The following provides an overview of
(a) yesterday’s addition of new names to the list of persons and entities subject to the asset freeze and travel ban;
(b) clarification on the grandfathering of pre-existing contracts in relation to restricted tourism activities in Crimea and Sevastopol; and
(c) some points of interest arising from the recent judgment in Rosneft’s judicial review of aspects of the UK’s implementation of the sanctions.
Extension of asset freeze and travel ban
On 16 February the EU published in the Official Journal Council Implementing Regulation (EU) 2015/240 of 9 February 2015 (amending Regulation (EU) No 269/2014) and Council Decision (CFSP) 2015/241 of 9 February 2015 (amending Decision 2014/145/CFSP).
The new legislation extends restrictive measures in respect of actions allegedly undermining or threatening the territorial integrity, sovereignty and independence of Ukraine by adding 14 additional persons and 9 additional entities to the list of persons, entities and bodies subject to an asset freeze and travel ban.
As well as 14 Ukrainians (military or political figures in the self-declared republics of Donetsk and Lugansk) the list includes two Russian deputy defence ministers, Arkady Bakhin and Anatoly Antonov, and Andrei Kartapolov, deputy chief of the general staff of armed forces of the Russian Federation. Two members of the Russian parliament are also listed – Valery Rashkin and Joseph Kobzon. All but one of the listed entities are armed separatist groups, the exception being the Public Movement “Novorossiya”.
The asset freezes in respect of these persons operate in the usual way, and HM Treasury has also issued an advisory notice confirming the measures.
Following an extraordinary meeting of the EU’s Foreign Affairs Council on 29 January the Council also agreed to extend the asset freeze and travel ban (due to expire this March) until September 2015.
No legislation has yet been published to effect this decision.
Tourism restrictions relating to Crimea and Sevastopol: grandfathering of pre-existing contracts
On 13 February the EU published a corrigendum to Council Regulation (EU) No 1351/2014 of 18 December 2014 amending Regulation (EU) No 692/2014 relating to the restrictive measures focused on Crimea and Sevastopol.
The corrigendum clarifies the scope of the carve-out of pre-existing contracts from the ban on tourism activities in Crimea and Sevastopol. Specifically it amends Article 2d(4) as follows:
- “4. The prohibitions in paragraphs 1 and 2 shall be without prejudice to the execution until 21 March 2015 of an obligation arising from a contract or an ancillary contract concluded before 20 December 2014…”.
Accordingly, there is now a long-stop date after which this exception cannot be relied upon.
Separately, the UK legislation which will criminalise breach of the extended Crimea-focused sanctions (the Export Control (Various Amendments) Order 2015) was passed on 3 February and will come into force on 24 February 2015.
Judgment in Rosneft’s judicial review application
The UK High Court has handed down judgment in a judicial review application brought by Rosneft (an entity subject to the sectoral/capital markets sanctions) against HM Treasury, the Secretary of State for Business, Innovation and Skills, and the Financial Conduct Authority.
The Court has referred a number of questions to the EU Court of Justice (CJEU). These are listed in the Schedule to the Judgment and include questions relating to:
- the validity of certain elements of the sanctions (relating to the oil sector and the capital markets restrictions);
- whether it is contrary to principles of legal certainty for breach of these provisions (if they are valid) to be criminalised;
- whether the term “financing or financial assistance” includes payment processing;
- whether the capital markets restrictions prevent the issuance of GDRs in relation to “old” transferable securities; and
- the proper interpretation of “shale” and “waters deeper than 150 metres”.
The UK proceedings will now remain stayed, pending the outcome of the proceedings before the CJEU.
Rosneft is separately pursuing an annulment challenge before the General Court, as are a number of other entities who are subject to the sectoral sanctions.
The Court also expressed its preliminary views (subject to the outcome of the CJEU reference) on a number of issues (see section C of the judgment), including:
- that the measures should be capable of challenge;
- that the measures were not sufficiently ambiguous to offend the principle of legal certainty; and
- that GDRs on “old” shares are not permitted.
An interesting (for those who are interested in such matters) summary of Rosneft’s and the Defendants’ arguments is included in the Schedule to the judgment.
Next steps
Whilst the European Council and Commission, together with the leaders of the G7 (UK, France, Germany, Italy, Canada, USA, Japan) have welcomed the agreement reached in Minsk on 12 February, the situation remains fragile and the G7 has stated that it remains ready to adopt “appropriate measures” against persons who violate the “Minsk package” and, in particular, those who do not observe the agreed ceasefire and withdrawal of heavy weapons.
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