, University of Luxembourg
In case C-872/19
P, Venezuela v Council, the Court
of Justice sets aside the judgment
under appeal of the General Court and holds that Venezuela has standing to
bring proceedings against EU acts which introduce restrictive measures (namely economic
sanctions) against it. This judgement represents an unprecedented ruling of the
CJEU. In fact, for the first time, the Court has decided to expand the category
of potential applicants as to include any third State in respect of which the
Union decides (as a matter of Common Foreign and Security Policy) to
interrupt or reduce economic and financial relations. Those States, even if
non-EU countries, are now empowered to challenge the validity of EU restrictive
measures before EU Courts.
Background to the dispute
Since November 2017, the EU has
imposed restrictive measures in view of the situation in Venezuela, more
precisely, in view of the continuing deterioration of democracy, the rule of
law and human rights in Venezuela. First, the EU sanctioning regime against
Venezuela imposes export bans on the sale, supply, transfer or export of
equipment which might be used for internal repression (mainly military and
surveillance equipment, technology and software, as listed in Annex I and II of
the Council
Regulation). Second, the regime also provides for individualized asset-freezing
measures against natural or legal persons, entities and bodies (i) responsible
for serious human rights violations or abuses or the repression of civil
society and democratic opposition; (ii) whose actions, policies or activities
otherwise undermine democracy or the rule of law in Venezuela; and (iii)
natural or legal persons, entities and bodies associated with them (see Article
8 of the Council
Regulation).
In the past four years, no individual
application has been submitted to EU Courts by any (of
the more than 120) targeted individuals, seeking to challenge the validity
of their listing decisions. Nevertheless, in February 2018, the Bolivarian
Republic of Venezuela brought an action for annulment before the General Court,
asking to annul several EU acts which impose restrictive measures in that State.
The question of admissibility
The central legal question in the
Venezuela v Council case is whether
the application made by Venezuela may be considered admissible before EU
Courts. Accordingly, the central legal provision to take into consideration is
Article 263(4) TFEU, which lays down the conditions for natural and legal
persons (the so-called ‘non-privileged applicants’) to bring action before the
Court. Article 263 provides for standing for legal or natural persons to
challenge EU measures directly in the EU Courts, provided either that the EU measure
is addressed to them, or that they have direct and individual concern, or that
they are challenging a non-regulatory act, have direct concern, and that act
does not entail implementing measures. This case turned on the interpretation
of the last of these three possibilities.
In the case at hand, the
preconditions of admissibility of the action are as follows: Venezuela must prove
its ‘direct concern’, which requires the fulfilment of two cumulative criteria,
namely that (1) the contested EU acts directly affect its legal situation and
(2) the same acts leave no discretion to the addresses who are responsible for
their implementation, making the implementation of those acts automatic, and
without the involvement of intermediate (domestic) rules. Moreover, the Council
also claimed two additional grounds for inadmissibility: it added that
Venezuela has no legal interest in bringing proceedings; and it is not even a
‘natural or legal person’ within the meaning of Article 263(4) TFEU (see § 23
of the judgement
under appeal).
On 20 September 2019, the General
Court (GC) firstly ruled on the Venezuela
v Council case (see Case
T‑65/18).
In line with the Council’s claims, the GC held that EU restrictive measures do
not directly affect Venezuela. ‘At most, the contested provisions are likely to
have indirect effects’ on the third State (§ 33). The Court stressed the fact
that Venezuela is not ‘explicitly and specifically referred to’ in the
restrictive measures (§ 36). Those measures (taken ‘in view of the situation in
Venezuela’ and not ‘against Venezuela’) simply have the effect of limiting the availability
of the certain goods and services in that State, but the applicant cannot be considered
as ‘directly concerned’ - since it is not directly targeted. It follows that,
according to the Court of first instance, Venezuela lacked the necessary locus standi (as provided for in the
fourth paragraph of Article 263 TFEU) and the proceedings were considered
inadmissible on that basis.
Nonetheless, on 22 June 2021 (see
Case
C-872/19 P), the Court of Justice, before which Venezuela lodged an appeal,
overturned the previous judgement and ruled that the General Court erred in law
in dismissing the action.
Firstly, the Court of Justice analysed
(as preliminary observations) the concept of ‘legal person’ – which was not
addressed by the GC. The Court affirmed that Article 263(4) TFEU ‘cannot be
interpreted restrictively’ (§ 44). On the contrary, it shall be read in the
light of the principles of effective judicial review and the rule of law, which
represent EU founding values (see Article 2 TEU) and shall guide the European
Union’s external action (see Article 21 TEU and the relevant case-law, inter
alia Rosneft
and Bank
Refah Kargaran, discussed here
and here).
Such a broad interpretation of the fourth paragraph of Article 263 TFEU (in
light of the above-mentioned EU founding values) ‘militates in favour of
finding that a third State should have standing to bring proceedings’ (§ 50). Accordingly,
the Court ruled that Venezuela, although it is a third State and a legal person
governed by public international law, ‘is equally likely as any another person
or entity to have its rights or interests adversely affected by an act of the
European Union and must therefore be able, in compliance with those conditions,
to seek the annulment of that act’ (§ 50).
Following AG
Hogan's Opinion, the Court held that Article 263(4) TFEU does not strictly apply
to private actors or individuals. On the contrary, the obligation to ensure
compliance with the principles of effective judicial review and the rule of law
requires the EU to allow Venezuela to challenge the restrictive measures
adopted by the Council that are prejudicial to that State. This is an
expression of the ubi ius ibi remedium
principle, which is a general principle of EU law, and is enshrined in Article
47 of the EU Charter of Fundamental Rights (see § 32 AG Opinion).
Secondly, the Court evaluated the
notion of ‘direct concern’. Once again, it followed AG Hogan’s reasoning and considered
the EU restrictive measures to directly concern Venezuela. Contrary to the GC,
the final decision of the Court of Justice advocates ‘a holistic and pragmatic
approach’ when assessing the effects of EU restrictive measures, and ‘favours
substance over form’ (see § 105 AG Opinion). Thus, even if the regime does not
refer to Venezuela as an explicit target, the Court reached the conclusion that
EU restrictive measures directly affect the legal situation of the State, since
those provisions prevent Venezuela from obtaining numerous goods and services (§
69 and § 117 AG Opinion).
Thirdly, the Court examined the
alleged absence of an interest in bringing proceedings (claimed by the Council
as a ground for inadmissibility for the action). The Court clarified that the
EU restrictive measures are liable to harm the interests, in particular the
economic interests, of Venezuela (§ 83). It follows that the action for
annulment is capable of procuring an advantage for the State. Such advantage
presupposes Venezuela’s interests in in bringing proceedings before the Court.
Lastly, the Court had to analyse
whether the contested EU provisions entail implementing measures or apply
without leaving any discretion to its addressees. The Court clarified that the
contested act (namely Council Regulation (EU) 2017/2063) constitutes a
‘regulatory act’ (see § 92), adopted in accordance with Article 215 TFEU, under
the non-legislative procedure. Hence, its provisions do not entail further implementing
measures.
The Court concluded that all the
conditions laid down in the third limb of the fourth paragraph of Article 263
TFEU are fulfilled. As a result, the action for annulment brought by Venezuela
before the General Court is admissible. Finally, it referred back the dispute
to the General Court which is now responsible for giving its judgment on the
merits (§ 95).
Critical assessment
Ruling in favour of admissibility
of the action brought by Venezuela is quite striking and leaves us puzzling. Is
it a dangerous move for the CJEU? Now it is hard to predict. Nonetheless, it is
worth noticing that the Venezuela v
Council ruling leads to a strong expansion of potential applicants before
the Luxembourg judges, meaning a potentially dangerous proliferation of
judicial challenges against EU restrictive measures (by affected third countries, such as Russia,
Belarus, Turkey). This aspect was emphasised by the Council in the dispute at
stake. In fact, the Council was concerned that empowering third States to bring
actions for annulment against EU restrictive measures could put the EU at a
disadvantage (§ 32 of the appeal), particularly because the Union does not
enjoy an equivalent right to judicial review before foreign courts as to
challenge third countries’ foreign policy (sanctioning) decisions. This lack of
reciprocity leaves the EU without any judicial guarantee before non-EU courts.
Moreover, EU restrictive measures
already represent a topic of abundant litigation, and consequent vulnerability
for the Union, before the EU Courts. That is why I was expecting a more
cautious approach from the Court of Justice (with the view of protecting its autonomous
legal order).
Lastly, will this generous
interpretation of the Court of Justice bring to a shift from geographic to thematic
restrictive measures (such as the
new EU human rights sanctions regime)? Surely the Union (and the Council)
has now to rethink about third-countries sanctions regimes. A possible solution
to avoid the proliferation of judicial challenges before the CJEU by non-EU
countries could be to rapidly shift to EU thematic sanctions regimes.
Barnard & Peers: chapter 24
Photo credit: Wiflredor, via Wikicommons
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