EU court dismisses claims of several Russian oligarchs to lift sanctions

The Court of Justice of the European Union has refused to lift European sanctions against Russian oligarchs Gennady Timchenko and his wife Elena, Mikhail Fridman, Petr Aven and German Khan.

After the start of Russia's full-scale invasion of Ukraine, sanctions were imposed on Timchenko, Friedman, Aven and Khan. They are required to declare their assets and cooperate with the competent national authorities in the EU. 

Afterwards, the plaintiffs tried to prove in court that they had no connection to Russia's war in Ukraine. The Russian oligarchs argued that the EU Council has no right to impose any additional obligations on the sanctions list.

For example, Timchenko argued in his lawsuit that his close ties with Kremlin leader Vladimir Putin did not mean that he was an ally in the war in Ukraine. 

However, the EU Council's lawyers insisted that Timchenko, who is referred to in the media as Putin's "main treasurer", contributes to the Russian economy through his connections at Rossiya Bank.

As the EU Court of Justice explained, due to the increasing complexity of sanctions evasion schemes, the EU Council adopted a regulation on 21 July 2022 that obliges reporting of funds and cooperation with competent authorities. Failure to comply with these obligations is considered circumvention of sanctions.

"In practical terms, the aim is to prevent use being made of complex legal and financial arrangements capable of making it, if not easier to circumvent measures, then at least more difficult for the competent national authorities to identify the funds or economic resources subject to restrictive measures.," the EU court said in a press release.

The National Settlement Depository (NSD) of Russia, which is the main safekeeper of Russian securities and plays a significant role in the functioning of the Russian financial market, also failed to challenge the European sanctions. 

As noted in the court's decision, NSD provides financial services that are of significant value to both the Russian government and the Russian Central Bank.

"This company provides the Russian government with quantitative and qualitative significant material or financial support, providing it with its financial resources in order to continue its activities to undermine Ukraine," the court's judgement said.

In April, the Court of Justice of the European Union (CJEU) annulled the EU Council's decision of 28 February 2022 to impose sanctions against Aven and Friedman. The court stated that the basis for including the Russian oligarchs in the sanctions list was not sufficiently substantiated.

The CJEU decision did not apply to later decisions of the EU Council, so the sanctions against these two Russians are still in force. They are also sanctioned by the United States, the United Kingdom, Ukraine and other countries due to their proximity to Russian leader Vladimir Putin.

Aven and Friedman are shareholders in Alfa Group, of which Alfa Bank, one of Russia's largest banks, is a part. Aven also holds Latvian citizenship and has resided in Latvia with his family since the beginning of Russia's invasion of Ukraine in 2022.