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Breakthrough in EU sanctions law

Third countries and fundamental rights

Breakthrough in EU sanctions law

The Azarov case sees the EU’s complex sanctions regime demonstrate the interplay between law and politics and the importance of offering clients targeted, comprehensive representation.

A little more than a year after the judgement, LGP has now also been able to ensure that the individual in question has been ‘delisted’ by the Council. In other words, this means that the restrictive measures have not been renewed. The individual in question is the highest ranking former Ukrainian politician for whom this has been successful to date. We can say that ‘the wheels of the European Union turn slowly – but they are turning.’ The unique element of party representation (including in relation to the typical legal cases in Brussels) results from the distribution of competences. For example, the procedure for imposing and renewing a sanction is handled by the Council and not, as in so many other matters, by the European Commission. The Council acts as a legislator and as an administrative body, in relation to the parties concerned. The decision-making structure is quite complex: the Council works not only at ministerial level but also at the level of the Permanent Representatives of the Member States and at the level of working groups in this area, in particular. In matters of sanctions, there are even several working groups. Ultimately, the direction at these levels and higher ones is determined by the Member States, i.e. their delegations, which in turn act in line with the instructions issued by their respective capitals. While the General Secretariat primarily provides support on legal matters, the European External Action Service (EEAS) is another stakeholder in this regard.Discussions about EU sanctions (or, to use the correct terminology, restrictive measures) usually focus on their effects on the level of economics and foreign policy. This overlooks the fact that these measures take the form of legal acts. They also play a major role in the European Union’s courts, with more than 500 cases decided there. Most of these cases are actions for annulment taken against the Council of the EU as the instigator of the measures, with a handful taking the form of preliminary rulings from national courts. After LGP obtained a ground-breaking judgement for former Ukrainian Prime Minister Azarov before the European Court of Justice, the effects of the judgement are now becoming apparent, with Union institutions now given much stricter guidelines than before. This forced both the Council and the General Court (the court of first instance in the matter) to carry out highly detailed examinations. The monitoring incumbent upon the Council and the General Court covers formal, procedural and substantive aspects. The European Union’s institutions cannot rely on information from third countries. Rather, the Council must verify this information and, by extension, the facts too, including whether certain basic procedural rights have been respected in the country of origin and whether the accusations against the individuals in question are valid. In short, this relates to ensuring that the proceedings are not simply a construct. Furthermore, the Council must also justify its findings. As a result, this may even lead to the European Union’s courts compensating for the lack of legal protection offered to the individuals in question in their countries of origin.

Since the EU’s sanctions regimes also have links to third countries, their legality must be reviewed in the third country in question. This often involves the ‘translation’ (in the sense of mediation) of concrete facts and the concrete legal assessment at play. The challenge often lies in getting European Union institutions to examine each case more closely, despite the fact that hundreds of individuals and companies have to be audited each year. The European Union institutions sometimes look at the parties in question from a perspective that is primarily political, which is why the legal framework within which these institutions operate is so obscure that the European Union’s courts have annulled one measure after another, as in our case. However, one shortcoming that impairs legal protection and is hurtful for those concerned has not yet been eliminated: namely, the time that proceedings take before the European Union’s courts. Even at first instance, proceedings take longer than the measures being contested, which are usually limited to one year.

In the Azarov case, the measures were extended every year, which is why one could already speak of a perpetuum mobile. This was one of the extremely rare occasions that a law firm, especially an Austrian one, was entrusted with a mandate of geopolitical importance. It is not only the more than six years of service that are remembered, but also and above all the result, namely to have promoted the protection of fundamental rights in the EU and in third countries. 

Authors:

Dr. Gabriel Lansky, Managing Partner at LANSKY, GANZGER + partner
Univ.-Doz. Dr. Dr. Alexander Egger, Attorney at Law and Head of EU, Regulatory, Public Procurement & State Aids at LANSKY, GANZGER + partner

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