JUDGMENT OF THE GENERAL COURT (First Chamber)
19 June 2024 (*)
(Common foreign and security policy – Restrictive measures taken in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine – Freezing of funds – List of persons, entities and bodies subject to the freezing of funds and economic resources – Maintaining the applicant’s name on the list – Definition of ‘benefitting from Russian decision-makers’ – Definition of ‘benefitting from the Government of the Russian Federation’ – Article 2(1)(d) and (f) of Decision 2014/145/CFSP – Obligation to state reasons – Error of assessment – Proportionality – Right to property – Freedom to conduct a business)
In Case T‑738/22,
Igor Rotenberg, residing in Moscow (Russia), represented by D. Rovetta, M. Campa, M. Moretto and V. Villante, lawyers, and S. Gee, Barrister,
applicant,
v
Council of the European Union, represented by J. Rurarz and P. Mahnič, acting as Agents, and by B. Maingain and S. Remy, lawyers,
defendant,
THE GENERAL COURT (First Chamber),
composed of D. Spielmann (Rapporteur), President, I. Gâlea and S.L. Kalėda, Judges,
Registrar: M. Zwozdziak-Carbonne, Administrator,
having regard to the written part of the procedure,
further to the hearing on 7 February 2024,
gives the following
Judgment
1 By his action under Article 263 TFEU, the applicant, Mr Igor Rotenberg, seeks annulment of Council Decision (CFSP) 2022/1530 of 14 September 2022 amending Decision 2014/145/CFSP concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2022 L 239, p. 149) and of Council Implementing Regulation (EU) 2022/1529 of 14 September 2022 implementing Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2022 L 239, p. 1), in so far as those acts (together, ‘the contested acts’) concern him. He also seeks annulment of the letter from the Council of 16 September 2022 by which the Council informed him that it had decided to maintain his name on the lists of persons subject to restrictive measures pursuant to the contested acts (‘the lists at issue’).
Background to the dispute
2 The present case has been brought in connection with the restrictive measures adopted by the European Union in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.
3 On 17 March 2014, the Council of the European Union adopted, under Article 29 TEU inter alia, Decision 2014/145/CFSP concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2014 L 78, p. 16). On the same day, it adopted, pursuant to Article 215 TFEU, Regulation (EU) No 269/2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2014 L 78, p. 6).
4 On 25 February 2022, in view of the gravity of the situation in Ukraine, the Council adopted Decision (CFSP) 2022/329 amending Decision 2014/145 (OJ 2022 L 50, p. 1) and Regulation (EU) 2022/330 amending Regulation No 269/2014 (OJ 2022 L 51, p. 1), in order, inter alia, to amend the criteria according to which natural or legal persons, entities or bodies could be subject to the restrictive measures at issue.
5 On 8 April 2022, the Council adopted Decision (CFSP) 2022/582 amending Decision 2014/145 (OJ 2022 L 110, p. 55) and Implementing Regulation (EU) 2022/581 implementing Regulation No 269/2014 (OJ 2022 L 110, p 3). The Council considered inter alia that companies supporting, materially or financially, or benefitting from the Government of the Russian Federation and materially or financially supporting actions which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine should also be subject to restrictive measures and, on that basis, added the applicant’s name, amongst others, to the list of persons, entities and bodies subject to restrictive measures contained in the annex to Decision 2014/145.
6 Article 2(1) and (2) of Decision 2014/145, as thus amended, provides the following:
‘1. All funds and economic resources belonging to, or owned, held or controlled by:
…
(d) natural or legal persons, entities or bodies supporting, materially or financially, or benefiting from Russian decision-makers responsible for the annexation of Crimea or the destabilisation of Ukraine;
…
(f) natural or legal persons, entities or bodies supporting, materially or financially, or benefitting from the Government of the Russian Federation, which is responsible for the annexation of Crimea and the destabilisation of Ukraine;
…
and natural or legal persons, entities or bodies associated with them, as listed in the Annex, shall be frozen.
2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies listed in the Annex.’
7 The detailed rules governing that freezing of funds are laid down in the subsequent paragraphs of that article.
8 Regulation No 269/2014, also as amended, requires that measures to freeze funds be adopted and defines the detailed rules for such freezing in essentially identical terms to those in Decision 2014/145, as amended. Article 3(1)(a) to (g) of that regulation in fact reproduces, in essence, Article 2(1)(a) to (g) of that decision.
9 By letter of 12 September 2022, the applicant requested that the Council provide him with access to the evidence examined in support of the inclusion of his name on the lists at issue.
10 On 14 September 2022, the Council adopted the contested acts, which maintain the applicant’s name on the lists at issue for the same reasons as those which formed the basis for his initial inclusion. On 15 September 2022, the Council published in the Official Journal of the European Union the Notice for the attention of the persons, entities and bodies subject to the restrictive measures provided for in Decision 2014/145, as amended by Decision 2022/1530, and in Regulation No 269/2014, as implemented by Implementing Regulation 2022/1529 (OJ 2022 CI 353, p. 1).
11 By letter of 16 September 2022, the Council informed the applicant that it had decided, on the same grounds, to maintain his name on the list of persons and entities subject to restrictive measures pursuant to the contested acts.
12 By letter of the same day, the applicant requested that the Council provide him with access to all new documents and evidence examined in support of the retention of his name on the contested lists.
13 By letter of 20 September 2022, the Council sent to the applicant file WK 5025/2022 (‘the file of evidence’) upon which it had based its decision.
14 By letter of 31 October 2022, the applicant requested that the Council reconsider the decision to maintain him on the lists at issue.
15 The reasons for the inclusion of the applicant’s name on the lists at issue are as follows:
‘[The applicant] is a Russian billionaire businessman, the oldest son and heir of Arkady Rotenberg, Russian billionaire businessman and co-owner of the SGM (Stroygazmontazh) group. He is the majority shareholder in Gazprom Drilling. The Rotenbergs are closely associated with President Putin. Due to his positions in leading Russian enterprises, including SGM, Gazprom Drilling and Mostotrest, which have received large state contracts, and his close ties with President Putin, Igor Rotenberg is benefitting from Russian decision-makers and the Government of the Russian Federation, both responsible for the annexation of Crimea and the destabilisation of Ukraine. Furthermore, he is a natural person associated with Arkady Rotenberg and President Putin, both listed under restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.’
Forms of order sought
16 The applicant claims that the Court should:
– annul the contested acts;
– annul the decision of the Council resulting from the letter of 16 September 2022 to maintain his name on the lists at issue;
– order the Council to pay the costs.
17 The Council contends that the Court should:
– dismiss the action against its letter of 16 September 2022 as inadmissible;
– dismiss the action as unfounded;
– order the applicant to pay the costs.
Law
18 In support of the action, the applicant raises a plea of illegality in respect of Article 2(1)(d) and (f) of Decision 2014/145. He also raises a first plea in law, alleging infringement of the obligation to state reasons and of the right to effective judicial protection; a second plea in law, alleging a manifest error of assessment; and a third plea, alleging infringement of fundamental rights and, in particular, of his right to free exercise of an economic activity and his right to property, as well as infringement of the principle of proportionality.
Admissibility of the action in so far as it is directed against the letter of 16 September 2022
19 The Council raises the inadmissibility of the action in so far as it is directed against the Council’s letter of 16 September 2022, on the ground that that letter merely communicates its decision, adopted by way of the contested acts, to maintain the applicant’s name on the lists at issue. The letter is not therefore an act affecting the applicant’s legal situation and the applicant has no interest in challenging it.
20 The applicant has not submitted written observations in that regard. At the hearing, he argued that the Council’s letter of 16 September 2022 was a separate decision confirming the Council’s position, which was formalised in the contested acts. It was a preparatory act, inextricably linked to the contested acts, which supplemented the statement of reasons.
21 It should be recalled that, according to the case-law, any measure the legal effects of which are binding on, and capable of affecting the interests of, the applicant by bringing about a distinct change in his or her legal position is an act or a decision which may be the subject of an action for annulment under Article 263 TFEU. In that connection, it has been held that a measure of a purely informative character can neither affect the interests of the addressee or change his or her legal position compared with the situation prior to receipt of that measure (judgment of 11 December 2012, Sina Bank v Council, T‑15/11, EU:T:2012:661, paragraph 30; see also order of 25 April 2023, RT France v Council, T‑605/22, not published, EU:T:2023:228, paragraph 31 and the case-law cited).
22 In the present case, the Council’s letter of 16 September 2022 is the act by way of which the Council informed the applicant that it had decided to extend the restrictive measures to which he was subject. In that letter, the Council also stated that the applicant could apply to the competent national authorities for exemptions pursuant to Article 4 of Regulation No 269/2014, and that he could, by 2 November 2022, request that the Council reconsider its decision, with such a request to be accompanied by supporting documents. The Council also referred to the applicant’s right of action.
23 The sending of that letter followed the adoption of the contested acts, namely Decision 2022/1530 and Implementing Regulation 2022/1529, which maintain the applicant’s name on the lists at issue.
24 This was therefore a purely informative measure, which, as such, is not capable of forming the subject matter of an action for annulment under Article 263 TFEU.
25 Accordingly, the applicant’s second head of claim seeking annulment of that measure must be rejected as inadmissible.
Substance
The plea of illegality in respect of Article 2(1)(d) and (f) of Decision 2014/145
26 The applicant relies, in the reply, on Article 277 TFEU and claims that the concept of ‘benefitting from Russian decision-makers or the Government of the Russian Federation’, which is strictly interpreted by the Council, is unlawful because it allows any person operating in public procurement markets to be included on the lists at issue, which is incompatible with the freedom to conduct a business protected under Article 16 of the Charter of Fundamental Rights of the European Union (‘the Charter’) and with the right to property protected by Article 17 of the Charter and inconsistent with the objectives of the EU sanctions against Russia.
27 The Council takes the view that the plea of illegality should be declared inadmissible or, in any event, unfounded.
28 It should be observed that the plea of illegality is raised only in the reply. The fact that the applicant explained, at the hearing, that that plea of illegality was contingent on the interpretation, by the Court, of the concept of ‘benefit’, does not invalidate that finding.
29 However, the context of the dispute is determined by the application initiating proceedings and a plea of illegality is inadmissible at the reply stage (see judgment of 27 September 2005, Common Market Fertilizers v Commission, T‑134/03 and T‑135/03, EU:T:2005:339, paragraph 51 and the case-law cited). Furthermore, the plea of illegality is not based on any matter of law or of fact which came to light in the course of the procedure within the meaning of Article 84 of the Rules of Procedure of the General Court.
30 In the light of the foregoing, the plea of illegality raised, for the first time, at the reply stage must be rejected.
The first plea in law, alleging infringement of the obligation to state reasons and of the right to effective judicial protection
31 The applicant submits that the reasons stated in the contested acts constitute an incomplete and stereotyped or contradictory statement of reasons. He claims that the Council has failed to explain how he benefits from Russian decision-makers and from the Government of the Russian Federation, when he no longer holds any stake in the companies referred to in that statement of reasons. In addition, the Council does not state how being the son of Arkady Rotenberg is relevant having regard to the listing criteria applied. Nor does it state how ‘the Rotenbergs’ are closely associated with President Putin or who is concerned. Furthermore, the applicant states that he does not understand how the fact that he received important state contracts could be grounds for considering that he has contributed to or supported Russia’s actions. Lastly, according to the applicant, no explanation has been provided as to how being awarded public contracts entails an undue benefit as compared with those awarded to third parties.
32 The Council disputes that line of argument.
33 It is settled case-law that the right to effective judicial protection, which is affirmed in Article 47 of the Charter, requires that the person concerned must be able to ascertain the reasons upon which the decision taken in relation to him or her is based, either by reading the decision itself or by requesting and obtaining disclosure of those reasons (see judgment of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 100 and the case-law cited).
34 Furthermore, it should be recalled that the statement of reasons required by Article 296 TFEU must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted the measure in such a way as to enable the persons concerned to ascertain the reasons for the measure for the purpose of assessing whether it is well founded and to enable the court having jurisdiction to exercise its power of review (judgments of 1 June 2022, Prigozhin v Council, T‑723/20, not published, EU:T:2022:317, paragraph 25, and of 6 September 2023, Pumpyanskiy v Council, T‑291/22, not published, EU:T:2023:499, paragraph 25).
35 The statement of reasons required by Article 296 TFEU must be appropriate to the measure at issue and the context in which it was adopted. The requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom it is of direct and individual concern, may have in obtaining explanations. In particular, it is not necessary for the reasoning to go into all the relevant facts and points of law or to provide a detailed answer to the considerations set out by the person concerned when consulted prior to the adoption of that same measure, since the question whether the statement of reasons is sufficient must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question. Consequently, the reasons given for a measure adversely affecting a person are sufficient if that measure was adopted in a context which was known to that person and which enables him or her to understand the scope of the measure concerning him or her (judgment of 15 November 2012, Council v Bamba, C‑417/11 P, EU:C:2012:718, paragraphs 53 and 54; see, also, judgment of 22 April 2021, Council v PKK, C‑46/19 P, EU:C:2021:316, paragraph 48 and the case-law cited).
36 Finally, it is important to note that the question of the statement of reasons, which concerns an essential procedural requirement, is separate from that of the evidence of the alleged conduct, which concerns the substantive legality of the act in question and involves assessing the truth of the facts set out in that act and the characterisation of those facts as evidence justifying the use of restrictive measures against the person concerned (judgments of 15 November 2012, Council v Bamba, C‑417/11 P, EU:C:2012:718, paragraph 60, and of 6 October 2015, Chyzh and Others v Council, T‑276/12, not published, EU:T:2015:748, paragraph 111).
37 In the present case, the statement of reasons relied on vis-à-vis the applicant in the contested acts is the statement of reasons set out in paragraph 15 of the present judgment.
38 It is sufficiently clear that the Council included the applicant’s name on the lists at issue by basing its decision, first, on benefitting from Russian decision-makers or from the Government of the Russian Federation, responsible for the annexation of Crimea or the destabilisation of Ukraine, within the meaning of Article 2(1)(d) of Decision 2014/145 and within the meaning of Article 2(1)(f) of that decision (‘criteria (d) and (f)’) and, second, the criterion relating to natural and legal persons, entities or bodies associated therewith (Article 2(1), in fine, of Decision 2014/145).
39 Furthermore, contrary to the applicant’s claims, the circumstances set out in the statement of reasons are sufficiently clear, precise and non stereotyped as to enable him to understand the reasons why his name was maintained on the lists at issue.
40 In particular, it follows sufficiently clearly that benefitting from Russian decision-makers and from the Government of the Russian Federation consists, inter alia, in being the co-owner of the SGM (Stroygazmontazh) Group, a majority shareholder in Gazprom Drilling, and holding positions in leading Russian undertakings that have received important state contracts. The fact that the statement of reasons does not contain any further detail concerning, inter alia, those state contracts cannot lead to a finding of infringement of the obligation to state reasons, since, in accordance with the case-law recalled in paragraph 34 above, the Council is not required to go into all the relevant facts and points of law, and the applicant was put in a position to understand the scope of the measures taken against him.
41 Similarly, the reasons relating to the criterion of the applicant’s association with his father and with President Putin are explicitly set out.
42 It should be added that, by letter of 20 September 2022, the Council granted the applicant’s request for access to the case file and sent him the file of evidence on which it had based the contested acts. That file contained information relating to the factors that justify maintaining the applicant’s name on the lists at issue, including the legal basis for that maintenance.
43 Consequently, since the applicant was put in a position to understand the measures taken against him, the fact that the statement of reasons does not go into further detail as to the benefits drawn from and the nature of the association at issue does not contravene the requirements of a statement of reasons, as recalled in paragraphs 32 to 34 above.
44 Finally, the other arguments raised by the applicant, concerning the fact that he no longer owns any shareholdings in the companies mentioned, that concluding important state contracts does not establish that he supports Russia’s actions, that receiving state contracts does not involve an ‘undue’ advantage, and that the ties to his father are purely familial, form part of the assessment of the merits.
45 It must therefore be held that the statement of the reasons on which the contested acts are based is sufficiently clear and precise as to enable the applicant to ascertain the reasons which led the Council to take the view that including his name on the lists at issue was justified, to challenge the lawfulness of those acts before the Courts of the European Union, and to enable the latter to exercise its power of review.
46 Accordingly, the applicant’s arguments that the statement of reasons on which the contested acts are based is imprecise, and thus disregards the obligation to state reasons as well as his right to effective judicial protection, must be rejected.
47 Consequently, the first plea must be rejected.
The second plea in law, alleging a manifest error of assessment
48 The applicant maintains that the facts set out by the Council in the grounds of the contested acts are inaccurate. First, he disputes benefitting from Russian decision-makers or from the Government of the Russian Federation within the meaning of criteria (d) and (f) and, second, he disputes being associated with his father and President Putin within the meaning of the criterion under Article 2(1), in fine, of Decision 2014/145.
49 The Council disputes that line of argument.
50 As a preliminary point, it should be pointed out that the second plea in law must be regarded as alleging error of assessment, and not manifest error of assessment. While it is, admittedly, true that the Council has a degree of discretion to determine, on a case-by-case basis, whether the legal criteria on which the restrictive measures at issue are based are satisfied, the fact remains that the Courts of the European Union must ensure the review, in principle the full review, of the lawfulness of all EU acts (judgment of 15 November 2023, OT v Council, T‑193/22, EU:T:2023:716, paragraph 121).
51 Next, it should be pointed out that the effectiveness of the judicial review guaranteed by Article 47 of the Charter requires in particular that the EU judicature is to ensure that the decision by which restrictive measures were adopted or maintained, which affects the person or entity concerned individually, is taken on a sufficiently solid factual basis. That entails a verification of the factual allegations in the summary of reasons underpinning that decision, with the consequence that judicial review cannot be restricted to an assessment of the cogency in the abstract of the reasons relied on, but must concern whether those reasons, or, at the very least, one of those reasons, deemed sufficient in itself to support that decision, is substantiated (judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 119, and of 15 November 2023, OT v Council, T‑193/22, EU:T:2023:716, paragraph 122).
52 It is the task of the competent EU authority to establish, in the event of challenge, that the reasons relied on against the person or entity concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded (judgments of 18 July 2013, Commission and Others v Kadi, C‑584/10 P, C‑593/10 P and C‑595/10 P, EU:C:2013:518, paragraph 121; of 3 July 2014, National Iranian Tanker Company v Council, T‑565/12, EU:T:2014:608, paragraph 57; and of 15 November 2023, OT v Council, T‑193/22, EU:T:2023:716, paragraph 123).
53 In the absence of investigative powers in third countries, the assessment of the EU authorities must rely on publicly available sources of information, reports, articles in the press, intelligence reports or other similar sources of information (judgments of 14 March 2018, Kim and Others v Council and Commission, T‑533/15 and T‑264/16, EU:T:2018:138, paragraph 107, and of 15 November 2023, OT v Council, T‑193/22, EU:T:2023:716, paragraph 115).
54 Furthermore, it should be noted that the conflict situation involving Russia and Ukraine can make it particularly difficult to access certain sources, to specify the primary source of some information and to collect testimonies from persons who agree to be identified. Ensuing investigation difficulties can prevent specific evidence and objective information from being provided (see judgment of 15 November 2023, OT v Council, T‑193/22, EU:T:2023:716, paragraph 116 and the case-law cited).
55 It is in the light of those rules of case-law that the merits of the applicant’s arguments concerning compliance with criteria (d) and (f), applied in the present case, must be examined.
56 In order to justify the inclusion of the applicant’s name on the lists at issue, the Council based its decision on the following exhibits in the file of evidence:
– an article from the online encyclopaedia Wikipedia concerning the applicant (exhibit No 1);
– an article published on the website of the magazine Forbes, dated 8 March 2018, concerning an overview of the applicant’s assets and his revenue structure (exhibit No 2);
– an article published on the website of the daily newspaper Süddeutsche Zeitung, dated 21 September 2020, concerning the transfer of assets within the Rotenberg family in order to circumvent the sanctions (exhibit No 3);
– an article published on the website of the daily newspaper The Washington Post, dated 5 October 2021, concerning the effect of the sanctions on oligarchs and particularly in relation to the circumvention of those sanctions (exhibit No 4);
– an article published on the website of the magazine Forbes, dated 22 February 2018, concerning the Russians who profit the most from state contracts and referring, inter alia, to the applicant on account of his 78.71% holding, as at 29 December 2017, in Gazprom Burenie, the successful company in calls for tender issued by the State companies Gazprom and Rosneft in 2017 (exhibit No 5);
– a report, dated 29 July 2020, from the United States Senate Permanent Subcommittee on Investigations on the asset structure of Russian oligarchs, in particular on the art market and the use of those assets to undermine sanctions (exhibit No 6);
– an article published on the website ‘rbc.ru’, dated 13 January 2018, stating that the applicant is one of the three owners of Gazprom Drilling (exhibit No 7);
– an article published on the website ‘Fortune.com’, dated 23 February 2022, stating inter alia that the applicant is co-owner of the SGM Group and is ‘a close associate of Putin’ (exhibit No 8);
– an article on the website of The Moscow Times, dated 17 November 2013, stating that the applicant benefitted from the Russian Government by winning the tender to build a highway (exhibit No 9).
57 The Court deems it relevant to examine, first of all, the maintenance of the applicant’s listing in the light of the concept of ‘benefitting from Russian decision-makers or from the Government of the Russian Federation’ within the meaning of criteria (d) and (f).
58 The applicant disputes the claim that he benefits from Russian decision-makers or from the Government of the Russian Federation. First, he states that he sold his shares in the SGM Group in 2014 to his father, who himself sold them in 2019, with the result that, as at 21 November 2019, the sole shareholder in the SGM Group was JSC Stroyinvestholding. It is claimed that JSC Stroygazmontazh (‘the company SGM’ or ‘SGM’) has been in liquidation proceedings since 28 April 2022. Second, he states that he sold the shares that he held in the company Gazprom Drilling on 26 July 2021 and therefore contests exercising control over that company. Third, he states that he sold his shares in the company Mostotrest in April 2015, and disputes that he exercised control over or held shares in that company on the date of the contested acts. In the reply, the applicant mentions various companies in which he no longer holds positions or owns shares and over which he has no power of control. He adds that being or, primarily, having been involved in certain companies which concluded state contracts is not sufficient grounds to consider that he benefits from Russian decision-makers or from the Government of the Russian Federation. In the applicant’s view, the concept of ‘benefitting from Russian decision-makers or the Government of the Russian Federation’ requires that there be an undue benefit as compared with those assigned to third parties and which exceeds an ordinary benefit either qualitatively or quantitatively. However, receiving large state contracts cannot be grounds for considering that he has contributed to or supported Russia’s actions or that he has obtained an undue advantage as compared with other entrepreneurs. He concludes that the Council has failed to adduce evidence that he benefits from Russian decision-makers or from the Government of the Russian Federation and submits that he does not benefit from any state contract awarded to those companies.
59 The Council disputes that line of argument.
60 It should be observed that, as to the condition relating to benefitting from Russian decision-makers or the Government of the Russian Federation, criteria (d) and (f) do not require that the persons or entities concerned benefit personally from the annexation of Crimea or from the destabilisation of eastern Ukraine. It is sufficient that they benefit from one of the ‘Russian decision-makers’ or from the ‘government’ responsible for those events, and it is not necessary to establish a link between the advantages enjoyed by the designated persons and the annexation of Crimea or the destabilisation of eastern Ukraine (see, to that effect, judgment of 30 November 2016, Rotenberg v Council, T‑720/14, EU:T:2016:689, paragraph 87).
61 Consequently, the applicant’s argument that the fact of having received important state contracts does not allow it to be inferred that he contributed to or supported the actions of the Russian Federation is ineffective.
62 As regards the concept of ‘benefit’, within the meaning of criteria (d) and (f), it is held to be a profit of any kind. Thus, it has been held that the acquisition of control of certain undertakings may in itself appear to be a profit, although that may not involve immediate financial profits (judgment of 7 June 2023, Shakutin v Council, T‑141/21, not published, EU:T:2023:303, paragraphs 172 and 173).
63 In the context of applying criteria (d) and (f), such a benefit may be constituted where the existence thereof is demonstrated.
64 In that connection, it should be recalled that the mere fact of being successful in one or several calls for tender is not in itself sufficient for it to be concluded that there are links enabling the person concerned to take advantage of Russian decision-makers or of the Russian Government, within the meaning of the applicable criteria (see, to that effect, judgment of 16 March 2022, Sabra v Council, T‑249/20, EU:T:2022:140, paragraph 215). However, the concept of ‘benefit’ and the issue of its scope must be interpreted in the light of the factors in the case, having regard to the situation in Ukraine and the objectives pursued by the contested acts, namely to exert pressure on the Russian authorities so that they bring an end to their actions and policies destabilising Ukraine.
65 Furthermore, as regards the concepts of ‘Russian decision-makers’ and ‘Government of the Russian Federation’ at the root of the benefits from which the persons included on the lists at issue on the basis of criteria (d) and (f) profit, it is necessary that those decision-makers or that government should, at the very least, have begun to prepare for the annexation of Crimea and the destabilisation of eastern Ukraine. Where that condition is satisfied, it must be concluded that the recipients of those benefits cannot be unaware of the involvement of those decision-makers and of that government in the preparations, and can expect their resources, derived at least in part from those benefits, to be targeted by restrictive measures, with the aim of preventing them from being able to support the decision-makers or the government in question (see, to that effect, judgment of 30 November 2016, Rotenberg v Council, T‑720/14, EU:T:2016:689, paragraph 91).
66 On that point, it must be noted that the restrictive measures in question are a reaction to the policies and activities of the Russian authorities in relation specifically to Ukraine, and not to the conduct of those authorities in general. However, those policies and activities have been implemented since the end of February 2014 (judgment of 30 November 2016, Rotenberg v Council, T‑720/14, EU:T:2016:689, paragraph 92) and were amplified in 2021 to culminate in the military operation in Ukraine launched on 24 February 2022, the gravity of which situation persists to this day.
67 Moreover, the concept of ‘Russian decision-makers’, placed in the context of the restrictive measures at issue, refers to high-ranking officials of the Russian Federation, including the President of the Russian Federation and the members of the Russian Government (judgment of 20 September 2023, Mordashov v Council, T‑248/22, not published, EU:T:2023:573, paragraph 92).
68 It is in the light of those considerations that the question whether the Council justified, to the requisite legal standard, that criteria (d) and (f) had been met, must be examined.
69 The Court must rule beforehand on the admissibility of the supplementary evidence produced by the applicant.
– The admissibility of the supplementary evidence produced by the applicant
70 It should be borne in mind that Article 85(3) of the Rules of Procedure provides that the main parties may, exceptionally, produce or offer further evidence before the oral part of the procedure is closed or before the decision of the General Court to rule without an oral part of the procedure, provided that the delay in the submission of such evidence is justified.
71 In the present case, the applicant produced five documents on 24 January 2024, stating that these were available only after the closure of the written part of the procedure on 24 May 2023. He claims that these documents are new and necessary to rebutting some of the Council’s assertions.
72 The Council contends that that evidence is out of time and therefore inadmissible, as well as being irrelevant in any event.
73 It should be noted that the first document, produced in Annex AE.1, is an extract from the State register concerning the liquidation of SGM on 20 July 2023. The second, third and fourth documents, produced in Annexes AE.2 to AE.4, comprise an extract from the State register dated 26 December 2023, an article published on the website ‘rbc.ru’ on 15 December 2023 and an article published on the website ‘tass.ru’ on 27 December 2023, all of which concern the transfer, on 26 December 2023, of the applicant’s shares in the company RT-Invest Transport Systems (RTITS) to the managing director of that company.
74 These documents thus refer to factual matters arising subsequent to the contested acts. The taking into account of those documents is therefore excluded for the purposes of assessing the lawfulness of those acts. Thus, without it being necessary to rule on the admissibility of the offer of evidence, it must be held that, since those documents have no effect on the examination of the lawfulness of the contested acts, that offer of evidence is irrelevant in the context of the present case.
75 As regards Annexes AE.5 and AE.6, dated 28 July and 27 June 2023 respectively, these contain two reports commissioned by the applicant. These are (i) a report from an ‘independent Russian legal expert’ concerning the analysis of the applicant’s father’s will, which concludes that the applicant is not named therein, and (ii) an expert report on the perception of corruption in Russia.
76 According to the applicant, these reports seek to rebut the factual allegations put forward by the Council at a stage where the applicant no longer had the opportunity to respond.
77 However, it is clear that the grounds of the contested acts referred, from the moment that the applicant’s name was included on the lists at issue, to the concept of ‘heir’, to which the report of 28 July 2023 is intended to respond.
78 Similarly, the allegation relating to corruption in Russia was already contained in the observations in defence submitted by the Council, which produced in annex to its defence articles on nepotism and corruption in Russia, to which the report of 27 June 2023 is intended to respond.
79 The applicant, who commissioned those reports, has failed to set out the reasons why he was unable to produce them at the very least in support of the reply, with the result that he has failed to justify the late production thereof.
80 Accordingly, Annexes AE.5 and AE.6 were produced out of time and are therefore inadmissible.
– The error of assessment concerning the concept of ‘benefitting from Russian decision-makers or from the Government of the Russian Federation’, within the meaning of criteria (d) and (f)
81 It is necessary to examine whether the Council was right to maintain the applicant’s name on the lists at issue on the grounds, inter alia, that he was the majority shareholder of Gazprom Drilling, co-owner of the SGM Group, and on account of his positions in leading Russian undertakings including SGM, Gazprom Drilling and Mostotrest PJSC, which have received important state contracts.
82 In the first place, as regards the applicant’s positions within the companies Gazprom Drilling, SGM and Mostotrest PJSC, the following should be noted.
83 First of all, the company Gazprom Drilling (or Gazprom Burenie) is the largest drilling undertaking in Russia, the result of the merger of the various drilling departments in the companies of the Gazprom Group, following the privatisation of assets in late 2010. The applicant’s father, who owned the company in 2011, transferred his shares to the applicant in 2014.
84 As the Council states, it is apparent from exhibit No 5 in the file of evidence that that company won several dozens of calls for tender issued by the undertakings Rosneft and Gazprom in 2017. It is also apparent from exhibit No 7 that the applicant held 78.71% of that company from 29 December 2017 onwards. Exhibits Nos 2, 5 and 7, which are corroborated by Annex B.2 to the defence, thus provide insight into the applicant’s fortune, estimated in 2018 at 1.1 billion United States dollars (USD) (approximately EUR 1.02 billion), in particular on account of his assets in the company Gazprom Drilling, the market value of which was estimated at 41 to 48 billion Russian roubles (RUB) (approximately EUR 418 to 489 million) in 2020.
85 It is, however, apparent from the information before the Court that the applicant and the other shareholders in Gazprom Drilling transferred their shares to Gazprom on 26 July 2021 for RUB 67.929 billion (approximately EUR 692 million) in total. Furthermore, the applicant states that he has not been a member of the board of directors since 2019, which is not disputed by the Council. On the date of the contested acts, the applicant was therefore no longer a majority shareholder in Gazprom Drilling.
86 Next, it is apparent from the information before the Court that the company SGM managed, inter alia, the project to build the Kerch Strait Bridge which connects Crimea to Russia, and was involved in the construction thereof. The company SGM had previously been successful in tendering procedures and had also been awarded state contracts involving no calls for tender. The applicant does not dispute having controlled that company from 2012 to 5 August 2014, but states that his shares were sold in particular to his father in 2014, though another company, then sold on thereafter. He states that, in 2019, the sole shareholder in that company was JSC Stroyinvestholding, which was restructured into ‘JSC Stroygazmontazh’ in September 2020, before joining the Gazprom Group in 2021. He maintains that, when the contested acts were adopted, he no longer held any shares in the company SGM. He adds that that company has been in liquidation proceedings since 28 April 2022.
87 The Council does not dispute that, when the contested acts were adopted, the applicant’s shares had been sold. In that connection, the Council maintained, in its written pleadings, that the applicant’s shares in SGM were sold in November 2019. However, it is apparent from its answers given at the hearing that the shares sold in November 2019 were those held by the applicant’s father. Consequently, in the absence of challenge by the Council at the hearing and of any material to invalidate that claim, it must be found that the applicant sold his shares in SGM in 2014.
88 It follows from all of the above that the applicant was no longer a co-owner of SGM on the date on which the contested acts were adopted. Furthermore, his duties in SGM date back to a period which begins in 2012 and ends on 5 August 2014.
89 Finally, in so far as concerns Mostotrest PJSC (‘Mostotrest’), which was founded in 1992, it is apparent from exhibit No 9 in the file of evidence that, in 2013, that company, jointly owned by the applicant and his father, was successful in a call for tenders for the construction and operation of a 209-kilometre-long stretch of a toll motorway between Moscow and St Petersburg (Russia). That contract was to run for 22 years. The applicant states that, from July 2014 to April 2015, he held 38.63% of the shares in that company, but that he sold that holding on 28 April 2015 to a non-commercial pension fund for RUB 10 billion (approximately EUR 102 million).
90 It must be observed that the contract at issue is linked to a call for tenders awarded before the annexation of Crimea. Pursuant to the case-law cited in paragraphs 64 and 65 above, this is therefore a contract concluded with decision-makers whose involvement in the conflict referred to in the contested acts the applicant could not be unaware of.
91 Moreover, even if, as a matter of principle, benefitting from Russian decision-makers cannot be ruled out on account of the performance of a contract the term of which extended beyond 2014, the fact remains that, in the present case, the finding that the applicant is benefitting from Russian decision-makers cannot be based on his position within the company Mostotrest.
92 It follows from all of the foregoing that the grounds of the contested acts based on the applicant’s capacity as co-owner of SGM, his capacity as majority shareholder in Gaxprom Drilling or his position within SGM, Gazprom Drilling and Mostotrest, which do not rely on information contemporaneous to the contested acts, cannot be regarded as being of such a nature as to justify, by themselves, the finding that the applicant is benefitting from Russian decision-makers or from the Government of the Russian Federation.
93 In the second place, it is necessary to examine the merits of the grounds of the contested acts in the light of the applicant’s position within the company Platon or RT-Invest Transport System (‘RTITS’).
94 Although that company is not itself referred to in the grounds, the phrase ‘including’ indicates sufficiently explicitly that the companies referred to by name in the grounds are given solely for illustrative purposes. Furthermore, exhibits Nos 1 and 2 in the file of evidence refer to the company RTITS, and the applicant himself mentioned it in his written pleadings and in his request to submit new evidence.
95 The applicant states that he joined the company RTITS in November 2014. It is apparent from the information in the case file that, when the contested acts were adopted, the applicant held 23.5% of the shares in that company.
96 It must be held that the company RTITS was awarded, without a call for tenders, the management of an electronic toll-collection system capable of following lorries on Russian federal roads and invoicing them for the tolls due. That is apparent, in particular, from (i) exhibit No 1 in the file of evidence, which is corroborated by Annex B.1 to the defence, containing an article published on the website ‘syl.ru’ on 19 March 2017 on the applicant’s biography, and (ii) exhibit No 2. In reply, the applicant states that RTITS and the Russian Federation, represented by the federal highways agency, entered into a concession agreement on 29 September 2014, in accordance with the Order of the Government of the Russian Federation of 29 August 2014, for a total duration of 13 years as from the date of signature, with a base fee, pursuant to the concession agreement, of RUB 10 610 million (approximately EUR 108 million) (excluding VAT) per year.
97 Admittedly, according to the applicant, RTITS created and operates the toll-collection system at its own expense using the financing received, and transfers all collected funds to the federal budget on a daily basis. The funds collected are, according to him, channelled to the Russian Federation Federal Road Fund, since the source of the road funds is, in particular, toll payments from the toll-collection system, it being specified that Platon toll payments are not tax payments but are intended to compensate for the costs associated with the restoration of federal public highways. He refers to an article from 2015 in the daily newspaper Vedomosti and an article from 2017 published on the website ‘Forbes.ru’ in order to state that from the RUB 10.6 billion (approximately EUR 108 million) received annually for the management of the Platon system, ‘the company bears its operating expenses, credit costs, settlements with suppliers, and so on. According to the financial results for 2015, RTITS LLC had management expenses of [RUB] 473 million [(approximately EUR 4.82 million)], and also received a loss from financial and economic activities in the amount of [RUB] 621 million [(approximately EUR 6.33 million)]’.
98 However, it must be found, as the Council did, that through the concession granted with no tendering procedure to the company RTITS, the applicant had the guarantee of receiving from the Russian State budget a significantly large proportion of the RUB 10.6 billion (approximately EUR 108 million) paid to RTITS. In that connection, it is apparent from the article of 3 August 2021 on the applicant, annexed to the defence as Annex B.2, confirming the file of evidence, that between 2017 and 2020, ‘RT-Invest Transport Systems paid [RUB] 1.8 billion (approximately EUR 18 million) in dividends’. As the Council states, and notwithstanding the applicant’s claims at the hearing that the profit made by the applicant is not considerable for that type of investment compared to the valuation of the company RTITS, the fact that the applicant confirms that he holds 23.5% of RTITS entitles him to not inconsiderable, and even considerable, amounts every year, valued at more than EUR 7 million for the 2017 to 2020 period.
99 Furthermore, it is apparent from the applicant’s written pleadings that the concession agreement in favour of RTITS is the result of Order No 1662-r of the Government of the Russian Federation of 29 August 2014, that the Platon system managed by RTITS was, moreover, funded by a loan from the State bank Gazprombank and that ‘the State was ready to give up other income for the sake of Platon. In December, President Vladimir Putin proposed to abolish the transport tax for heavy trucks as compensation’. It is also apparent from the 2015 article published on the website ‘vedomosti.ru’, to which the applicant refers in his written pleadings, that according to a member of the Coordinating Council of Truckers of St Petersburg, the company ‘“Platon” reveals all the hidden mechanisms of decision-making in the system of power: redistribution of income, when open competition is replaced by lobbying’. According to exhibit No 1, the applicant was guaranteed to receive from the State budget a very large portion of the RUB 10.6 billion (approximately EUR 108 million) from 15 November 2015 to 29 September 2027.
100 In the light of the foregoing, it must be found that the Council has thus sufficiently demonstrated that there exists a benefit, granted by the Government of the Russian Federation to the company RTITS through a concession agreement concluded without any call for tenders, a benefit from which the applicant profited from the moment he took up his position within the company RTITS and which lasted, at the very least, until the date on which the contested acts were adopted.
101 In that context, the maintenance of the applicant’s name on the lists at issue on the basis of criteria (d) and (f) must be found to be justified to the requisite legal standard.
102 It follows that the present plea in law must be rejected, without there being any need to examine the applicant’s arguments concerning the association criterion.
The third plea in law, alleging infringement of the applicant’s fundamental rights and, in particular, of his right to the free exercise of an economic activity and of his right to property, as well as infringement of the principle of proportionality
103 The applicant maintains that the objective of the restrictive measures is to sanction those who threaten or at least support those who threaten the sovereignty of Ukraine. He does not, however, do so and the restrictive measures taken against him are therefore disproportionate. He requests that measures of organisation of procedure or measures of inquiry be adopted with a view to obtaining access to the confidential file held by the Council.
104 The Council disputes that line of argument.
105 It should be recalled that the principle of proportionality, which is one of the general principles of EU law and is reproduced in Article 5(4) TEU, requires that measures implemented through provisions of EU law be appropriate for attaining the legitimate objectives pursued by the legislation at issue and must not go beyond what is necessary to achieve them (judgments of 15 November 2012, Al-Aqsa v Council and Netherlands v Al-Aqsa, C‑539/10 P and C‑550/10 P, EU:C:2012:711, paragraph 122, and of 1 June 2022, Prigozhin v Council, T‑723/20, not published, EU:T:2022:317, paragraph 133).
106 Furthermore, the right to property is among the general principles of EU law and is enshrined in Article 17 of the Charter. Similarly, under Article 16 of the Charter, ‘the freedom to conduct a business in accordance with Union law and national laws and practices is recognised’.
107 In the present case, it should be observed that the restrictive measures contained in the contested acts entail limitations on the applicant’s exercise of his right to property and his right to freedom to conduct a business.
108 However, the fundamental rights on which the applicant relies are not absolute and their exercise may be subject to restrictions justified by the objectives of general interest pursued by the European Union, provided that such restrictions in fact correspond to objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very essence of the rights thus guaranteed (judgments of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 148, and of 25 June 2020, VTB Bank v Council, C‑729/18 P, not published, EU:C:2020:499, paragraph 80).
109 In order to comply with EU law, an infringement of the fundamental rights at issue must be provided for by law, respect the essential content of that freedom, refer to an objective of general interest, recognised as such by the European Union, and not be disproportionate (see judgment of 27 July 2022, RT France v Council, T‑125/22, EU:T:2022:483, paragraph 222 and the case-law cited).
110 It is clear that those four conditions are met in the present case.
111 It has thus been held that the restrictive measures laid down by Decision 2014/145 and by Regulation No 269/2014 and taken against natural or legal persons, entities and bodies on the lists annexed to those acts met those four conditions (judgments of 15 November 2023, OT v Council, T‑193/22, EU:T:2023:716, paragraphs 195 to 200, and of 6 December 2023, Zubitskiy v Council, T‑359/22, not published, EU:T:2023:779, paragraphs 98 to 105).
112 Moreover, in so far as concerns the harm suffered by the applicant, it is true that the right to property and the freedom to conduct a business are restricted by the contested acts. However, the inconvenience caused to the applicant is not disproportionate to the importance of the objective pursued by the contested acts. Those acts in fact provide for the periodic review of inclusion on the lists at issue with a view to ensuring that the names of persons and entities that no longer meet the criteria for inclusion on those lists be removed. Furthermore, the contested acts make provision for the possibility of authorising the use of frozen funds in order to meet basic needs or to meet certain commitments, and of granting specific authorisations permitting the release of funds, other financial assets or other economic resources.
113 Finally, that finding as to the absence of infringement of the principle of proportionality is not invalidated by the applicant’s argument based on the fact that the concept of ‘benefitting from Russian decision-makers or from the Government of the Russian Federation’, within the meaning of criteria (d) and (f), makes it possible to take restrictive measures against persons on the sole ground that they are active in tendering procedures and thus obtain ‘ordinary benefits’ not linked to the crisis in Ukraine. Admittedly, it is correct that the mere fact of being successful in one or several calls for tender is not sufficient for it to be concluded that there are links enabling the person concerned to take advantage of Russian decision-makers or of the Russian Government, within the meaning of criteria (d) and (f) (see, to that effect, judgment of 16 March 2022, Sabra v Council, T‑249/20, EU:T:2022:140, paragraph 215). However, the context must be taken into consideration in that regard. Furthermore, it must be held that while the concept of ‘benefitting from Russian decision-makers or from the Government of the Russian Federation’ within the meaning of criteria (d) and (f) may concern persons active in tendering procedures, the fact remains that it is applied whilst taking all of the circumstances of the case into account. Moreover, in the present case, the benefit linked to the shareholding in the company RTITS is not the result of a call for tenders.
114 Consequently, the applicant has failed to demonstrate that that interpretation of the concept of ‘benefitting from Russian decision-makers or from the Government of the Russian Federation’ – which concerns, inter alia, persons active in tendering procedures – goes beyond what is necessary in the light of the objective pursued, namely to exert pressure on the Russian authorities so that they bring an end to their actions and policies destabilising Ukraine.
115 It follows that contested acts have not disregarded the principle of proportionality and, in particular, have not disproportionately infringed the applicant’s right to property and his freedom to conduct a business.
116 In the light of the foregoing, the third plea in law must be rejected and, accordingly, the action dismissed in its entirety, without it being necessary to grant the applicant’s application seeking production of the confidential file, it being noted that the Council has stated in that connection that the file of evidence provided to the applicant was complete.
Costs
117 Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, he must be ordered to pay the costs in accordance with the form of order sought by the Council.
On those grounds,
THE GENERAL COURT (First Chamber)
hereby:
1. Dismisses the action;
2. Orders Mr Igor Rotenberg to pay the costs.
Delivered in open court in Luxembourg on 19 June 2024.
V. Di Bucci | | S. Papasavvas |