CELEX: 62014TJ0290
Language: en
Date: 2015-10-26
Title: Judgment of the General Court (Ninth Chamber) of 26 October 2015.#Andriy Portnov v Council of the European Union.#Common Foreign and Security Policy — Restrictive measures adopted in view of the situation in Ukraine — Freezing of funds — List of persons, entities and bodies covered by the freezing of funds and economic resources — Inclusion of the applicant’s name — Proof that inclusion on the list is justified.#Case T-290/14.

Parties
               Grounds
               Operative part
               
            
            Parties
            In Case T‑290/14,
            Andriy Portnov,  residing in Kiev (Ukraine), represented by M. Cessieux, lawyer,
            applicant,
            v
            Council of the European Union,  represented by V. Piessevaux and J.-P. Hix, acting as Agents 
            defendant,
            supported by
            European Commission, represented by D. Gauci and. T. Scharf, acting as Agents,
            intervener,
            APPLICATION for annulment of Council Regulation (EU) No 208/2014 of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 1) and Council Decision 2014/119/CFSP of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 26), in so far as the applicant’s name was included on the list of persons, entities and bodies covered by those restrictive measures,
            THE GENERAL COURT (Ninth Chamber),
            composed of G. Berardis (Rapporteur), President, O. Czúcz and A. Popescu, Judges, 
            Registrar: S. Bukšek Tomac, administrator,
            having regard to the written procedure and further to the hearing on 21 May 2015,
            gives the following
            Judgment 
            
            Grounds
            Background to the dispute 
            1. The applicant, Andriy Portnov, a Ukrainian national, has held numerous positions within the Ukrainian administration including, in particular, that of adviser to the President of Ukraine.
            2. On 5 March 2014, the Council of the European Union adopted, on the basis of Article 29 TEU, Decision 2014/119/CFSP concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 26, ‘the contested decision’).
            3. Article 1(1) and (2) of the contested decision provides that: 
            ‘1. All funds and economic resources belonging to, owned, held or controlled by persons having been identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine, and natural or legal persons, entities or bodies associated with them, as listed in the Annex, shall be frozen. 
            2. No funds or economic resources shall be made available, directly or indirectly, to or for the benefit of natural or legal persons, entities or bodies listed in the Annex.’
            4. The procedures for implementing the restrictive measures at issue are defined in the subsequent paragraphs of that article.
            5. On the same date, the Council of the European Union adopted, on the basis of Article 215(2) TFEU, Council Regulation (EU) No 208/2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine (OJ 2014 L 66, p. 1, ‘the contested regulation’).
            6. In accordance with the contested decision, the contested regulation requires the adoption of the restrictive measures at issue and defines the procedures for implementing those restrictive measures in terms which are essentially identical to those used in the aforementioned decision.
            7. The names of the persons covered by the contested decision and regulation were included on the list in the annex to that decision and in Annex I to that regulation (‘the list’) along with, in particular, the reason for their inclusion on the list.
            8. The name of the applicant was on the list along with the identifying information ‘former adviser to the President of Ukraine’ and the following reason was given:
            ‘Person subject to criminal proceedings in Ukraine to investigate crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine.’ 
            9. On 6 March 2014, the Council published the Notice for the attention of the persons subject to the restrictive measures provided for in the contested decision and the contested regulation in the Official Journal of the European Union  (OJ 2014 C 66, p. 1).
            10. According to that notice, ‘[t]he persons concerned may submit a request to the Council, together with supporting documentation, that the decision to include them on the ... list should be reconsidered ...’. The notice also draws the attention of the persons concerned ‘to the possibility of challenging the Council’s decision before the General Court ..., in accordance with the conditions laid down in Article 275, second paragraph, and Article 263, fourth and sixth paragraphs, [TFEU]’.
            11. On 17 April 2014, the applicant submitted a request to the Council asking it to reconsider the inclusion of his name on the list and to state the grounds on which it was included.
            12. The Council confirmed that the request was under consideration and sent, as an annex to the statement in defence and the rejoinder, the documents in the applicant’s case-file, namely, the letter of 3 March 2014 from the Public Prosecutor’s Office of Ukraine to the High Representative of the European Union for the Foreign Affairs and Security Policy (‘the letter of 3 March 2014’) and some other evidence post-dating the contested acts.
            13. The contested decision and regulation were amended by Council Implementing Decision 2014/216/CFSP of 14 April 2014 implementing the contested decision (OJ 2014 L 111, p. 91) and by Council Implementing Regulation (EU) No 381/2014 of 14 April 2014 implementing the contested regulation (OJ 2014 L 111, p. 33). Implementing Decision 2014/216 and Implementing Regulation No 381/2014 did not, however, change the applicant’s position.
            14. The contested decision was also amended by Council Decision (CFSP) 2015/143 of 29 January 2015 amending the contested decision (OJ 2015 L 24, p. 16), which entered into force on 1 February 2015. As to the criteria for the designation of persons covered by the restrictive measures at issue, according to Article 1 of that decision, Article 1(1) of the contested decision is replaced by the following: 
            ‘1. All funds and economic resources belonging to, owned, held or controlled by persons having been identified as responsible for the misappropriation of Ukrainian State funds and persons responsible for human rights violations in Ukraine, and natural or legal persons, entities or bodies associated with them, as listed in the Annex, shall be frozen. 
            For the purpose of this Decision, persons identified as responsible for the misappropriation of Ukrainian State funds include persons subject to investigation by the Ukrainian authorities: 
            (a) for the misappropriation of Ukrainian public funds or assets, or being an accomplice thereto; or 
            (b) for the abuse of office as a public office-holder in order to procure an unjustified advantage for him- or herself or for a third party, and thereby causing a loss to Ukrainian public funds or assets, or being an accomplice thereto.’ 
            15. Council Regulation (EU) 2015/138 of 29 January 2015 amending the contested regulation (OJ 2015 L 24, p. 1) amended the latter in accordance with Decision 2015/143.
            16. The contested decision and regulation were further amended by Council Decision (CFSP) 2015/364 of 5 March 2015 amending the contested decision (OJ 2015 L 62, p. 25) and by Council Implementing Regulation (EU) No 2015/357 of 5 March 2015 implementing the contested regulation (OJ 2015 L 62, p. 1). Decision 2015/364 amended Article 5 of the contested decision, extending the application of the restrictive measures in respect of some of the persons whose names had been included on the list until 6 March 2016 or until 6 June 2015. Consequently, Implementing Regulation 2015/357 replaced Annex I to the contested regulation.
            17. As a result of those amendments, the name of the applicant no longer appears on the list.
            Procedure and forms of order sought by the parties 
            18. By application lodged at the Registry of the General Court on 29 April 2014, the applicant brought the present action. He also lodged a request for an expedited procedure pursuant to Article 76a of the Rules of Procedure of the General Court of 2 May 1991.
            19. By a decision of 4 June 2014, the General Court rejected the request for an expedited procedure. 
            20. On 24 July 2014, the Council lodged its defence. It also submitted a reasoned application, in accordance with the second subparagraph of Article 18(4) of the Instructions to the Registrar of the General Court, requesting that the content of certain annexes to the defence be omitted from the documents relating to that case to which the public has access. 
            21. By document lodged at the Registry of the General Court on 4 August 2014, the European Commission sought leave to intervene in the proceedings in support of the form of order sought by the Council. By order of 11 September 2014, the President of the Ninth Chamber of the General Court granted the Commission leave to intervene. By a document lodged at the Registry of the General Court on 14 October 2014, the Commission waived its right to submit a statement in intervention.
            22. The reply and the rejoinder were lodged at the Registry of the General Court on 17 September 2014 and 12 November 2014 respectively. The Council also submitted a reasoned application, in accordance with the second subparagraph of Article 18(4) of the Instructions to the Registrar of the General Court, for the content of certain annexes to the rejoinder to be omitted from the documents relating to that case to which the public has access.
            23. On 31 March 2015, in the context of the measures of organisation of procedure provided for in Article 64 of the Rules of Procedure of 2 May 1991, the General Court invited the parties to submit their observations on the question whether the applicant still had an interest in bringing proceedings after his name was removed from the list of persons covered by the restrictive measures and, if so, in relation to which pleas he still had such an interest. The parties complied with that request within the period prescribed.
            24. The parties presented oral argument and answered the questions put to them by the Court at the hearing on 21 May 2015.
            25. The applicant claims that the Court should:
            – annul the contested regulation in so far as it concerns the applicant; 
            – annul the contested decision in so far as it concerns the applicant;
            – order the Council to pay the costs.
            26. The Council, supported by the Commission, contends that the Court should:
            – declare the action unfounded;
            – order the applicant to pay the costs;
            – in the alternative, declare that the effects of the contested decision are to be maintained until the partial annulment of the contested regulation takes effect.
            Law 
            The applicant’s continuing interest in bringing proceedings 
            27. It should be noted that, as a result of the amendments made to the contested acts by Decision 2015/364 and by Implementing Regulation 2015/357, the applicant’s name no longer appears on the list.
            28. In response to the written question put by the Court (paragraph 23 above), the Council, supported by the Commission, took the view that the applicant had not shown a continuing interest in bringing proceedings.
            29. According to settled case-law, the objective of the dispute, like an applicant’s interest in bringing proceedings, must continue until the final decision, failing which there will be no need to adjudicate, which presupposes that the action must be liable, if successful, to procure an advantage for the party bringing it (see judgment of 7 June 2007 in Wunenburger  v Commission , C‑362/05 P, ECR, EU:C:2007:322, paragraph 42 and the case-law cited).
            30. Moreover, whilst recognition of the illegality of the contested act cannot, as such, compensate for material harm or for interference with a person’s private life, it is nevertheless capable of rehabilitating the person concerned or constituting a form of reparation for the non-material harm which he has suffered by reason of that illegality, and of thereby establishing that he retains his interest in bringing proceedings. In that regard, the fact that the repeal of the restrictive measures at issue was definitive does not prevent an interest in bringing proceedings from continuing to exist so far as concerns the effects of the acts which imposed those measures between the date of their entry into force and that of their repeal (see, to that effect, judgment of 28 May 2013, Abdulrahim  v Council and Commission , C‑239/12 P, ECR, EU:C:2013:331, paragraphs 70 to 72 and 82).
            31. In this case, it should be noted that, as he stated in his reply to the Court’s questions and as he submitted at the hearing, without being contradicted by the Council, the applicant was and is currently involved in Ukrainian politics. Therefore, being publicly identified, through the inclusion of his name on the list, as the subject of criminal proceedings in Ukraine in connection with the misappropriation of funds, could harm, in particular, his reputation as a politician.
            32. It must therefore be concluded that the applicant’s interest in bringing proceedings continues to exist notwithstanding the repeal, in so far as he is concerned, of the restrictive measures at issue.
            Substance 
            33. In support of the action, the applicant raises five pleas in law. The first plea alleges infringement of the rights of the defence and the right to an effective remedy. The second alleges infringement of the obligation to state reasons. The third alleges failure to observe the criteria for the designation of persons covered by the restrictive measures at issue which are laid down in the contested decision and regulation. The fourth alleges an error of fact and the fifth alleges infringement of property rights.
            34. The Court considers that it is appropriate to examine the third plea first. 
            35.  In support of the third plea, the applicant claims, in essence, that the adoption of restrictive measures against him does not comply with the criteria set by the contested acts for the designation of persons covered by those measures. He claims, first, that it has not been established that he was responsible for the misappropriation of State funds and that he was the subject of criminal proceedings or an inquiry in connection with that conduct and, secondly, that the illegal transfer of the misappropriated funds outside the Ukraine constitutes an infringement which is separate from that specified in those acts, namely, the misappropriation of funds. 
            36. On the basis of that line of argument, the applicant disputes, in essence, that the inclusion of his name on the list was justified.
            37. The Council maintains, first, that Article 1 of the contested decision should not be interpreted as applying only to persons who have been the subject of a judicial decision finding them guilty of misappropriating State funds and, secondly, that transferring misappropriated State funds outside the Ukraine may constitute the offence of misappropriation of funds itself. 
            38. It should be noted that, although the Council has a broad discretion as regards the general criteria to be taken into consideration for the purpose of adopting restrictive measures, the effectiveness of the judicial review guaranteed by Article 47 of the Charter of Fundamental Rights of the European Union requires that, as part of the review of the lawfulness of the grounds which are the basis of the decision to include or to maintain a person’s name on the list of persons subject to restrictive measures, the Courts of the European Union are to 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 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, are substantiated by sufficiently specific and concrete evidence (see judgment of 21 April 2015, Anbouba  v Council , C‑605/13 P, ECR, EU:C:2015:248, paragraphs 41 and 45 and the case-law cited).
            39. In the present case, the criterion laid down in Article 1(1) of the contested decision provides that restrictive measures are to be adopted against ‘persons having been identified as responsible for the misappropriation of Ukrainian State funds’. 
            40.  The name of the applicant was included on the list on the ground that he was a ‘[p]erson subject to criminal proceedings in Ukraine to investigate crimes in connection with the embezzlement of Ukrainian State funds and their illegal transfer outside Ukraine’. It thus appears that the Council considered that, at the very least, the applicant was the subject of a preliminary investigation or inquiry which had not (or not yet) culminated in the bringing of a formal charge.
            41. In support of the ground for the applicant’s listing, the Council relies on the letter of 3 March 2014, which states that ‘[t]he Ukrainian law enforcement authorities have initiated a number of criminal proceedings to investigate criminal acts committed by former senior officials’, including the applicant. The letter subsequently states, in very general terms, that the inquiry in question ‘made it possible to establish misappropriation of sizeable amounts of State funds and the subsequent illegal transfer of those funds outside Ukraine’. 
            42. Having regard to the case-file, the letter of 3 March 2014 is the only piece of evidence submitted by the Council during the course of these proceedings which pre-dates the contested decision and the contested regulation. Accordingly, the lawfulness of those acts must be assessed in the light of that piece of evidence alone.
            43. It must therefore be established whether the letter of 3 March 2014 constitutes sufficient proof to support the conclusion that the applicant was identified ‘as responsible for the misappropriation of Ukrainian State funds’ within the meaning of Article 1(1) of the contested decision.
            44. Although, as the Council points out, the letter of 3 March 2014 was sent by a high court in a non-member country, namely, the Public Prosecutor’s Office of Ukraine, it contains only a general statement to the effect that the applicant, among other former senior officials, was the subject of an inquiry into acts, not further specified, involving the misappropriation of funds, and concerning the illegal transfer abroad of those funds. It does not give any details of that conduct or of the applicant’s responsibility for it.
            45. Furthermore, as regards the Council’s assertions before the Court to the effect that the opening of an inquiry concerning the applicant was necessarily based on information acquired as a result of unspecified investigations conducted before that inquiry was opened, it must be pointed out that these are merely assumptions. In that regard, it should be noted that a decision on the adoption of restrictive measures as provided for in Article 29 TEU is not adopted in response to a request from the authorities of the non-member country concerned, but constitutes an autonomous measure adopted in pursuit of the Common Foreign and Security Policy objectives of the European Union. 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 (judgments of 18 July 2013 in Commission and Others  v Kadi , C‑584/10 P, C‑593/10 P and C‑595/10 P, ECR, EU:C:2013:518, paragraphs 120 and 121, and of 28 November 2013, Council  v Fulmen and Mahmoudian , C‑280/12 P, ECR, EU:C:2013:775, paragraphs 65 and 66). 
            46. It is true that, as the Council submits, in the context of the application of restrictive measures, the EU judicature has held that identifying a person as responsible for an offence does not necessarily imply that that person has been convicted of that offence (see, to that effect, judgments of 5 March 2015, Ezz and Others  v Council , C‑220/14 P, ECR, EU:C:2015:147, paragraph 72, and of 27 February 2014, Ezz and Others  v Council , T‑256/11, ECR, EU:T:2014:93, paragraphs 57 to 61). 
            47. However, in the context of the cases which gave rise to the case-law cited in paragraph 46 above, the applicants had, at least, been the subject of an order of the Prosecutor General of the non-member country concerned seeking to seize their assets, which had been endorsed by a criminal court (judgment in Ezz and Others  v Council , paragraph 46 above, EU:T:2014:93, paragraph 132). Consequently, the imposition of restrictive measures on the applicants in those cases was based on specific facts of which the Council was apprised.
            48. In this case, it must be found, first, that the Council did not have any information regarding the acts or conduct specifically imputed to the applicant by the Ukrainian authorities and, secondly, that, even if it is examined in its context rather than in isolation, the letter of 3 March 2014 on which it relies cannot constitute a sufficiently solid factual basis within the meaning of the case-law cited in paragraph 38 above for including the applicant’s name on the list on the ground that he was identified ‘as responsible’ for the misappropriation of State funds. 
            49. Moreover, the additional evidence submitted by the Council, which post-dates the contested acts, proves that the applicant was the subject of a preliminary inquiry which was registered after those acts were adopted and on the same day that they were published. Therefore, it is not even established that, at the time when the contested acts were adopted, the applicant was the subject of genuine ‘criminal proceedings’, or even a mere preliminary inquiry. It follows that the inclusion of the applicant’s name on the list as a ‘person subject to criminal proceedings’ is incorrect. Furthermore, when questioned, at the hearing, about the withdrawal of the restrictive measures against the applicant, the Council did not provide any explanation justifying that withdrawal.
            50. In view of all the foregoing, the inclusion of the applicant’s name on the list does not comply with the criteria set by the contested decision for the designation of persons covered by the restrictive measures at issue.
            51. Consequently, the third plea must be upheld and the contested decision must therefore be annulled in so far as it concerns the applicant.
            52. For the same reasons, the contested regulation must be annulled in so far as it concerns the applicant.
            53. Since the third plea is well-founded, the action must be upheld, without there being any need to rule on the other pleas.
            54. Moreover, since, as a result of Decision 2015/364 and of Implementing Regulation 2015/357, the applicant’s name was removed from the list of persons covered by the restrictive measures, there is no need to rule on the question whether the effects of the contested decision should be maintained in so far as it concerns the applicant.
            Costs 
            55. Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
            56. Since the Council has been unsuccessful, it must be ordered to pay the costs, in accordance with form of order sought by the applicant.
            57. Under the first subparagraph of Article 138(1) of the Rules of Procedure, the institutions which have intervened in proceedings are to bear their own costs. The Commission must therefore bear its own costs.
            
            Operative part
            On those grounds,
            THE GENERAL COURT (Ninth Chamber),
            hereby:
            1. Annuls Council Decision 2014/119/CFSP of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine and Council Regulation (EU) No 208/2014 of 5 March 2014 concerning restrictive measures directed against certain persons, entities and bodies in view of the situation in Ukraine in so far as they concern Andriy Portnov; 
            2. Orders the Council of the European Union to bear its own costs and to pay those of Mr Portnov; 
            3. Orders the European Commission to bear its own costs.