JUDGMENT OF THE GENERAL COURT (First Chamber)
15 May 2024 (*)
(Common foreign and security policy – Restrictive measures adopted in view of Russia’s actions destabilising the situation in Ukraine – Prohibition on investing in, participating in or otherwise contributing to projects co-financed by the applicant – Jurisdiction of the General Court – Action for annulment – Locus standi – Admissibility – Plea of illegality – Manifest error of assessment – Rights of the defence – Freedom to conduct a business – Proportionality)
In Case T‑235/22,
Russian Direct Investment Fund, established in Moscow (Russia), represented by K. Scordis and A. Gavrielides, lawyers,
applicant,
v
Council of the European Union, represented by A. Antoniadis and M. Bishop, acting as Agents,
defendant,
supported by
European Commission, represented by J.‑F. Brakeland, C. Giolito and M. Carpus Carcea, acting as Agents,
intervener,
THE GENERAL COURT (First Chamber),
composed of D. Spielmann (Rapporteur), President, R. Mastroianni and I. Gâlea, Judges,
Registrar: I. Kurme, Administrator,
having regard to the written part of the procedure,
further to the hearing on 26 September 2023,
gives the following
Judgment
1 By its action under Article 263 TFEU, the applicant, Russian Direct Investment Fund, seeks, in essence, the annulment of (i) Council Decision (CFSP) 2022/346 of 1 March 2022 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2022 L 63, p. 5; ‘the contested decision’) and (ii) Council Regulation (EU) 2022/345 of 1 March 2022 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2022 L 63, p. 1; ‘the contested regulation’) (together ‘the contested acts’), in so far as those acts concern the applicant.
I. Background to the dispute
2 The applicant is one of the Russian Federation’s sovereign wealth funds. It was established in June 2011 by the Government of the Russian Federation.
3 In March 2014, the Russian Federation illegally annexed the Autonomous Republic of Crimea and the city of Sevastopol and, since then, has engaged in ongoing destabilisation actions in eastern Ukraine. In response, the European Union has imposed restrictive measures in the light of the actions of the Russian Federation, restrictive measures in the light of actions compromising or threatening the territorial integrity, sovereignty and independence of Ukraine, and restrictive measures in response to the illegal annexation of the Autonomous Republic of Crimea and the city of Sevastopol by the Russian Federation.
4 In particular, on 31 July 2014, in view of the gravity of the situation in Ukraine despite the adoption in March 2014 of travel restrictions and asset freezes against certain natural and legal persons, the Council of the European Union adopted, on the basis of Article 29 TEU, Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2014 L 229, p. 13), in order to introduce targeted restrictive measures on access to capital markets, defence, dual-use goods and sensitive technologies, including in the energy sector. More specifically, Article 1 of that decision inter alia prohibited transactions in or the provision of financing or investment services or dealing in new bonds or equity or similar financial instruments with a maturity exceeding 90 days issued by State-owned Russian financial institutions, excluding Russia-based institutions with international status established by intergovernmental agreements with Russia as one of the shareholders.
5 That same day, the Council adopted, on the basis of Article 215 TFEU, Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2014 L 229, p. 1), which contains more detailed provisions to give effect, both at EU level and in the Member States, to the requirements laid down in Decision 2014/512.
6 On 23 February 2022, the Council adopted a first package of restrictive measures prohibiting inter alia the financing of the Russian Federation, its Government and its Central Bank.
7 On 24 February 2022, the President of the Russian Federation announced a military operation in Ukraine and, on the same day, Russian armed forces attacked Ukraine at several locations in the country.
8 On 25 February 2022, the Council adopted a second package of restrictive measures applying in particular in the fields of finance, defence, energy, the aviation sector and the space industry.
9 That same day, by Decision (CFSP) 2022/327 amending Decision 2014/512 (OJ 2022 L 48, p. 1), the Council introduced a new package of restrictive measures in the financial sector. Article 1 of that decision extends the existing financial restrictions, in particular those on access by certain Russian entities to capital markets. It also prohibits the listing and provision of services in relation to shares of Russian State-owned entities on EU trading venues. Furthermore, it introduces new measures which significantly limit the financial inflows to the European Union from Russia by prohibiting the acceptance of deposits exceeding certain amounts from Russian nationals or residents, the holding of accounts of Russian clients by EU central securities depositories, and the sale of euro-denominated securities to Russian clients.
10 On 28 February 2022, the Council adopted further restrictive measures, in particular by Decision (CFSP) 2022/335 amending Decision 2014/512 (OJ 2022 L 57, p. 4). That decision prohibited transactions related to the management of reserves and assets of the Central Bank of Russia, including transactions with any legal person, entity or body acting on behalf of, or at the direction of, the Central Bank of Russia.
11 That same day, the Council adopted, on the basis of Article 215 TFEU, Regulation (EU) 2022/334 amending Regulation No 833/2014 (OJ 2022 L 57, p. 1).
12 On 1 March 2022, given the gravity of the situation in Ukraine, the Council adopted the contested decision.
13 According to recital 5 of that decision, in view of the gravity of the situation, and in response to Russia’s military aggression against Ukraine, the Council considered it appropriate to introduce further restrictive measures with regard to the provision of specialised financial messaging services to certain Russian credit institutions and their Russian subsidiaries, which are relevant for the Russian financial system and which are already the subject of restrictive measures imposed by the European Union or by partner countries and, subject to certain exceptions, with regard to engagement with the applicant.
14 Article 1(2) of the contested decision inserted the following paragraphs into Article 4b of Decision 2014/512 (‘Decision 2014/512, as amended’):
‘3. It shall be prohibited to invest, participate or otherwise contribute to projects co-financed by the Russian Direct Investment Fund.
4. By way of derogation from paragraph 3, the competent authorities may authorise, under such conditions as they deem appropriate, an investment participation in, or contribution to, projects co-financed by the Russian Direct Investment Fund, after having determined that such an investment participation or contribution is due under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts.’
15 That same day, the Council adopted the contested regulation, which amended Regulation No 833/2014 by adding the following paragraphs to Article 2e (‘Regulation No 833/2014, as amended’):
‘3. It shall be prohibited to invest, participate or otherwise contribute to projects co-financed by the Russian Direct Investment Fund.
4. By way of derogation from paragraph 3, the competent authorities may authorise, under such conditions as they deem appropriate, an investment participation in, or contribution to, projects co-financed by the Russian Direct Investment Fund, after having determined that such an investment participation or contribution is due under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts.’
II. Forms of order sought
16 The applicant claims that the Court should:
– annul the contested acts in so far as they concern the applicant;
– order the Council to pay the costs.
17 The Council, supported by the Commission, contends that the Court should:
– dismiss the action;
– order the applicant to pay the costs;
– in the alternative, should the Court annul the contested acts, order that the effects of the contested decision be maintained until the annulment in part of the contested regulation takes effect.
III. Law
A. The Court’s jurisdiction to hear and determine the application for annulment of the contested acts and the applicant’s locus standi
18 In paragraph 31 of its defence, and without, however, formally contesting the Court’s jurisdiction to hear and determine the present action or the applicant’s locus standi, the Council submits that the contested acts constitute measures of general application. In particular, although the Council acknowledges that the applicant is named in the body of the contested acts, it states that the measures at issue are aimed at the financial sector and, specifically as regards the applicant, the sector of sovereign wealth management for the Russian Federation. According to the Council, the fact that the applicant is mentioned individually in those acts does not affect the nature of the measures, since the applicant covers the entire sector of the economy targeted by the restrictive measures in question.
19 It must be observed that the Court may examine of its own motion, first, whether a claim for annulment of the contested acts has been brought before a court which has no jurisdiction to hear that claim and, secondly, whether the claim for annulment of those acts is admissible, in accordance with the case-law pursuant to which the Courts of the European Union may at any time of their own motion consider whether there exists any bar to proceeding with a case, including the extent of their jurisdiction and the conditions for the admissibility of an action (see, to that effect, judgment of 17 February 2017, Islamic Republic of Iran Shipping Lines and Others v Council, T‑14/14 and T‑87/14, EU:T:2017:102, paragraph 34 and the case-law cited).
20 In the present case, where it submits that the action is inadmissible, the Council bases its argument on the scope of the measures at issue and raises, in particular, the question whether they are restrictive measures of individual or of general application. The nature of the measures at issue is decisive in determining whether the Court has jurisdiction, within the meaning of Article 275 TFEU, ‘to monitor compliance with Article 40 of the Treaty on European Union and to rule on proceedings, brought in accordance with the conditions laid down in the fourth paragraph of Article 263 of this Treaty, reviewing the legality of decisions providing for restrictive measures against natural or legal persons adopted by the Council on the basis of Chapter 2 of Title V of the Treaty on European Union’.
21 It is therefore necessary to examine whether the Court has jurisdiction to hear and determine the application for annulment of the contested acts, even though the Council does not formally challenge its jurisdiction, before, if appropriate, examining the applicant’s locus standi and then the substance of the action.
1. The Court’s jurisdiction to hear and determine the application for annulment of the contested acts
(a) The application for annulment of the contested decision
22 The contested decision was adopted on the basis of Article 29 TEU, which is a provision concerning the common foreign and security policy (CFSP) within the meaning of Article 275 TFEU. Under the second paragraph of Article 275 TFEU, read in conjunction with Article 256(1) TFEU, the General Court has jurisdiction only to rule on proceedings, brought in accordance with the conditions laid down in the fourth paragraph of Article 263 TFEU, reviewing the legality of decisions providing for restrictive measures against natural or legal persons adopted by the Council on the basis of Chapter 2 of Title V of the EU Treaty. As the Court of Justice has stated, concerning measures adopted on the basis of provisions relating to the CFSP, it is the individual nature of those measures which, in accordance with the second paragraph of Article 275 TFEU and the fourth paragraph of Article 263 TFEU, permits access to the Courts of the European Union (judgments of 23 April 2013, Gbagbo and Others v Council, C‑478/11 P to C‑482/11 P, EU:C:2013:258, paragraph 57, and of 17 February 2017, Islamic Republic of Iran Shipping Lines and Others v Council, T‑14/14 and T‑87/14, EU:T:2017:102, paragraph 37).
23 Moreover, according to the case-law, restrictive measures resemble both measures of general application, in that they impose on a category of addressees determined in a general and abstract manner a prohibition on making available funds and economic resources to entities listed in their annexes, and also individual decisions affecting those entities (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 102).
24 In the light of the case-law cited in paragraph 22 above, the Court will have jurisdiction to rule on the present action in so far as it is directed against the contested decision if the provisions of that decision concerning the applicant constitute an individual decision affecting it.
25 In that connection, it follows from the case-law that a decision providing for restrictive measures may be considered to be an individual measure if the person concerned is identified in the body of the decision or in a list annexed thereto, in other words, if that person is referred to by name in that decision (see, to that effect, judgments of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 104, and of 13 September 2018, Gazprom Neft v Council, T‑735/14 and T‑799/14, EU:T:2018:548, paragraph 60).
26 In the light of the foregoing, the restrictive measures provided for by Decision 2014/512 are measures of general application as regards the unidentified persons who are prohibited from investing in, participating in or otherwise contributing to investment projects co-financed by the applicant. By contrast, those measures must be considered to be of individual application vis-à-vis the applicant, since they expressly target and name it in Decision 2014/512, as amended.
27 It follows that Decision 2014/512, as amended, contains, as regards the applicant, ‘restrictive measures against natural or legal persons’ within the meaning of the second paragraph of Article 275 TFEU. The Court therefore has jurisdiction to rule on the application for annulment of the contested decision, in so far as that decision provides for restrictive measures affecting the applicant.
(b) The application for annulment of the contested regulation
28 The applicant seeks the annulment of the contested regulation in so far as it amends Article 2e of Regulation No 833/2014. It must be observed that that article was adopted on the basis of Article 215 TFEU, which governs the restrictive measures adopted by the Council within the framework of the European Union’s external action.
29 It should be pointed out that the Court also has jurisdiction to rule on the action for annulment in so far as it is directed against the contested regulation, under the first paragraph of Article 263 TFEU, which the Council does not dispute. Notwithstanding the fact that it is intended to implement the contested decision, which was adopted in the context of the CFSP, the contested regulation is not a ‘[provision] relating to the common foreign and security policy’ within the meaning of the first paragraph of Article 275 TFEU, which falls outside the Court’s jurisdiction (see, to that effect, judgment of 13 September 2018, Gazprom Neft v Council, T‑735/14 and T‑799/14, EU:T:2018:548, paragraph 63).
2. The applicant’s locus standi
30 Under the fourth paragraph of Article 263 TFEU, any natural or legal person may, under the conditions laid down in the first and second paragraphs of that article, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures. The second limb of the fourth paragraph of Article 263 TFEU specifies that if the natural or legal person who brings the action for annulment is not a person to whom the contested act is addressed, the admissibility of the action is subject to the condition that the act is of direct and individual concern to that person. The Treaty of Lisbon also added to the fourth paragraph of Article 263 TFEU a third limb which relaxed the conditions of admissibility of actions for annulment brought by natural and legal persons. Since the effect of that limb is that the admissibility of actions for annulment brought by natural and legal persons is not subject to the condition of individual concern, it renders possible such legal actions against ‘regulatory acts’ which do not entail implementing measures and are of direct concern to the applicant (see, to that effect, judgment of 3 October 2013, Inuit Tapiriit Kanatami and Others v Parliament and Council, C‑583/11 P, EU:C:2013:625, paragraphs 56 and 57).
31 First, as regards the condition relating to direct concern to the applicant, in accordance with settled case-law, the condition that there must be direct concern to a natural or legal person, as laid down in the fourth paragraph of Article 263 TFEU, requires the contested EU measure to affect directly the legal situation of the individual and leave no discretion to its addressees, who are entrusted with the task of implementing it, such implementation being purely automatic and resulting from EU rules without the application of other intermediate rules (see, to that effect, judgment of 13 March 2008, Commission v Infront WM, C‑125/06 P, EU:C:2008:159, paragraph 47 and the case-law cited).
32 In the present case, the relevant provisions include a general prohibition on investing in, participating in or otherwise contributing to projects co-financed by the applicant, with the exception of an investment participation in, or contribution to, projects co-financed by it under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts. Since that prohibition prevents EU economic operators from entering into such projects with the applicant, it directly affects the applicant’s legal situation (see, to that effect and by analogy, judgment of 22 June 2021, Venezuela v Council (Whether a third State is affected), C‑872/19 P, EU:C:2021:507, paragraph 69).
33 It must, therefore, be found that the applicant is directly concerned by the relevant provisions of the contested acts. The measures at issue apply directly to it, as an immediate consequence of the fact that it is expressly targeted by those provisions, and leave no discretion to the addressees who are entrusted with the task of implementing them.
34 Moreover, it should be observed that the condition of individual concern, provided for in the second limb of the fourth paragraph of Article 263 TFEU, is clearly satisfied in the present case.
35 The measures at issue in Decision 2014/512, as amended, and in Regulation No 833/2014, as amended, expressly target and name the applicant, with the result that it must be regarded as being individually concerned by those measures. In particular, the applicant’s designation, in so far as it resembles an individual decision affecting the applicant, permits it access to the Courts of the European Union, under the fourth paragraph of Article 263 TFEU, to which the second paragraph of Article 275 TFEU refers (see, to that effect, judgments of 28 November 2013, Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraph 50; of 1 March 2016, National Iranian Oil Company v Council, C‑440/14 P, EU:C:2016:128, paragraph 44 and the case-law cited, and of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 103 and the case-law cited).
36 Any other approach would infringe Article 263 and the second paragraph of Article 275 TFEU and would therefore be contrary to the system of judicial protection established in the FEU Treaty, and to the right to an effective remedy enshrined in Article 47 of the Charter of Fundamental Rights of the European Union (‘the Charter’) (judgment of 13 September 2018, Vnesheconombank v Council, T‑737/14, not published, EU:T:2018:543, paragraph 56).
37 Consequently, it must be concluded that the applicant is entitled to seek the annulment of the restrictive measures established by the relevant provisions of the contested acts in so far as they concern the applicant.
B. Substance
38 In support of its claim for annulment, the applicant relies on four pleas in law, alleging (i) lack of a ‘sufficiently solid factual basis’ for imposing the restrictive measures, (ii) failure to observe the rights of the defence and the right to effective judicial protection, (iii) a disproportionate restriction of the freedom to conduct a business, and (iv) the unlawfulness of Decision 2014/512, as amended, and Regulation No 833/2014, as amended.
1. First plea in law, alleging lack of a ‘sufficiently solid’ factual basis for imposing the measures at issue
39 The applicant submits that the Council failed to comply with its obligation to ensure that the decision to impose the restrictive measures concerned was adopted on a sufficiently solid factual basis. It claims that it was designated without there being any indication, either in the contested acts themselves or in any other publicly available sources, as to the factual basis for the Council’s decision to impose such measures. The applicant adds in that regard that its activities and the projects co-financed by it do not contribute to the Russian Federation’s ability to conduct a military operation in Ukraine or to finance, enable or assist the actions of the Russian armed forces in Ukraine. Moreover, at the hearing, the applicant stated that it was not the only sovereign wealth fund in the Russian Federation and that it was not a major player on the foreign direct investment market.
40 The applicant also maintains that the Council misrepresents the involvement of the President and the Prime Minister of the Russian Federation in its management by misquoting a reference taken from the applicant’s website to suggest that they run it. The applicant asserts that it is in fact managed by its management company, JSC Management Company of the Russian Direct Investment Fund, and that it is not an instrument of the State.
41 The applicant states in particular that it acts as a minority shareholder in the vast majority of the projects in which it invests. It adds that its investments are unrelated to military projects and include projects that benefit the world at large, such as the significant investment in the project to develop an effective vaccine against the COVID-19 virus. According to the applicant, the Council makes general, abstract and unsubstantiated assessments about the ‘sector-specific’ basis of the measures at issue and the central role played by the applicant in allowing the Russian Federation to maintain its financial ability to continue its war of aggression against Ukraine. In that respect, since restrictive measures have not been imposed on many well-known public entities in the sector concerned which contribute directly to the finances of the Russian State, their imposition on the applicant infringed the fundamental principle of non-discrimination and equal treatment.
42 The Council, supported by the Commission, disputes the applicant’s arguments.
43 As a preliminary point, the EU legislature must be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. Thus, the legality of a measure adopted in those fields can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (see judgment of 1 March 2016, National Iranian Oil Company v Council, C‑440/14 P, EU:C:2016:128, paragraph 77 and the case-law cited).
44 It follows that the Courts of the European Union must, in their judicial review of restrictive measures, allow the Council a broad discretion in establishing the general criteria defining the category of persons that could be made subject to such measures (see, to that effect, judgment of 21 April 2015, Anbouba v Council, C‑605/13 P, EU:C:2015:248, paragraph 41).
45 However, the effectiveness of the judicial review guaranteed by Article 47 of the Charter requires, as a rule, that, as part of the review of the lawfulness of the grounds which form the basis of the decision to include or to maintain a person’s name on the list of persons subject to restrictive measures, the Courts of the European Union must ensure that that decision, which affects that person individually, is taken on a sufficiently solid factual basis. That entails, as a rule, 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, are substantiated by sufficiently specific and concrete evidence (see, to that effect, judgment of 15 September 2016, Klyuyev v Council, T‑340/14, EU:T:2016:496, paragraph 36 and the case-law cited).
46 In the present case, and as a preliminary point, it should be noted that the applicant claims, with reference to the judgment of 11 July 2019, Yanukovych v Council (T‑244/16 and T‑285/17, EU:T:2019:502, paragraph 64), that the Council has failed to satisfy its obligation to undertake ‘a full and rigorous review to ensure that any decision imposing a restrictive measure is taken on a sufficiently solid factual basis’. Moreover, citing the judgment of 14 September 2016, National Iranian Tanker Company v Council (T‑207/15, not published, EU:T:2016:471, paragraph 76), the applicant asserts that it is for the Council, on which the burden of proof falls, to establish, in the event of challenge, that the reasons relied on against the person concerned are well founded, and not for that person to adduce evidence of the negative, that those reasons are not well founded.
47 In that regard, account must be taken of the particular nature of the regime at issue, which differs from the restrictive measures referred to in the case-law relied on by the applicant in paragraph 46 above.
48 First, the regime at issue introduced by Article 1(2) of the contested acts involves a political and economic choice on the part of the Council, consisting in the general assessment that, in view of the gravity of the situation, it was necessary to target the Russian financial sector and the sovereign wealth funds sector of the Russian Federation, as well as the mechanisms for financing the Russian Government’s actions, including the aggression against Ukraine.
49 Accordingly, although the review carried out by the General Court cannot, in principle, be regarded as a limited review, where the person concerned by a decision imposing restrictive measures is identified in the body of the decision or in a list annexed thereto, and having regard to the case-law of the Court of Justice cited in paragraph 45 above, the Council must be allowed, in accordance with the case-law cited in paragraph 43 above, a broad discretion as regards the general assessments of a political and economic nature in order to attain its objective in the field of the CFSP. That field is particularly sensitive, since it concerns international relations and the security of the European Union and of its Member States.
50 Furthermore, the applicant’s arguments relating to the burden of proof that allegedly falls on the Council cannot be accepted. The judgments invoked by the applicant and cited in paragraph 46 above concern individual restrictive measures adopted by the Council on the basis of a concrete and specific criterion laid down for the adoption of individual restrictive measures. The reasons relied on against the person concerned could be substantiated only on the basis of concrete evidence and information concerning the activities of the persons or entities in question.
51 In the present case, the restrictions arising from the contested acts are based not on a specific and concrete assessment or contention by the Council concerning the provision of financial services which are relevant for the Russian financial system, but on a general assessment relating to the sector for the management of sovereign wealth funds by the Russian Federation, to the mechanisms for financing the Russian Federation’s military aggression against Ukraine, and to the general measures capable of preventing it.
52 Consequently, contrary to what the applicant claims, the case-law cited in paragraph 45 above should not be applied to the present case, with the result that, in particular, there is no need to require the Council to establish that the applicant is actually involved in activities linked to Russia’s military aggression against Ukraine.
53 The restrictive measures at issue seek to increase the costs of the actions of the Russian Federation designed to undermine Ukraine’s territorial integrity, sovereignty and independence, and to promote a peaceful settlement of the crisis. Accordingly, they are intended to exert additional pressure on the Russian authorities to bring to an end their actions and policies destabilising Ukraine. That is an objective which falls within those pursued under the CFSP and referred to in Article 21(2)(b) and (c) TEU, such as the consolidation of and support for democracy, the rule of law, human rights and the principles of international law, and the preservation of peace, prevention of conflicts and strengthening of international security and the protection of civilian populations (see, to that effect and by analogy, judgments of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraphs 113 to 115, and of 30 November 2016, Rotenberg v Council, T‑720/14, EU:T:2016:689, paragraph 176).
54 In view, in particular, of the gravity of the situation at issue resulting from the Russian Federation’s unprovoked and unjustified military aggression against Ukraine, it was not manifestly inappropriate for the Council to adopt measures to exert further pressure on the Russian Federation, by restricting foreign direct investment in Russia and by limiting the access of foreign capital to the Russian financial sector in view of its crucial role in maintaining the Russian Federation’s ability to continue to finance its military aggression against Ukraine, irrespective of any involvement of the entities concerned in the Russian State’s actions destabilising the situation in Ukraine.
55 Secondly, it is true that, contrary to what the Council and the Commission claim, since the applicant is expressly named in the abovementioned provisions and targeted by the measures at issue, which are of direct and individual concern to it, those measures are of individual application vis-à-vis the applicant (see paragraphs 26 and 35 above). Thus, the Council’s general political and economic assessment as regards the imposition of the general prohibition on investing in, participating in or otherwise contributing to projects co-financed by Russian sovereign wealth funds, a prohibition addressed to an indefinite number of natural and legal persons, takes the form of an individual assessment vis-à-vis the applicant, according to which the applicant is a sovereign wealth fund of the Russian Federation.
56 It should be noted, in the first place, that the applicant does not deny that it is a sovereign wealth fund of the Russian Federation which serves as a vehicle for direct investment, in particular in the Russian Federation. In its reply, the applicant states only that it is managed by its management company, JSC Management Company, that it is not an instrument of the Russian State, and that it is not run by either the President or the Prime Minister of the Russian Federation. However, and as the Council points out, the argument put forward by the applicant concerning its management structure is not relevant for the purpose of assessing whether it is actually controlled by the Russian Federation. In that regard, it should be noted that, as is clear from the extract from Russian Federal Law No 154-FZ produced by the applicant in Annex C.1 to its reply, the applicant is a ‘non-public joint stock company with the Russian Federation as its sole shareholder’.
57 Since the applicant is a sovereign wealth fund of the Russian Federation which, as is apparent from paragraph 6 of and Annex 5 to the application, provides direct investments in that State in partnership with other investment funds and private undertakings, it is an archetypal vehicle for strategic investment in the Russian Federation, attracting financing from international investors. Furthermore, it is clear from the successive restrictive measures adopted by the Council in response to Russia’s actions to destabilise Ukraine (see paragraphs 3 to 11 above) that the financial sector was, in view of its crucial role in maintaining the Russian Federation’s ability to continue to finance its aggression against Ukraine, a prime target of those measures. Accordingly, the express reference to the applicant in the body of the contested acts does no more than specify one particular investment channel, organised and supervised by the Government of the Russian Federation, without it being necessary to provide additional individual evidence in respect of it.
58 In the second place, the arguments put forward by the applicant relate to issues that are irrelevant for the purpose of assessing whether the Council was right to include its name in the body of the contested acts. In particular, the fact that the applicant acts as a minority shareholder in the vast majority of projects and that its investments concern projects which benefit the world at large, such as the project to develop an effective vaccine against the COVID-19 virus or the project to address shortages of certain vital resources worldwide, is not capable of rendering the imposition of the measures at issue unlawful. As is apparent from the recitals to the contested acts, the applicant falls within the scope of those measures solely by virtue of being a Russian sovereign wealth fund, not because of its direct or indirect responsibility for the Russian Federation’s actions in Ukraine or its involvement in specific investment projects.
59 For the same reasons, the Court must reject the applicant’s arguments raised at the hearing that it is neither the only sovereign wealth fund in the Russian Federation nor a major player on the foreign direct investment market. Even if those assertions were true, they would not call into question the fact that, as is apparent from paragraphs 56 and 57 above, the applicant is a vehicle for strategic investment in the Russian Federation, attracting financing from international investors.
60 In the third place, without it being necessary to examine the admissibility of the applicant’s argument, put forward for the first time in the reply, that the Council infringed the principles of non-discrimination and equal treatment, since restrictive measures have not been imposed on many well-known public entities in the sector which contribute directly to the finances of the Russian State, that argument must be rejected as unfounded.
61 In particular, even if, as the applicant states, the Council has failed to adopt restrictive measures against certain persons or entities in the financial sector in the Russian Federation and those persons or entities are in a comparable situation to its own, such an argument would have to be rejected. The principles of equal treatment and non-discrimination and the principle of sound administration must be reconciled with the principle of legality, according to which no one may rely, to his or her own benefit, on an unlawful act committed in favour of another (judgments of 14 October 2009, Bank Melli Iran v Council, T‑390/08, EU:T:2009:401, paragraph 59, and of 3 May 2016, Post Bank Iran v Council, T‑68/14, not published, EU:T:2016:263, paragraph 135).
62 In the light of the foregoing, the first plea in law must be rejected as unfounded.
2. Second plea in law, alleging failure to observe the rights of the defence and the right to effective judicial protection
63 The applicant submits that the Council failed to observe its right to good administration, which includes the rights of the defence, and its right to effective judicial protection, guaranteed by Articles 41 and 47 of the Charter. In particular, those guarantees were not observed inasmuch as the contested acts were adopted without the applicant having been notified of them, either before their adoption or within a reasonable time thereafter. The applicant maintains that it has never received even a summary of the reasons which led to the adoption of the contested acts in so far as those acts concern it, adding that the Council has never disclosed to it the evidence upon which that institution relied to adopt the contested acts nor given it the opportunity to submit comments and defend its procedural rights.
64 The applicant states that if the Council had given it the opportunity to make its views known, the outcome could have been different. It would have explained to the Council that it has no involvement in the Russian military operations in Ukraine and that its views are often at variance with those expressed by the Russian authorities. In that respect, the applicant asserts that the Council has failed to adduce any evidence of its involvement in the military operation in Ukraine. In fact, had the Council engaged in proper research and undertaken a proper investigation as to the applicant’s views on the policies pursued by the Government of the Russian Federation, whether on Ukraine or generally, it could have easily deduced that the applicant concentrates solely on its financial activities, that it acts in the best interests of its investors and that, in many instances, it has taken a position diverging from official statements. The applicant adds that its activities have always been focused on investing in projects with humanitarian goals or which seek to improve the quality of life of people around the world.
65 The Council, supported by the Commission, disputes the applicant’s arguments.
66 It should be recalled that respect for the rights of the defence and the right to effective judicial protection are fundamental rights, forming an integral part of the EU legal order, in the light of which the Courts of the European Union must ensure the review – which in principle should be a full review – of the lawfulness of all EU acts (see, to that effect, judgment of 24 May 2016, Good Luck Shipping v Council, T‑423/13 and T‑64/14, EU:T:2016:308, paragraphs 47 and 48 and the case-law cited).
67 Respect for the rights of the defence, which is expressly affirmed in Article 41(2)(a) of the Charter, includes the right to be heard and the right to have access to the file, subject to legitimate interests in maintaining confidentiality (see, to that effect, judgments of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 60, and of 15 June 2017, Kiselev v Council, T‑262/15, EU:T:2017:392, paragraph 139 and the case-law cited).
68 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, without prejudice to the power of the court having jurisdiction to require the authority concerned to disclose that information, so as to make it possible for him or her to defend his or her rights in the best possible conditions and to decide, with full knowledge of the relevant facts, whether there is any point in applying to the court having jurisdiction, and in order to put the latter fully in a position to review the lawfulness of the decision in question (see judgment of 24 May 2016, Good Luck Shipping v Council, T‑423/13 and T‑64/14, EU:T:2016:308, paragraph 50 and the case-law cited).
69 When that disclosure takes place, the competent EU authority must ensure that that individual is put in a position in which he or she may effectively make known his or her views on the grounds advanced against him or her (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 112).
70 The applicant’s arguments must be examined in the light of those principles.
71 As a preliminary point, in the light of the considerations set out in paragraph 55 above, the Council’s argument that the measures at issue in the present case are measures of general application and not restrictive measures targeted at the applicant must be rejected.
72 As to the fact that the applicant was not heard before the restrictive measures concerning it were adopted, it should be borne in mind that the Court has held that, in the case of an initial decision to freeze funds, the Council is not obliged to inform the person or entity concerned beforehand of the grounds on which it intends to rely in order to include that person or entity’s name in the relevant list. So that its effectiveness may not be jeopardised, such a measure must, by its very nature, be able to take advantage of a surprise effect and to apply immediately. In such a case, it is as a rule enough if the institution notifies the person or entity concerned of the grounds and affords it the right to be heard at the same time as, or immediately after, the decision is adopted (judgment of 21 December 2011, France v People’s Mojahedin Organization of Iran, C‑27/09 P, EU:C:2011:853, paragraph 61).
73 Consequently, and in so far as that case-law can be applied to the present case, since the restrictions imposed on the applicant under the relevant provisions of the contested acts are restrictive measures of individual application vis-à-vis the applicant, they had to take advantage of a surprise effect. As the Commission rightly points out, the prior notification of those measures to the applicant would have brought with it the risk of the applicant attempting to enter into financing agreements before the date of entry into force of the contested acts, thereby diminishing their impact.
74 Moreover, it must be recalled that, before an infringement of the rights of the defence can result in the annulment of an act, it must be demonstrated that, had it not been for that irregularity, the outcome of the procedure might have been different (see, to that effect, judgments of 18 September 2014, Georgias and Others v Council and Commission, T‑168/12, EU:T:2014:781, paragraph 106 and the case-law cited, and of 15 June 2017, Kiselev v Council, T‑262/15, EU:T:2017:392, paragraph 153).
75 In the present case, the applicant does not deny that it is a sovereign wealth fund of the Russian Federation and it has failed to explain what arguments or evidence it could have legitimately put forward if it had been heard prior to or within a reasonable time after the adoption of the contested acts. In that regard, it should be borne in mind that, as is apparent from paragraph 58 above, the arguments that the applicant is not involved in Russian military operations in Ukraine, that its views are at variance with those expressed by Russian State authorities, and that it is involved in projects with humanitarian goals or which seek to improve the quality of life of people around the world are irrelevant, since the applicant falls within the scope of those measures solely by virtue of being a Russian sovereign wealth fund, which is an important channel for foreign investment in the Russian Federation. For the same reason, and contrary to what the applicant claims, the Council was under no obligation to disclose to it specific items of evidence upon which that institution relied to adopt the contested acts.
76 Furthermore, the applicant’s argument raised at the hearing that it could have asserted before the Council that it is neither the only Russian sovereign wealth fund nor a major player on the foreign direct investment market cannot be upheld, having regard to the considerations set out in paragraph 59 above.
77 In the light of the foregoing, the second plea in law must be rejected as unfounded.
3. Third plea in law, alleging a disproportionate restriction of the applicant’s freedom to conduct a business and misuse of powers
78 The applicant submits that the Council misused its powers and infringed the principle of proportionality in so far as the adoption of the contested acts goes beyond what is genuinely necessary to meet the objectives of general interest recognised by the European Union.
79 The applicant maintains that the contested acts significantly restrict its freedom to conduct a business given that, as a result of the adoption of those acts, all EU persons are prohibited from investing in, participating in, or contributing to projects co-financed by the applicant, except to the extent that such investment participation or contribution is due under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts and permitted by the competent State authorities. Furthermore, given that, at the time the contested acts were adopted, numerous projects being financed by the applicant were co-financed by EU persons, the contested acts impose a very serious restriction on its freedom to carry out an economic or commercial activity in general.
80 The applicant also states that the contested acts impair the essence of the fundamental right enshrined in Article 16 of the Charter and that the failure to give reasons for those acts makes it impossible for the Court to assess and determine whether the relevant restrictive measures are necessary, whether they genuinely meet the objectives of general interest pursued, and whether they are proportionate to the objective pursued.
81 In any case, the applicant submits that the measures at issue are not necessary and do not genuinely meet the objective pursued, as its activities and the projects co-financed by it do not contribute to the ‘military operation in Ukraine’ or finance, enable or assist the actions of the Russian armed forces in Ukraine. The applicant claims that the Council also fails to explain why the stated objective of the contested acts could not have been achieved by more targeted restrictive measures, such as measures applying only to projects which the Council considers to be of particular value to the Russian State for military purposes.
82 The applicant adds that its situation as the ‘world’s largest investment fund’ whose assets are used to invest in projects around the world is of major interest not only to Russian based partners, but especially to investors in other countries, which in turn reflects the extent to which foreign investors are protected by the European Union.
83 The Council, supported by the Commission, disputes the applicant’s arguments.
(a) Complaint alleging a disproportionate restriction on the freedom to conduct a business
84 First, it should be recalled that, under Article 16 of the Charter, ‘the freedom to conduct a business in accordance with Union law and national laws and practices is recognised’.
85 Secondly, Article 17(1) of the Charter provides as follows:
‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.’
86 It is true that restrictive measures such as those at issue here undeniably limit the rights which the applicant enjoys under Articles 16 and 17 of the Charter (see, to that effect and by analogy, judgment of 22 September 2016, NIOC and Others v Council, C‑595/15 P, EU:C:2016:721, paragraph 50 and the case-law cited). However, the freedom to conduct a business relied on by the applicant is not an unfettered prerogative and may therefore be limited, under the conditions laid down in Article 52(1) of the Charter (see, to that effect, judgments of 28 November 2013, Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraph 121, and of 27 February 2014, Ezz and Others v Council, T‑256/11, EU:T:2014:93, paragraph 195 and the case-law cited).
87 In that regard, it should be noted that, according to Article 52(1) of the Charter, ‘any limitation on the exercise of the rights and freedoms recognised by [the] Charter must be provided for by law and respect the essence of those rights and freedoms’, and, moreover, ‘subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others’.
88 Consequently, in order to comply with EU law, a limitation on the exercise of the fundamental right at issue must satisfy three conditions. First, the limitation must be provided for by law. In other words, the measure in question must have a legal basis. Secondly, the limitation must refer to an objective of general interest, recognised as such by the European Union. Thirdly, the limitation may not be excessive. It must be necessary and proportional to the aim sought, and the ‘essential content’, that is, the substance of the right or freedom at issue, must not be impaired (see judgment of 30 November 2016, Rotenberg v Council, T‑720/14, EU:T:2016:689, paragraphs 170 to 173 and the case-law cited).
89 It is clear that those three conditions are satisfied in the present case.
90 In the first place, the restrictive measures at issue are ‘provided for by law’, since they are laid down in acts which, in particular, are of general application and have a clear legal basis in EU law (see paragraphs 13 to 15 above).
91 In the second place, as is apparent inter alia from paragraph 53 above, the restrictive measures at issue pursue a legitimate aim.
92 In the third place, with regard to the principle of proportionality, it must be noted that, as a general principle of EU law, this requires that measures adopted by the EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the objectives pursued by the legislation in question. Consequently, when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see judgment of 30 November 2016, Rotenberg v Council, T‑720/14, EU:T:2016:689, paragraphs 178 and the case-law cited).
93 The case-law makes clear in that respect that, with regard to judicial review of compliance with the principle of proportionality, the EU legislature must be allowed a broad discretion in areas which involve political, economic and social choices on its part, and in which it is called upon to undertake complex assessments. Therefore, the legality of a measure adopted in those areas can be affected only if the measure is manifestly inappropriate having regard to the objective which the competent institution is seeking to pursue (see judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 146 and the case-law cited).
94 In the present case, contrary to what is claimed by the applicant, there is a reasonable relationship between the restrictive measures at issue and the objective pursued by the Council in adopting them. That objective is, inter alia, to increase the costs of the actions of the Russian Federation designed to undermine Ukraine’s territorial integrity, sovereignty and independence. Accordingly, the approach of targeting the Russian sovereign wealth fund generally, given its status as an important channel for foreign investment in the Russian Federation, and, contrary to the applicant’s submissions, not targeting it in a more circumscribed manner, that is to say by singling out its projects of particular value to the Russian State for military purposes, is consistent with the objective pursued. Furthermore, and as the Court has already found in paragraph 54 above, that approach cannot, in any event, be regarded as manifestly inappropriate with respect to that objective (see, by analogy, judgment of 13 September 2018, Vnesheconombank v Council, T‑737/14, not published, EU:T:2018:543, paragraph 151).
95 In addition, it is indeed the case that restrictive measures, by definition, have consequences which affect rights to property and the freedom to pursue a trade or business, thereby causing harm to persons who are in no way responsible for the situation which led to the adoption of the sanctions. That is a fortiori the case with respect to the consequences of targeted restrictive measures for the entities subject to those measures (see judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 149 and the case-law cited).
96 However, it should be observed that, in the light of the considerations set out in paragraph 94 above, the objectives pursued by the Council are such as to justify the possibility that, for certain operators, the consequences flowing from the restrictive measures at issue may be negative, even significantly so. Furthermore, as regards the allegedly disproportionate nature of the measures at issue, it must be pointed out that Article 4b(4) of Decision 2014/512 and Article 2e(4) of Regulation No 833/2014 introduce an exception to the prohibition laid down in paragraph 3 of those provisions. In particular, those provisions envisage that, by way of derogation from paragraph 3, the competent authorities may authorise, under such conditions as they deem appropriate, an investment participation in, or contribution to, projects co-financed by the applicant, after having determined that such an investment participation or contribution is due under contracts concluded before 2 March 2022 or ancillary contracts necessary for the execution of such contracts.
97 In those circumstances, and having regard, inter alia, to the fact that the restrictive measures adopted by the Council in response to the crisis in Ukraine have become progressively more severe, interference with the applicant’s freedom to conduct a business cannot be considered to be disproportionate (see, by analogy, judgment of 13 September 2018, Vnesheconombank v Council, T‑737/14, not published, EU:T:2018:543, paragraph 153).
98 In the light of the foregoing considerations, the complaint alleging a disproportionate interference with the freedom to conduct a business must be rejected.
(b) Complaint alleging misuse of powers
99 As a preliminary point, it should be recalled that, according to settled case-law, a measure is vitiated by misuse of powers only if it appears, on the basis of objective, relevant and consistent evidence, to have been taken solely, or at the very least chiefly, for ends other than those for which the power in question was conferred or with the aim of evading a procedure specifically prescribed by the Treaties for dealing with the circumstances of the case (see judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 135 and the case-law cited).
100 In the present case, it should be observed that the applicant pleads misuse of powers on the part of the Council but does not expand any further on that claim. In any event, it follows from paragraph 53 above that the measures at issue are a legitimate means of exerting pressure on the Russian authorities to bring to an end their actions and policies destabilising Ukraine. Thus, those measures are intended to achieve an objective which falls within those pursued under the CFSP and referred to in Article 21(2)(b) and (c) TEU.
101 It follows that the applicant has not adduced objective, relevant and consistent evidence to demonstrate that the restrictive measures at issue in the present case were adopted for ends other than those stated in the contested acts (see, to that effect and by analogy, judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 136).
102 In the light of the foregoing considerations, the Court must reject the complaint alleging misuse of powers and, therefore, the third plea in law in its entirety.
4. Fourth plea in law, alleging that Decision 2014/512, as amended, and Regulation No 833/2014, as amended, are unlawful
103 The applicant asks the Court, in the alternative, pursuant to Article 277 TFEU, to declare Decision 2014/512, as amended, and Regulation No 833/2014, as amended, to be inapplicable and/or void, because they are unlawful in so far as they name, concern or apply to the applicant, which should entail the annulment of the contested acts.
104 The Council disputes those arguments.
105 Under Article 277 TFEU, any party may, in proceedings in which an act of general application adopted by an institution, body, office or agency of the European Union is at issue, plead the grounds specified in the second paragraph of Article 263 TFEU in order to invoke before the Court of Justice of the European Union the inapplicability of that act.
106 Article 277 TFEU gives expression to the general principle conferring upon any party to proceedings the right to challenge indirectly, in seeking annulment of a decision addressed to that party, the validity of acts of general application which form the basis of such a decision, if that party was not entitled under Article 263 TFEU to bring a direct action challenging those acts by which it was thus affected without having been in a position to ask that they be annulled (see, by analogy, judgments of 6 March 1979, Simmenthal v Commission, 92/78, EU:C:1979:53, paragraph 39, and of 17 February 2017, Islamic Republic of Iran Shipping Lines and Others v Council, T‑14/14 and T‑87/14, EU:T:2017:102, paragraph 55).
107 With regard to the intensity of the judicial review, it is settled case-law that the Courts of the European Union must, in accordance with the powers conferred on them by the FEU Treaty, ensure the review, in principle the full review, of the lawfulness of all EU acts in the light of the fundamental rights forming an integral part of the European Union legal order. That obligation is expressly laid down by the second paragraph of Article 275 TFEU (see judgments of 28 November 2013, Council v Fulmen and Mahmoudian, C‑280/12 P, EU:C:2013:775, paragraph 58 and the case-law cited, and of 28 November 2013, Council v Manufacturing Support & Procurement Kala Naft, C‑348/12 P, EU:C:2013:776, paragraph 65 and the case-law cited).
108 The fact remains that the Council enjoys a broad discretion as regards the general and abstract definition of the legal criteria and procedures for adopting restrictive measures (see, to that effect, judgment of 21 April 2015, Anbouba v Council, C‑605/13 P, EU:C:2015:248, paragraph 41 and the case-law cited). Consequently, rules of general application defining those criteria and procedures – such as the provisions of the contested acts laying down the criteria at issue concerned by the fourth plea in law – are subject to a limited judicial review, restricted to checking that the rules governing procedure and the statement of reasons have been complied with, that the facts are materially accurate, that there has been no error of law, and that there has been no manifest error of assessment of the facts or misuse of power (see, to that effect, judgment of 9 July 2009, Melli Bank v Council, T‑246/08 and T‑332/08, EU:T:2009:266, paragraphs 44 and 45).
109 In the present case, it must be observed that the plea of illegality is directed at exactly the same provisions as those covered by the application for annulment, since the applicant’s name is included in the actual body of the contested acts, not in a list annexed to those acts. In that regard, it must be stated that the applicant does not submit any additional arguments in support of the plea of illegality over and above those already put forward in support of the application for annulment. Since the relevant arguments have already been considered and rejected in the three pleas relating to the application for annulment, the plea of illegality must be rejected.
110 It follows from all of the foregoing that the action must be dismissed in its entirety.
IV. Costs
111 Under Article 134(1) of the Rules of Procedure of the General Court, 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, it must be ordered to bear its own costs and to pay those incurred by the Council, in accordance with the form of order sought by the Council.
112 According to Article 138(1) of the Rules of Procedure, the Member States and institutions which have intervened in the proceedings are to bear their own costs. Consequently, the Commission must bear its own costs.
On those grounds,
THE GENERAL COURT (First Chamber)
hereby:
1. Dismisses the action;
2. Orders Russian Direct Investment Fund to bear its own costs and to pay those incurred by the Council of the European Union;
3. Orders the European Commission to bear its own costs.
Spielmann | Mastroianni | Gâlea |
Delivered in open court in Luxembourg on 15 May 2024.
V. Di Bucci | | M. van der Woude |