Photo credit: Alvegaspar, via Wikicommons media
Many challenges before the EU
General Court of listings or re-listings of Russian oligarchs and their
immediate family members have been unsuccessful in recent past.
However, on 29 November 2023, a
second de-listing application of Alexander Pumpyanskiy before the EU General
Court was successful (Case T‑734/22 Pumpyanskiy
v Council, ECLI:EU:T:2023:761 only available in French). This came after
a first application was unsuccessful (Case T-291/22 Pumpyanskiy
v Council, EU:T:2023:499 only available in French).
Alexander Pumpyanskiy is the son
of Dmitry Pumpyanskiy, a Russian billionaire and founder of TMK, a leading
producer of pipes for the oil and gas industry in Russia. Sinara Group is a Russian investment company. Dimitry,
the primary target of the designation criteria, and his wife have separate
cases before the Court.
Introduction
The basis for Mr. Pumpyanskiy’s initial
listing stemmed from his association with his father, Dmitry, through their
roles in TMK and the Sinara Group. He was also said to provide support to and
benefit from the government of Russia. In his first case the Court held that the
positions in the two companies ‘undoubtedly gave him a power of influence and
responsibilities within those undertakings’. His family relationship and
business ties with his father were sufficient to show that he was associated
with him.
Regarding his re-listings in Case
T-734/22, after periodic reviews, the EU General Court found that the criterion
of association was no longer fulfilled as the applicant had resigned from his
positions within the Sinara group and TMK on 9 March 2022 following his initial
listing. The only remaining connection to his father was his familial tie,
which the Court deemed insufficient for an association in this particular
context. Furthermore, the General Court ruled that his former roles were
insufficient evidence to demonstrate ongoing ‘support for the government’. The
Court only dismissed his request for damages
This ruling from the General
Court within the context of Russian sanctions offers valuable insights into the
Court's approach in how it will address future challenges of listings or
re-listings by immediate family members of leading Russian businesspersons. It also appears that the Prigozhina case,
the case of the mother of the late Chef of the Wagner Group Yevgeni Prigozhin (Case
T-212/22, Prigozhina
v Council, EU:T:2023:104) continues to be important case law on which
the Court will rely regarding applications of immediate family members of Russian
oligarchs.
Ceasing of business
relationship with primary target
In the case at hand the Court
recalled that the applicant's name was initially listed on the grounds that he
was related to his father, by reason of their family relationship and their business
relationship, i.e., their respective activities within the TMK company and the
Sinara group.
The General Court found that since
the applicant had ceased his functions on 9 March 2022, i.e., six months before
the adoption of the first maintenance measures, one year before the adoption of
the second and one and a half years before the adoption of the third, such past
functions, could not, by reason of the length of time, justify, on their own,
the maintenance of the measures. The past functions alone were deemed insufficient
to establish a link of association with his father within the meaning of the
criterion (g). (para. 61 of the Judgment)
Mere family relationship
insufficient
The General Court determined
that, at the time of the applicant's re-listing, there was no evidence of ‘economic
or capital ties’ or ‘common interests’ between the applicant and his father
which are necessary for fulfilling the criterion of association. Relying on its
case law of Tay
Za v Council (C-376/10 P, ECLI:EU:C:2012:138) regarding associated family
members the listing was effectively grounded solely on the family tie between
him and his father which was considered insufficient.
Ongoing relevance of Tay Za
case law
The Court accepted the Council’s
argument that the sanctions framework was different in the present case than in
the Tay Za case related to the regime of Myanmar, however it considered
that notwithstanding that, the case-law of Tay Za could be applied mutatis
mutandis, to the applicant's situation. (paras. 62 to 64 of the
Judgment)
This
underscores the ongoing relevance of the Tay Za case law, also within
the context of Russian sanctions. It appears to enable sons and daughters who
have been listed under the criterion associated with leading businesspersons
operating in Russia to be successful with their challenges of their listings or
re-listings when resigning from company positions in which the primary
sanctioned individual is or was involved.
Without
association no risk of circumvention established
The
General Court found that the Council had not established a risk of
circumvention making the exact same findings as in the Prigozhina case on
the ground that there was no association. (see paras. 54, 68-71 of the
Judgment)
The General Court like in Prigozhina
accepted that there was a ‘non-negligible risk’ that individuals providing
support to the government, e.g., leading businesspersons, might exert pressure
on individuals associated with them, e.g., their family members, in order to
circumvent the effect of the measures imposed on them. (see para. 105 of Prigozhina
case) However in the case at hand association to a leading businessperson had
not been established.
In the Syrian sanctions framework
it was expressly provided for ‘leading businesspersons operating in Syria’ and ‘members
of the Assad or Makhlouf families’ and ‘persons associated with them’. The
familial connection with these families might be adequate to include individuals'
names on the lists using the criterion of 'association with members of these
families.' (para. 70 of the Judgment) In Pumpyanskiy's case, the relevant legal
framework did not include 'members of certain families' among the listing
criteria.
The importance of being
up-to-date
As in other sanctions cases in
which applicants succeeded with their de-listing applications, the Court made
clear how important an up-to-date statement of reasons and up-to-date evidence
is. In the court proceedings the Council relied, to justify the re-listings, on
matters on which it did not rely when it adopted the contested measures. Regarding
the Council’s claim that the applicant continued to be involved in TMK’s
foreign subsidiaries after resigning from his company roles the Court ruled
that this assertion was absent from the statement of reasons. Some evidence the
Council provided post-dated the contested measures and was therefore dismissed.
(see paras. 74 and 76, 77 of the Judgment). Other evidence was not regarded as
sufficiently concrete and precise.
Material or financial support
to the Government of Russia
The Court also found that the Council
could not assume, merely because the applicant was chairman and a member of the
board of directors of the Sinara group or a member of the board of directors of
the TMK company when his name was initially entered on the lists at issue, that
he could be classified as a natural person who provides material or financial
support to the Government of Russia, even several months after leaving such
functions. That would lead to the applicant's situation being frozen and to the
periodic review exercise being deprived of any useful effect. (para. 85 of the
Judgment)
In line with previous case law
the General Court held that the ceasing of exercising functions within a
structure did not in itself imply that former functions in companies were
irrelevant, as past activities could influence behaviour. However, taken in
isolation, a person's former functions could not justify the listing. If the Council
intended to rely on past activities, it needed to provide serious and
corroborating evidence in support of its view that the applicant maintained
links with the companies in question on the date on which the contested
measures were adopted. (para. 87 of the Judgment)
Conclusion
In this case the Council failed
to convincingly prove that the applicant maintained ties with his father and
the companies in question after stepping down from his roles in those companies
at the time of his initial listing. In future similar cases, the Council might
be able to furnish convincing up-to-date evidence and establish that the family
member in question remained connected to the primary targeted individual by for
example ‘common interests’.
This case shows that there must a
complete cutting off of business ties with the primary targeted individual in
order to be successful before the Court and in order not to risk a further
listing by the Council on the basis of association.
The Court was correct in
requiring an up-to-date statement of reasons and up-to-date evidence to support
a continuous involvement of the applicant in TMK, e.g., in TMK’s foreign
subsidiaries. The result might be though that the Council in Pumpyanskiy's case
decides to update the statement of reasons and use the evidence which
post-dated the contested measures in support of a new listing. This might be
then the subject of further litigation before the General Court which is
already swamped with sanctions cases.
The risk of circumvention might
be considered by the Council as significant in many Russian sanctions cases. However,
fact remains in the absence of a presumption of circumvention by immediate
family members and the Council failing to provide convincing evidence which establishes
association and a risk of circumvention, immediate family members of leading
businesspersons will be successful before the Court.
What role the Council’s introduction
of the new listing criterion of ‘immediate family member of leading Russian
businesspersons operating in Russia’ can and will in the future play in all of this
remains to be seen. On this point see my previous
post: ‘The risk of circumvention of EU sanctions through the immediate
family of leading businesspersons and the case law of the CJEU’.
*Antje Kunst is an international lawyer and a member of Pavocat Chambers advising and representing individuals in a wide range of matters in the field of the EU’s Common Foreign Security Policy (CFSP) and takes instructions from individuals for challenging EU and UN sanctions before the EU courts and international bodies.
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