Summaries of judgments made in collaboration with the Portuguese judges and référendaire of the General Court (Maria José Costeira, Ricardo Silva Passos and Esperança Mealha)
Judgment of the General Court (Eighth Chamber, Extended Composition) 17 July 2024, Cases T-635/22 | Fridman and Others v Council and T-644/22 | Timchenko and Timchenko v Council
Common foreign and security policy – Restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine – Freezing of funds – Obligation to report funds or economic resources belonging to or owned, held or controlled by the applicants – Obligation to cooperate with the competent national authority – Participation in activities the object or effect of which is to circumvent restrictive measures – Article 9(2) and (3) of Regulation (EU) No 269/2014.
Facts
In view of the increasing complexity of sanction evasion schemes, on 21 July 2022 the Council adopted a regulation laying down obligations to report funds and to cooperate with the competent authorities. Failure to comply with those obligations is treated as a circumvention of fund-freezing measures. In practical terms, the aim is to prevent use being made of complex legal and financial arrangements capable of making it, if not easier to circumvent measures, then at least more difficult for the competent national authorities to identify the funds or economic resources subject to restrictive measures.
The parties concerned brought actions before the General Court of the European Union seeking the annulment of those obligations to declare their funds or economic resources before 1 September 2022 and to cooperate with the competent national authorities. They submit that, since those obligations are not laid down in a decision taken by the Council in the field of the common foreign and security policy (CFSP), they cannot be regarded as measures necessary for the implementation of such a decision. In particular, they argue that the Council regulation amounts to a misuse of powers, since the adoption of the obligations in question should fall within the implementing powers of the Member States.
The General Court dismisses the actions in their entirety.
In its judgments, the General Court recalls that EU law permits the adoption of regulations by the Council in order to implement or give effect to restrictive measures so as to ensure their uniform application in all Member States.
The measures provided for by EU law are not limited to obligations not to act and the Council was entitled to adopt reporting and cooperation obligations, even though they were not expressly provided for in the decision to which they relate.
The General Court also takes the view that the Council did not act in the stead of the Member States in deciding how the restrictive measures should be implemented and what penalties should apply in their territory. On the contrary, the national authorities retain their power to decide whether the offence of participation in circumvention activities and the penalties attached thereto are to be of a criminal, civil or administrative nature.
