By Prof. Dr. Dr. h.c. Carl Baudenbacher, Partner Baudenbacher Kvernberg, lawyers and advisors, Zurich/Oslo/Stavanger/Brussels, Door Tenant Monckton Chambers, London, Visiting Professor at LSE, President of the EFTA Court 2003-2017*
In the Kadi I case, the CJEU made legal history when ruling that terror suspects in the EU enjoy fundamental rights protection and can assert these rights before EU courts even if the EU authorities are obliged under international law to freeze their assets on the basis of a UN Security Council resolution. The General Court had taken a different view. After the European Commission put Mr. Kadi back on the sanctions list, he won at first instance and then again at second instance (Kadi II). Alexander Pumpyanskiy, for his part, was listed by the Council of the EU under Council Regulation (EU) No 269/2014. The General Court annulled this decision, but the Council decided not to appeal the judgment to the ECJ and sanctioned him again, based on a formally amended listing criterion, but on essentially on the same grounds. Mr. Pumpyanskiy has brought another action for annulment before the General Court. But there is also an interesting sideshow in Switzerland.
1 Mr. Kadi’s first sanctioning
On 17 October 2001, Saudi Arabian citizen Yassin Abdullah Kadi was designated as a person associated with Osama bin Laden and the Al-Qaida network and his name was added to the UN Sanctions Committee’s consolidated list. These sanctions were taken over by the EU and Mr. Kadi’s assets were frozen.
On 18 December 2001, Mr. Kadi brought an action before the Court of First Instance for annulment of the relevant regulations as far as they concerned him. He claimed a violation of his right to be heard and his right to property, a violation of the principle of proportionality, and a violation of his right to effective judicial review. By judgment of 21 September 2005, the Court of First Instance (today: General Court) dismissed the action because it assumed that the measures taken by the UN Security Council were immune from judicial review (Case T-315/01 Yassin Abdullah Kadi c. Conseil de l’UE and Commission, EU:T:2005:332).
Mr. Kadi appealed to the ECJ (now: CJEU). By judgment of 3 September 2008, the ECJ set aside the General Court’s ruling and annulled the relevant regulation as far as it concerned Mr. Kadi (C-402/05 P and C-415/05 P Kadi and Al Barakaat International Foundation v Council and Commission, EU:C:2008:461). The ECJ ruled that the EU’s obligations arising from an international agreement may not affect the principle that all acts of the Union must respect fundamental rights. The principles governing the international legal order established by the United Nations do not mean that a Union act such as the relevant Regulation is not justiciable.
2 Mr. Kadi’s second sanctioning
Based on information from the UN Sanctions Committee, the European Commission decided to place Mr. Kadi on the sanctions list again. Mr. Kadi appealed to the General Court, and this time he won (T-85/09 Yassin Abdullah Kadi v European Commission, EU:T:2010:418).
The European Commission, the Council, and the UK (which was an EU Member State at the time) each brought an appeal before the ECJ. On 18 July 2013, the ECJ dismissed the appeals and ruled in favour of Mr. Kadi (C‑584/10 P, C‑593/10 P und C‑595/10 P European Commission and Others v Yassin Abdullah Kadi, EU:C:2013:518). The decisive factor was again the objective of protecting fundamental rights.
3 Mr. Pumpyanskiy’s first sanctioning
Russian-Swiss double citizen Alexander Pumpyanskiy was listed by the Council based on EU sanctions law enacted in the context of the Ukraine war because he sat on the board of two sanctioned Russian companies. However, he had resigned from these positions and challenged his being sanctioned before the General Court. Mr. Pumpyanskiy won his second case before the General Court because his fundamental rights had been violated (T-734/22 Pumpyanskiy v Council, judgment of 29 November 2023, EU:T:2023:761). The Council had argued that, given the applicant’s sanctioned father’s privileged position within the two companies, their present or past business links, their family ties, and the importance of the family businesses in which they held shares and positions of responsibility, it was reasonable to believe that Mr. Pumpyanskiy was associated with his father and there was a real risk of circumvention of the restrictive measures applying to his father. The General Court however, concluded that the Council had not established said risk. Unlike in the first Kadi case, there were no proceedings before the ECJ because the Council refrained from lodging an appeal. The judgment of the General Court therefore became final.
4 Mr. Pumpyanskiy’s renewed sanctioning
As noted, despite the General Court having annulled Mr. Alexander Pumpyansky’s sanctioning in November 2023, the Council in March 2024 listed him again, this time based upon a slightly amended criterion, in which the Council enabled itself to list family members ”benefiting” from sanctioned individuals. This is in essence all but the same as the perviously applied “association” criterion. The Council thus essentially refused to implement a final judgment of the General Court by formally resorting to a new listing criterion, which the Council created to repair the cases in which it has lost before the General Court by being unable to prove “association” between a family member and a sanctioned individual. This may well constitute an abuse of powers, as the Council is acting in breach of basic principles of the separation of powers which are fundamental from the perspective of a democracy and the rule of law. Further, the listing of family members disproportionately infringes on fundamental rights such as the right to family life under Art 8 ECHR. On 26 April 2024, Mr. Pumpyanskiy brought a further action for annulment against the Council.
5 The Swiss aspect
There is an important side issue in the Alexander Pumpyanskiy saga: The non-EU state of Switzerland has adopted the EU sanctions regime and has also listed the Russian-Swiss dual citizen. In the case of such autonomous implementation, the Swiss courts are according to the settled case law of the Federal Suprem Court required to follow the relevant CJEU jurisprudence in case of doubt and if the national methodology allows it (ATF 129 III 335, cons. 6; 130 III 182, cons. 5.5.1). This must also apply to the case law of the EU General Court. Following his victory before that court, Alexander Pumpyanskiy unsuccessfully asked the Swiss sanctions authority SECO to lift the Swiss sanctions. He then lodged a complaint against SECO’s negative decision with the Swiss Federal Administrative Court in St. Gallen, where the case is pending.
It goes without saying that Mr. Pumpyanskiy’s situation is not made any easier by the renewed and, according to the view expressed here, unlawful listing in the EU. The court in St. Gallen should nevertheless not follow the line of the administrative authorities, but that of the EU General Court when it comes to guaranteeing its citizens their fundamental rights. Anything else would be incompatible with the Swiss Federal Constitution, the fundamental rights guaranteed therein, and the case law of the Federal Supreme Court as well as the Federal Administrative Court itself (B-3064/2008) on the interpretation of autonomously implemented EU law.
6 Conclusions
It is well known that the Council (which is often supported by the Commission) does not take its sanction decisions free from political considerations. This is incompatible with those voices in the EU who continuously highlight alleged “European values” and reference the “rule of law”. It is difficult to understand why the Council which disposes of a legal service consisting of high profile lawyers has learnt nothing from the Kadi saga. In the end, it may be up to a Swiss court to show the EU the way. There can be no doubt that the Federal Administrative Court will have to subject SECO’s decision to a full judicial review. But that should not cause any problems. When it comes to protecting fundamental rights, the Swiss federal courts have always been exemplary.
Literature:
Carl Baudenbacher, Die Russland-Sanktionen: Ein Fall des autonomen Nachvollzugs von EU-Recht, Nebelspalter of 30 December 2023.
Cristina Contartese/Mads Andenas, Opinion 1/17 and Its Themes: An Overview, in: Mads Andenas/Cristina Contartese/Luca Pantaleo/Tarjei Bekkedal, Opinion 1/17: Between European and International Perspectives, European Papers, Vol. 6, No 1, 621 ff.
Juliane Kokott/Christoph Sobotta, The Kadi Case – Constitutional Core Values and International Law – Finding the Balance? European Journal of International Law, Volume 23, Issue 4, November 2012, 1015 ff.
Koen Lenaerts, The Kadi Saga and the Rule of Law within the EU, 67 SMU Law Review 707 (2014).
Maximilian Steinbeis, EuGH entkafkaisiert globales Terrorbekämpfungs-Regime, VerfassungsBlog of 18. Juli 2013
* Baudenbacher Kvernberg are part of the team representing Alexander Pumpyanskyi in Switzerland.
