Petr Aven and Mikhail Fridman, high-profile Russian businesspersons and main shareholders of Alfa Bank, have since 22 February 2022 been subject to asset freeze measures under EU Council Regulation 269/2014, as amended (Regulation 269).

According to the reasons for designation specified by the Council for including Aven and Fridman to the asset freeze list under Regulation 269, Aven and Fridman provided material and financial support to Russian decision-makers, and supported actions and policies that undermined or threatened the territorial integrity, sovereignty, and independence of Ukraine.

On 23 May 2022, Aven and Fridman brought actions to the General Court of the European Union (the GeneralCourt), a constituent Court of the CJEU, against the Council seeking the annulment of the relevant Council acts providing for their designation (the Applications).

Both Aven and Fridman relied on the following arguments in their Applications:

1. Error in the Council’s assessment:
   • None of the evidence put forward by the Council met the requirements of the European case law on standard and quality of proof.
   • The assertions in the statement of reasons of the Council are not well established and none therefore fits in the relevant designation criteria under Regulation 269.
2. Infringement of the principle of proportionality:
   • The criterion that the Council has relied on to include their names in the asset freeze list under Regulation 269 is not appropriate considering the objective pursued.
   • The Council could impose less restrictive measures to them rather than including them in the asset freeze list under Regulation 269.
3. Lack of a legal basis: No sufficient link has been established between the category of individuals targeted by the designation criterion under Regulation 269 and the Russian Federation.
4. Error in the Council’s assessment: The Council failed to show that Aven and Fridman are prominent or leading businesspersons or that they are involved in economic sectors which provide substantial source of revenue to the government of Russia.

On 10 April 2024, the General Court decided in cases T-301/22 Aven v Council  and T-304/22 Fridman v Council, to annul, insofar as Aven and Fridman are concerned:

1. Council Decision 2022/337 of 28 February 2022 amending Decision 2014/145/CFSP (Decision2014/145),
2. Council Implementing Regulation 2022/336 of 28 February 2022 implementing Regulation 269/2014(Regulation269),
3. Council Decision 2022/1530 of 14 September 2022 amending Decision 2014/145, and
4. Council Implementing Regulation 2022/1529 of 14 September 2022 implementing Regulation 269,

which included the names of Aven and Fridman in the list of designated persons of Regulation 269 for the period 22 February 2022 to 13 March 2023 (the Relevant Acts).

The General Court decided to annul the Relevant Acts, on the basis of the first argument (error in the Council’s assessment), without considering the remaining arguments put forward in the Applications, for the following reasons:

1. The alleged close link that Aven and Fridman had with Putin was not sufficiently justified under the evidence file provided by the Council.
2. The political support given in 2005 by Putin to Alfa Group of which Aven and Fridman are major shareholders allegedly as a reward for loyalty to the Russian government, could not be taken into consideration by Council for the purposes of justifying the inclusion of their names in the Relevant Acts, as the Russian decision-makers at the origin of the advantages enjoyed by the persons concerned must have already at least started the preparation of the annexation of Crimea and destabilisation of eastern Ukraine ( Rotenberg v Council  T-720/14).
3. The mere fact that Aven and Fridman were significant shareholders of the Alfa Group, which includes Alfa Bank, one of the largest banks in Russia, does not automatically lead to a conclusion that they satisfy the designation criteria.
4. The fact that the daughter of Putin ran a charitable project which was financed by Alfa Group was not sufficient to demonstrate a link of Aven and Fridman with Putin.
5. Political assistance provided by Aven to Putin in 1992, did not meet the requirements of the landmark case of Rotenberg v Council  T-720/14 – see point (2) above.
6. Putin’s warnings to Aven in 2016 that the United States could impose additional sanctions against him could not be viewed as a benefit to Aven, as the United States had not at the relevant time imposed such additional sanctions.
7. Putin’s alleged assistance to Aven in a Russian legal matter in 2019 could not be substantiated.
8. The argument that Aven and Fridman have participated in efforts to lift Western sanctions adopted in response to the aggressive policy of Russia against Ukraine was not enough to justify that they have supported actions or policies which compromise or threaten the integrity territorial, sovereignty, and independence of Ukraine.

Although the Relevant Acts which included the names of Aven and Fridman in the list of designated persons of Regulation 269 for the period of 22 February 2022 to 13 March 2023 were annulled (insofar as Aven and Fridman are concerned) by the General Court, the Applications did not concern subsequent acts of the Council enacted after the Relevant Acts.

In particular, Council Decision 2023/572 (Decision2023/572) of 13 March 2023 amending Decision 2014/145 and Council Implementing Regulation 2023/571(ImplementingRegulation2023/571) of 13 March 2023 which included Aven and Fridman on the list of designated persons of Regulation 269 until 15 September 2023, as well as similar subsequent Council decisions still remain in force.

In this respect, Fridman and Aven still remain designated persons subject to the asset freeze provisions of Regulation 269 until such time as Decision 2023/572 and Implementing Regulation 2023/571 and all other similar subsequent Council decisions are annulled, amended, or expire. As things stand, Aven and Fridman are set to remain designated persons until 15 September 2024, at which point a new Council decision will have to be issued for them to remain designated persons.

Aven and Fridman have filed applications to challenge Decision 2023/572 and Implementing Regulation 2023/571 and it is expected that they have done or will do the same for subsequent acts.

The decisions in Aven v Council  and Fridman v Council  demonstrate the willingness of the General Court to rule in favour of designated persons where proper procedure and principles of law are not strictly adhered to by the Council as the designating authority.

At the same time, the fact that Aven and Fridman remain subject to the asset freeze list sheds light on weaknesses in the architecture of EU sanctions legislation and the ability of the European courts to provide an effective remedy in sanctions designation cases.

While Messrs Aven and Fridman are free to challenge any subsequent designation acts, the Council could theoretically issue a new decision on or before 15 September 2024 to renew their designations where any challenges before the General Court against the subsequent acts remain outstanding at that point in time. Any such new decision would again have to be separately challenged by the affected parties.

The official judgment of T-301/22 Aven v Council  (currently only available in French) can be found here.

The official judgment of T-304/22 Fridman v Council  (currently only available in French) can be found here.