Judgment — ECLI:EU:T:2018:331
Date: 2018-06-06
Language of the case: Czech
Court formation: Sixth Chamber
Subject matter: External relations;Common foreign and security policy
Procedure: Action for annulment - successful

summary of his situation prepared by the PGO, without asking for additional information and without examining with due diligence the exculpatory evidence which he had submitted to it. 56 The Council argues in response that the contested decision has a sufficiently sound factual basis, consisting, in particular, of the new documents from the PGO. Preliminary observations 57 It should be recalled, on one hand, that the designation criterion provided for in Article 1(1) of Decision 2014/119, as amended by Decision 2015/143 (‘the relevant criterion’), by virtue of which the applicant’s name was maintained on the list at issue by the contested decision, applies to persons who have been ‘identified as responsible’ for acts of misappropriation of public funds — which includes persons ‘subject to investigation by the Ukrainian authorities’ for the misappropriation of Ukrainian public funds or assets — and, on the other, that the relevant criterion must be interpreted as meaning that it does not concern in abstract terms any act classifiable as misappropriation of State funds, but rather acts classifiable as misappropriation of State funds or public assets which are such as to undermine respect for the rule of law in Ukraine (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 97 and the case-law cited). 58 The applicant’s name was maintained on the list at issue by the contested decision on the grounds that he was a ‘person subject to criminal proceedings by the Ukrainian authorities for the misappropriation of public funds or assets’. 59 On that basis, it is necessary to determine whether the Council’s decision to maintain the applicant’s name on the list was made impartially and fairly, in view of an assessment of the evidence in its possession, the grounds on which that decision was based and the relevant criterion. 60 It should be recalled that, while the Council has a broad discretion with regard to the general criteria to be taken into consideration with a view to the adoption of restrictive measures, the effectiveness of the judicial review guaranteed by Article 47 of the Charter requires that, as part of the review of the lawfulness of the grounds which are the basis of the decision to include or maintain a specific person’s name on a list of persons subject to restrictive measures, the Courts of the European Union ensure that that decision, which affects that person individually, is taken on a sufficiently solid factual basis. That entails a verification of the factual allegations in the summary of reasons underpinning that decision, with the consequence that the judicial review cannot be restricted to an assessment of the cogency in the abstract of the reasons relied on, but must concern whether those reasons or, at the very least, one of those reasons, deemed sufficient in itself to support that decision, is or are substantiated in a sufficiently precise and concrete manner (see judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 100 and the case-law cited). 61 Moreover, according to the case-law on decisions maintaining a person’s name on a list of persons covered by restrictive measures, when comments are made by the individual or entity concerned on the summary of reasons, the competent European Union authority is under an obligation to examine, carefully and impartially, whether the alleged reasons are well founded, in the light of those comments and any exculpatory evidence provided with those comments. Furthermore, in the context of the adoption of restrictive measures, the Council is under an obligation to observe the principle of good administration, enshrined in Article 41 of the Charter, which, according to settled case-law, entails the obligation for the competent institution to examine, carefully and impartially, all the relevant aspects of the individual case (see judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 101 and the case-law cited). 62 It is also apparent from the case-law that, in order to assess the nature, form and degree of the proof that the Council may be required to provide, it is necessary to take account of the specific nature and scope of the restrictive measures, as well as of their objective (see judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 102 and the case-law cited). 63 As is apparent from recitals 1 and 2 of Decision 2014/119, that decision forms part of a more general EU policy of support for the Ukrainian authorities, intended to promote the political stability of Ukraine. It thus satisfies the objectives of the common foreign and security policy, which are defined, in particular, in Article 21(2)(b) TEU, pursuant to which the European Union is to engage in international cooperation with a view to consolidating and supporting democracy, the rule of law, human rights and the principles of international law (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 103 and the case-law cited). 64 It is against that background that the restrictive measures at issue provide for the freezing of the funds and economic resources of, amongst others, persons who have been identified as being responsible for the misappropriation of Ukrainian State funds. The facilitation of the recovery of those funds consolidates and supports the rule of law in Ukraine (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 104). 65 It follows that the restrictive measures at issue are not intended to penalise any misconduct in which the persons concerned may have engaged, or to deter them, by coercion, from engaging in such conduct. The sole purpose of those measures is to facilitate the Ukrainian authorities’ identification of any misappropriation of State funds that has taken place and to protect the possibility of the authorities’ recovering misappropriated public funds. They are, therefore, purely precautionary (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 105 and the case-law cited). 66 Thus, the restrictive measures at issue, imposed by the Council on the basis of the powers conferred on it by Articles 21 and 29 TEU, have no criminal-law aspect. They cannot, therefore, be treated in the same way as a decision to freeze assets that has been taken by a national judicial authority of a Member State in the relevant criminal proceedings, respecting the safeguards provided by those proceedings. Consequently, the requirements the Council must fulfil with regard to the evidence underpinning the entry of a person’s name on the list of persons whose assets are to be frozen cannot be exactly the same as those which apply to the national judicial authority in the abovementioned case (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 106 and the case-law cited). 67 It should also be recalled that the Council is not required to carry out, systematically and on its own initiative, its own investigations or checks for the purpose of obtaining additional information when it already has information provided by the authorities of a third country, in taking restrictive measures against nationals of that country who are subject to judicial proceedings in that country (see judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 107 and the case-law cited). 68 In the present case, the Council must ascertain, first, to what extent the new documents from the PGO, on which it intends to rely, prove that, as indicated by the grounds for including the applicant’s name on the list at issue, referred to in paragraph 58 above, the applicant is subject to criminal proceedings by the Ukrainian authorities in respect of actions that may be characterised as the misappropriation of State funds, and, second, whether those proceedings are such that his actions can be characterised as satisfying the relevant criterion. Only if those investigations were not successful would it, in the light of the case-law referred to in paragraph 61 above, be incumbent on the Council to investigate further (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 108 and the case-law cited). 69 Furthermore, in the context of the cooperation governed by the restrictive measures at issue (see paragraph 63 above), it is not, in principle, for the Council itself to examine and assess the accuracy and relevance of the information relied on by the Ukrainian authorities in conducting criminal proceedings in respect of the applicant for conduct that could be characterised as misappropriation of State funds. As explained in paragraph 65 above, in adopting the restrictive measures at issue, the Council does not seek itself to punish the misappropriation of State funds being investigated by the Ukrainian authorities, but to protect the possibility of the authorities’ identifying such misappropriation and recovering the funds thus misappropriated. It is, therefore, for those authorities, in the context of those proceedings, to verify the information on which they are relying and, where appropriate, to draw the appropriate conclusions as regards the outcome of those proceedings (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 109 and the case-law cited). 70 That interpretation is confirmed by the case-law to the effect that it is not for the Council to verify whether the investigations to which the person concerned is subject are well founded, but only to verify whether that is the case as regards the decision to freeze funds in the light of those investigations (see judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 110 and the case-law cited). 71 Admittedly, the Council cannot, in all circumstances, adopt the findings of the Ukrainian authorities contained in the documents provided by them. Such conduct would not be consistent with the principle of good administration nor, generally, with the obligation on the part of the EU institutions to respect fundamental rights in the application of EU law, under the combined provisions of the first subparagraph of Article 6(1) TEU and Article 51(1) of the Charter (see judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 111 and the case-law cited). 72 However, it is for the Council to assess, on the basis of the circumstances of the case, whether it is necessary to investigate further, in particular to seek the disclosure of additional evidence from the Ukrainian authorities if it transpires that the evidence already supplied is insufficient or inconsistent. Information communicated to the Council, either by the Ukrainian authorities themselves or in some other way, might conceivably lead that institution to doubt the adequacy of the evidence already supplied by those authorities. Furthermore, when availing themselves of the opportunity which the persons concerned must be given to submit their comments on the reasons which the Council intends to use to maintain their names on the list at issue, those persons may submit such information, or even exculpatory evidence, which would require the Council to investigate further. In particular, while it is not for the Council to take the place of the Ukrainian judicial authorities in assessing whether the criminal proceedings mentioned in the PGO’s letters are well founded, it is not inconceivable that, in the light, in particular, of the applicant’s observations, the Council might be obliged to seek clarification from those Ukrainian authorities with regard to the material on which those proceedings are based (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 112 and the case-law cited). 73 It is in light of those considerations that it is necessary to examine the applicant’s more specific arguments, which relate, in essence, to the subject of the proceedings relating to him and the progress of those proceedings. Subject of the criminal proceedings in respect of the applicant 74 The applicant, relying on a number of documents, argues that the offence of which he is accused and which forms the basis of the restrictive measures at issue did not cause any loss of funds for the National Bank of Ukraine, and thus for the Ukrainian State. Consequently, no misappropriation of funds can be attributed to the applicant. 75 The Council maintains, in essence, that the acts which the applicant is alleged to have committed fall within the concept of ‘the misappropriation of public funds’, regardless of whether it was the applicant or a third party who benefited from that misappropriation. The evidence adduced by the applicant does not demonstrate that the Ukrainian State did not suffer damage as a result of such acts. 76 In the present case, it should be noted that the Council’s decision to maintain the restrictive measures against the applicant is based primarily on the PGO’s letters of 25 July and 16 November 2016 and 27 January 2017. 77 In the letter of 25 July 2016, the PGO recalls the following: – [confidential]; – [confidential]; – [confidential]; – [confidential]; – [confidential]; – [confidential]. 78 In the letter of 16 November 2016, the PGO indicated that there was no additional information concerning the proceedings [confidential]. 79 In the letter of 27 January 2017, the PGO supplied essentially the same information as that appearing in the letter of 25 July 2016, adding that [confidential] the misappropriation of that sum of money had reduced the ability of the National Bank of Ukraine to ensure the stability of the national currency and had thus caused damage to the Ukrainian State. In its letter, the PGO mentioned the decision of 15 February 2016 and indicated that the pre-trial investigation in question was still pending. 80 Moreover, it should be observed that when the Council adopted the contested decision, it also had at its disposal the information which it had received from the PGO in response to its questions. 81 Thus, in its responses submitted to the Council on 7 July 2016, firstly, the PGO, in essence, indicated [confidential]. 82 [confidential]. 83 [confidential]. 84 It follows that the decision to maintain the restrictive measures against the applicant was based on evidence which allowed the Council to make an unequivocal finding that proceedings had been initiated by the Ukrainian judicial authorities against the applicant in relation to an offence of misappropriation of public funds. 85 It should be observed that, by consulting the new documents from the PGO, the Council had at its disposal the number of the relevant proceedings, their commencement date, the offence of which the applicant was suspected, the corresponding article of the Ukrainian Criminal Code, the relevant factual circumstances and the date on which a notice of suspicions was sent to the applicant. Those documents confirm that those proceedings are being conducted in respect of actions which are described in a sufficiently concrete and precise manner, so that they leave no doubt as to the applicant’s alleged involvement, and all the more so given that the facts describing the offence are consistent and coherent and are classified in law by the Ukrainian authorities as the misappropriation of public funds, which meets the relevant criterion. 86 Moreover, the documents communicated to the Council are acts emanating from the PGO, one of Ukraine’s highest judicial authorities. It acts, in that State, as the public prosecutor’s office in the administration of criminal justice and it conducts pre-trial investigations in the context of criminal proceedings in respect of, inter alia, the misappropriation of public funds (see, to that effect, judgment of 19 October 2017, Yanukovych v Council, C‑598/16 P, not published, EU:C:2017:786, paragraph 53). In this regard, the Council cannot, therefore, be criticised for having regarded the information provided by the PGO as correct and substantiated. 87 Furthermore, it is important to note that the documents at issue indicate that the applicant is suspected of having committed an economic offence relating to a very large sum of money, [confidential]. 88 In this regard, it should be noted that the restrictive measures at issue facilitate and complement the efforts made by the Ukrainian authorities to recover the misappropriated public funds, which falls within the objective of consolidating the rule of law, as indicated in paragraphs 64 and 65 above. 89 On that point, it is apparent from the PGO’s letter of 25 July 2016 that [confidential], on several occasions during the investigation, the District Court, acting on a proposal from the investigator, adopted protective measures relating to the applicant (see the final indent of paragraph 77 above). Consequently, the decision taken by the Council, to freeze funds throughout the European Union, enhances the effectiveness of the initiative taken at national level. 90 Finally, it is also appropriate to observe that the prosecution of economic crimes, such as the misappropriation of public funds, is an important means of combating corruption, and that the fight against corruption constitutes, in the context of the external action of the European Union, a principle falling within the concept of the rule of law. It must further be observed that the offence which the applicant is alleged to have committed has a wider context, in that a significant part of the former Ukrainian leadership is suspected of having committed serious crimes in the management of public resources, thereby seriously threatening the legal and institutional foundations of the country and undermining, inter alia, the principles of legality, prohibition on arbitrary exercise of power by the executive, effective judicial review and equality before the law. It follows that, taken as a whole and taking into consideration the role occupied by the applicant within the former Ukrainian leadership and his position as head of the National Bank of Ukraine at the time of the offence of which he is suspected, the restrictive measures at issue contribute, in an effective manner, to facilitating the prosecution of crimes of misappropriation of public funds that were to the detriment of the Ukrainian institutions and ensure that the Ukrainian authorities can more easily secure restitution of the profits of such misappropriation. That facilitates, in the event that the prosecutions are successful, the punishment, through the courts of law, of alleged acts of corruption committed by members of the former regime, and thereby contributes to the support of the rule of law in that country (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 128 and the case-law cited). 91 Thus, in adopting the contested decision, in so far as it relates to the applicant, the Council did not commit a manifest error of assessment with regard to the subject of the criminal proceedings relating to the applicant and the relevance of those proceedings to the relevant criterion. 92 The applicant’s arguments seeking to challenge that conclusion cannot succeed. 93 Firstly, the notice of suspicions of 18 May 2017, on which the applicant relies as exculpatory evidence, merely confirms that conclusion, in so far as it is apparent from that notice, in essence, that the applicant is suspected of having misappropriated funds by abusing his position as Governor of the National Bank of Ukraine [confidential]. 94 Secondly, with regard to the claim that the National Bank of Ukraine has not suffered any damage, it should be observed that that argument is unfounded, since it is apparent from a number of new documents from the PGO that the applicant is suspected of having illegally transferred funds for purposes other than those to which they were allocated. Such a finding satisfies the definition of the concept of ‘the misappropriation of public funds’ given by case-law, according to which that concept covers any act consisting in the unlawful use of resources belonging to public authorities, or which are placed under their control, for purposes which run counter to those planned for the resources, in particular for private purposes. To fall within the scope of that concept, that use must have been prejudicial to the financial interests of these authorities, and must, therefore, have caused damage which can be assessed in financial terms (see, to that effect, judgment of 7 July 2017, Arbuzov v Council, T‑221/15, not published, EU:T:2017:478, paragraph 138 and the case-law cited). 95 [confidential]. Progress of the criminal proceedings in respect of the applicant 96 The applicant emphasises that when the contested decision was adopted, more than a year had passed since the District Court, by the decision of 15 February 2016, had authorised the PGO to proceed in absentia, during which the PGO had, nevertheless, not brought the case to court. According to the applicant, the investigation is being conducted in a purely formal manner, in particular so that the Council can extend the restrictive measures in respect of the applicant for an unlimited period. 97 The Council is of the opinion that the duration of the criminal proceedings relating to the applicant does not, in itself, have a direct impact on the question of whether he continues to fulfil the necessary conditions for his name to remain on the list at issue. However, the Council takes the time factor into consideration when it reviews that list and regularly asks the PGO for information on the conduct of ongoing proceedings. 98 It is not disputed that, by the decision of 15 February 2016, the District Court authorised the PGO to proceed in absentia with the proceedings [confidential]. It is also not disputed that, more than a year after the adoption of that decision, the Council extended the restrictive measures in respect of the applicant, having been informed by the PGO that those proceedings were still at the pre-trial investigation stage, in so far as the case had not yet been brought before a Ukrainian criminal court. 99 First, it should be noted that the reference made by the Council to the fact that proceedings can be delayed by the absence of the person concerned is entirely irrelevant in the present case, given that the decision of 15 February 2016 specifically allowed the PGO to proceed in absentia. 100 Second, as is apparent from the documents lodged by the Council in response to a written question from the Court (see paragraph 37 above), during the proceedings before the Council, the applicant raised the issue of the lack of progress in the proceedings [confidential], despite the adoption of the decision of 15 February 2016, which allowed the PGO to proceed in absentia. Thus, firstly, in his letter of 4 October 2016, the applicant suggested that the Council ask the PGO why, if the investigators maintained that they had proved that he was guilty, they had not yet brought the case before a court, when the investigation had been ongoing for nearly 2½ years. Secondly, in his letter of 14 December 2016 to the Council, just after having referred to the existence of the decision of 15 February 2016, the applicant again emphasised the lack of progress in the proceedings in question and argued that the Ukrainian authorities were seeking to keep those proceedings pending for as long as possible, in order to provide the Council with a basis on which to extend the restrictive measures in respect of him. Thirdly, in his letter of 13 January 2017 to the Council, the applicant clearly pointed out that it was very surprising that the PGO had not yet brought the case relating to the proceedings [confidential] before a court, in view, in particular, of the fact that the use of proceedings in absentia had been authorised, albeit unlawfully, in his opinion. 101 In light of the applicant’s observations summarised in paragraph 100 above and of the fact that, at the very least since the PGO’s letter of 25 July 2016 (see paragraph 77 above), the Council had been aware of the existence of the decision of 15 February 2016, the Council’s contention that the applicant had not expressed in a sufficiently precise manner his argument based on the lack of progress in the proceedings relating to him, notwithstanding the adoption of that decision, must be rejected. 102 In those circumstances, it must be held that the Council should have sought clarification from the Ukrainian authorities as to the possible reasons for the lack of progress in the proceedings [confidential], despite the adoption of the decision of 15 February 2016, as it did with regard to other elements of those proceedings which it did not consider to be sufficiently clear, in particular following the observations submitted by the applicant. 103 It follows that the Council failed to fulfil its duty of diligence, given that the applicant’s comments should have raised legitimate questions on its part, justifying its making further enquiries of the Ukrainian authorities. 104 In this regard, it should be made clear that the question is not whether, in view of the information communicated to the Council, it was obliged to remove the applicant’s name from the list, but simply whether it was obliged to take that information into account and to investigate further or to seek clarification from the Ukrainian authorities. Consequently, it is sufficient for that information to be, as it is in the present case, such as to raise legitimate questions regarding the conduct of the investigation and the adequacy of the information provided by the PGO. 105 It follows from all of the foregoing that the Council committed a manifest error of assessment in taking the view that the applicant’s observations regarding the lack of progress in the proceedings [confidential] did not justify its making further enquiries of the Ukrainian authorities, when those observations were such as to raise legitimate questions as to the adequacy of the information supplied by the PGO with regard to the proceedings [confidential] against the applicant. 106 Consequently, the third plea in law must be upheld and the contested decision must be annulled, without it being necessary to rule on the second and fourth pleas in law or on the new evidence (see paragraph 34 above). 107 With regard to the Council’s alternative claim, seeking that the effects of the contested decision be maintained until the expiry of the period of time allowed for bringing an appeal and, in the event that an appeal is lodged, until the decision ruling on that appeal, it is sufficient to observe that the contested decision was effective only until 6 March 2018. Consequently, the annulment of that decision by this judgment has no effect on the period after that date, so that it is not necessary to rule on the question of maintaining the effects of that decision (see, to that effect and by analogy, judgment of 28 January 2016, Azarov v Council, T‑331/14, EU:T:2016:49, paragraphs 70 to 72). Costs 108 Under Article 134(1) of the Rules of Procedure, the unsuccessful party shall be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Council has been unsuccessful, it must be ordered to pay the costs, in accordance with the form of order sought by the applicant. On those grounds, THE GENERAL COURT (Sixth Chamber) hereby: 1. Annuls Council Decision (CFSP) 2017/381 of 3 March 2017 amending Decision 2014/119/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine, in so far as Mr Sergej Arbuzov’s name was maintained on the list of persons, entities and bodies subject to those restrictive measures; 2. Orders the Council of the European Union to pay the costs. Berardis Spielmann Csehi Delivered in open court in Luxembourg on 6 June 2018. [Signatures] * Language of the case: Czech. 1 Confidential information redacted.