Judicial Cases

C-91/05 Commission v Council, judgment of 20 May 2008

This case is connecting with the choice of the correct legal basis for a particular act.

THE COURT ANNULS THE COUNCIL DECISION SUPPORTING THE MORATORIUM ON SMALL ARMS AND LIGHT WEAPONS IN WEST AFRICA

The decision, which pursues objectives falling not only within common foreign and security policy but also Community development cooperation policy, should have been adopted under the EC Treaty and not the EU Treaty.

In July 2002, the Council adopted, in the framework of the Common Foreign and Security Policy(CFSP) and on the basis of the EU Treaty, a Joint Action concerning the combating of the proliferation of small arms and light weapons1. In order to implement that joint action, on 2 December 2004 the Council adopted a Decision2 with a view to a European Union contribution to the Economic Community of West African States (ECOWAS) in the framework of the Moratorium on Small Arms and Light Weapons. The decision was adopted on the basis of the joint action and the EU Treaty.

The Commission declared that in its view it should not be adopted under the EU Treaty and on the basis of the CFSP and that it fell rather under Community development cooperation policy and, more specifically, the Cotonou Agreement3 . In that context, the Commission stated that it was already preparing a similar financing proposal under the Cotonou Agreement. The Commission requested the Court to annul the decision. The Court points out that Community development cooperation policy concerns not only the economic and social development of developing countries and the campaign against poverty, but also the development and consolidation of democracy and the rule of law, as well as respect for human rights and fundamental freedoms. If a measure is to fall within development cooperation policy, it must nevertheless contribute to the pursuit of that policy’s economic and social development objectives.

In accordance with Article 47 of the EU Treaty, a measure which could be adopted under the EC Treaty cannot have the EU Treaty as a legal basis. Even if a measure simultaneously pursues a number of objectives or has several components, without one being incidental to the other, it cannot for that reason be adopted on the basis of the EU Treaty if it also falls within a competence conferred by the EC Treaty.

The decision therefore pursues a number of objectives, falling within the CFSP and development cooperation policy respectively, without one of those objectives being incidental to the other.

Thus, the Court concludes that, by adopting the contested decision on the basis of the CFSP, even though it also falls within development cooperation policy, the Council infringed Article 47 of the EU Treaty. Therefore, the Council decision is annulled.

C-72/15, OJSC Rosneft Oil Company v Her Majesty’s Treasury , judgment of 28 March 2017

THE RESTRICTIVE MEASURES ADOPTED BY THE COUNCIL IN RESPONSE TO THE CRISIS IN UKRAINE AGAINST CERTAIN RUSSIAN UNDERTAKINGS, INCLUDING ROSNEFT, ARE VALID

The Court of Justice has jurisdiction to give preliminary rulings on the legality of restrictive measures against individuals or entities in the context of the Common Foreign and Security policy

By a decision of 31 July 20141 and a regulation of the same date,2 the Council adopted restrictive measures in response to actions of Russia to destabilise the situation in Ukraine. Those measures impose restrictions on certain financial transactions and on the export of certain sensitive goods and technologies, restrict the access of certain Russian entities to the capital market and prohibit the provision of services required for certain oil transactions. The objective of the measures adopted by the Council is to increase the cost of the actions taken by Russia to undermine the sovereignty of Ukraine. One of the companies affected by those measures is the Russian company, Rosneft, which specialises in the oil and gas sector.

Rosneft has challenged before the High Court of Justice (England & Wales) the validity, of the restrictive measures imposed by the Council on it and the implementing measures adopted by the United Kingdom that are based on the Council acts. That court’s question to the Court of Justice is, in essence, whether the acts of the Council and the United Kingdom are valid.

As regards the measures adopted by the United Kingdom, the referring court asks whether, first, the United Kingdom was entitled, in the event of an infringement of the restrictive measures, to establish criminal penalties before the Court has clarified the meaning of terms used by the Council. Second, it asks whether the restrictive measures relate to the processing of payments by banks and prohibit the issuance of Global Depositary Receipts representing shares issued before the adoption of those measures.

The Court considers, first, that it has jurisdiction to give preliminary rulings on the validity of an act adopted on the basis of provisions relating to the Common Foreign and Security Policy (CFSP), such as the Council decision. The Court specifies however that a reference for a preliminary ruling must relate either to the monitoring of the legality of the decision itself in the light of Article 40 TEU (an article which governs, in essence, the relationship of the CFSP with other Union policies) or a review of the legality of restrictive measures against natural or legal persons. Next, the Court finds that there is nothing capable of affecting the validity of the decision or the regulation.

The Court also holds that the terms of the regulation do not preclude a Member State imposing criminal penalties that are to be applied in the event of an infringement of the provisions of the regulation. The Court holds that the restrictive measures do not relate to the processing of payments by banks. Last, the Court holds that the measures prohibit the issuance of Global Depositary Receipts representing shares issued before the adoption of those measures.