The EU’s Ukraine-related targeted sanctions against Russia have been constantly increased since their first imposition in March 2014, latest, at press, by a set of decisions made in 25 July 2014¹ and 29 July 2014.² Whereas in March the EU listed only people and companies who can be deemed responsible for actions which undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine, sanctioned behavior is now expanded through a set of enhanced criteria adopted by the European Council (Council).³

Sanctions are targeted against individuals or entities who: (1) actively support or implement actions or policies, which undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine, or stability or security in Ukraine, or which obstruct the work of international organizations; (2) actively provide material or financial support to, or benefit from, Russian decision-makers responsible for the annexation of Crimea and Sevastopol or the destabilization of Eastern Ukraine; or (3) natural or legal persons, entities or bodies in Crimea or Sevastopol whose ownership has been transferred contrary to Ukrainian law, or legal persons, entities or bodies which have profited from such a transfer.⁴

In addition, the 29 July 2014 decisions establish a whole new set of restrictions, with the aim of restricting Russia’s access to EU capital markets, of prohibiting import and export of arms and related material to/from Russia as well as exports of dual-use goods and technology for military use in Russia and exports of certain energy-related equipment and technology to Russia.⁵ Also new designations on targeted sanctions lists as well as new restrictions on Crimea and Sevastopol are introduced at the same token.

Leaving aside the political wisdom, or the lack of it, of such sanctioning, a few legal issues may arise should sanctioned entities decide to subject these restrictive measures to judicial review by the European Courts charged with interpreting legality under European treaty law.

The scope of judicial review by the European Courts is defined in the context of the Council’s broad discretion as to what may be taken into consideration for the purpose of adopting economic and financial sanctions on the basis of Article 29 of the TEU and Article 215 of the Treaty on the Functioning of the European Union.⁶ Also, the Council is not acting in a vacuum; public international law sets some limits on its discretion so that sanctions are balanced with the previous wrong—that is the violation of European or international law—which caused the initial adoption of sanctions in the first place. If the Council steps outside the boundaries of legality, Russia may legitimately resort to countermeasures. The downing of the Malaysian Airlines Flight 17 in July 2014 is bound to have played a role in the Council’s resolve to impose more stringent measures on Russia.⁷ However, the Council cannot act merely on the basis of considerations of political expediency but needs to derive its authority to act from the European law and underlying general principles.

Regarding the review of the lawfulness of Council decisions, the General Court has stated that:

[I]t must be restricted to checking that the rules governing procedure and the statement of reasons have been complied with, that the facts are materially accurate, and that there has been no manifest error of assessment of the facts or misuse of power. That limited review applies, especially, to the Council’s assessment of the considerations of appropriateness on which such decisions are based.⁸

What is more, with regard to the review of the lawfulness of the decision by which an entity is entered in the list, the General Court has specified that:

[T]he judicial review of the lawfulness of the decision in question extends to the assessment of the facts and circumstances relied on as justifying it, and to the evidence and information on which that assessment is based. The Court must likewise ensure that the rights of the defense are observed and the requirement of a statement of reasons is satisfied and also, where applicable, that the overriding considerations relied on exceptionally by the Council in disregarding those rights are well founded.⁹

The guarantees of the rights of the defense, especially the right to be heard and the right to effective judicial review, have received significant attention by the European judicature (see for instance the Kadi cases).¹⁰ The ECJ has reserved the European Community (Community) judicature the right to review the lawfulness of all Community acts in the light of the fundamental rights forming an integral part of the general principles of Community law.¹¹

The objective of the European Courts’ jurisprudence is to affirm the EU as a community of values based on the rule of law and the protection of fundamental rights. Hence, the Courts are willing to evaluate independently the substantive legality of different EU acts and are prepared to annul acts imposing restrictive measures if they find that the acts in question are in breach of EU legislation or general principles underlying it. Not surprisingly, the number of applications for the annulment of EU restrictive measures has constantly increased. Many of the most recent judgments annulling partially or completely restrictive measures by the Community have been issued in connection with restrictive measures taken against Iran with the aim of preventing nuclear proliferation. These comprise the most recent European jurisprudence on sanctions.¹²