Summaries of judgments: OT v Council of the European Union | Abramovich v Council

Summaries of judgments made in collaboration with the Portuguese judges and référendaire of the General Court (Maria José Costeira, Ricardo Silva Passos and Esperança Mealha)

Judgment of the General Court (First Chamber, Extended Composition), 10 April 2024, Case T-301/22, Petr Aven v Council of the European Union

Common foreign and security policy – Restrictive measures taken in view of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine – Freezing of funds – List of persons, entities and bodies covered by the freezing of funds and economic resources – Inclusion and maintenance of the applicant’s name on the lists – Concept of ‘support for actions or policies’ – Article 2(1)(a) of Decision 2014/145/CFSP – Article 3(1)(a) of Regulation (EU) No 269/2014 – Concepts of ‘material or financial support for Russian decision-makers’ and ‘benefit’ from those decision-makers – Article 2(1)(d) of Decision 2014/145 – Article 3(1)(d) of Regulation No 269/2014 – Error of assessment

Facts

The Council of the European Union (‘the Council’) adopted, following the military aggression carried out by the Russian Federation (‘Russia’) against Ukraine on 24 February 2022, several measures by which it added the applicant’s name to the lists of persons, entities and bodies supporting actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (“the lists at issue”), adopted by the Council since 2014.

On 28 February 2022, the Council imposed on the applicant, Mr. Petr Aven, an oligarch of Russian and Latvian nationality, the freezing of his banking funds and assets, in accordance with Article 2(1) and (2) of Decision 2014/145/CFSP of 17 March 2014^[1].

The Council took such actions on the ground that he is a major shareholder of the Russian conglomerate ‘Alfa Group’, one of Russia’s main banks. As such, the applicant is one of the most influential persons in Russia and has links with the Russian President, Vladimir Putin, supporting the Russian regime. According to the Council, the Russian President rewarded the Alfa Group for its loyalty to the Russian authorities by promoting the group’s investment plans abroad.

The applicant brought an action for annulment under article 263 of the Treaty on the functioning of the European Union (“TFEU”) against the acts adopted by the Council, which the General Court (“GC”) upheld. In his action, the applicant raises two pleas a first plea of law concerning an error of assessment by the Council, in including and maintaining the applicant’s name on the lists at issue, and a second plea alleging an infringement of the obligation by the Council to review the applicant’s situation periodically and the duty to state reasons.

Decision

In its first plea, the applicant contests the validity of having his name included and maintained on the lists at issue based on two criteria. Firstly, he questions the compliance with the criterion specified in Article 2(1) (a) of Decision 2014/145, referred to as ‘criterion (a)’^[2]. Secondly, he raises concerns regarding adherence to the criterion outlined in Article 2(1) (d) of the same decision, referred to as ‘criterion (d)’[3]. He alleges that the Council did not collect evidence that is sufficiently specific, precise, and compelling to justify his inclusion and retention on the lists at issue.

The Council sought to introduce new reasons to justify the inclusion of the applicant’s name on the lists at issue. According to the Council, the applicant as the majority shareholder of ‘Alfa Bank’, one of the largest private banks in Russia, acts as a source of substantial revenue for the Russian government.

The General Court rejected the arguments put forward by the Council and ruled that in accordance with established case law, the legality of contested actions must be assessed solely based on the factual and legal elements upon which they were originally adopted. Consequently, the GC is precluded from substituting the grounds underlying these measures[4].

Secondly, concerning the merits of including and retaining the applicant’s name based on criteria (a) and (d), the General Court emphasizes the importance of ensuring an effective judicial review as guaranteed by Article 47 of the Charter of Fundamental Rights of the European Union. This entails verifying that the decision to impose or maintain restrictive measures, which directly impacts the individual or entity concerned, is grounded on a sufficiently robust factual basis. Consequently, the GC must scrutinize the allegations outlined in the summary of reasons behind that decision. Judicial review cannot be restricted to an assessment of the cogency in the abstract of the reasons relied on but must ascertain whether those reasons, or at least one of them, considered individually, is adequately substantiated[5].

Additionally, the General Court recalls that criterion (a) is linked to the endorsement of actions or policies that undermine or pose a threat to the territorial integrity, sovereignty, and independence of Ukraine, or to the stability or security within Ukraine. This criterion necessitates establishing a direct or indirect causal link between the activities or actions of the individual or entity under scrutiny and the situation in Ukraine that prompted the adoption of the restrictive measures in question[6].

Regarding criterion (d), it specifically targets natural and legal persons, entities, or bodies that, although not inherently connected to, or beneficiaries of, the annexation of Crimea or the destabilization of Ukraine, offer material or financial support to, or derive benefits from, Russian decision-makers responsible for such actions.

Finally, the GC analyses the multiple rationales put forth by the Council and asserts that simply being a shareholder of the “Alfa Group” does not lead to the conclusion that the applicant endorsed or profited from actions or policies detrimental to the territorial integrity, sovereignty, and independence of Ukraine, as outlined in criterion (a). Similarly, it does not indicate that the applicant provided material or financial support to, or gained benefits from, Russian decision-makers accountable for the annexation of Crimea or the destabilization of Ukraine, as stipulated in criterion (d).

The General Court thus determines that none of the reasons presented by the Council has been substantiated to the necessary legal standard, rendering the inclusion of the applicant’s name on the lists at issue unjustified. Furthermore, concerning the maintenance of the restrictive measures, the Council has failed to provide any additional evidence beyond what was originally relied upon to include the applicant’s name on the lists at issue.

The GC upheld the first plea in law, concluding that there had been an error of assessment on the part of the Council regarding the inclusion and maintenance of the applicant’s name on the lists at issue without it being necessary to assess the other arguments and pleas put forward by the applicant. In particular, the alleged breach of the duty to periodically review the acts adopted and the duty to state reasons. 

Judgment of the General Court (Third Chamber), 17 April 2024, Case T-255/23, Escobar / EUIPO (Pablo Escobar)

EU trade mark – Application for the EU word mark Pablo Escobar – Absolute ground for refusal – Trade mark contrary to public policy and to accepted principles of morality – Article 7(1)(f) of Regulation (EU) 2017/1001 – Presumption of innocence

Facts

On 30 September 2021, Escobar Inc., established in Puerto Rico (United States), filed an application with the European Union Intellectual Property Office (EUIPO) for registration of the word sign Pablo Escobar as an EU trade mark for a wide range of goods and services.

The Colombian national named Pablo Escobar, who was born on 1 December 1949 and died on 2 December 1993, is presumed to be a drug lord and a narco-terrorist who founded and was the sole leader of the Medellín cartel (Colombia).

EUIPO rejected the application for registration on the ground that the mark was contrary to public policy and to accepted principles of morality. It relied on the perception of the Spanish public, as it is the most familiar with Pablo Escobar due to the links between Spain and Colombia.

Escobar Inc. brought an action against that decision before the General Court of the European Union. The Court upholds the refusal to register the trade mark Pablo Escobar.

Decision

The Court decide that the name Pablo Escobar may not be registered as an EU trade mark as the public would associate it with drug trafficking and narco-terrorism.

According to the Court, EUIPO could rely, in its assessment, on the perception of reasonable Spaniards, with average sensitivity and tolerance thresholds and who share the indivisible and universal values on which the European Union is founded (human dignity, freedom, equality and solidarity, and the principles of democracy and the rule of law and the right to life and physical integrity).

EUIPO correctly found that those persons would associate the name of Pablo Escobar with drug trafficking and narco-terrorism and with the crimes and suffering resulting therefrom, rather than with his possible good deeds in favour of the poor in Colombia.

For the Court, the trade mark would therefore be perceived as running counter to the fundamental values and moral standards prevailing within Spanish society.

The Court adds that Pablo Escobar’s fundamental right to the presumption of innocence has not been infringed because, even though he was never criminally convicted,, he is publicly perceived in Spain as a symbol of organised crime responsible for numerous crimes.

[1] Council Decision 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine (OJ 2022 L 78, p. 16)

[2] According to Article 2(1)(a) of Decision 2014/145: “1. All funds and economic resources belonging to, or owned, held or controlled by: (a) natural persons responsible for, supporting or implementing actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, or stability or security in Ukraine, or which obstruct the work of international organisations in Ukraine;”

[3] According to Article 2(1)(d) of Decision 2014/145 provides: : “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 benefitting from Russian decision-makers responsible for the annexation of Crimea or the destabilisation of Ukraine;”

[4] Judgement of 12 November 2013, North Drilling v. Council, T 552/12, not published, EU:T:2013:590, p. 25.

[5] Judgement of 18 July 2013, Commission v. Kadi, C-584/10 P, C 593/10 P e C 595/10 P, EU:C:2013:518, p. 119.

[6] Judgement of 30 November 2016, Rotenberg v. Council, T- 720/14, EU:T:2016:689, p. 74.