@Mister Pittinger – pixabay
On 20 March 2024 the first Chamber of the EU General Court once again had to decide on behalf of a person sanctioned due to their association and immediate familiar ties to a Russian businessperson. This time Nikita Mazepin (the Claimant) brought an action of annulment under Art. 263 TFEU before the Court, seeking to be taken off the list of sanctioned persons under Council Decision 2014/145/CFSP.
The judgement confirms the previous case law (Case T-212/22 | Prigozhina v Council) that family ties alone are not sufficient to establish necessary association and holds the Council to a high standard of factual reasoning for the inclusion and maintenance of a person on the list of sanctioned persons.
Facts of the Case:
Nikita Mazepin is a former race car driver in the Formula 1 and son to Dimitry Arkadievich Mazepin, a (sanctioned) Russian businessman involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation. The Claimant was under contract as a race car driver with Haas F1 Team until March 2022. During which a company (Uralkali), at the time controlled by his father, had a sponsoring contract with the same team which was terminated by Haas in March 2022. On 9 March 2022 the Council of the European Union (Council) first added the Claimant’s name to the list of sanctioned persons in Council Decision 2014/145/CFSP citing the following reason:
“[The applicant] is the son of Dmitry Arkadievich Mazepin, General Director of JSC UCC Uralchem. As Uralchem sponsors Haas F1 Team, Dmitry [Arkadievich] Mazepin is the major sponsor of his son’s activities at Haas F1 Team. He is a natural person associated with a leading businessperson (his father) involved in economic sectors providing a substantial source of revenue to the Government of the Russian Federation, which is responsible for the annexation of Crimea and the destabilisation of Ukraine.”
The three Council decisions subject to the judgement are so-called maintaining acts which with respect to the Claimant ensured that he remained on the list of sanctioned persons and slightly amended the reasoning each time.
The only change in reasoning in the first maintaining act which was adopted on the 14 September 2023 was grammatical. To account for the fact that the Claimant was no longer a F1 driver for Haas and his father was no longer the General Director of Uralchem (shareholder of Uralkali), the above cited reasoning was converted into past tense.
On 1 March 2023 the Council Decision 2014/145/CFSP saw the inclusion of the Claimant’s foundation “We Compete As One” allegedly funded by the Uralkali company into the reasoning. A circumstance which was said to unduly benefit the Claimant.
The last maintaining act of 13 September 2023 subject to the judgement was preceded by a Council Decision 2023/1094 which extended the general definition of sanctioned persons under Council Decision 2014/145/CFSP:
Under Art. 2 (1) (g)
“leading businesspersons or legal persons, entities or bodies involved in economic sectors providing substantial source of revenue to the Government of the Russian Federation, which is responsible for annexation of Crimea and the destabilisation of Ukraine, and natural or legal persons, entities or bodies associated with them, as listed in the Annex, […]“
remained subject to Council Decision 2014/145/CFSP. But the restrictive measures were extended to immediate family members of the leading businesspersons operating in Russia who are benefitting from them.
The final maintaining decision of 13 September 2023 subject to the judgement amended the reasoning to mention Hitech GP, a company that was partly owned by the Claimant’s father through Uralkali and is now owned by a common business associate of the Claimant as his father. The Council argued that the objective of the company was to benefit Nikita Mazepin’s career as a motorsport driver which benefits the Claimant as an immediate family member.
The Claimant brought action against the three amending Council decisions and the letters that were sent to him by the Council in response to his objections to the maintaining acts. The General Court having previously granted interim injunctions against the aforementioned Council decisions, ruled in his favour citing error of assessment on part of the Council:
Decision:
- Dismissal on the grounds of inadmissibility regarding the letters by which the Council EU decided to maintain Nikita Mazepins name on the list of persons sanctioned under Council Decision 2014/145/CFSP.
- Annulment of all three Council decisions and corresponding Council Implementing Regulations which maintained the placement of the Claimant on the list of sanctioned persons of Council Decision 2014/145/CFSP and amended the reasoning.
Analysis:
While the correspondence from the Council addressed to the Claimant, in response to his objections against the amending Council decisions, was deemed inadmissible for annulment, the remainder of the claim yielded success.
1. Inadmissibility
The General Court found that the letters had a mere responsive and informative purpose. Art. 263 TFEU (4) however requires natural persons to have individual concern in order to be eligible to bring an action of annulment before the General Court. Individual concern, meaning individual substantive interest in the letters could not be found.
2. Substance
With regards to the main part of the reasoning, the Court started by very carefully describing the scope of their judicial review regarding Council decisions on restrictive measures. It thereby recognized the discretion of the Council to determine whether a person satisfies the criteria on which the restrictive measures are issued but upheld the necessity of judicial review of the lawfulness of Union Acts in order to satisfy Art. 47 of the Charter of Fundamental Rights. This would be essential because restricted measures have a detrimental individual effect on a person, thus requiring a sufficient factual basis. The Court maintained that the question whether the Council has satisfied this requirement must be determined by judicial review which on a case-by-case basis examines whether the reasons are sufficient to support the restrictive measure.
The Court even provided guidance to the Council on how it can discharge this burden of proof: It must provide for each person subject to restrictive measures a set of indicia sufficiently specific, precise and consistent to establish that there is a sufficient link between the entity subject to a measure freezing its funds and the regime/the situation combated. The means of generating the required indicia are almost unlimited. The Court even deemed press articles to be sufficient to corroborate the existence of certain facts. Whether they prove persuasive, depends on the specific circumstances of each case.
By so clearly establishing that the burden of proof lay with the Council, the restricted person is released of any and all obligation to adduce evidence to the fact that the reasons brought by the Council are in fact not well founded, insufficient or inconsistent. Conclusively, a plausible assertation should already be acceptable.
Finally, the Court generally highlighted the nature and purpose of restrictive measures as precautionary and provisional whose validity depends on the factual and legal circumstance at the time of their adoption. For their validity it is necessary that this factual and legal basis continues to apply and that their aims are still appropriate and achievable. This is how the Court explains the necessity of conducting periodic reviews to reassess the situation, appraise the impact of the restrictive measures and readjust the means to the purpose.
In its display of general principles, the Court already indicates the two deciding factors in its reasoning: (1) The reassessment of facts by the Council must focus not only on the general situation, which is the war between Russia and the Ukraine, but especially on the particular situation of the person concerned; (2) the facts corroborating the restrictive measures against the individual person must be present at the time of each adopting or amending act.
All three Council decisions are found to lack the required precise and consistent factual basis at the time of adoption to justify the maintenance of the Claimant in the list of sanctioned persons. Thus, the Courts finds an error of assessment.
Regarding the first two maintaining acts, the Court looks at the interpretation of association. It finds that the Council has failed to provide sufficient and express grounds to assume the required association between the Claimant and his father at the time of the adoption of the acts in question. There is sufficient case law for the proposition, that a mere family link is not sufficient to establish association. On the other hand, it is held, that common economic activity is also not required for association. It is sufficient if there is a proven link of common interest at the time the contested acts are adopted.
Regarding the first maintaining act, the reasoning to maintain the Claimant on the list of sanctioned persons is explicitly based on the same reasons as for his first listing. That itself presents an error of assessment as the Council thereby ignores the evident change of circumstance. On the 14 September 2022 the Claimant isn’t part of the Haas F1 team anymore and the sponsoring contract has been terminated. While the Court recognizes the possibility that the reasons for the first adoption of restrictive measures remain the same at the time of review by the Council, it requires justification, especially if the circumstances have substantially changed. Where there is a change of individual circumstances, it must be reflected in the Council’s reasoning. Otherwise, the Council’s obligation to reassess, review and amend their decisions, as expressly stated in Art. 6 Decision 2014/145 is circumvented and deprived of its purpose to prevent the freezing of a restricted persons situation.
Additionally, the Court states that reasoning which does not appear in the decision at all cannot be considered because the legality of a Union act must be assessed on the basis of facts and law existing at the date on which the act was adopted. That is, unless a substitution of grounds is admitted, which is not the case here.
The second decision faces the same criticism by the Court. On the facts the Court also finds that the Council has not provided sufficient evidence to prove that the foundation “We Compete As One” of the Claimant was funded by his father. The press article cited to the point might generally be an admissible indicium but in the present case it not only predates the creation of the foundation but also merely states intention and is contradicted by statements made my employees of the foundation. It is therefore not persuasive to the point of proving association between the Claimant and his father.
Finally, the Court is forced to take a closer look at the familiar connection which was introduced to Decision 2014/145 by Decision 2022/329 as a criterion for a person who can be subjected to restrictive measures. The familiar connection itself, however, is not sufficient, the Claimant, in the present case, must also benefit from his father. The Court shied away from introducing a general definition for “benefit” but for the purpose of the case it concluded that benefit may be a benefit to the applicant’s career but also the procurement of any advantage. From the Court’s reasoning it can be drawn, that the advantage must be imminent as it refuses to recognize a benefit even if Dimitry Arkadievich Mazepin had really funded his son’s foundation. It is held, that even if the alleged funding of the foundation had happened, the foundation would be the beneficiary, not the Claimant himself.
Finally, the Court holds, that the Council has not sufficiently proven that the Claimant specifically and imminently benefits from the Hitech GP. It especially doesn’t seem sufficient that the Claimant is considering competing for the Hitech GP team in the future because these are wholly hypothetical, futuristic consideration without any weight for current restrictive measures.
Conclusion:
The ECJ’s ruling sets a precedent for rigorous scrutiny of EU sanctions, ensuring compliance with legal standards and protecting individual rights. By emphasizing the need for precise reasoning and periodic reviews, the court upholds the integrity of EU sanctions policies while safeguarding against unjust measures.