The EU has given itself the right to impose sanctions against any major Russian businessmen EU Sanctions

now can be introduced against all leading Russian businessmen and their relatives. Also, any entrepreneurs and legal entities working in the industry are at risk of being blocked.

The Council of the European Union has expanded the criteria for imposing blocking sanctions against Russian business. Now sanctions can be imposed against any businessmen and organizations working in the most profitable sectors of the Russian economy, as well as against family members of leading Russian businessmen.

The profile TELEGRAM channel The Sanctions Law drew attention to this change. The new criterion came into effect on 7 June, the day after it was published in the Official Journal of the EU (Government Gazette of the European Union).

The amendment is made in sub. "g" paragraph 1 of Art. 3 of the EU Council Regulation on restrictive measures against actions that undermine or endanger the territorial integrity, sovereignty and independence of Ukraine. This paragraph describes the circle of persons and organizations against which, in principle, European sanctions can be introduced in connection with the situation in Ukraine .

Previously, the updated subparagraph referred simply to "leading entrepreneurs, legal entities, structures or organizations involved in sectors of the economy that provide a significant source of income to the government of the Russian Federation." Such a criterion was first introduced at the end of February last year as part of the second EU sanctions package.

The amendment clarified and expanded this paragraph to:

“leading” entrepreneurs operating in RUSSIA (i.e. essentially any businessmen who can be considered leading), their immediate family or other individuals (such as friends) who benefit from them; entrepreneurs, legal entities, organizations and bodies (that is, without specifying the scale of activity) involved in sectors of the economy that provide a significant source of income for the Russian government. Read PIONERPRODUKT .by How China's Silicon Valley Benefited from the U.S. Standoff Will beatoil is a new historical record and how it will affect stocks Not only for pilots: how the Vote of No Confidence in London checklists are useful. Why the City is no longer the financial center of the world

European sanctions have previously been systematically imposed against relatives of officials and officials involved, according to the European authorities, in the destabilization of Ukraine (based on the criterion of “individuals who benefit from Russian officials responsible for decisions to destabilize Ukraine”, or from the Russian government ). In a number of cases, in 2022, they were introduced against relatives of Russian businessmen, but there was no clear formal criterion for this.

Goals of change

The Council of the EU itself explains the new norm as follows: between the Russian government and its leading businessmen there is a "connection through mutual benefit and support." Therefore, "taking into account the interdependence between leading entrepreneurs and the government," the criteria for inclusion in the sanctions list should include "leading entrepreneurs operating in any sector of the Russian economy."

The EU Council has expanded the grounds for imposing new sanctions, primarily to prevent circumvention of existing sanctions restrictions, as well as to be able to include a wider range of people on personal sanctions lists, Bulat Zhambalnimbuev, a partner at Better Chance law firm, said. In general, these changes fix the established practice within the framework of the latest EU sanctions packages, he noted.

The EU justifies the amendment explicitly states that “leading Russian entrepreneurs are engaged in a systematic practice of distributing their funds and assets among their families and others, often in order to hide assets, circumvent restrictive measures and maintain control over available resources.”

Consequences for those involved in the sanctions

The amendments to the criteria for inclusion in the sanctions lists appeared as a reaction of the EU Council to the March decision of the European COURT in the case of Violetta Prigozhina, the mother of the founder of Wagner PMC, businessman Yevgeny Prigozhin, emphasizes Yury Shumilov, a partner at the Brussels-based Acquis law firm, sanctions specialist. “With regard to her, the court overturned the decision to include her in the sanctions list, based on the practice of the court, which says that one family connection is not enough to justify the sanctions,” Shumilov recalled, adding that now it will be enough.

“The Council sees that the European Court takes a fairly balanced position in considering Russian sanctions cases (for example, decisions on the son of businessman Dmitry Mazepin Nikita Mazepin, Violetta Prigozhina and, in general, the general tone of hearings on Russian cases), and is preparing for the fact that the court will cancel inclusion in the lists in a number of cases,” states Shumilov. In the past, even if the European Court, by its decision, lifted sanctions against a Russian person (this was the case with Arkady Rotenberg), Brussels left such a defendant on the sanctions list, updating the grounds for inclusion in the list.

Most likely, the amendment is needed to strengthen the position on claims from blocked persons who indicated the unreasonableness of their inclusion in the sanctions lists, Denis Primakov, Candidate of Law, HEAD of Sanctions Law and Compliance Practice at the KIAP Law Office, agrees.

Lawsuits to challenge sanctions take quite a long time, the chances of successfully challenging them were already quite low, and with an extended wording it will be even more difficult, Zhambalnimbuev agrees.

“The chances of satisfying the claims of persons included in the sanctions lists on the specified basis after the amendments to the regulations will face new difficulties. The list of persons who may now be threatened with being included in the sanctions lists will also significantly expand, ”Alexey Stankevich, partner at the Orchards law firm, told RBC.

Primakov does not expect a large surge in blocking sanctions after the amendment comes into force, since many have already been included in the sanctions lists. “But this will facilitate the inclusion in the sanctions lists of legal entities that work with those who are already under EU sanctions,” he stressed.

The potential for introducing new sanctions restrictions that affect entire sectors and industries is almost exhausted, Zhambalnimbuev notes. “However, expanding the list of persons under personal blocking sanctions is quite possible and even probable. It is hardly possible to talk about a surge of new sanctions, but rather about their further expansion,” he said.

A number of large Russian businessmen and companies are trying to challenge the sanctions against them in the European Court in Luxembourg. For example, Gennady Timchenko appealed to the second instance of the European Court of Justice. Also challenging the sanctions was initiated by Roman Abramovich, Petr Aven and Mikhail Fridman, Alexei Mordashov, MegaFon, Vyacheslav Kantor, Oleg Deripaska, Dmitry Pumpyansky and others.