Russia’s attempt to halt economic sanctions via
UK or EU courts is unlikely to bear fruit, according to a legal opinion issued on Tuesday (31 May).
Rosneft, a huge,
state-run Russian oil firm which is part-owned by British company BP, has filed
two cases against the EU measures.
The first one,
at the EU Court of Justice (ECJ) in Luxembourg, seeks to annul an EU Council
decision in July 2014 to impose curbs on credit and on technology exports to
Russian energy firms and banks.
The second one,
at the English high court, seeks to stop UK authorities from implementing the
EU decision. But the English court subsequently asked the ECJ to clarify legal
issues before giving its verdict.
Both Rosneft
cases object to the EU measures citing a laundry list of complaints.
Rosneft has said
that the Council had overreached its powers and that the terms used in its
decisions - for instance, on what is “shale” gas or which kinds of financial
services are forbidden by the sanctions - were unclear.
It said that a
1994 EU-Russia agreement forced the EU to allow free movement of goods and
capital to Russia.
It said the
Council had failed to justify its targeting of Rosneft and failed to provide
documents that it needed for its defence. It also said that it should be able
to convert shares issued before the sanctions came into effect into debt and
that two EU legal acts contradicted themselves.
In his opinion
on Tuesday, one of the EU court’s advocate generals, Melchior Wathelet, said
all of its complaints but one were invalid.
The one he
upheld, on contradictory language in EU legal acts, did not serve Rosneft well.
Rosneft had
noted that a Council decision said the sanctions covered contracts concluded
before 1 August 2014. A subsequent EU regulation gave member states the
discretion to decide whether to include old deals. But Wathelet said that the
prior decision meant that the leeway given in the regulation was “invalid”.
Wathelet’s
opinion pertains to the English court’s request for clarification.
But the ECJ has
decided to stay the proceedings in Rosneft vs. the Council until that
clarification is ready because, an ECJ source said, the points in dispute are
so similar that the British clarification will have a strong bearing on the
Council verdict.
An advocate
general’s opinion is not binding on the court, but it is followed in most
cases.
The final
verdict on the English clarification is expected between September and
December. The verdict on Rosneft vs. the Council is likely to come soon
afterward.
In general
terms, Wathelet said the EU “enjoys a broad discretion in the field of foreign
and security policy, that must also apply whenever it concludes that there is
serious international tension constituting a threat of war”.
He said the EU
did not overstep “the bounds of what was necessary” to attain its “objective of
increasing the costs of the action taken by the Russian Federation by targeting
strategic sectors of the Russian economy, including the oil sector”.
He also said the
case is of “great significance” because it will likely confirm that the Luxembourg
tribunal has jurisdiction on EU foreign policy decisions.
The Council had,
in the recent past, lost several cases in Luxembourg brought by Belarusians,
Iranians, and Ukrainians who had been subjected to travel bans and asset
seizures.
Many similar cases
are ongoing but, unlike the Rosneft challenge, the personal cases would have
little strategic impact even if the EU lost more of them.
Sanctions renewal
Meanwhile, EU
states will decide, later this month, whether to extend the life of the
economic sanctions for another six months.
According to one
senior EU diplomat, speaking on condition of anonymity, the extension is a done
deal despite attempts by some small states, such as Greece and Hungary, to
cultivate closer Russia ties.
“There are some
countries that want a review of the sanctions. But ultimately we will listen to
what [German] chancellor Merkel and [French] president Hollande will say on
whether the Minsk conditions have been fulfilled … my assessment and my
prediction is that the conditions haven’t been fulfilled,” he said.
The Minsk
ceasefire accord on Ukraine, which says all “foreign”, meaning Russian, troops
should leave and that Kiev should get back control of its border, was
negotiated by Merkel and Hollande in the Belarusian capital last year.
The diplomat
said that if there was progress on Minsk over the summer then the sanctions
would be reviewed in December.
He added that
the EU would, in a forthcoming long-term strategy paper, designate Russia as a
“strategic challenge - not a strategic partner or a strategic problem. It’s
very diplomatic language”.
He said some EU
states had wanted the EU paper to name Russia as an “aggressor” in Ukraine, but
that this is unlikely to end up in the final draft.
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