Judgment;Summary — ECLI:EU:C:2025:522
Date: 2025-07-03
Language of the case: English
Court formation: Fifth Chamber
Procedure: Action for annulment;Appeal - unfounded

summary of reasons underpinning the contested acts, with the consequence that 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 those acts, is substantiated. Moreover, it is for the competent European Union authority to establish, in the event of challenge, that the reasons relied on against the person concerned are well founded, and not the task of that person to adduce evidence of the negative, that those reasons are not well founded (judgment of 29 November 2018, Bank Tejarat v Council, C‑248/17 P, EU:C:2018:967, paragraph 39 and the case-law cited). 36 In the present case, it must be pointed out that, as stated in paragraph 37 of the judgment under appeal, the appellants acknowledged in their written pleadings submitted to the General Court that they paid a part of their profits to the Belarusian State during the period from 2018 to 2020 and produced documents relating to those payments. The appellants thus confirmed the fundamental fact that they represented a source of revenue for the Lukashenko regime. 37 In those circumstances, the Council was not required to adduce evidence to substantiate that fundamental fact, which established that the statement of reasons was well founded, as is apparent from the case-law cited in paragraph 35 above. 38 The fact that the appellants submitted the information relating to those payments as ‘exculpatory’ evidence is irrelevant, as the General Court rightly observed in paragraph 37 of the judgment under appeal. 39 Consequently, it cannot be held that, by taking account, inter alia, of that information, produced during the proceedings by the appellants and related to payments of part of their profits to the Belarusian State, in order to determine whether those payments constituted support to the Lukashenko regime, such as to justify their inclusion on the list of persons and entities subject to restrictive measures in the form of a freezing of funds and economic resources, the General Court reversed the burden of proof borne by the Council (see, to that effect, judgment of 29 November 2018, Bank Tejarat v Council, C‑248/17 P, EU:C:2018:967, paragraph 41). 40 Inasmuch as the appellants emphasise the importance of the data relating to the payment of part of their profits being referred to by the Council in the statement of reasons or included in the file lodged in support of that statement, and therefore explicitly taken into account by that institution when adopting the restrictive measure concerned, meaning that that information cannot be communicated ex post facto, they appear in fact to be arguing that the General Court erred in failing to find an infringement by the Council of the requirement to state reasons laid down in Article 296 TFEU. 41 In that regard, it should be observed that, according to consistent case-law of the Court of Justice, the purpose of the obligation to state the reasons on which an act adversely affecting an individual is based, which is a corollary of the principle of respect for the rights of the defence, is, first, to provide the person concerned with sufficient information to make it possible to ascertain whether the act is well founded or whether it is vitiated by a defect which may permit its legality to be contested before the European Union judicature and, second, to enable that judicature to review the legality of that act (judgment of 15 November 2012, Council v Bamba, C‑417/11 P, ECR, EU:C:2012:718, paragraph 49 and the case-law cited). 42 Furthermore, as regards, in particular, acts imposing restrictive measures, the Court has already held that it is irrelevant that those acts have not referred explicitly to certain payments in defining the methods and extent of the financial support provided to the government of the third State which is the subject of such measures. According to the Court’s case-law, the question whether the statement of reasons for an act is sufficient must be assessed with regard to its context and to all the legal rules governing the matter in question, such that the reasons given for a measure adversely affecting a person are sufficient if that measure was adopted in a context which was known to that person and which enables the latter to understand the scope of the measure concerning that person (see, to that effect, judgment of 12 May 2016, Bank of Industry and Mine v Council, C‑358/15 P, EU:C:2016:338, paragraph 63 and the case-law cited). 43 In the light of the information provided to them in the statement of reasons and in the Council’s file, namely, in essence, information relating to the fact that, as State enterprises, they were to be regarded as providing financial support to the Lukashenko regime on account of the evident payment of part of their profits to the Belarusian State, the acts at issue provided sufficient reasoning since, first, the appellants were in a position to challenge before the General Court, and have in fact done so, the relevance of those payments for applying the criterion of support to the Lukashenko regime, which payments, as the Court observes, had been referred to by the appellants themselves, and, second, that statement of reasons enabled the General Court to review the lawfulness of those acts. 44 In the light of the foregoing, the first ground of appeal must be rejected. The second ground of appeal Arguments of the parties 45 By their second ground of appeal, relating to paragraphs 60 to 67 of the judgment under appeal, the appellants submit that the General Court erred in law in rejecting their argument that the dividends paid to the Belarusian State under Edict No 637/2005 should be treated, having regard to their nature and function, in the same way as taxes, such that, according to the case-law of the General Court, they cannot, as a matter of principle, constitute support to the Lukashenko regime, for the purposes of Article 4(1)(b) of Decision 2012/642. The General Court thereby misinterpreted the nature and function not only of the dividends in the present case, which are mandatory, but also of any tax regime, irrespective of the State concerned, in that it declined to treat those dividends as taxes on the ground that taxes apply to all Belarusian taxpayers, while the calculation of the dividends in question corresponds to a particular tax basis, defined by Edict No 637/2005, and the payment thereof concerns only a selected category of entities. 46 In the first place, contrary to the General Court’s finding, not all Belarus taxpayers pay the same taxes. All tax regimes worldwide define the object of the tax concerned and those liable to pay it and, in the present case, it is Belarusian State-owned enterprises which are required to pay mandatory dividends. Moreover, Edict No 637/2005 applies to different categories of State-owned enterprises, namely to enterprises that are fully owned by the State and those where the State owns at least 50% of the shares. Many taxes in Belarus, like the mandatory dividends, are aimed at defined categories of persons. The fact that State enterprises are required to pay mandatory dividends is no different from the selective application of other taxes. 47 In the second place, in paragraph 62 of the judgment under appeal, the General Court failed to consider the fact that, like any other tax in Belarus, and anywhere else in the world, mandatory dividends in Belarus are calculated with regard to a particular basis of assessment, that being, in the present case, in accordance with the second subparagraph of paragraph 1.2 of Edict No 637/2005. 48 In the third place, the General Court’s finding in paragraph 63 of the judgment under appeal that the Belarusian State, ‘as the sole shareholder’, merely increased its control over companies such as the appellants by imposing a mandatory distribution of profits, contradicts paragraph 33 of that judgment, according to which that State held only ‘99.96% of [the appellants’ share] capital’. 49 The finding in question is illogical because as the sole or even majority shareholder of enterprises, a State already has control of those enterprises and cannot increase it. Accordingly, the State can unilaterally decide on the distribution of dividends. 50 In the fourth place, there are other factors, disregarded by the General Court, confirming that the Belarus mandatory dividends are taxes. 51 First, the collection of the Belarus mandatory dividends is in the competence of the tax authorities, in accordance with the relevant tax procedures. Second, the approach that dividends are collected after corporate income tax is based on the principle of windfall taxation. Third, several Belarusian taxes originate in other legal acts than the Tax Code. Fourth, the non-payment or late payment of mandatory dividends is penalised in the same manner as the non-payment or the late payment of taxes. Fifth, mandatory dividends and corporate income tax are paid to the same recipient and into the same bank account. Sixth, like any other tax, a liability in respect of the payment of mandatory dividends may be set off against a claim arising from overpayment in respect of another tax, such as corporate income tax. Seventh, unlike ordinary dividends, where the distributing company acts as tax agent and retains taxes on the dividends paid out, which it pays into the State treasury, there is no tax on Belarus’s mandatory dividends, in accordance with the principle that it is not possible to levy a tax on a tax, as laid down in Article 166 of the Belarus Tax Code. 52 The Council contends primarily that the appellants’ arguments are in part inadmissible, as regards the claims directed against paragraphs 61 and 62 of the judgment under appeal, since those paragraphs contain findings of fact, and are in part unfounded. In the alternative, the Council submits that such a line of argument is unfounded. Findings of the Court 53 It should be observed, as did the General Court in paragraph 37 of the judgment under appeal, that, in their written pleadings, the appellants ‘acknowledge … that [they have] paid out dividends’ to the Belarusian State, which holds almost all of the capital in Grodno Azot and that they also produced a document which shows that that company paid dividends into the budget of the Republic of Belarus that amounted to BYN 8 481 000 (approximately EUR 3 526 000) in 2018, BYN 34 200 000 (approximately EUR 14 604 000) in 2019 and BYN 6 835 000 (approximately EUR 2 462 000) in 2020. 54 The General Court therefore correctly held, in paragraph 64 of the judgment under appeal, that the Council had not erred in law in finding that the appellants represented ‘a source of substantial revenue for the Lukashenko regime’ and that that fact, taken together with the appellants’ position in the Belarusian economy, and the fact that they belonged to the State as to 99.96% of their capital, constituted a sufficient basis for the view to be taken that the appellants provided support to that regime for the purposes of Article 4(1)(b) of Decision 2012/642, that provision referring in particular to persons and entities providing financial support to that regime (see, to that effect, judgment of 12 May 2016, Bank of Industry and Mine v Council, C‑358/15 P, EU:C:2016:338, paragraph 81). 55 Such an interpretation of the criterion of support to the Lukashenko regime, in that it focuses on the financial support provided to that regime, is, moreover, consistent with the main objective pursued by that provision, namely to increase the pressure put on that regime so that it brings an end to the serious and persistent violation in Belarus of human rights, democracy and the rule of law and the repression of civil society and democratic opposition. 56 In those circumstances, it must be held that classification as a tax or dividend on the basis of which the sums are paid to the Belarusian State is not decisive for identifying ‘support to the Lukashenko regime’, under Article 4(1)(b) of Decision 2012/642. Both cases involve sums paid to the State by an entity in which the State holds almost all of the capital, pursuant to State legislation imposing that payment. To exclude such payments from that concept of ‘support to the Lukashenko regime’, solely on the ground that the sums due are classified as taxes, could enable the circumvention of EU rules by increasing the rate of tax on the profits of such entities, in return for a reduction in the amount of the dividends which must be paid to the State under Belarusian law where an enterprise belonging to the Belarusian State makes profits (see, by analogy, judgment of 12 May 2016, Bank of Industry and Mine v Council, C‑358/15 P, EU:C:2016:338, paragraph 80). 57 It follows that, in so far as the appellants complain that the General Court, in paragraph 59 of the judgment under appeal, unduly restricted the concept of ‘tax’ in that context and, consequently, in paragraphs 60 to 62 of that judgment, erred in finding that their payments to the Belarusian State could not be treated in the same way as such taxes, their line of argument is ineffective, since it cannot, in any event, call into question the General Court’s finding, in paragraph 64 of that judgment and referred to in paragraph 54 above, that there existed a sufficient basis for the view to be taken in the present case that the appellants provided ‘support to the Lukashenko regime’, for the purposes of Article 4(1)(b) of Decision 2012/642. 58 The same is true of the appellants’ arguments relating to paragraph 63 of the judgment under appeal. In particular, the General Court held in that paragraph that the obligation on the appellants, under Belarusian law, to pay part of their profits to the State ‘confirms’ the assessment that they provided financial support to the Lukashenko regime, since, by imposing that obligation, the regime increased the control which it exercised. It is apparent from the word ‘confirm’ and, more generally, from an overall reading of paragraphs 58 to 64 of the judgment under appeal that the finding in paragraph 63 thereof is not at all necessary in order to reach the conclusion referred to in the preceding paragraph. 59 According to settled case-law, complaints directed against grounds included in a decision of the General Court for the sake of completeness are ineffective since they cannot lead to the decision being set aside (see, to that effect, judgments of 7 November 2002, Hirschfeldt v EEA, C‑184/01 P, EU:C:2002:645, paragraph 48, and of 6 September 2017, Intel v Commission, C‑413/14 P, EU:C:2017:632, paragraph 63 and the case-law cited). 60 In light of all the above, the second ground of appeal must be rejected. The third ground of appeal Arguments of the parties 61 By their third ground of appeal, relating to paragraphs 36 to 38, 47 to 57 and 74 to 79 of the judgment under appeal, the appellants complain that the General Court made a manifest error of assessment by failing to rule on whether the economic support provided in the form of dividend payments for 2018, 2019 and 2020, the amounts of which they detailed in their written pleadings, was ‘substantial’, in accordance with the classification to that effect set out in the statement of reasons. That error is apparent as regards both the analysis of the initial and of the maintaining acts at issue. 62 Neither that statement of reasons nor the Council’s first evidence file contain data capable of justifying that classification. 63 On a subsidiary basis, the appellants submit that if the General Court had properly analysed whether they are a source of substantial revenue for the Lukashenko regime, which it did not do, it would have answered that question in the negative. 64 In that context, the appellants refer to the judgment of 29 April 2015, Bank of Industry and Mine v Council (T‑10/13, EU:T:2015:235), and, in particular, to paragraph 186 thereof, in which the General Court concluded that the State-owned undertaking at issue had paid ‘considerable’ amounts to the Iranian national treasury, which constituted financial support to the Iranian Government. 65 The appellants argue that the payment at issue in the case which gave rise to that judgment totalled at least EUR 76 million over a five-year reference period, therefore a sum that was much higher than the amounts paid by the appellants to the Belarusian State as mandatory dividends for 2018, 2019 and 2020. Accordingly, those latter amounts cannot be classified as a source of substantial revenue, which is confirmed when expressing those amounts as a percentage of the Republic of Belarus’s gross domestic product (GDP) for the years concerned, which is namely 0.0069%, 0.0253% and 0.0045% of GDP respectively. 66 That conclusion also applies as regards the payment in connection with the maintaining acts at issue. The Council’s second evidence file in fact shows that in 2022 the appellants paid EUR 33 195 000 in respect of mandatory dividends, representing 0.0471% of the GDP of the Republic of Belarus for that year. That amount is considerably less than the sum found by the General Court to be ‘substantial’ in the judgment of 29 April 2015, Bank of Industry and Mine v Council (T‑10/13, EU:T:2015:235). 67 Lastly, the mandatory dividends paid by the appellants, whether in connection with the initial or with the maintaining acts at issue, do not represent a source of revenue for the State, given that the total amount of those dividends is lower than the refunds for value added tax they received for the period from 2018 to 2022. 68 The Council disputes the arguments put forward by the appellants. Findings of the Court 69 It should be observed that while the General Court held in paragraph 64 of the judgment under appeal that the Council did not err in law in finding, inter alia, that the appellants represented ‘a source of substantial revenue for the Lukashenko regime’, that finding of necessity takes into account the sums paid as specified in paragraph 37 of that judgment, and it therefore implies that the General Court accepted the substantial nature of that source of revenue, thus confirming the Council’s assessment to that effect and the validity of the initial acts at issue. 70 The same applies to the assessment of the maintaining acts at issue, as is apparent from a combined reading of paragraphs 74 and 76 of the judgment under appeal. 71 It must therefore be held that the third ground of appeal is based on a misreading of the judgment under appeal. 72 In so far as the appellants, by way of a subsidiary line of argument, call into question the General Court’s assessment of the significance of the source of revenue that they represented for the Lukashenko regime, in the light of the sums paid to the Belarusian State under Edict No 637/2005, it must be held that that is an assessment of facts which cannot, unless that evidence has been distorted, be subject to review by the Court of Justice at the appeal stage (see, to that effect, judgment of 28 April 2022, Yieh United Steel v Commission, C‑79/20 P, EU:C:2022:305, paragraph 52 and the case-law cited). 73 Accordingly, that subsidiary line of argument is inadmissible since the appellants have not demonstrated such distortion by the General Court (see, to that effect, judgment of 28 April 2022, Yieh United Steel v Commission, C‑79/20 P, EU:C:2022:305, paragraph 53 and the case-law cited). 74 That applies in particular to the appellants’ arguments that the sums paid on the basis of Edict No 637/2005 cannot be classified as substantial since the total amount of the payments is significantly lower than that held to be ‘considerable’ by the General Court in paragraph 186 of the judgment of 29 April 2015, Bank of Industry and Mine v Council (T‑10/13, EU:T:2015:235), or that their individual amounts do not appear to be significant if they are expressed as a percentage of the Republic of Belarus’s GDP. 75 Those arguments must on any view be rejected since they have no factual basis. First, it is clear, as the Council has, moreover, correctly stated, that paragraph 186 of that judgment cannot be understood as indicating a limit below which financial support cannot be considered as substantial. 76 Second, in view also of the broad discretion enjoyed by the Council when adopting restrictive measures pursuant, inter alia, to the criterion of support to the Lukashenko regime referred to in Article 4(1)(b) of Decision 2012/642, there is nothing to prevent that institution from assessing the significance of such support on the basis of the payments at issue, expressed in absolute amounts, rather than as a percentage of the GDP of the Republic of Belarus. 77 In addition, while, in fact, the Council and the General Court did accept or even confirm the substantial nature of the sums paid by the appellants under Edict No 637/2005, that ground is, in any event, manifestly superfluous in the light of the clear and precise wording of Article 4(1)(b) of Decision 2012/642, which precludes the imposition of an additional condition not laid down in that provision, such as that of the significance of the support to the Lukashenko regime. The appellants’ subsidiary line of argument is therefore also ineffective, in accordance with the case-law resulting, inter alia, from the judgments of 7 November 2002, Hirschfeldt v EEA (C‑184/01 P, EU:C:2002:645, paragraph 48), and of 6 September 2017, Intel v Commission (C‑413/14 P, EU:C:2017:632, paragraph 63). 78 Lastly, in accordance with settled case-law of the Court of Justice, the argument claiming infringement of the principle of proportionality which the appellants put forward in support of their third ground of appeal, is inadmissible at the stage of the appeal since it is common ground that that argument was not raised before the General Court (see, to that effect, judgment of 6 October 2021, World Duty Free Group and Spain v Commission, C‑51/19 P and C‑64/19 P, EU:C:2021:793, paragraphs 54 and 55). 79 In the light of all the foregoing considerations, the third ground of appeal must be rejected. The fourth plea in law Arguments of the parties 80 By their fourth ground of appeal, contesting paragraphs 47 to 52 of the judgment under appeal, the appellants claim that the General Court erred in law in its interpretation of Article 4(1)(b) of Decision 2012/642 since it held that the criterion of support to the regime laid down therein is satisfied for any State-owned enterprise since they of necessity provide significant support to the regime simply because of their ownership structure; that thus leads to an excessively broad interpretation of that provision, bringing about an infringement of Article 21 TEU and, as they state in their reply, of the principles of proportionality, legal certainty and fairness enshrined in EU law. 81 The appellants infer from the various details set out in the first paragraph of the statement of reasons and from the fact that the Council never referred to any concrete payments they made to the Belarusian State that the General Court’s interpretation of Article 4(1)(b) of Decision 2012/642 confirms that any State-owned enterprise is automatically a source of revenue for the State and that a large, strategic and important State-owned enterprise is of necessity a source of substantial revenue for the latter. 82 Since, like any public official, State-owned enterprises will always provide an advantage to the State through their contribution in kind to the public sector, it follows that evidence for support provided to the regime must go beyond a mere finding that they are State-owned enterprises. In the present case, the Council failed to submit any evidence of payments or specific financial contributions carried out or provided by the appellants to the Belarusian State, rather it referred to their size, their net profit in 2018 and their revenue in 2020. 83 The General Court’s approach is tantamount to granting the Council unfettered discretion to decide whom to sanction, even if there is no sufficiently concrete, precise and consistent evidence of the support provided to the Lukashenko regime. 84 The Council disputes the arguments put forward by the appellants. Findings of the Court 85 It is clear from paragraphs 47 and 64 of the judgment under appeal that, contrary to what is claimed by the appellants, the General Court did not rely solely on the fact that the appellants belonged to the Belarusian State in order to find that they supported the Lukashenko regime, but that it rightfully took other factors into account for that purpose, such as the fact that they represented a source of substantial revenue for that regime. 86 Furthermore, it is apparent from paragraph 55 of the judgment under appeal that the General Court found correctly that financial flows were the main factor on which the assessment of the criterion of support was based, namely the appellants’ payments of part of their profits to the Belarusian State, held to be financial support to the Lukashenko regime, and not the fact that they are owned by the State. 87 In view of all the foregoing, the fourth ground of appeal must be rejected and the appeal must be dismissed in its entirety. Costs 88 Under 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 costs. Under Article 138(1) of those rules, applicable 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. 89 Since the Council has applied for costs and the appellants have been unsuccessful, the latter must be ordered to bear their own costs and to pay those incurred by the Council. On those grounds, the Court (Fifth Chamber) hereby: 1. Dismisses the appeal; 2. Orders Grodno Azot AAT and Khimvolokno Plant to bear their own costs and to pay those incurred by the Council of the European Union. Arastey Sahún Gratsias Regan Passer Smulders Delivered in open court in Luxembourg on 3 July 2025. A. Calot Escobar M.L. Arastey Sahún Registrar President of the Chamber * Language of the case: English.