EU sanctions reality. How the new EU Council Acts on restrictive measures work

The Council of the EU adopted Decision dated 07.12.2020 (CFSP) No. 2020/1999 and Regulation dated 07.12.2020 (EU) No. 2020/1998 (hereinafter - the Decision, Regulation), which establish the general regime of action of restrictive measures taken in connection with material violations human rights.

Briefly about the unilateral EU sanctions themselves

These are restrictive measures taken unilaterally by Decision of the EU Council in the presence of an alleged violation of the norms and principles (standards) of international law, including those provided for in Art. 21 of the EU Treaty (for example, violation of human rights, fundamental freedoms, principles of equality).
In the EU, the term restrictive measures is commonly used. In international law, there is a discussion about the existence of the right of states and unions, including the EU to unilaterally take restrictive measures, outside the procedure established by Art. 39-41 of the UN Charter that is, by the Decision of the UN Security Council.

The Decision and the Regulation combine the previous practice of applying unilateral EU restrictive measures and create the basis for the subsequent uniform imposition of sanctions. Previously, the Council of the EU in each case adopted separate regulations and decisions for each country and case, for example, restrictive measures are now in force in relation to the Republic of Belarus on the basis of the Regulation of 18.05.2006 (EC) No. 765/2006 and the Decision of 15.10.2012 No. 2012 / 642 / CFSP.

The sanctions lists are open and publicly available on websites that publish EU legal acts. There is also a dedicated website EU Sanctions Map.

Now the restrictive measures will be covered by the Regulation and Decision, which provide general provisions on economic restrictions; cases where restrictions may not apply; categories of persons against whom restrictive measures are applied, and a number of other restrictions. At the moment, the restrictive lists to the Regulation and the Decision are empty; however, it is assumed that new restrictive measures will be taken by including persons in these lists.

What is considered a violation?

The EU Council Regulation applies to violations of human rights (Art.2.1 of the Regulation), including:

  • genocide;
  • crimes against humanity;
  • significant violations of human rights (torture and cruel forms of actions; slavery; extrajudicial detention, the arrest of a person and murder; the disappearance of a person);
  • other violations of human rights, including human trafficking; sexual and gender-based violence; violation of the freedom of citizens to peaceful assembly; violation of freedom of expression and belief).
To whom the restrictive measures are applied?

The Regulation and Decision provide that restrictive measures apply to:

  1. individuals and companies who directly committed the above violations;
  2. individuals and companies that provide financial, technical or material support to commit the above violations or are otherwise involved in such actions, including planning, managing, preparing, facilitating and encouraging such actions;
  3. individuals and companies who are associated with persons of the first or second category.

Based on the practice of applying EU economic sanctions, the first category usually includes civil servants. Businessmen and private businesses are included on the second or third basis:

  • on the second basis, the provision of support means, among other things, repairs, production, consulting (technical support), the condition of funds and resources (financial support) - the usual fulfilment of obligations within the framework of standard commercial activities does not constitute financial support;
  • the third reason is the most questionable, from the point of view of justification, compliance with international law, since there are no clear criteria for a person's "connectedness" - it is usually assumed that such a person receives benefits or special conditions as a result of human rights violations and "connectedness" with the first and second category of sanctioned persons. In the EU, there is a wealth of jurisprudence on the issue of challenging sanctions due to insufficient justification of "connectedness".

It should be noted that the Regulation does not specify the procedure for applying the so-called sectoral sanctions, that is, restrictions imposed on key companies in the country's sensitive sectors of the economy. Such companies can be both public and private and are included in restrictive lists if there is no "fault" of human rights violations. It is assumed that the sectoral ones will be adopted by separate regulations, for example, in relation to the Russian Federation, the EU Council Regulation No. 833/2014 of July 31, 2014, is in effect.

The EU Council is obliged to notify the person included in the sanctions lists, indicating the grounds for imposing restrictive measures. The fact of notification is extremely important for the protection of the rights of the person against whom the sanctions have been imposed, as this affects the time frame for appealing to the EU Court of Justice of the fact of inclusion in the sanctions list.

What are the restrictions?

The Regulation and Decision focus on economic constraints and establish:

  1. Freezing funds and economic resources, i.e. restriction of sanctioned persons on the disposal of assets, including cash, shares, funds in bank accounts, movable and immovable property;
  2. No funds and economic resources shall be made available, including receiving payment for goods (services, works); receipt of paid goods; crediting, loans;
  3. Ban on entry and transit through the EU.

Restrictions on means of payment and economic resources owned, held, controlled by unauthorized persons. Other EU acts contain clarifications regarding the procedure for the execution of sanctions, as well as the criteria for determining which assets are subject to restrictions.

The Regulation also provides for a list of exceptions under which, by a decision of the competent authority (usually the Ministry of Foreign Affairs of the country in which the action is carried out), the action may be allowed to take place.

REVERA’s general recommendations:
  1. Do not commit acts that may be considered by EU authorities as a violation of human rights;
  2. Resist the dissemination of inaccurate information that may be considered by EU authorities as a basis for imposing restrictions on you and your companies;
  3. Track the status of publications on sanctions topics, as well as the adoption of EU decisions and regulations on this issue;
  4. Take measures to protect your assets in the EU, including the receipt of receivables. In addition, consider the possibility of including anti-sanction or sanction clauses in contracts;
  5. If you receive information about the inclusion of you or your companies in the sanctions list, immediately consult with a Belarusian or European law firm with experience in international trade - the time frame for taking measures to challenge acts of the Council of the EU is limited and is 2 months;
  6. If there are suspicions about the possible inclusion of you or your companies in the sanctions list, or you have already been included in the sanctions list - take preparatory measures to generate evidence if you believe that inclusion is unreasonable. When considering a case in the European Court of General Jurisdiction, it will be necessary to transparently show all your business and personal financial flows, confirmed by expert and audit reports of reputable companies. Carrying out such procedures takes a long time, and as already indicated above, the period for appealing EU acts is limited to 2 months.
  7. Think over options for restructuring business ownership and diversifying commercial activities, taking into account the accepted restrictions of the EU, the USA and other countries (Switzerland, Great Britain, Canada, etc.), so that your entire business does not become paralyzed at once. Challenging EU sanctions in a sanction court usually takes several years.