CELEX: 62018CJ0729
Appeal
Restrictive measures adopted in view of the Russian Federation’s actions destabilising the situation in Ukraine
Inclusion of the appellant’s name on the list of entities to which restrictive measures apply
Principle of proportionality
Right to property
Right to carry on an economic activity

By its appeal, VTB Bank PAO asks the Court to set aside the judgment of the General Court of the European Union of 13 September 2018,
VTB Bank
v
Council
(T‑734/14, not published, ‘the judgment under appeal’, EU:T:2018:542), by which the General Court dismissed its action for annulment, first, of Council Decision 2014/512/CFSP of 31 July 2014  concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2014 L 229, p. 13), as amended by Council Decision 2014/659/CFSP of 8 September 2014 (OJ 2014 L 271, p. 54) (‘the decision at issue’), and second,  of Council Regulation  (EU) No 833/2014 of 31 July 2014  concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2014 L 229, p. 1), as amended by Council Regulation (EU) No 960/2014 of 8 September 2014 (OJ 2014 L 271, p. 3) (‘the regulation at issue’), in so far as those acts (together,  ‘the acts at issue’)  concern it.

Background to the dispute
The background to the dispute, which is set out in paragraphs 1 to 23 of the judgment under appeal, may be summarised as follows.
On 20 February 2014, the Council of the European Union condemned the use of violence in Ukraine, called for an immediate end to the violence and for respect for human rights, and decided to impose restrictive measures against those responsible. On 3 March 2014, the Council condemned acts of aggression committed by the Russian armed forces on Ukrainian territory and called on the Russian Federation to adhere to its international commitments, before adopting, on  5 March 2014,  restrictive measures freezing funds and for the recovery of misappropriated Ukrainian State funds. At an extraordinary meeting held on 6 March 2014, the Heads of State or Government of the Member States of the European Union condemned the unprovoked violation of Ukrainian sovereignty and territorial integrity by the Russian Federation.  They endorsed the measures proposed by the Council  to suspend bilateral talks with the Russian Federation on visa matters and on the new comprehensive partnership and cooperation agreement between the European Union and its Member States, of the one part, and the Russian Federation, of the other part, and stated that any further steps by the Russian Federation to destabilise the situation in Ukraine would lead to far reaching consequences for relations in a broad range of economic areas between the European Union and its Member States, on the one hand, and the Russian Federation, on the other.
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 adopted, on the basis of Article 29 TEU, Decision 2014/512  in order to introduce targeted restrictive measures on access to capital markets, defence, dual-use goods, and sensitive technologies, including in the energy sector.
On the same date, the Council adopted, on the basis of Article 215  TFEU, Regulation No 833/2014, which  contains more detailed provisions to give effect  at both EU level and Member State level to the requirements in Decision 2014/512.
The stated objective of those restrictive measures was 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. To that end, Decision 2014/512 established, in particular, prohibitions on the export of certain sensitive products and technologies to the oil sector in Russia and restrictions on access to the EU capital market,  including in the energy sector.
Subsequently, on 8 September 2014, the Council adopted Decision 2014/659 and Regulation No 960/2014 in order to extend the prohibition decided upon on 31 July 2014 relating to certain financial instruments and to impose additional restrictions on access to the capital market.
The appellant, VTB Bank PAO, is a commercial bank registered as a joint stock company in Russia.
Article 1(1) of the decision at issue  is worded as follows:
‘The direct or indirect purchase or sale of, the direct or indirect provision of investment services for or assistance in the issuance of, or any other dealing with bonds, equity, or similar financial instruments with a maturity exceeding 90 days, issued after 1 August 2014 to 12 September 2014, or with a maturity exceeding 30 days, issued after 12 September 2014 by:
(a)      major credit institutions or finance development institutions established in Russia with over 50% public ownership or control as of 1 August 2014, as listed in Annex I;
(b)      any legal person, entity or body established outside the Union owned for more than 50% by an entity listed in Annex I; or
(c)      any legal person, entity or body acting on behalf, or at the direction, of an entity within the category referred to in point (b) of this paragraph or listed in Annex I,
shall be prohibited.’
The appellant’s name is listed in  point 2 of Annex I to the decision at issue.
Article 5(1) of the regulation at issue reads as follows:
‘It shall be prohibited to directly or indirectly purchase, sell, provide investment services for or assistance in the issuance of, or otherwise deal with transferable securities and money-market instruments with a maturity exceeding 90 days, issued after 1 August 2014 to 12 September 2014, or with a maturity exceeding 30 days, issued after 12 September 2014 by:
(a)      a major credit institution, or other major institution having an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment, established in Russia with over 50% public ownership or control as of 1 August 2014, as listed in Annex III; or
(b)      a legal person, entity or body established outside the Union whose proprietary rights are directly or indirectly owned for more than 50% by an entity listed in Annex III; or
(c)      a legal person, entity or body acting on behalf or at the direction of an entity referred to in point (b) of this paragraph or listed in Annex III.’
The appellant’s name is listed in point 2 of Annex III to  the regulation at issue.

The proceedings before the General Court and the judgment under appeal
By application lodged at the Registry of the General Court on 24 October 2014, the appellant brought an action for annulment of the acts at issue  in so far as they concern it, relying upon four pleas in law. The first plea  concerned an infringement of the obligation to state reasons, laid down in the second paragraph of Article 296 TFEU. The second plea alleged that the Council committed a manifest error of assessment and acted
ultra vires
when it included the appellant’s name on the lists in the annexes to the acts at issue. The third plea related to infringement of the appellant’s rights of defence and right to effective judicial review.  Finally, the fourth plea alleged an infringement of the appellant’s fundamental rights, including the right to property and the  right to carry on an economic activity  enshrined in Articles 16 and 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’).  The appellant also advanced, on the basis of Article 277 TFEU, a plea of illegality in respect of Article 1 of  the decision at issue  and Article 5  of the regulation at issue.
By decision of  29 October 2015, the President of the Ninth Chamber of the General Court decided, after hearing the parties, to stay proceedings in Case T‑734/14 pending the decision of the Court of Justice in Case C‑72/15. Proceedings resumed following delivery by the Court of Justice of the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236).
After rejecting the Council’s plea that the action was inadmissible, the General Court rejected each of the four pleas in law and the plea of illegality put forward by the appellant and, consequently, dismissed the action in its entirety.

Forms of order sought by the parties before the Court of Justice
The appellant claims that the Court should:
–        set aside the judgment under appeal;
–        annul the acts at issue, in so far as they concern it;
–        make a declaration of illegality/inapplicability as regards Article 1 of  Decision 2014/512, Article 5  of Regulation No 833/2014, Article 1 of Decision 2014/659 and Article 1(5) of Regulation No 960/2014; and
–        order the Council to pay the costs of the present appeal and of the proceedings before the General Court.
The Council  contends that the Court should:
–        dismiss the appeal;
–        in the alternative, if the Court decides to set aside the judgment under appeal and give  final judgment itself, dismiss the application for annulment of the acts at issue; and
–        order the appellant to pay the costs of the appeal.
The European Commission contends that the Court should:
–        dismiss the entirety of the appeal as manifestly unfounded; and
–        order the appellant to pay the costs.

The appeal
The appellant puts forward three grounds of appeal.

The first
ground of appeal

Arguments of the parties
By its first ground of appeal, the appellant contends that in  paragraphs 93  to 100 of  the judgment under appeal the General Court erred in law by interpreting Article 5(1)(a) of  the regulation at issue  as permitting the Council  to include on the list of persons covered by the restrictive measures  at issue any ‘major credit institution … established in Russia with over 50% public ownership or control as of 1 August 2014’  even if that institution did not have an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment (‘the explicit mandate criterion’). That error of law led the General Court to hold, incorrectly, in  paragraph 100  of  that  judgment, that the Council  neither erred in law nor committed an error of assessment when it considered that the appellant  satisfied the conditions provided for in Article 5(1)(a) of  the regulation at issue  for inclusion on the list in Annex III to that regulation.
In the appellant’s submission, Article 5(1)(a) of the regulation at issue makes it a condition for a Russian credit institution to be included on the list of persons covered by the restrictive measures at issue that it have  in particular  ‘an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment’. As the appellant does not have such a mandate, it should not have been included on that list.
The appellant argues that the General Court could not interpret that provision in the light of ‘the purpose and general scheme of the rules of which it forms part’.  In the appellant’s submission, it is clear from the case-law cited by the General Court itself that, before recourse can be had to the ‘purpose and general scheme’ of rules, it is a requirement that there be a genuine ‘divergence between the  various language versions’ of the provisions of those rules. However, the various language versions of Article 5(1)(a) of  the regulation at issue  show unambiguously that  the explicit mandate criterion  also applies to the ‘major  credit institutions’ referred to in that provision. The Council,  by contrast, has not put forward any language version of that provision that is capable of being read only in accordance with its favoured interpretation, that the requirement for such a mandate does not apply to major credit institutions. At best, it has indicated that certain language versions are capable of being read both ways, which is not enough to establish that the meaning of that regulation is ambiguous.
In the alternative, the appellant contends that, even if there is a sufficient divergence between the various language versions of Article 5(1)(a) of  the regulation at issue which entitled the General Court to have regard, for the purpose of interpreting that provision, to the ‘purpose and general  scheme of the rules of which it forms part’, it wrongly took the view in  paragraphs 95  and 96 of  the judgment under appeal that the decision at issue  was part of the rules of which that provision formed part. The appellant contends that  the decision at issue  is not only a different instrument from the regulation at issue, but does not lay down any rules. Nor can a decision  be relied upon to expand the scope of a regulation, contrary to the language used in the regulation.
In any event, the General Court misinterpreted Article 5(1)(a) of  the regulation at issue  in the light of Article 1(1)(a) of the decision at issue as meaning that the explicit mandate criterion  does not apply to ‘major  credit institutions’.
In order to reach that interpretation, the General Court, in  paragraph 97 of  the judgment under appeal, relied exclusively upon the distinction in Article 1(1)(a) of  the decision at issue  between ‘major credit institutions’ and ‘finance development  institutions’. It assumed, without any reasoning in that regard, that this distinction was intended to be carried through into the regulation at issue and that the words ‘other major institution having an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment, established in Russia with over 50% public ownership or control as of 1 August 2014’, in Article 5(1)(a) of the regulation at issue,  related to ‘finance development institutions’, within the meaning of Article 1(1)(a) of the decision at issue. It would follow that the explicit mandate criterion  did not apply to  credit institutions. The appellant submits that that interpretation cannot be upheld. The General Court erred in  regarding solely the decision at issue as providing the ‘scheme and purpose’ of the regulation at issue, rather than looking at the decision and regulation together.
In its reply, the appellant contends that, since the Council, when adopting Regulation No 960/2014, considered that it was necessary to amend the wording of Article 5(1)(a) of  Regulation No 833/2014  in certain language versions, it implicitly recognised that that provision in its initial version did not permit  major credit institutions, such as the appellant, which did not satisfy the explicit mandate criterion  to be included on the list of persons  covered by the restrictive measures. Such amendment had the effect of replacing wording favourable to the appellant with wording more favourable to the Council.  Finally, the appellant submits that, even if the amendment made were to permit the appellant to be included on that list, the defect  vitiating the appellant’s listing on the basis of Regulation No 833/14 was not cured. That listing therefore remained unlawful, even following the amendment.
The Council and the Commission contest the appellant’s arguments.

Findings of the Court
The first ground of appeal is in three parts.
By the first part of the first ground of appeal, the appellant contends that the General Court erred in law by interpreting Article 5(1)(a) of  the regulation at issue  in the light of the purpose and general scheme of the rules of which that regulation forms part, although there was no genuine divergence between the  various language versions of that provision.
The General Court observed in paragraph 93  of  the judgment under appeal that a literal reading of several of the language versions of Article 5(1)(a) of the regulation at issue might suggest that the alternative was between, on the one hand, ‘a major credit institution’ and, on the other, ‘other major institution’ and that both types of institution had, in all cases, to satisfy the explicit mandate criterion. It added in  paragraph 94 of that  judgment that  certain language versions were ambiguous and could be interpreted in the manner advocated by the appellant, that is to say as requiring,  even for a major credit institution, the existence of an ‘explicit mandate’.
The General Court did not err in law in holding, after noting the ambiguity of certain language versions of  Article 5(1)(a) of  the regulation at issue, that recourse should be had to the purpose and general scheme of the regulation for the purpose of interpreting that provision.  Where the wording of a provision does not, in itself, allow, by analysis of the  provision’s various language versions, the exact scope of the provision to be determined, recourse should be had to the purpose and general scheme of the rules of which the provision forms  part, without it being necessary to find  that there is a contradiction between its various language versions  (see, to that effect, judgment of  10 July 2019,
Amazon EU
, C‑649/17, EU:C:2019:576, paragraphs 35  to 37). Therefore, the first part of the first ground of appeal must be rejected.
By the second part of this ground of appeal, the appellant submits that the General Court could not interpret the regulation at issue  in the light of the decision at issue since that decision fell outside the general scheme  constituted by the rules of which Article 5(1)(a) of the regulation formed part.
However, the General Court correctly observed in paragraph 96 of the judgment under appeal, relying upon paragraph 141 of the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236), that, since the objective of Article 5(1) of the regulation at issue is, in accordance with Article 215 TFEU, the adoption of measures necessary to give effect to Article 1(1) of the decision at issue, its terms must be interpreted, so far as possible, in the light of Article 1(1) of that decision. It should, in addition, be noted that it is not apparent that the difference in wording of those two instruments of EU law is such that they cannot be interpreted uniformly. It follows that the second part of this ground of appeal cannot succeed.
By the third part of its first ground of appeal, the appellant contends that the General Court interpreted Article 5(1) of  the regulation at issue in the light of  the decision at issue  in an incorrect manner.
It is apparent from Article 1(1)(a) of the decision at issue  that the restrictive measures  at issue cover entities  established in Russia that may be regarded as ‘major credit institutions’ or ‘finance development institutions’. The General Court correctly noted in paragraph 97 of  the judgment under appeal that that provision relates to two categories of entities, namely, first, ‘major credit institutions’ and, second, ‘finance development institutions’. In the light of the requirement, noted in paragraph 33 of the present judgment, that the decision at issue and the regulation at issue be interpreted uniformly, the General Court was correct in holding that those two categories of entities correspond to the two categories of entities referred to in Article 5(1)(a) of the regulation at issue, which distinguishes ‘major credit institution[s]’ from ‘other major institution[s]’. It follows that the General Court could hold without erring in law that the category, referred to by the decision at issue, of ‘finance development institutions’ corresponds to the category, defined more specifically in the regulation at issue, of ‘other major institution having an explicit mandate to promote competitiveness of the Russian economy, its diversification and encouragement of investment’. It may also be noted that the criterion of public control of both categories of entities concerned is also included in Article 1(1)(a) of the decision at issue.
Such an interpretation does not result in the scope of  the decision at issue being extended, but is intended simply to clarify the concept of ‘finance development institutions’, within the meaning of that decision. As  the Council has observed in its response, provisions giving effect to a position in the area of the common foreign and security policy (CFSP),  in an instrument  which is to be applied not only by the authorities of the Member States, but also by economic operators across the European Union,  must be set out with a greater level of detail.
Therefore, the third part of the first ground of appeal must be rejected.
In addition, the appellant contends that,  since the Council, when adopting Regulation No 960/2014, considered that it was necessary to amend Article 5(1)(a) of Regulation No 833/2014 in certain language versions, in order for those versions to bear out the interpretation for which it argues, it implicitly recognised that that provision in its initial version did not permit  major credit institutions, such as the appellant, which did not satisfy the explicit mandate criterion  to be included on the list of persons covered by the restrictive measures.
That line of argument is directed not against the judgment under appeal  but against the regulation at issue  and must therefore be rejected as inadmissible.
In any event, the judgment under appeal relates to an application for annulment of the regulation at issue in its amended version. The legality of the appellant’s inclusion on the list of persons covered by the restrictive measures, which is in Annex III to the regulation at issue,  must therefore be examined in the light of that regulation’s provisions as amended.  The line of argument directed against the reasons for that amendment is irrelevant in that regard.
Therefore, that line of argument must in any event be rejected as ineffective.
Consequently, the first ground of appeal must be rejected.

The second
ground of appeal

Arguments of the parties
By its second ground of appeal, the appellant contends that, in paragraphs 15, 143, 150 to 152 and 160 of  the judgment under appeal, the General Court wrongly held that the  restrictive measures  at issue were justified by the stated objectives of the regulation at issue  and were proportionate to them.
The appellant submits, first, that the General Court erred in law in paragraph 160  of  the judgment under appeal by summarily dismissing its arguments that the listing criteria at issue were not appropriate or proportionate and by taking the view that those  arguments were ‘identical to or overlap[ped] considerably with’ those advanced by the appellant in support of its line of argument that the restrictive measures  at issue breached its fundamental rights. In so ruling, the General Court conflated two distinct issues, namely the legality of the listing criteria and the way in which listing affects the appellant’s fundamental rights. Those two separate issues should have been examined separately by the General Court.
The appellant submits, second, that, in paragraphs 15 and 143 of the judgment under appeal, the General Court  wrongly took the view that the stated objective of the restrictive measures  at issue was ‘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’.  The ‘stated objective’ of the  restrictive measures  that is described by the General Court  is found only in recital 2  of  the regulation at issue  and not in the decision at issue and accordingly cannot be taken into account, since the objective of  the regulation at issue  is defined by the decision at issue. The objectives of the restrictive measures  at issue are set out in recital 7 of  the decision at issue, read in conjunction with recitals 5 and 6 thereof. They consist in securing that the Russian Federation  enables access to the site of the downing of Flight MH17 in Donetsk (Ukraine),  stops the flow of equipment and militants across the Ukrainian  border and withdraws its troops from the border areas with Ukraine. The appellant submits that those objectives are clear and precise and that they do not correspond to the objective set out by the General Court according to which the general objective of the  restrictive measures at issue had been to increase the costs of the actions of the Russian Federation.
In the alternative, the appellant contends that, even if it was possible to have regard to the stated objectives of the regulation at issue  when examining the lawfulness of the listing criteria in Article 1(1) of  the decision at issue  and Article 5(1) of  the regulation at issue, those criteria are not justified by or proportionate to those objectives.  In that regard, the appellant submits that it is impossible ‘to see how imposing restrictions on [it] is necessary, let alone proportionate, as  a means to increase the costs, to Russia, of its actions in Ukraine’ and that it  was not contested before the  General Court that the appellant had played no direct or indirect role in relation to such actions.
The appellant adds that the General Court wrongly held, in  paragraph 151 of  the judgment under appeal, that the  restrictive measures  at issue, which restrict access of institutions such as the appellant to the EU capital market, obliging them to seek alternative sources of funding and ultimately call upon the Russian State, enabled the objective of the acts at issue, consisting in increasing the costs of the actions of the Russian Federation in Ukraine, to be attained. In its submission, the costs of ‘bailing out’ a bank cannot be regarded as costs of the Russian Federation’s actions in Ukraine.
According to the appellant,  the General Court, in stating in  paragraph 150 of the judgment under appeal that the objective of the restrictive measures  at issue was  ‘to increase the costs to be borne by the Russian Federation for its actions to undermine Ukraine’s territorial integrity, sovereignty and independence’, reformulated the objective. The objective of those  restrictive measures, as is clear from recital 2 of  the regulation at issue, is to increase the costs of the actions, not to impose additional costs indirectly via restrictive  measures upon institutions such as the appellant, which had no involvement in those actions. The General Court exceeded its powers by carrying out such a reformulation. In the light of the wording used in recital 2 of the regulation at issue, the criteria adopted to include the appellant on the lists at issue were manifestly inappropriate having regard to the objectives of increasing the ‘costs of the actions of the Russian Federation’ in Ukraine.
In the further alternative, the appellant contends that the listing criteria at issue  are manifestly inappropriate on the ground that there  is no necessary or sufficient connection between the restrictions imposed on the appellant and any cost being imposed on the Russian State. In that regard, it submits, first of all, that whilst restricting its access to EU capital markets has no direct or necessary effect on Russian State finances, it has the immediate effect of increasing its cost of capital and thus first affects its customers and  counterparts. Next, the appellant contends that, if that increase leads to a reduction in its profitability, numerous shareholders in the appellant other than the Russian State are also affected without any justification. Finally, it submits that, whilst it is possible that the increased costs and reduced access to capital imposed by the restrictive measures might in theory lead to the Russian State having ‘as a last resort to bail [it] out’, such an outcome could not be predicted with any confidence on the date when those measures  were adopted.
The appellant adds that bank bailouts by a State do not necessarily lead to increased costs for that State, since it generally makes the payment of public funds on punitive terms as to repayment or in return for significant equity. As a result, bank bailouts can be highly profitable for the State in question.
Furthermore, according to the appellant, the press articles which suggest that it had to seek ‘alternative sources of funding’  following the adoption of the restrictive measures, and upon which the General Court relied, in  paragraph 151 of  the judgment under appeal, in order to take the view that ‘those measures enable[d] their objective to be attained’, cannot be allowed as evidence. It states that the legality of the acts at issue  must be determined in the light of matters as they stood on the date when they were adopted, and not in the light of subsequent events. The General Court did not, however, provide any reasoning or explanation as to the relationship between the listing criteria and the objective allegedly pursued by them or as to how they were appropriate to achieve it, beyond referring to the (inadmissible)
ex post facto
evidence that the appellant had, since the acts at issue were adopted, sought ‘alternative source of funding’.  Such
ex post facto
evidence, by itself, cannot establish that there is a reasonable relationship between the listing  criteria at issue and the objective pursued.
The General Court’s determination, in  paragraph 152 of  the judgment under appeal, that the Council  could ‘legitimately find that in order to achieve that objective, it was appropriate to target major credit institutions … established in Russia with over 50% public ownership or control as of 1 August 2014’ is wrong and lacks any basis. In particular, the General Court failed to consider why the requirement of State  ownership or control of a credit institution was appropriate for attaining the objective of imposing future costs on the Russian State through the risk of having to fund a bailout of such institutions.
Finally, the appellant contends that, since there is no basis for the view that a State-owned bank is more likely to be the subject of a bailout by the Russian State than a privately owned bank — which would for example be 49% owned by the Russian State — the listing criteria at issue are arbitrary and discriminatory.
The Council and the Commission contest the appellant’s arguments.

Findings of the Court
The second ground of appeal is in three parts.
By the first part of its second ground of appeal, the appellant contends that in paragraph 160  of  the judgment under appeal  the General Court  conflated the issue of the proportionality of the interference with the appellant’s fundamental rights caused by the restrictive measures at issue and the issue of the proportionality of those measures in the light of their objectives, an issue which required separate analysis.
This part of the second ground of appeal must be rejected. In  paragraph 160  of  the judgment under appeal, the General Court  correctly pointed out that the arguments which were relied upon by the appellant in support of the plea  of illegality in respect of Article 1 of the decision at issue and Article 5  of the regulation at issue, and which alleged that the restrictive measures at issue were inappropriate and disproportionate, were identical to or overlapped considerably with those that had already been examined in the context of the fourth plea in law, a plea that alleged, in essence, infringement of the appellant’s fundamental rights. The General Court  could therefore, in  paragraph 161  of that judgment, reject the appellant’s arguments relied upon in support of the plea of illegality by referring to the grounds set out, in  paragraphs 144  to 156 of the  judgment, in the context of the fourth plea in law. The appellant does not, moreover, set out why a fresh appraisal by the General Court  of the same arguments  when examining the plea of illegality could have led to a different outcome.
By the second part of its second ground of appeal, the appellant contends that  the General Court  erred in law, in  paragraphs 15  and 143 of  the judgment under appeal, when it took the view that the stated objective of the restrictive measures at issue was 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,  when that objective was found only in recital 2 of the regulation at issue,  and not in the decision at issue, and the General Court could not take  the regulation at issue into account in order to define the objective of  the acts at issue.
In that regard, it is sufficient to point out that, in  paragraph 123  of the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236
),
the
Court of Justice stated that it is apparent from recital 2 of the regulation at issue that the declared objective of the acts at issue was 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, and therefore this part of the ground of appeal cannot succeed.
By the third part of its second ground of appeal, the appellant contests the grounds, set out in paragraphs 150 to 152  of  the judgment under appeal, according to which the listing criteria were not disproportionate and manifestly inappropriate for achieving the objective of the  restrictive measures that was identified by  the General Court.
It is clear from the case-law of the Court of Justice 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. Accordingly, 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 (judgments of 28 March 2017,
Rosneft
, C‑72/15, EU:C:2017:236
,
paragraph 146, and of  31 January 2019,
Islamic Republic of Iran Shipping Lines and Others
v
Council
, C‑225/17 P,  EU:C:2019:82, paragraph 103).
In  paragraph 150 of  the judgment under appeal, the General Court held that there was a reasonable relationship between the restrictive measures at issue and the objective pursued by the Council in adopting them. Referring to paragraph 147 of the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236
)
, it took the view that, in so far as that objective consisted, in particular, in increasing the costs to be borne by the Russian Federation for its actions to undermine Ukraine’s territorial integrity, sovereignty and independence, the approach of targeting Russian State-owned banks was consistent with that objective and could not, in any event, be considered to be manifestly inappropriate with respect to the objective pursued. In  paragraph 151 of  the judgment under appeal, the General Court  added that the Council  could legitimately find that the fact of restricting the appellant’s access to the EU capital market was capable of contributing to that objective. The General Court stated, in that regard, that it was apparent from the evidence provided by the appellant that, following the adoption of the restrictive measures at issue, it had to seek alternative sources of funding, which tended to show that those measures enabled their objective to be attained, since, in the event of financial difficulties, it was for the Russian State as a last resort to bail the appellant out. Finally, in  paragraph 152 of the judgment under appeal, the General Court  held that, consequently,  the Council could legitimately find that, in order to achieve that objective, it was appropriate to target major credit institutions or finance development institutions established in Russia with over 50% public ownership or control as of 1 August 2014.
In the third part of its second ground of appeal, the appellant  relies on four complaints, directed against the grounds of the judgment under appeal  that are set out in the previous paragraph.
By the first complaint, it contends that the General Court distorted the objective stated in recital 2  of  the regulation at issue, which is said to consist in increasing the costs of the actions concerned, that is to say, in making the actions ‘to undermine Ukraine’s territorial integrity, sovereignty and independence’ more onerous and not in imposing additional costs indirectly via restrictive measures upon institutions, such as the appellant, which had no involvement in those actions.  However, it is not apparent from the objective set out in recital 2 of  the regulation at issue that the Council was required to adopt measures designed only to increase the costs directly connected with the specific actions carried out by the Russian Federation in Ukraine. The first complaint must therefore be rejected.
By the second complaint, the appellant  submits that the listing criteria are manifestly inappropriate, on the ground that  restricting its access to capital markets has no direct or necessary effect on Russian State finances.
It must be pointed out that the Council  was required to prove not that the restrictive measures  at issue had such an effect, but only that they were capable of having such an effect. The fact, not contested by the appellant, that it was a major credit institution more than 50% of which was owned by the Russian State was sufficient for the view to be taken that the adoption of  restrictive measures in its regard was capable of increasing the costs of its majority shareholder, namely the Russian State. Consequently, the General Court was correct in holding, in  paragraph 150 of the judgment under appeal, that the restrictive measures  at issue were not manifestly inappropriate for the purpose of achieving the objectives pursued by the Council. The second complaint cannot therefore be upheld.
By the third complaint, the appellant contends that  the General Court  could not, in order to establish that there was a  reasonable relationship between the listing criteria at issue and the objective pursued, rely in paragraph 151 of  the judgment under appeal on evidence, suggesting that the appellant had to seek alternative sources of funding,  which was subsequent to the date on which the acts at issue were adopted.
It must, however, be pointed out that the General Court held, in  paragraph 150  of  the judgment under appeal, that there was a reasonable relationship between the restrictive measures at issue and the objective pursued by the Council in adopting them, so that those measures were not manifestly inappropriate with respect to that objective.  It noted in  paragraph 151  of that judgment,  on the basis of the discretion which the Council has in this field, that the Council  could legitimately find that the fact of restricting the appellant’s access to the EU capital market was capable of contributing to the objective of the acts at issue. It then stated that that seemed to have been the case, mentioning, by way of illustration, the evidence produced by the appellant.  Since the General Court’s determination relating to the existence of that reasonable relationship was not founded on that evidence, the third complaint is ineffective.
By the fourth complaint, the appellant contends that the listing criteria at issue are arbitrary and discriminatory and infringe the principle of equal treatment since they do not cover banks that are not more than 50% owned by the Russian State.
Since this complaint was not put forward at first instance, it must be rejected as inadmissible (see, to that effect, judgment of  11 September 2019,
HX
v
Council
, C‑540/18 P,  not published, EU:C:2019:707, paragraph 37  and the case-law cited).  In any event, it is unfounded. The Council  has a broad discretion as regards determination of the entities covered by the restrictive measures. Furthermore, the condition requiring ownership or control by the Russian State of over 50% is an objective differentiating factor between those entities and the entities that are not covered by the measures at issue.
Since the four complaints put forward in support of the third part of the second ground of appeal have been rejected, that part and, consequently, the second ground of appeal must also be rejected.

The third
ground of appeal

Arguments of the parties
By its third ground of appeal, the appellant contends that  the General Court wrongly held, in paragraph 154 of  the judgment under appeal, that the interference with its fundamental rights cannot be considered to be disproportionate.
The appellant submits that the General Court  did not apply the correct test for proportionality. It is clear from the case-law that this test is in two stages, namely, the first, during which  the General Court must ascertain whether the measure is  manifestly inappropriate having regard to the objective which the Council was seeking to pursue, and the second, which must enable the General Court to satisfy itself that it was not possible for the Council to adopt  alternative measures that were less onerous for the appellant.  However, the General Court  did not apply the second stage. It paid no heed to the existence of alternative measures less onerous for  the appellant that could have been adopted and did not seek to ascertain whether, prior to adopting the restrictive measures at issue, the Council gave consideration to the possibility of adopting alternative measures. The appellant adds that the fact that the initial restrictive measures,  laid down in Article 5  of  Regulation  No 883/2014, were subsequently relaxed shows that the Council did not have recourse, initially, to the least onerous measures.
The appellant also contends that the General Court  did not state grounds for the finding, set out in  paragraph 154 of  the judgment under appeal, as to ‘the fact that the restrictive measures adopted by the Council [had] become progressively more severe’  as regards the appellant. It merely reproduced paragraph 150  of the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236
)
, by which the Court of Justice found that the restrictive measures  concerning the company at issue in the case which gave rise to that judgment were not disproportionate. However, that paragraph cannot be transposed here. The appellant submits, in that regard, that that company was in a situation entirely different from its own, in the light of the company’s status, the industry in which it operated, the criteria for inclusion on the list of persons covered by restrictive measures  and the restrictions that could be imposed on it. The appellant adds that, so far as concerns the restrictive measures  at issue in the case which gave rise to that judgment, the regulation at issue provides for a licensing regime permitting exemptions from those restrictions to be granted on a case-by-case basis.
Finally, the appellant  puts forward a number of alternative measures that  the Council could have envisaged and, in its submission, would have been less onerous for it and its subsidiaries. It submits in particular that the regulation at issue  provides for a licensing regime in respect of the  restrictive measures  imposed in Articles 2  to 4 of that regulation and that there is no reason why a licensing regime could not also be provided for in respect of the restrictive measures at issue.
In its reply, the appellant contends that the Commission accepts that, at the hearing before the General Court,  the appellant put forward arguments relating to the less onerous alternative measures that the Council could have adopted. The General Court, to which it fell to rule on the admissibility of such arguments, did not find, either at the hearing or in the judgment under appeal, that those arguments were inadmissible. In any event, the appellant’s arguments concerning the alternative measures are not a new ground of appeal, but part of its case relating to the proportionality of the measures at issue.
The Council and the Commission contest the appellant’s arguments.

Findings of the Court
By its third ground of appeal, the appellant contends that  the General Court  wrongly held, in paragraph 154 of the judgment under appeal, that the interference with its rights cannot be considered to be disproportionate.
In paragraph 153  of that  judgment, the General Court  pointed out ‘that the measures adopted by the Council in the present case consist in targeted economic sanctions, which cannot be considered a total interruption of economic and financial relations with a third country, although the Council has such a power under Article 215 TFEU’.  In  paragraph 154  of that judgment, it held, in the light of the matters set out in  paragraphs 146  to 153 thereof  and the fact that the restrictive measures adopted by the Council in reaction to the crisis in Ukraine became progressively more severe, that interference with the appellant’s freedom to conduct a business and its right to property cannot be considered to be disproportionate.
It should be recalled that the fundamental rights relied on by the appellant, namely the freedom to conduct a business and the right to property, are not absolute, and their exercise may be subject to restrictions justified by objectives of public interest pursued by the European Union, provided that such restrictions in fact correspond to objectives of general interest and do not constitute, in relation to the aim pursued, a disproportionate and intolerable interference, impairing the very essence of the rights guaranteed (judgment  of 28 March 2017,
Rosneft
, C‑72/15, EU:C:2017:236
,
paragraph 148  and the case-law cited).
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 (judgment  of 28 March 2017,
Rosneft
, C‑72/15, EU:C:2017:236
,
paragraph 149  and the case-law cited).
In the present instance, having regard to the importance of the objectives pursued by the Council, the achievement of which is part of the wider objective of maintaining peace and international security, in accordance with the objectives of the European Union’s external action stated in Article 21 TEU, and to the progressive increase, according to their effectiveness, of the  restrictive measures  adopted by the Council  in reaction to the Russian Federation’s actions destabilising Ukraine, an increase which is described in recitals 1  to 7 of  the decision at issue, the General Court was correct in holding that the restrictive measures  at issue cannot be considered to be disproportionate (see, to that effect, judgment  of 28 March 2017,
Rosneft
, C‑72/15, EU:C:2017:236
,
paragraph 150).
Nor can the appellant succeed with its line of argument alleging that the General Court erred in law by not assessing whether less onerous restrictive measures had been envisaged or could have been adopted by the Council.
The General Court, in accordance with the requirements set by the Court of Justice  in the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236
),
examined
, in paragraphs 150 to 152 of  the judgment under appeal, whether the restrictive measures at issue were manifestly inappropriate  with respect to the objectives pursued by the Council  and then examined, in  paragraphs 153  and 154 of  the judgment under appeal, whether the interference with the appellant’s rights was disproportionate.
Furthermore, before the General Court, the appellant did not assert in the application or the reply,  or even in its written response to the question asked by the General Court about the consequences for Case T‑734/14 of the judgment of the Court of Justice  of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236
)
,
that restrictive measures existed that were less onerous than the restrictive measures at issue.
It is true that the appellant submitted in the appeal that, at the hearing before the General Court, it drew the General Court’s attention to the possibility of adopting alternative measures less onerous than the measures at issue. However, the appellant did not clearly indicate in its appeal the arguments relating to such a possibility that had already been  submitted at the hearing before the General Court.
If at the hearing before the General Court — as seems from the appeal to be the case — the appellant  merely drew the General Court’s attention to the disparity between the restrictive measures that were applied to it and the licensing regime provided for in respect of the other economic sectors targeted in other provisions of the same acts, that line of argument was not sufficiently clear and precise, and the General Court therefore cannot be criticised for not having ruled on that issue (see, to that effect, judgment of  26 April 2018,
Cellnex Telecom and Telecom Castilla-La Mancha
v
Commission
, C‑91/17 P and  C‑92/17 P,  not published, EU:C:2018:284, paragraph 95  and the case-law cited).
Furthermore, even supposing that the line of argument  advanced by the appellant at the hearing before the General Court, alleging that it was possible for the Council to adopt less onerous measures,  was substantiated, it would have been inadmissible  since the appellant did not justify  its belated advance (judgment of  13 March 2012,
Melli Bank
v
Council
, C‑380/09 P,  EU:C:2012:137
,
paragraph 59). The arguments put forward in support of the action’s fourth plea in law, a plea which alleged that the appellant’s fundamental rights were infringed, and in particular that the infringement was disproportionate, did not relate at all to that possibility. Therefore, the line of argument  put forward for the first time in that regard at the hearing cannot, contrary to what the appellant in essence contends, be regarded as amplification of a plea put forward in the application.
Moreover, the fact, asserted by the appellant, that the initial restrictive measures laid down in Article 5 of Regulation  No 883/2014 were subsequently relaxed does not serve to show that those initial measures were disproportionate, but reflects only the Council’s periodic checks that the restrictive measures at issue are necessary.
Nor, finally, can the appellant succeed with its argument that paragraph 150  of the judgment of 28 March 2017,
Rosneft
(C‑72/15, EU:C:2017:236
),
cannot be transposed here on the ground that
the company at issue in the case which gave rise to that judgment

operates
in the oil sector and not in the banking sector and that the restrictive measures at issue in that case provided for a licensing regime. The banking sector, like the oil sector, is an important sector of the economy and paragraph 150  of that judgment, according to which the principle of proportionality had been observed by the Council  as regards the  restrictive measures  at issue in that case,  is not founded on the existence of a licensing regime concerning those measures.
Consequently, the third ground of appeal must be rejected.
Since all the grounds of appeal relied upon have been rejected, the appeal must be dismissed.

Costs
In accordance with Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to the costs.
Under Article 138(1) of the  Rules of Procedure, which applies to appeal proceedings by virtue of Article 184(1) thereof, 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 Council has applied for costs and the appellant has been unsuccessful, the latter must be ordered to bear its own costs and to pay those incurred by the Council.
In accordance with Article 184(4) of the Rules of Procedure, the Commission is to bear its own costs.
On those grounds, the Court (Seventh Chamber) hereby:
1.
Dismisses the appeal;
2.
Orders VTB Bank PAO 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.
Xuereb
von Danwitz
Kumin
Delivered in open court in Luxembourg on 25 June 2020.
A. Calot Escobar

P.G. Xuereb
Registrar

President of the  Seventh Chamber
*
Language of the case: English.